Ethics: Advisory Opinion No. 1996-10

Advisory Opinion No. 1996-10
Advisory Opinion No. 1996-10

Application Of Conn. Gen. Stat. 1-84b(b) To
State Employees Competing For Second Injury Fund Contract

Public Act 95-277, An Act Concerning The Recommendations Of The Blue Ribbon Commission On The Second Injury Fund, reduced the financial liabilities and streamlined the operation of the Second Injury Fund.  The Second Injury Fund is a state-run workers’ compensation fund financed by state employers and operated by the State Treasurer.  The Act closes the fund to second injuries that occur on or after July 1, 1995.  See Summary of 1995 Public Acts at p. 313, Office of Legislative Research, Connecticut General Assembly.

A bill has been proposed during this legislative session to provide for the transition of the Second Injury Fund pursuant to Public Act 95-277.  See, Raised Bill No. 5799, An Act Authorizing The Discontinuance Of Claims Management Functions Of The Second Injury fund And The Issuance Of Revenue Bonds Of The State Payable Solely From Assessments On Employers To Finance The Settlement Of Second Injury Claims.  This bill proposes that the state discontinue operating the claims management of the Fund by procuring private management of this function.  Id. at Section 3.  Under the bill, the Treasurer will enter into a management services contract with one or more private entities, i.e., the fund management group; however, “such contract shall contain such terms and conditions as shall enable the Treasurer to retain the overall regulation and supervision of such management group.”  Id. at Section 4.  The claims management function, even when performed by a private entity, will still be financed with state money in the form of bond proceeds.  Id. at Section 8 and 9.

The Honorable Christopher B. Burnham, State Treasurer, has indicated that if the legislation under consideration becomes law he anticipates current state employees, who now staff the Second Injury Fund, may bid on the contract in order to become the fund management group.  A request for proposal will be drafted, distributed, reviewed, and selected with strict adherence to the standard competitive bid guidelines.  Treasurer Burnham has asked whether the state employee group may bid on the contract and, if so, how the post-state employment rules would apply, if these individuals were awarded the contract.

The group of individuals who now staff the Second Injury Fund will bid on the contract while they are still state employees.  Conn. Gen. Stat. 1-84(i), in pertinent part, allows a state employee or a business with which the employee is associated, to enter into a contract with the State valued at one hundred dollars or more, if the contract has been awarded through an open and public process, including prior public offer and subsequent public disclosure of all proposals considered and the contract awarded.  The manner in which the request for proposal will be announced and awarded complies with the open and public disclosure requirement.  See criteria established in Advisory Opinion No. 87-10, 49 Conn. L.J. No. 8, p. 17C (August 25, 1987).  The affected state employees, however, should not be involved in developing the request for proposal nor should they have any involvement in the selection process.  Such involvement would be an impermissible use of one’s office for financial gain in violation of Conn. Gen. Stat. 1-84(c).

Once a fund management group has been selected and is operational, the current state employees of the Second Injury Fund will be terminated from state employment.  Conn. Gen. Stat. 1-84b(b) states that no former executive branch public official or state employee shall, for one year after leaving state service, represent anyone, other than the state, for compensation before their former agency.  Since the Office of the Treasurer will have ongoing responsibility in the oversight and financing of the selected fund management group, such group will be required to have continual interaction, i.e. appearances, before the Office of the Treasurer.  However, if the state employee group is selected, they will then be the equivalent of state consultants representing, not private interests, but the interests of the State.  Such interaction will not, therefore, be an impermissible appearance in violation of Conn. Gen. Stat. 1-84b(b) Regulations of Conn. State Agencies, 1-81-33(b).

The Commission has, however, ruled that negotiation of a compensation agreement with one’s former agency will be considered representation for someone other than the state, i.e. himself or herself, in violation of Conn. Gen. Stat. 1-84b(b), unless the compensation level is no greater than the pay level received at the time of separation of service.  Advisory Opinion No. 90-30, 52 Conn. L.J. No. 15, p.1C (10/9/90).  The Commission reasoned that, if the former state employee is restricted from negotiating a fee, the opportunity for use of improper advantage for personal financial gain has been removed.  Id.  Therefore, in this matter, the former state employee management group, if selected, will be free to implement the contract requirements; it will not, however, for one year from the date of termination from state service, be able to renegotiate the terms of the awarded contract.

By order of the Commission,

David T. Nassef

Content Last Modified on 9/7/2005 8:01:36 AM