Decision  William A. Burke, Jr.

Date:	10/15/1985
Organization:	State Ethics Commission
Docket Number:	282

I. Procedural History

The Petitioner initiated these adjudicatory proceedings  on March 26, 1985 by filing an Order to Show Cause pursuant to the  Commissions Rules of Practice 

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and Procedure, 930 CMR 1.01(5)(a). The Order alleged that the  Respondent. William A. Burke, Jr., a Public Health Council  (Council) member, had violated G.L. c. 268A, s. 3(b), [1] s.  23(par. 2)(2) [2] and s. 23(par 2)(3) [3] in pursuing his duties  as a consultant for J. Peter Lyons, Inc. (the Lyons Company).  Specifically, Mr. Burke was alleged to have violated s. 3(b) in six  instances by soliciting or receiving something of substantial  value ("entree into the executive offices and the time and  attention these [hospital] chief executives devoted to listening  to information about an insurance package") from Brockton Hospital.  Cardinal Cushing Hospital, Melrose-Wakefield Hospital. Salem  Hospital, South Shore Hospital. and University Hospital for or  because of official acts performed or to be performed by him as a  member of the Council. The eleven s. 23(par. 2)(2) allegations were  premised on Mr. Burke's alleged use or attempted use of his official  position to secure an unwarranted privilege for the Lyons Company,  namely "a personal meeting with the hospital official," with  respect to eleven separate hospitals.[4] The Order also alleged  that Mr. Burke violated s. 23(par. 2)(3) by using his position as  a member of the Council in contacting executive officers of twenty-  seven hospitals in the commonwealth to promote a life insurance  program on behalf of a company for which he was a paid consultant,  during the time that all but one of these hospitals had important  matters pending before the Council.[5]   

Mr. Burke filed an answer in which he admitted that he had  served as a Council member and as a paid consultant for the J.  Peter Lyons company during the period in question, and that he had  met with several officers of various hospitals during the period  of his consultant arrangement. Mr. Burke also admitted in his answer  that he became involved in promoting the Company's supplemental  life insurance program. Mr. Burke denied all other material  allegations contained in the Order.    

Prior to the commencement of the hearings, the Respondent  moved for Decision on the Pleadings or in the alternative for  Summary Decision. The motion was denied by Commission Chairman  Colin Diver,[6] who was designated as the Presiding Officer. See  G.L. c. 268B, s. 4(c).    

Adjudicatory hearings were held on June 11 and 12, July 17 and  August 16, 1985. The parties thereafter filed post-hearing briefs  and presented oral arguments before the Commission on September 11,  1985. In rendering this Decision and Order, each participating  member of the Commission has considered the testimony, evidence and  arguments of the parties.

II. Findings of Fact

1. The Respondent William A. Burke. Jr. was, at all times  relevant to the violations alleged in the Order to Show Cause, a  member of the Council.   

2. The Council is responsible for the review and final  approval of all hospital determination of need applications (DONs)  required by law for substantial capital expenditures, acquisitions  of equipment and changes in services by the hospitals in the  commonwealth.   

3. Mr. Burke provided consultant services for the Lyons  Company from January 1983 to October 1984 at a rate of $4,000 a  month.   

4. Mr. Lyons hired Mr. Burke as a consultant to introduce him  to people and businesses in need of the financial services which  the Lyons Company could provide. Between January 1983 and October  1984. Mr. Burke introduced him to fifteen or twenty companies,  excluding hospital introductions. Mr. Burke also engaged in venture  capital work and the analysis of the financial needs of companies  and businesses which were of interest to the Lyons Company.   

5. In June or July of 1983, Mr. Lyons decided to pursue a  supplemental life payroll deduction program with hospitals. Mr.  Lyons asked Mr. Burke to become involved because he knew (1) Mr.  Burke was on the Council, (2) Mr. Burke was personally acquainted  with a number of hospital administrators and (3) Mr. Burke would  know people in hospitals such as St. Elizabeth's due to his  involvement in the Catholic Church in Boston. Mr. Burke initially  questioned the propriety of working in the hospital field, but was  given assurances by the enrolling agent for the Lyons Company that  it would be no problem.    

The six hospitals listed in the s. 3 allegations    

6. Mr. Burke placed a call to the chief executive officer  (CEO) of each of the six hospitals on the following dates:   

South Shore Hospital - sometime in January  or February of 1984   

University Hospital - sometime between February 28, 1984 and  March 12, 1984   

Brockton Hospital - sometime in July of 1984   

Cardinal Cushing  Hospital - July 19, 1984    Salem Hospital - August 20, 1984[7]   

Melrose-Wakefield  Hospital - during the week of September 10, 1984  

 7. Each of the six hospitals had a DON pending before  the Council at the time Mr. Burke made contact. The documentary  evidence as well as the testimony of individual hospital CEOs in  the record indicates that the DON process is a difficult and often  lengthy process. which can become quite costly to the hospitals.  Substantial   

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capital outlays depend on the approval of a hospital's DON. In  particular, Melrose-Wakefield Hospital's DON, which was filed in  January 1983 and was still pending as of October 1984, involved the  new construction and renovation of an ancillary services building  and a parking garage for a proposed capital cost of $25,875,000.  Salem Hospital's DON, filed in September 1983 and still pending as  of October 1984, involved general expansion and renovation as well  as the expansion of radiation therapy, for a proposed capital cost  of $21,900,000.   

8. In his call to five of the hospitals, including Melrose-  Wakefield Hospital and Salem Hospital, Mr. Burke identified himself  as a Council member.   

9. In the calls to both Melrose-Wakefield Hospital and Salem  Hospital, Mr. Burke stated at the outset that he was calling with  regard to something other than the hospital's pending DON.   

10. Five of the hospital CEOs, including the CEO of Melrose-  Wakefield Hospital, agreed to meet with Mr. Burke.   

11. Five of the hospital CEOs, including the CEOs of Melrose-  Wakefield Hospital and Salem Hospital, stated that they would not  normally meet with an individual selling insurance and that such  a call would be transferred to the personnel or benefits director  of the hospital.   

12. Mr. Burke attended meetings with the CEOs of four  hospitals on the following dates:   

South Shore Hospital - February 10, 1984  University Hospital - March 12, 1984  Brockton Hospital - August 1, 1984  Cardinal Cushing  Hospital - August 1, 1984   

Joanne Costello, a Lyons Company representative, gave the  presentation on the insurance package at these meetings. As to the  two remaining hospitals, (1) all three appointments with the CEO  of Melrose-Wakefield Hospital, scheduled for September 20, 1984,  September 28, 1984 and October 12, 1984, were cancelled by Mr.  Burke and (2) the CEO of Salem Hospital never agreed to meet with  Mr. Burke.    

13. As of August 1984, Mr. Burke was making two to three  introductions a month. This number was unsatisfactory to Mr. Lyons,  who expected eight to ten introductions per consultant per month.   

14. Mr. Lyons communicated his dissatisfaction to Mr. Burke  in early September 1984,[8] informing Mr. Burke that he did not see  the consultant status as continuing because it was not leading  anywhere.    

15. In response to Mr. Lyons' request for a status report  from him, Mr. Burke submitted a memorandum dated September 14, 1984  listing six hospital cases he had opened that week, including  Melrose-Wakefield Hospital, and one hospital case he had closed.   

16. In late September or early October 1984. Mr. Lyons  and Mr. Burke had another discussion concerning the fact that the  consultant relationship was not working, and Mr. Burke indicated  that someone was questioning what he was doing in connection with  the hospitals. Mr. Lyons stated that he was willing to keep Mr.  Burke on to make non-hospital contacts.   

17. By mutual agreement. Mr. Burke's consultant relationship  was terminated in October of 1984.

III. Decision

For the reasons stated below, the Commission concludes that  Mr. Burke violated G.L. c. 268A, s. 3(b) with respect to one of the  six hospitals, namely Melrose-Wakefield Hospital.

A. Section 3

Section 3(b) prohibits a public employee from soliciting or  receiving anything of substantial value for himself for or because  of an official act performed or to be performed by him. Its  counterpart, s. 3(a), prohibits anyone from offering or giving  anything of substantial value to a public employee for or because  of any official act performed or to be performed by such an  employee. Unlike s. 2, which is the bribery section of the conflict  law, s. 3 does not require a showing of corrupt intent. See, e.g.  Commonwealth v. Dutney, 4 Mass. App. 363 (1976). Rather, the basis  for a s. 3 violation is the existence of a nexus between the  employee's public duties and the motivation behind the  solicitation. offer or receipt of something of substantial value.  In the Matter of George Michael, 1981 Ethics Commission 59,68. If  such a connection exists, even in the absence of a corrupt intent.  there remains a tendency to provide conscious or unconscious  preferential treatment to the giver of something of value by the  recipient. Section 3, like its federal counterpart 18 U.S.C. s.  201(f) and (g). constitutes a legislative effort to eliminate the  temptation inherent in such a situation. See United States v.  Evans, 572 F.2d 455, rehearing denied 576 F.2d 931 (5th Cir.), cert  denied, 439 U.S.870 (1978).   

The actual performance of some identifiable official act as  quid pro quo is not necessary for a violation of s. 3. See  {Commission Advisory No. 8}: accord, United States v. Evans,  supra [addressing s. 3's federal counterpart 18 U.S.C. s. 201 (f) and  (g)]. To require such a quid pro quo would subject public employees  to a host of temptations which would undermine the impartial  performance of their duties. As the Commission stated In the Matter  of George Michael, supra at 68:   

Sound public policy necessitates a flat prohibition since the  alternative would present unworkable burdens of proof. It would be  nearly impossible to prove the loss of an employee's objectivity  or to assign a motivation to his exercise of discretion. If public  credibility in government

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institutions is to be fostered, constraints which are conducive to  reasoned, impartial performance of public functions are necessary,  and it is in this context that Section 3 operates.

B. Elements of a s. 3(b) violation

The three elements necessary to establish a s. 3(b) violation  on Mr. Burke's part are that he:[9]

1. solicited or received something of substantial value   

2. for himself   

3. for or because of an official act performed or to be  performed by him.

1. Solicitation or receipt of something of substantial value

The term "substantial value" is not defined in the conflict  of interest statute. The vast majority of cases the Commission has  decided containing alleged 13 violations have involved items of  tangible value, such as cash discounts (In the Matter of George  A. Michael, 1981 Ethics Commission 59), private loans (In the  Matter of Rocco J. Antonelli, Sr., 1982 Ethics Commission 101), and  cash payments (In the Matter of Frank Wallen and John Cardelli,  1984 Ethics Commission 197). However, the Commission has also held  that the scope of s. 3 includes items which lack an immediately  ascertainable cash value but which nonetheless possess substantial  prospective worth and utility value. See, e.g. EC-COI-83-70 and 81-  136 (both cases held that unpaid faculty appointments constituted  something of substantial value which could not be accepted by state  employees). In its decisions and orders and disposition agreements  in cases alleging violations of s. 3, the Commission has recognized  that "substantial value" is a standard "to be dealt with by  judicial interpretation in relation to the facts of the particular  case and [is] more desirable than the imposition of a fixed  valuation formula." See e.g.. In the Matter of Rocco J. Antonelli,  Sr,, 1982 Ethics Commission 101, 109 n. 19 citing Final Report  of the Special Commission on Code of Ethics, 1962 House Doc. No.  3650 at 11 upon which the provisions of s. 3 were based.   

In the Order to Show Cause, the Petitioner characterized the  "entree into the executive offices and the time and attention these  [hospital] chief executives devoted to listening to information  about the substance package" as having substantial value. The CEOs  in five of the six hospitals listed in the s. 3 allegations  testified that they would not normally meet with an individual  selling insurance, that such a call would be transferred to the  personnel or benefits director of the hospital. Based on this  testimony of the hospital CEOs regarding the standard operating  procedure, the Commission finds that the access Mr. Burke obtained  by virtue of his Council membership to the limited time of the CEOs  for his company's presentation of its insurance package was of  substantial value in this case. First, it enabled the Lyons Company  to bypass competition with other insurance agents before  subordinate hospital personnel. The logical inference to be drawn  is that the opportunity afforded to the Lyons Company to make its  insurance presentation directly to a hospital CEO greatly enhanced  the chance of a sale. Second, based on Mr. Lyons' testimony,[10]  each contact Mr. Burke made was worth approximately $400 to the  Lyons Company. Mr. Lyons testified that (1) he hired Mr. Burke  primarily to make introductions, (2) he paid Mr. Burke $4,000/month  as a consultant and (3) he would consider eight to ten  introductions per month to be satisfactory. On a strict calculation  basis, that would equal approximately $400 per introduction, well  above the $50 benchmark the court established as constituting  "substantial value" in Commonwealth v. Famigletti, 4 Mass. App.  584. 587 (1976).[11] Under these facts, the Commission concludes  that the access to hospital CEOs which Mr. Burke solicited was of  substantial value.[12]

2. For himself

The issue here is whether Mr. Burke's solicitation of something of substantial value was for himself or merely for the  Lyons Company. The evidence established that Mr. Burke's sole  compensation from the Lyons Company was his $4,000/month consultant  fee: i.e., he would not receive any commission for the consummation  of an insurance contract with a hospital. The question, then.  focuses on the connection between the access to hospital CEOs Mr.  Burke solicited and his retention as a $4,000/ month consultant.   

The record is clear that by September 1984. Mr. Burke was  under pressure to make more contacts in order to retain his  position. There is no evidence in the record of Mr. Burke's  involvement in business acquisition/entrepreneurial projects or  non-hospital contacts made during September of that year. On the  contrary. all seven contacts Mr. Burke reported in his September  14, 1984 status report to Mr. Lyons were hospitals. While Mr. Lyons  testified that he would have kept Mr. Burke on as a consultant  making solely non-hospital contacts. Mr. Burke chose to trade on  his Council membership to gain access to hospital CEOs to make  sufficient contacts during this period to reduce the risk of losing  his consultant arrangement. The contact with the CEO of Melrose-  Wakefield Hospital, listed as one of the seven hospital contacts  in Mr. Burke's September 14. 1984 status report, constituted a part  of Mr. Burke's insurance against losing his consultant position.  The Commission therefore finds that the access Mr. Burke obtained  to the CEO of Melrose-Wakefield hospital was of substantial value  to himself as well as to the Lyons Company.   

On the other hand. the evidence does not support the  conclusion that the contact Mr. Burke made with Salem Hospital on  August 20, 1984 was of substantial   

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value to him personally. Mr. Lyons testified that by late summer  of 1984, he was unsatisfied with the general direction the Lyons  Company was taking. In particular, Mr. Lyons testified that as of  August 1984, Mr. Burke was making two to three introductions a  month, which was unsatisfactory. While Mr. Lyons' testimony is that  he communicated this dissatisfaction to Mr. Burke in "September,  maybe August," the record as a whole supports the inference that  the discussion took place in early September, as discussed above.  Mr. Burke's contact with Salem Hospital would therefore have  predated this discussion. Without the dependency relationship  between the Salem Hospital contact and Mr. Burke's retention as a  consultant, the Commission finds that the "for himself' element has  not been met with respect to that hospital.   

Likewise, the Commission finds that the evidence does not  sufficiently establish the dependency relationship between Mr.  Burke's contacts with "the four hospitals prior to August 1, 1984  and his retention as a consultant Mr. Burke was not initially hired  by Mr. Lyons to work in the hospital field. Mr. Burke called and  met with the CEOs of South Shore Hospital, University Hospital,  Brockton Hospital and Cardinal Cushing Hospital between January  1984 and August 1, 1984. These contacts therefore predated Mr.  Lyons' communication with Mr. Burke that his position was in  jeopardy if the number of introductions he made did not increase.  Moreover, the testimony of John McInerney, a fellow Lyons Company  consultant, indicated that between January and June of 1984, Mr.  Burke and he worked on a number of business acquisition projects  for the Lyons Company. In light of Mr. Burke's business analysis  duties and non-hospital introductions prior to August 1984, the  Commission finds that Mr. Burke's consultant relationship did not  depend on the hospital introductions he made during that period.   

In summary, the Commission concludes that the "for himself"  element of a s. 3(b) violation was met only with respect to the  Melrose-Wakefield Hospital.

3. For or because of an official act performed or to be  performed by him.

The Commission finds that there is ample evidence in the  record that the access Mr. Burke solicited from Melrose-Wakefield  Hospital was for or because of an official act performed or to be  performed by him. Mr. Burke placed the contact call directly to the  CEO of Melrose-Wakefield Hospital (Richard Quinlan), instead of the  Hospital's personnel director, thus bypassing the normal channels  required of insurance salesmen seeking accounts with that  Hospital.[13] That call was made by Mr. Burke at a time when  Melrose-Wakefield Hospital's DON, which carried a proposed capital  cost of over $25 million, was pending before Mr. Burke's Council.  Mr. Quinlan testified that the DON was "very" important to Melrose-  Wakefield Hospital: it involved a needed parking garage and the  construction of an ancillary services building to replace the aging  buildings currently in use.   

In making contact, Mr. Burke identified himself as a  Council member even though he was contacting the hospital in his  private capacity to sell an insurance package. Mr. Quinlan did  testify that Mr. Burke indicated during the call that the call was  not related to Council business. However, Mr. Quinlan nonetheless  testified that he thought it would be "inappropriate" to cancel the  appointment his secretary had scheduled "because Mr. Burke was a  member of the Public Health Council and I had a DON pending." The  Commission finds that Mr. Burke's disclaimer was ineffective under  the circumstances. A true disclaimer would have been not to mention  his Council membership at all in making contact with the hospitals  in his private capacity. Once Mr. Burke identified himself as a  Council member, the connection between a hospital's public dealings  with the Council and Mr. Burke's private solicitation of a hospital  was forged. Any subsequent disclaimer would prove insufficient due  to the importance of a pending DON to a hospital, as evidenced by  Mr. Quinlan's testimony.   

The Commission concludes that the facts surrounding the  Melrose-Wakefield Hospital contact go beyond a mere coincidence of  overlapping private and public dealings with that Hospital. Mr.  Burke placed his insurance sales call directly to CEO Quinlan (1)  at a time when Melrose-Wakefield Hospital had a very important DON  pending before the Council and (2) identified himself as a Council  member even though the call was not related to Council business.  The Commission finds that solicitation under those conditions is  "for or because of official acts."

IV. Order

On the basis of the foregoing, the Commission concludes that  William A. Burke, Jr. violated G.L. c. 268A. s. 3(b) in connection  with the Melrose-Wakefield Hospital. Pursuant to its authority  under G.L. c. 268B. s. 4(d), the Commission orders Mr. Burke to pay  one thousand dollars ($1,000) to the Commission as a civil penalty  for such violation.  

[1] G.L. c. 268A. s. 3(b) states that "whoever, being a  present or former state. county or municipal employee or member  of the judiciary, or person selected to be such an employee or  member of the judiciary, otherwise than as provided by law for the  proper discharge of official duty, directly or indirectly, asks,  demands, exacts, solicits, seeks, accepts, receives or agrees  to receive anything of substantial value for himself for or because  of any official act or act within his official responsibility  performed or to be performed by him" violates that section.   

[2] G.L c. 268A. s. 23 (par. 2)(2) provides that no state  employee shall "use or attempt to use his official position to  secure unwarranted privileges or exemptions for himself or others."   

[3] G.L c. 268A. s. 23,(par. 2)(3) provides that no state  employee shall "by his conduct give reasonable basis for the  impression that any person can improperly influence or unduly enjoy  his favor in the performance of his official duties, or that he is  unduly affected by the kinship. rank, position or influence of any  party or person.   

[4] Following the Court's ruling in Saccone v. State Ethics  Commission. 395 Mass. 326 (1985) that the commission does not  possess the statutory authority to enforce the provisions of G.L.  c. 268A, s. 23. the Respondent moved to dismiss the s. 23 (par.  2)(2) and (par. 2)(3) allegations of the Order to Show Cause. The  Commission has granted the Respondent's Motion to Dismiss without  prejudice.    

[5] This allegation was likewise dismissed without prejudice.  See footnote 4.   

[6] To the extent that the Respondent has renewed the  substantive arguments of his motion before the full Commission in  the closing arguments and briefs in the case. they are discussed  infra.   

[7] During the direct examination of the Salem Hospital CEO,  the following exchange took place:   

Q: Did you receive a telephone call from William A. Burke,  Jr. in September of 1984? 

A: I did.   

However, his more specific testimony on cross examination regarding  the date of the call placed it on August 20, 1984.   

[8] Mr. Lyons testified that this first conversation took  place in "September, during the month of September, maybe August.  September, something like that." while this testimony does not  unequivocally establish that the conversation took place in  September, we reasonably infer that the date of the conversation  "as in September shortly before Mr. Burke's submission of the  September 14. 1984 status report.   

[9] As a Council member. Mr. Burke was a state employee and  was therefore subject to the provisions of the conflict of interest  law. G.L c. 268A. The fact that Mr. Burke also qualified as a  "special state employee" [see G.L c. 268A. s. 1(o)] is irrelevant  to this case. inasmuch as s. 3 is not one of the conflict law  provisions which applies less restrictively to special state  employees.    

[10] The Commission found Mr. Lyons to be a credible witness.   

[11] While a "fixed valuation formula" is not the sole means for determining substantial value under s. 3. the Court's bottom  line figure is a factor that the Commission will consider in  assessing substantial value.   

[12] That is not to say that access in all contexts will be considered of substantial value for s. 3 purposes. In many instances, the seeking of such access will be more appropriately  regulated as an unwarranted privilege under s. 23(par. 2)(2). which prohibits a public employee from using or attempting to use his  official position to secure unwarranted privileges or exemptions  for himself or others. Here, however. Mr. Burke's conduct raises problems under s. 3 as well.    [13] Mr. Quinlan testified that he would normally refer such solicitations regarding insurance to a subordinate, namely the  hospital's personnel director.