In the Matter of Matthew Amorello
February 11, 2009
DECISION AND ORDER
Stephen P. Fauteux, Esq.
Counsel for Petitioner
Thomas R. Kiley, Esq.
Counsel for Respondent
Commissioners: Kane, Kempthorne and King
Presiding Officer: Commissioner Jeanne M. Kempthorne
I. Background & Procedural History
On November 5, 2007, Petitioner issued an Order to Show Cause ("OTSC") against Matthew Amorello ("Amorello"), the former Board Chair and Chief Executive Officer of the Massachusetts Turnpike Authority ("MTA"). The OTSC alleges that Amorello violated G.L. c. 268A, section 6, section 23(b)(2) and section 23(b)(3) by participating in particular matters involving the MTA's sick leave buy-back policy applicable to him and other non-union employees, including members of his senior staff, when he knew he and they had a financial interest in that policy. Amorello denies any violation.
An evidentiary hearing was held on August 5, 2008. The parties presented closing arguments to the Commission on October 17, 2008. In rendering this Decision and Order, each undersigned Commissioner has considered the testimony, the evidence in the public record and the arguments of the parties.
II. Findings of Fact
1. Matthew Amorello ("Amorello") was Chairman and Chief Executive Officer of the Massachusetts Turnpike Authority ("MTA") from February 2002 to August 15, 2006. The MTA Board and Chair are appointed by the Governor.
2. Marie Hayman ("Hayman") was the MTA Chief of Staff from March 2003 to August 2006. She was responsible for supervising the staff and reported directly to Amorello.
3. Keith Shirley ("Shirley") worked directly with Amorello for a brief time at the Highway Department. In March 2002, he began working at the MTA, and, after promotion, became Deputy Chief of Staff.
4. Norman "Chuck" Chalupka ("Chalupka") was the MTA Director of Human Resources. He had previously worked at the Highway Department and came to the MTA in 2002. He reported to Amorello most often through Hayman.
5. Mariellen Burns ("Burns") was the MTA Director of Communications.
6. At all times material hereto, William Sweeney, the MTA Director of Payroll since June 1987, monitored sick leave payments upon termination and oversaw accrual of time.
The MTA's Sick Leave Buy-Back Policy Prior to 2006
7. As the MTA Board Chair and Chief Executive Officer, Amorello had authority to decide all matters regarding employee compensation and fringe benefits.
8. Pursuant to the MTA By-Laws, "the Chair, in his discretion, may delegate any portion of [his] powers and duties" involving personnel decisions. Sometime before early 2006, Amorello delegated responsibility to establish fringe benefit policies to Chalupka.
9. From 1979 until 1996, the MTA gave retiring non-union employees 50% of the cash value of their accrued unused sick time, and also gave them 50% of the cash value of the accumulated sick time toward health insurance premiums, a benefit known as sick leave "buy-back." Non-retiring employees did not receive this benefit.
10. In 1996, the MTA reduced the buy-back for retiring employees to 20%, a change that generated considerable criticism by those affected. Amorello was aware of this criticism.
11. On March 7, 2002, Amorello signed an acknowledgement stating he would read and comply with the listed MTA's policies, including the sick leave policy.
12. On June 6, 2005, the Superior Court ruled that the MTA's 20% policy could not be applied retroactively to non-union MTA retirees.
13. Sometime in late 2005 or early 2006, as a result of non-union employee concerns and the court decision, Amorello directed Chalupka to re-evaluate the 1996 policy change. He gave no direction relating to sick leave buy-backs for non-retiring employees.
14. Amorello did not monitor Chalupka's activities with respect to the sick leave buy-back policy for retirees. Nor did he receive periodic reports from him on the issue.
The 2006 Changes to the MTA's Sick Leave Buy-Back Policy
15. At some point prior to July 26, 2006, Chalupka changed the sick leave buy-back policy for MTA non-union employees. The new policy provided that non-union employees would receive 100% cash value upon leaving the MTA for any reason ( i.e., whether retiring or not). This new policy changed the amount of this benefit available to non-union employees who left without retiring from 0% to 100%, and, for retirees, from 20% cash value to 100% cash value. This policy is dated July 5, 2006.
16. Stacey Wagner, a non-union employee, resigned on July 7, 2006. She received no sick leave buy-back even though Chalupka had purportedly changed the policy to 100% on July 5, 2006. As of July 13 th, MTA Payroll Director Sweeney was unaware of Chalupka's policy change. Chief of Staff Hayman was also unaware of the 100% policy at that time.
17. On July 17, 2006, by e-mail, Chalupka instructed that Wagner be paid her sick leave balance "[i]n accordance with the revised sick leave policy directive." Sweeney, who received a copy of the 100% policy, then submitted another termination pay worksheet to the Personnel Department to pay Wagner 100% of her unused sick leave.
18. On July 10, 2006, an MTA tunnel ceiling collapsed resulting in the death of a motorist.
19. Late on July 17, 2006, Amorello received notice that Governor Mitt Romney intended to remove him as Chair. Amorello filed an action on July 24, 2006, in the Supreme Judicial Court ("SJC") seeking to prevent his removal.
20. On July 26, 2006, Amorello, after learning that the SJC had denied his request for relief, decided to resign. He was then 48 years old, had no intention of retiring, and did not believe he was eligible for a superannuation retirement.
21. That day, Amorello met with Hayman, Shirley and Chalupka. Amorello asked Chalupka: "I am stepping down. What does that mean?" In response, Chalupka told Amorello that "he had enacted a policy buy back, you have a vacation time and policy buy back for sick time" and that "he had implemented a 100 percent buy back of unused sick time." When Chalupka told him of the policy change, Amorello was aware of and understood that the 100% policy applied to him.
22. Amorello testified that "the definition [Chalupka] gave to me verbally was 100% for non-retiring individuals and then this 50:50 for retiring individuals." (In fact, Chalupka's policy as set forth in Exhibit 5 did not provide for a 50/50 benefit for retirees). Amorello did not ask Chalupka how he arrived at the 100% buy-back policy or for a written version of the policy.
23. Amorello was "outraged" and immediately told Chalupka that the change to a 100% buy-back for non-retirees was excessive and had to be revisited. Amorello instructed Chalupka to examine the policies of other authorities such as MassPort and the MBTA, and "to make a recommendations (sic) similar to those, similar to that effect."
24. Amorello knew that his directive meant that the benefit would be reduced. He communicated to the staff that the 100% policy was unacceptable.
25. Amorello did not notify his appointing authority or the MTA Board that he had directed his staff to revise the sick leave buy-back policy.
26. Later that day, Chalupka recommended to Amorello that the policy be changed from 100% to 50%. Amorello indicated that the revision was reasonable and that he was comfortable with it.
27. The MTA sick leave buy-back policy, Policy Directive 2-8.0, was thereupon changed to provide for a cash payment of 50% of the value of accumulated sick leave "[u]pon retirement, resignation, termination or death." An employee with ten (10) or more years of service at the time of retirement under the MTA's retirement system or the state system, would also be entitled to medical benefits coverage under the MTA Group Insurance Plan without contribution, until the contributions equaled 50% of the value of accumulated sick leave credit. The revised sick leave buy-back policy is dated July 5, 2006.
28. Chalupka did not testify at the adjudicatory hearing and indicated that if called to testify, he would invoke his rights under the Fifth Amendment of the U.S. Constitution and Article 12 of the Massachusetts Declaration of Rights not to incriminate himself.
Amorello's Departure from the MTA
29. On July 26, 2006, after Amorello had decided to step down, his attorneys began negotiating a severance package with the Governor's Office. Amorello's principal concern was to ensure that when he retired, he would receive the health care coverage available to MTA retirees.
30. At a dinner with Chalupka and others that evening, Amorello handed Chalupka a draft of his severance agreement. Chalupka suggested that Amorello ask for the retirement benefit.
31. Amorello knew that without a severance agreement, the sick leave buy-back policy as revised would apply to him.
32. Amorello ultimately signed a severance agreement ("Severance Agreement") pursuant to which he agreed to relinquish his positions effective August 15, 2006.
33. The Severance Agreement provides:
The MTA agrees to provide Amorello with all health, dental, life and other benefits that he currently enjoys as Chairperson, Member and CEO of the MTA through February 15, 2007. At the future point when Amorello retires and becomes entitled to receive benefits from the MTA retirement plan, he shall be entitled to receive the same health care coverage that is available to MTA retirees as of July 26, 2006.
34. Chalupka and the MTA Director of Operations to the Retirement Board and Retiree Benefits sent Amorello a letter dated August 10, 2006, which states:
You have chosen to leave 100% of your accumulated sick leave in the custody of the MTA. Should you choose to retire through the Retirement System at some future date, 50% of that accumulated sick leave will be made available to you in cash. The other 50% will be credited to a "medical bank" to allow for medical benefits coverage, without contribution on your part, until such time as contributions equal 50% of the value of accumulated sick leave credit (see Policy Directives 2.8-0 and 2-12.0).
A copy of Policy Directive 2-8.0 was enclosed with the letter.
35. Pursuant to the Severance Agreement, Amorello remained on the payroll until February 15, 2007. As of October 13, 2008, he has received no sick leave buy-back benefit from the MTA.
36. As of July 26, 2006, Amorello had accrued 613.8 hours of sick leave or84.6 days. At his hourly rate of pay of $120.08, if he had received 100% of the cash value of his sick leave, it would have been worth approximately $73,706.
37. On or about July 26 th, but prior to August 17, 2006, seven senior MTA employees received a payment pursuant to the revised sick leave buy-back policy as follows: (a) Mariellen Burns, Director of Communications, resigned and received $4,312; (b) Keith Shirley, Deputy Chief of Staff, resigned and received $12,567; (c) Marie Hayman, Chief of Staff, retired and received $58,746; (d) Victoria Tsao, Civil Engineer, retired and received $48,058; (e) George Ward, Director of Highway Maintenance, retired and received $35,821; (f) Paul Carr, Assistant Chief Engineer, retired and received $38,874; and (g) Michael Swanson, Chief of Operations, retired and received $40,440. In addition to these payments, all but Burns and Shirley were eligible for health insurance premium contributions in an amount equal to the cash payment they received.
38. On or about August 17, 2006, the MTA revised its sick leave policy to provide benefits at the same level as the 1996 policy. Non-union employees became entitled to 20% sick leave buy-back only upon retirement. Employees who left for other reasons would no longer be compensated for unused sick leave.
Other Sick Leave Buy-Back Policies
39. The sick leave buy-back policies for union employees at the MTA in effect during 2006 did not provide for any cash payment for an employee who voluntarily left. They did include provisions for cash payments and credits towards an employee's medical bank in the event of retirement.
40. Other state agencies had sick leave buy-back policies in 2006. The MBTA's policy for executive employees provided that the only payment they would receive for accrued, unused sick leave was 20% of the accrued sick leave balance at the time of retirement. The Massachusetts Convention Center Authority's policy provided that full-time, non-affiliated employees who worked until retirement and had completed at least five years of continuous employment would be paid up to six weeks' salary of unused accrued sick leave. Massport's policy provided that employees who had been employed for two years or more would be paid 50% of their unused sick time when they voluntarily separated from employment or when their termination was for non-disciplinary reasons. Employees who retired and immediately filed for retirement benefits with the MassPort Retirement System would receive compensation for 100% of their sick leave.
A. The Section 6 Allegations
Section 6 of G.L. c. 268A provides in relevant part that a state employee may not participate as such in any particular matter in which, to his knowledge, he has a financial interest. In order to establish a violation of section 6, Petitioner must prove by a preponderance of the evidence that: (1) Amorello was a state employee; (2) he participated as a state employee; (3) in a particular matter; (4) in which he had a financial interest; and (5) he had knowledge of his financial interest. Only the participation, financial interest and knowledge elements of the alleged section 6 violation are disputed by the parties.  / We find that Petitioner has proven by a preponderance of the evidence that Amorello violated G.L. c. 268A, section 6.
Did Amorello Participate in Changing the Sick Leave Buy-Back Policy?
"Participate" is defined in G.L. c. 268A, section 1(j) as follows: "participate in agency action or in a particular matter personally and substantially as a state . . . employee, through approval, disapproval, decision, recommendation, the rendering of advice, investigation or otherwise." Participation must be "personal and substantial."
When interpreting the modifying terms personal and substantial, the Commission, as it noted in In Re Pathiakis, 2004 SEC 1167, 1174, has been guided by the interpretations of the federal Office of Government Ethics.  / In 5 CFR 2635.402(b)(4), the Office of Government Ethics described and clarified the phrase personal and substantial as follows:
To participate personally means to participate directly. It includes the direct and active supervision of the participation of the subordinate in the matter. To participate substantially means that the employee's
involvement is of significance to the matter. . . . [I]t requires more than official responsibility, knowledge, perfunctory involvement, or involvement on an administrative or peripheral issue. A finding of substantiality should be based not only on the effort devoted to a matter, but also on the importance of the effort. . . . [T]he single act of approving or participating in a critical step may be substantial.
Previous Commission decisions have discussed and addressed the issue of whether conduct rose to the level of personal and substantial. A public employee who discusses or makes recommendations on the merits of a matter will be deemed to have participated personally and substantially.  / A public employee may participate by supervising or overseeing others.  /
Applying these principles, we find that Amorello participated in decisions involving the sick leave buy-back policy. On July 26, 2006, when Amorello was advised by Chalupka that he had changed the policy from 20% cash for retirees only with nothing for non-retirees, to 100% for anyone leaving the MTA, Amorello reacted swiftly. Amorello "asked [Chalupka] to re-look at that," and gave Chalupka specific instructions. He told Chalupka "to review other agencies similar to the [MTA], independent, . . . Massport, MBTA" and "to make a recommendations (sic) similar to those, similar to that effect." By his actions and his express directions to Chalupka, his subordinate, Amorello rejected the 100% buy-back policy at least as it applied to non-retirees. By virtue of his disapproval and rejection of the revised sick leave buy-back policy, he "participated" for purposes of the conflict of interest law.
Chalupka clearly understood that he had received an unambiguous directive from the head of his agency that the 100% policy was not acceptable and needed to be changed. Chalupka returned to Amorello that same day "with a recommendation to change it from 100 to 50." We conclude that Amorello's comments on the recommendation constituted an approval of the revised sick leave buy-back policy which Chalupka then effected.
Amorello argues that he did not participate in any matters relating to the change in benefits for retirees. Under the circumstances, where Amorello vetoed one portion of the policy, but left the other portion as it was proposed, his actions constituted an acceptance of the 50/50 policy. In short, Amorello's reactions to the policy and its proposed revisions constitute substantial and active participation.
Did Amorello Have a Financial Interest?
Section 6 encompasses any financial interest without regard to the size of that interest and whether the financial interest is positive or negative.  / The financial interest, however, must be direct and immediate or reasonably foreseeable.  / Financial interests that are remote, speculative or not sufficiently identifiable do not require disqualification under the conflict of interest law.  /
The evidence demonstrates that Amorello had a financial interest in the sick leave buy-back policy. As of July 26, 2006, Amorello had 613.8 hours in sick leave with a 100% cash value of approximately $73,706. The terms of the policy would have applied to him as a non-union employee and he would have been legally entitled to such benefits. Had Amorello resigned from the MTA without a severance agreement, he would have been entitled to whatever benefits were available to him as a matter of law. Moreover, it is reasonable to infer that because Amorello had a legal entitlement to such benefits, that entitlement would have been, at a minimum, a bargaining chip in his severance negotiations.
The fact that Amorello's outrage at and disapproval of the 100% policy resulted in a decrease to 50% does not obviate his financial interest in the policy change. Section 6 prohibits a state employee from participating in a particular matter in which he has a financial interest either positive or negative. In any event, the net effect of Amorello's actions was a substantial increase - - not decrease - - in buy-back benefits. As a result of Amorello's participation, what began before July 2006 as a 0% cash payment for non-retirees became a 50% cash payment. What began before July 2006 as a 20% cash payment only upon retirement became a 50% cash payment and a 50% contribution to health insurance premiums - - a huge increase in benefits for retirees.
Finally, the fact that Amorello has not yet received any payment for his sick leave and may never receive any such payment does not change our conclusion. The determination of whether he had a financial interest involves a determination of the facts at the time he was participating, not as determined by subsequent events. Accordingly, what Amorello will actually receive should he retire from the MTA is irrelevant. That said, we note that the Severance Agreement provides that when he retires, he shall be entitled to receive the same health care coverage available to MTA retirees as of July 26, 2006. In a letter dated five days before Amorello's resignation was effective, Chalupka and the MTA Director of Operations to the Retirement Board and Retiree Benefits expressly stated that "[Amorello] ha[s] chosen to leave 100% of [his] accumulated sick leave in the custody of the MTA." This statement indicates that rather than rejecting payment for sick leave to which he was entitled, Amorello decided to leave it in the custody of the MTA and should he retire, 50% of that accumulated sick leave will be made available to him in cash and the other 50% will be credited to a medical bank for medical benefits coverage.
Did Amorello Have Knowledge of His Financial Interest?
Amorello testified that after making his decision to step down on July 26, 2006, he asked Chalupka: "I am stepping down. What does that mean?" It was at that point that Chalupka told him that "he had enacted a policy buy back, you have a vacation time and policy buy back for sick time." Amorello then went on to discuss the sick leave buy-back policy with Chalupka. Amorello's question to Chalupka and his ensuing discussion with him demonstrates a conscious knowledge of his financial interest in the sick leave buy-back policy.
When Amorello was asked whether the 100% policy applied to him when he learned about it on July 26th, he responded: "well, negotiations with the Governor's attorneys on my severance agreement - - well, I guess it did apply to me." Amorello admitted that he understood the 100% policy could apply to him, even though that was not a conscious consideration at the time he learned of the policy from Chalupka. He knew that he had a stake in the policy, but not specifically what his hours were. In sum, even though Amorello may not have known how much he would have been entitled to under the policy, he knew that he had a financial interest.
Finally, we note that section 6 contains an exemption procedure that would have allowed him to participate in matters involving the sick leave buy-back policy if he first made a written disclosure of all the facts surrounding his financial interest to his appointing authority, the Governor, and the Governor made a written determination allowing him to participate. Amorello did not avail himself of this procedure.
B. The Section 23(b)(2) Allegations
Section 23(b)(2) prohibits state employees from knowingly or with reason to know, using or attempting to use their official positions to secure for themselves or others unwarranted privileges or exemptions of substantial value which are not properly available to similarly situated individuals. In order to establish a violation, Petitioner must prove by a preponderance of the evidence that: (1) Amorello was a state employee; (2) who used or attempted to use his official position; (3) to secure an unwarranted privilege or exemption  / for himself or others; (4) which was of substantial value; (5) which was not properly available to similarly situated individuals; and (6) who did so, knowingly or with reason to know.
We conclude that Petitioner has failed to prove by a preponderance of the evidence that the sick leave buy-back policy was an unwarranted privilege. The record reflects that some form of a sick leave buy-back policy was available to non-union MTA employees since 1979. Moreover, the buy-back percentage varies among state agencies. There seems to be no clear consensus on what percentage is "unwarranted." Thus we are in no position to rule that the specific policy adopted by the MTA conferred an unwarranted privilege per se.
Furthermore, the policy applied across the board to all non-union employees. It does not reflect any use of position by Amorello to secure a benefit solely for himself or a small group of individuals comprising an alleged "inner circle." Although the timing of the change to the sick leave buy-back policy suggests an intention to benefit insiders likely to leave with Amorello, the timing alone is not enough to sustain the Petitioner's charge.
Having found that Petitioner failed to demonstrate by a preponderance of the evidence that there was an unwarranted privilege, we need not decide whether the other elements of a section 23(b)(2) violation have been proven.
C. The Section 23(b)(3) Allegations
Section 23(b)(3) prohibits a state employee from knowingly or with reason to know acting in a manner that would cause a reasonable person having knowledge of the relevant circumstances to conclude that any person could improperly influence or unduly enjoy his favor in the performance of his official duties or that he was likely to act or fail to act as a result of kinship, rank, position or undue influence of any party or person. Section 23(b)(3) further provides that "[i]t shall be unreasonable to so conclude if such . . . employee has disclosed in writing to his appointing authority or, if no appointing authority exists, discloses in a manner which is public in nature, the facts which would otherwise lead to such a conclusion." In order to establish a violation, Petitioner must prove by a preponderance of the evidence that: (1) Amorello was a state employee; (2) who knowingly, or with reason to know, acted in a manner; (3) which would cause a reasonable person, having knowledge of the relevant circumstances, to conclude; (4) that any person can improperly influence or unduly enjoy his favor in the performance of his official duties, or that he is likely to act or fail to act as a result of kinship, rank, position or undue influence of any party or person.
While at first blush it might appear that Amorello's conduct created an appearance of favoritism, our task is to determine whether such an appearance is warranted, or conversely is dispelled, by the "relevant circumstances," that is, by the facts. A careful review of the record compels us to conclude that Petitioner has failed to demonstrate a section 23(b)(3) violation. There is insufficient evidence in the record of any outside personal or social relationships between Amorello and his senior staff. Amorello testified that he brought the MTA's General Counsel, Mike Powers, with him from the Highway Department to the MTA in February 2002. There is no evidence in the record, however, that Powers availed himself of the sick leave buy-back policy. Although there is evidence that other Highway Department employees came over to the MTA, the record does not reflect what role, if any, Amorello played in their hiring. Moreover, Shirley testified that he could not see how Virginia Tsao, a senior staff member who retired and received a sick leave buy-back under the revised 50% policy, could be a member of Amorello's "inner circle" when Shirley had never heard her name. The record further reflects that Shirley approached Amorello to ask if he could get "some sort of severance if [he] was to resign." Rather than attempting to work out any type of special deal for Shirley, Amorello told him to "avail [himself] of the HR policy."
As noted above in our discussion of section 23(b)(2), we find that the sick leave buy-back policy applied across the board to all non-union employees and did not single out any specific senior staff of Amorello's. The OTSC refers to three people as Amorello's close senior staff: Hayman; Shirley; and Burns. Hayman retired from the MTA. Both Shirley and Burns resigned and received 50% of the cash value of their sick leave pursuant to the policy.  / Four other senior employees (George Ward; Paul Carr; Michael Swanson; Virginia Tsao) received benefits from the revised sick leave buy-back policy. There is insufficient evidence in the record as to the nature of their relationship with or their interaction with Amorello. In addition, there is insufficient evidence that Amorello initially participated in reestablishing the 50/50 benefit for retirees. In light of these circumstances and based on the record before us, we find that Petitioner has failed to prove a violation of section 23(b)(3) by a preponderance of the evidence.
Petitioner has proven by a preponderance of the evidence that Amorello violated G.L. c. 268A, section 6 when he participated in revising and approving the MTA's sick leave buy-back policy when he knew that he had a financial interest in that policy. Petitioner has failed to prove by a preponderance of the evidence that Amorello violated G.L. c. 268A, section 23(b)(2) or G.L. c. 268A, section 23(b)(3).
Having concluded that Respondent Matthew Amorello violated G.L. c. 268A, section 6 and pursuant to the authority granted it by G.L. c. 268B, section 4(j), the State Ethics Commission hereby ORDERS Matthew Amorello to pay a civil penalty of $2,000.
DATE AUTHORIZED: January 16, 2009
DATE ISSUED: February 11, 2009
 / Although Amorello denied the existence of a "particular matter" in his Answer, he neither developed nor argued that point in his brief. We find the existence of a particular matter for purposes of section 6.
 / EC-COI-98-3.
 / See, e.g., EC-COI-89-2 (discussion of the merits of a particular matter); 87-19 (participation includes any discussion, recommendation, vote, investigation); 85-75 (participation includes reviewing and recommending decisions to others); 79-74 (participation found where employee discussed with decision-makers factors that were central considerations of the final evaluation of a contract even if employee did not participate in selection, final review, approval and execution of contract); In Re Craven, 1980 SEC 17, 22 aff'd, Craven v. State Ethics Commission, 390 Mass. 191, 202 (1983) (state representative participated by using position to exert pressure on agency to award contract).
 / See, e.g., EC-COI-93-16; 87-27. See also EC-COI-89-7 (approving recommendation made by subordinate is not ministerial) .
 / See, e.g., EC-COI-89-33.
 / See, e.g., EC-COI-92-12; 90-14; 89-33; 89-5.
 / See, e.g., EC-COI-89-19; 87-16.
 / The OTSC alleges that Amorello obtained an unwarranted privilege, not an unwarranted exemption. Accordingly, we address only the unwarranted privilege issue.
 / Burns also received $13,269.24 in special recognition pay for the additional hours that she worked after the accident. There is insufficient evidence in the record as to Amorello's involvement with that special recognition pay.