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One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors. -- Plato (429-347 BC)

Monday, July 16, 2018

The Forgotten Arkansas Ethics Law

by David Ferguson: The names of executives of Preferred Family Healthcare who had also been former employees of the Department of Human Services keep popping up in criminal investigations of bribery and Medicaid fraud.

The latest person who name came up is Robin Raveendran who was an executive vice president of PFH and prior to that was an administrator with the state Medicaid program. He was arrested for Medicaid fraud.

The transition from employee of the regulatory body, DHS, to employee of a Medicaid provider that wants state contracts must be quite common. That in itself is a concern.

But we must ask, in any of these instances was a little noticed state ethics law broken by the former state employee by them being involved in certain Medicaid contracts? Perhaps PFH somehow insulated them from being involved or perhaps they weren’t involved in the contracts when they were DHS employees. In any event this is an issue that should be investigated. And, Governor Asa Hutchinson’s DHS and his other state agencies should be investigated to see whether the agencies have been following the ethics law.

The law I am referring to is Arkansas Code § 19-11-701 et seq. The law doesn’t have a name but has been referred to in the past by the old compilation of Arkansas laws, Arkansas Statutes Annotated, as Ethics in Contracting. Much of this 1979 law is written with an eye on contracts for the purchase or sale of commodities but it also applies to contracts involving services. Medicaid contracts are for services.

The ethics in contracting law is quite detailed and addresses gratuities, kickbacks, disclosures of financial conflicts, restrictions on being involved when the employee has a conflict, and a temporary or permanent ban on being involved in certain matters after leaving state employment. The law also includes some good statements on ethical standards for state employees.

I want to highlight the provision imposing a permanent ban on a former state employee from being involved in certain matters. (A.C.A § 19-11-709 (b)(1)) Be aware there is also a similar provision applying a one-year ban and a disqualification when a former employee is a partner.

(1) Permanent Disqualification of Former Employee Personally Involved in a Particular Matter. It shall be a breach of ethical standards for any former employee knowingly to act as a principal or as an agent for anyone other than the state in connection with any:
(A) Judicial or other proceeding, application, request for a ruling, or other determination;
(B) Contract;
(C) Claim; or
(D) Charge or controversy,
in which the employee participated personally and substantially through decision, approval, disapproval, recommendation, rendering of advice, investigation, or otherwise while an employee, where the state is a party or has a direct and substantial interest.

Again, I am not insinuating any of the former employees of DHS have violated any provision of the ethics in public contracting law. I am raising this issue as one for consideration, because the ethics in contracting law is rarely noticed.

Here are my recommendations:
  • Governor Hutchinson should make sure his state agency directors and appointees are informed and are enforcing the law;
  • Some state employees involved in purchasing receive training in ethics but all state employees involved in contracts should receive training in compliance;
  • Former employees involved in contracts should be required to disclose that fact on contracts with the state;
  • The legislature should review the law to see if it should be updated to address loopholes; and
  • The legislature should consider moving enforcement of the law from Governor Hutchinson’s director of the Department of Finance and Administration to the Arkansas Ethics Commission.
The ethics in contracting law might also be an example of — if current ethics laws had been observed, amending the Senate Code of Ethics might not have been necessary. I recall an opinion by the Department of Finance and Administration that applied part of commodities contracting rule to sales by legislators, since legislators receive a salary and could be considered state employees. I do not have a copy of the old ruling but it is my recollection it had to do with sales of fuel by Knox Nelson who at the time was a state senator.

Because the ethics in contracting law has gone largely unnoticed for nearly 40 years I am including the law in its entirety in the notes, including some sections added to the subchapter by other acts.[Detailed Notes] The statutes listed below will be primarily of interest to state employees involved in contracts, to those individuals researching ways to improve Arkansas’ ethics laws, and perhaps to investigators.
--------------------
David Ferguson is a former Director of Arkansas’ Bureau of Legislative Research, having a thirty-two-year career as an attorney for the Arkansas legislature. After retirement from state service his primary focus has been beef cattle farming. He is also a former officer of Conduit for Action.

Tags: David Ferguson, Conduit for Action, Forgotten, Arkansas, Ethics Law To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service and "Like" Facebook Page - Thanks!
Posted by Bill Smith at 8:30 AM - Post Link

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