Advisory Opinion No. 1994-12

DSS Employee’s Ownership Of Pharmacy Which Has
Contract With DSS

An Accounts Examiner for the Internal Audit Unit of the Department of Social Services is an owner of a pharmacy which has a contract with the Department.  The employee’s wife is both an owner and an employee of the business.  Under the terms of the contract, the pharmacy bills DSS for services rendered to Medicaid recipients.  In his state position, the employee has access to two computer information systems, the Medicaid Management Information System (MMIS) and the Eligibility Management System (EMS), which contain confidential information on the entire state population of Medicaid recipients, including identification numbers which are used for billing.  The petitioner, the Personnel Officer of the Department of Social Services, has asked whether the employee’s ownership of the pharmacy raises any issues under the Code of Ethics for Public Officials.

The pharmacy of which the DSS employee and his wife are owners is a “business with which he is associated,” within the meaning of Conn. Gen. Stat. §1-79(b).  Pursuant to Conn. Gen. Stat. §1-84(c), a state employee may not use his or her public position or confidential information acquired as a result of such position to obtain financial gain for himself, his spouse, or a business with which he is associated.  As an internal auditor, the employee does not, in fact, have input into DSS procedures which might directly affect either the business itself or his wife as an employee of the business, such as processing bills or reviewing the store’s accounts.  The employee must avoid any such activities for so long as he or his wife is an owner of the pharmacy.  In addition, the employee must refrain from publicizing his DSS employment to pharmacy customers, thereby implying perhaps that the business receives some benefit thereby, or that it has the imprimatur of the state.  Similarly, any use of confidential information by the employee for the benefit of his pharmacy business, for example, a marketing effort targeting persons identified as Medicaid clients through the EMS or MMIS programs, would violate §1-84(c).

Under section 1-84(i) of the Code, any contract, valued at $100 or more, between a state agency and a state employee, his or her business, or a family member, may only be awarded through an open and public process, including prior public offer and subsequent public disclosure of all proposals.  At the time of purchasing the business, the employee, upon submission of an application, was required to meet certain licensure requirements, after which the business was awarded a provider agreement.  Although there is no indication that the employee received favorable treatment, the process is not “open and public” within the meaning of the Code.  However, a well-publicized, annual advertisement of the availability of DSS provider agreements would meet the requirements of §1-84(i).

By order of the Commission,

Christopher T. Donohue
Chairperson