STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IN RE: HARVEY KALTSAS, )

) CASE NO. 92-6732EC

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on April 23, 1993, in Sarasota, Florida.

APPEARANCES

For the Advocate Laura Rush, Esquire

of the Florida Department of Legal Affairs Commission on Ethics: The Capitol

Tallahassee, Florida 32399-1050

For Respondent: Mark Herron, Esquire

Post Office Box 10555 Tallahassee, Florida 32302-2555

STATEMENT OF THE ISSUES

The issues for resolution, as provided in an Order Finding Probable Cause dated March 11, 1992, are whether Respondent, as a member of the State Board of Acupuncture:

1. violated section 112.313(7)(a), F.S., by having an employment or contractual relationship with The Healing Center which created a continuing or frequently recurring conflict between his private interest and the performance of his public duties; and

   
   

2. violated section 112.3143(2), F.S. by voting on a measure which inured to his or his wife's special private gain without disclosing the nature of his interest in the matter.

PRELIMINARY STATEMENT

On November 3, 1992, the Executive Director of the Florida Commission on Ethics forwarded this case to the Division of Administrative Hearings for conduct of a public hearing and a recommended order. The hearing was scheduled after consultation with the parties.

At the hearing, the Acting Advocate presented testimony of Harvey Kaltsas and Cynthia O'Donnell. Exhibits A-M were received in evidence without objection.

Respondent testified in his own behalf, and presented the additional testimony of Luis O. Celpa.

During the course of the hearing, counsel for Mr. Kaltsas moved to dismiss the charge that Mr. Kaltsas violated Section 112.313(7)(a), Florida Statutes (1989), because of a failure of proof as to any matter related to an employment or contractual relationship coming before the Board of Acupuncture on a continuing or frequently recurring basis so as to create a prohibited conflict. That motion was taken under advisement by the Hearing Officer. At the close of the hearing, counsel for Mr. Kaltsas renewed his motion for dismissal of the charge under Section 112.313(7)(a), Florida Statutes (1989). In addition, counsel renewed his motion made prior to the hearing for dismissal of the charge under Section 112.3143(2), Florida Statutes (1989). Each of these matters will be addressed within the context of this recommended order.

The transcript was filed, and both parties submitted proposed recommended orders. These have been considered, and specific rulings on the proposed findings of fact are found in the attached appendix.

FINDINGS OF FACT

1. Harvey Kaltsas served on the Board of Acupuncture from February, 1987 through April 3, 1991. As a member of the Board of Acupuncture, his duties included regulation of the practice of acupuncture, and the promulgation of rules to implement Chapters 455, 457, and 120, Florida Statutes.

   
   

2. Mr. Kaltsas has been a licensed acupuncturist in the State of Florida since 1984, and was registered as an apprentice prior to licensure.

   
   

3. Since 1989, Harvey Kaltsas has been married to Cynthia O'Donnell, who is the sole officer and shareholder of a business, The Healing Center, Inc., which was incorporated in April of 1989. In addition to providing other health services, The Healing Center, Inc. has sold sterile, disposable acupuncture needles since October, 1990. Gross sales of needles have averaged one to two thousand dollars per month from October 1990 until the present.

   
   

4. Harvey Kaltsas was not and is not a shareholder or stockholder in The Healing Center, Inc. Harvey Kaltsas has had no interest in The Healing Center, Inc.

   
   

5. At all times pertinent to the complaints at issue, The Healing Center, Inc. was located at 430 North Tamiami Trail, Suite C, Sarasota, Florida 34236. The lease for such property remained in the name of Harvey Kaltsas during this period. Although Harvey Kaltsas was ultimately responsible for lease payments on the property, lease payments were made by The Healing Center, Inc. to the landlord. Harvey Kaltsas, as well as other tenants of the property, paid rent to The Healing Center, Inc.

   
   

6. The utilities account for the leased property was in the name of Harvey Kaltsas. Although he was ultimately responsible for utilities payments, such payments were made by The Healing Center, Inc.

   
   

7. From April, 1989 through December 1990, Harvey Kaltsas was both a tenant of and an independent contractor with The Healing Center, Inc. As a tenant, Mr. Kaltsas paid rent of approximately $300.00 per month to The Healing Center, Inc. As an independent contractor, Mr. Kaltsas performed thermographic examinations on several patients of The Healing Center, Inc. These services were performed from time to time on an ad hoc basis. For these services, Mr. Kaltsas received $3625.00. No contract existed between Mr. Kaltsas and the

   Healing Center, Inc., regarding performance of these services. Other individuals provided similar thermographic services.

   
   

8. On January 1, 1991, Harvey Kaltsas became a salaried employee of The Healing Center, Inc. At the time he vacated his seat on the Board of Acupuncture in April 1991, he was still a salaried employee of The Healing Center, Inc.

   
   

9. On December 14, 1990, Harvey Kaltsas moved for consideration of, and voted for, an amendment to Rule 21AA-8.002, Florida Administrative Code, which would have required all licensed acupuncturists in the State of Florida to use only sterile, disposable acupuncture needles. The matter had been raised in an earlier meeting of the board by Luis Celpa, another acupuncturist member.

   
   

10. The proposed amendment to Rule 21AA-8.002, Florida Administrative Code, was noticed and published in the Florida Administrative Weekly on February 15, 1991 (Vol. 17, No. 7, p.645). The proposed amendment deleted existing language with regard to sterilization procedures and substituted language requiring disposable needles for one-time use only.

1. The proposed ruled was subsequently withdrawn by the Board of Acupuncture and never became effective. The Joint Administrative Procedures Committee challenged the authority for the rule since Chapter 457, F.S. provides for resterilization of needles.

   
   

2. Prior to voting on the measure to amend Rule 21AA-8.002, Florida Administrative Code, Mr. Kaltsas did not disclose to the Board of Acupuncture his interests in or relationship with The Healing Center, Inc.

   
   

3. On or about March 7, 1991, The Healing Center, Inc. mailed a letter signed by Cynthia O'Donnell-Kaltsas to licensed Florida acupuncturists advising them of the proposed rule change requiring the use of sterile, disposable needles and offering such needles for sale at a discounted price. Ms. O'Donnell was aware of the board's action, and the letter was mailed after publication of the proposed rule change in The Florida Administrative Weekly. After the rule was withdrawn Ms. O'Donnell sent a follow up letter stating that the rule did not go through and apologizing for any misinformation. Even though she does not use the husband's name, Ms. O'Donnell signed the letters, "O'Donnell-Kaltsas", as her husband had been president of the Florida Acupuncture Association and she was raising money for the association with a 2 percent contribution from needle sales.

   
   

4. There are a significant number of potential vendors offering sterile, disposable needles for sale to Florida practitioners of acupuncture. There are a minimum of at least fifteen such vendors in Florida, as well as a minimum of eleven practitioners who sell needles. In addition, Chinese practitioners have direct access to needle suppliers in China from whom they can purchase needles. Florida practitioners receive solicitations from needle vendors across the country and from needle vendors located in Canada, England, Taiwan and Hong Kong. There are no barriers to interstate sale and shipment of needles into the State of Florida by any company or person.

   
   

5. The Board of Acupuncture does not regulate the sellers of acupuncture needles. No barriers to entering this market have been established by the Board of Acupuncture. The Board does not license persons or entities which sell needles, nor does it inspect facilities of such persons or entities. The Board

   does not regulate the types of needles which can be sold, nor does it subject sellers of needles to any kind of disciplinary action.

   
   

6. For all intents and purposes, Mr. Kaltsas and his wife maintain separate financial identities. They maintain separate bank accounts, with the exception of a $30.00 credit union account. They do not have signing privileges on each other's banking accounts. In business transactions involving The Healing Center, Inc., Mr. Kaltsas did not receive any special consideration with respect to the amount of rent or with respect to making of rent payments. Although the couple resides in a house owned by Ms. O'Donnell, Harvey Kaltsas makes payments to her to offset the household expenses.

   
   

7. There is no evidence that the vote of December 14, 1990 regarding the proposed attachment to Rule 21AA-8.002, Florida Administrative Code, inured to the special private gain of Mr. Kaltsas or to the special private gain of Cynthia O'Donnell.

   
   

8. There is no evidence that any matter came before the Board of Acupuncture on a continuing or frequently recurring basis which created a conflict between Mr. Kaltsas' private interests and the performance of his public duties. The sterile, disposable needle rule was formally addressed on two occasions while Mr. Kaltsas was on the Board; it was approved by the Board on December 14, 1990; and it was subsequently withdrawn by the Board on April 3, 1991.

   
   

9. Most acupuncturists use disposable needles already. The low cost of such needles compared to the cost of effective sterilization created a legitimate concern for the safety and welfare of the needle handlers and their patients. This concern, rather than any private interest or benefit motivated Harvey Kaltsas' action as a board member.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to Section 120.57(1), Florida Statutes, and Florida Commission on Ethics Rule 34-5.010, Florida Administrative Code.

    
    

11. The Commission on Ethics has determined that the applicable standard of proof in these proceedings is the "preponderance of evidence" standard. In re Michael Langton, 14 FALR 4175, 4178 (1992); see also, In re Leo C. Nichols, 11 FALR 4234 (1989).

    
    

12. Section 112.313(7)(a), Florida Statutes (1989), provides in pertinent part, as follows:

    
    

    112.313 Standards of conduct for public officers and employees of agencies.--

    1. CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP.--

       1. No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee,

          . . . nor shall an officer or employee of an agency have or hold any employment or contractual

          relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and

          faithful discharge of his public duties

          . . . (emphasis added)

          
          

13. Section 112.3143(2), Florida Statutes (1989), provides, in pertinent part, as follows:

    
    

    112.3143 Voting Conflicts.--

    (2)(a) Except as provided in subsection (3), no public officer is prohibited from voting in his official capacity on any matter.

    However, any public officer voting in his official capacity upon any matter which inures to his special private gain or the special private gain of any principal by whom he is retained shall, within 15 days after the vote occurs, disclose the nature of his interest

    as a public record in a memorandum filed with the person responsible for recording the minutes of the meeting who shall incorporate the memo- randum in the minutes.

    1. No appointed public officer shall participate in any matter which inures to his special private gain or the special private gain of any principal by whom he is retained, without first disclosing the nature of his interest in the matter. Such disclosure, indicating the nature of the conflict, shall be made in a written memorandum filed with the person responsible for recording the minutes . . . For the purposes of this paragraph, the term "participate" means any attempt to influence the decision by oral or written communication whether made by the

    officer or at his direction. (emphasis added).

    
    

14. In order to establish a violation of Section 112.313(7)(a), Florida Statutes (1989), the following must be established:

    
    

    1. that Mr. Kaltsas was a public officer or employee;

    2. that he had an employment or contractual relationship; and

    3. that such employment or contractual relationship created a continuing or frequently recurring conflict between his private interests and the performance of his public duties.

       
       

15. With respect to the alleged violation of Section 112.313(7)(a), Florida Statutes (1989), competent, substantial evidence established that Mr. Kaltsas was, by virtue of his service on the Board of Acupuncture, a public officer. Prior to January 1, 1991, Mr. Kaltsas had a contractual relationship with The Healing Center, Inc.; or depending on how the lease arrangement was viewed, he was the landlord of The Healing Center, Inc. In either case, Mr.

    Kaltsas paid rent to the Healing Center, Inc. From time to time, he performed services for patients of The Healing Center, Inc. for which he was compensated. These services were performed on an ad hoc basis. Other individuals performed similar services. On or after January 1, 1991, Mr. Kaltsas had an employment relationship with The Healing Center, Inc.

    
    

16. Neither the employment relationship nor the contractual relationship was of such a nature to create a continuing or frequently recurring conflict between his private interests and the performance of his public duties. No evidence was presented at hearing to explain the nature of the continuing or frequently recurring conflict other than the general suggestion that as a member of the Board of Acupuncture, Mr. Kaltsas' duties included regulation of the practice of acupuncture, and the promulgation of rules to implement Chapters 457, 455 and 120, Florida Statutes. Such evidence is not sufficient to establish a conflict, particularly in light of the provisions of Section 112.313(7)(b), Florida Statutes (1989), which provide as follows:

    
    

    This subsection shall not prohibit a public officer or employee from practicing a particular profession or occupation when such practice by persons holding such public office or employment is required or permitted by law or ordinance.

    
    

    This provision allows an acupuncturist to serve on the Board of Acupuncture and to simultaneously engage in all activities relating to the practice of acupuncture. Section 457.103, F.S. requires that three of the five Board of Acupuncture members be acupuncturists.

    
    

17. There was no evidence to indicate that matters relating to the use of sterile, disposable needles came before the Board of Acupuncture with such frequency as to create a prohibited conflict. The sterile, disposable needle issue was addressed by vote on only two occasions while Mr. Kaltsas was on the board. The second time it was addressed, the proposed rule was withdrawn. The history of Rule 21AA-8.002, Florida Administrative Code, indicates that it was amended only three times during Mr. Kaltsas' term.

    
    

18. In order to establish a violation of Section 112.3143(2), Florida Statutes (1989), the following must be established, consistent with the applicable standard of proof:

    
    

    1. that Mr. Kaltsas was a public officer, or in the case of Section 112.3143(2)(b),

       Florida Statutes (1989), that he was an appointed public officer;

    2. that he voted on a measure, or "participated" in a measure;

    3. that such measure inured to Mr. Kaltsas' special private gain or the special private gain of any principal by whom he is retained; and

    4. that he failed to disclose the nature of his interests in the matter.

       
       

19. With respect to the alleged violation of Section 112.3143(2), Florida Statutes (1989), competent, substantial evidence established that Mr. Kaltsas was an appointed public officer. It is established that he "participated" in and voted on a measure, the proposed amendment to Rule 21AA-8.002, Florida

    Administrative Code, at the December 14, 1990 meeting of the Board of Acupuncture. It is likewise established that he failed to disclose his interest in the measure.

    
    

20. No evidence was presented to indicate that the measure upon which Mr. Kaltsas participated in or voted on inured to his special private gain. Although The Healing Center, Inc. which was owned by Mr. Kaltsas' wife, Cynthia O'Donnell, engaged in the sale of sterile, disposable needles, Mr. Kaltsas had no financial interest in that corporate entity. At the time of the vote on December 14, 1990, Mr. Kaltsas was not an employee of The Healing Center, Inc.

    
    

21. Nor is there evidence that Harvey Kaltsas gained indirectly from the vote as a result of some benefit flowing to his wife. Mr. Kaltsas and his wife did not maintain joint bank accounts but rather they maintained separate financial identities. Although the evidence indicated that Mr. Kaltsas lived in a house owned by his wife, he contributed his share of living expenses for rent and the like.

    
    

22. There is no evidence from which to conclude that the measure upon which Mr. Kaltsas participated in or voted on inured to the special private gain of his wife, Cynthia O'Donnell. The size of the affected class, i.e., sellers of disposable, sterile acupuncture needles, was shown to be sufficiently large that a voting conflict would have existed only if The Healing Center, Inc. would have gained more than the other members of the class. 1/ Sterile acupuncture needles for Florida licensed acupuncturists were available from many vendors within and outside the state. The proposed rule was advertised to the public in the Florida Administrative Weekly and even though Ms. O'Donnell knew of the rule earlier when the board voted, she did not solicit sales and mention the rule until after it was published. Her business gained no more than would other vendors from the brief life of the proposed measure.

    
    

23. Section 112.3142(2), Florida Statutes (1989), does not on its face refer to the spouse of a public officer. This construction of the statute has been established by the Commission on Ethics within the context of advisory opinions which are not binding on any person other than the person who sought the opinion. Section 112.322(3)(b), F.S. It is, however, unnecessary to address the Acting Advocate's argument that those opinions affect the result here, given the conclusions above. Nor is it necessary or appropriate to address Respondent's constitutional claims, which claims are reserved for a judicial forum.

RECOMMENDATION

Based on the foregoing, it is, hereby RECOMMENDED:

That the Commission on Ethics enter its final order and public report finding that Harvey Kaltsas did not violate Sections 112.3143(2), Florida Statutes (1989) and 112.313(7)(a), Florida Statutes, as alleged, and dismissing the complaints.

DONE AND ORDERED this 31st day of August, 1993, in Tallahassee, Florida.

MARY CLARK

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 31st day of August, 1993.

ENDNOTES

1/ The Commission on Ethics has formulated the following tests for determining the existence of special private gain when the class of persons benefited by the vote includes the official, or one by whom the official is retained:

[w]hether a measure inures to the special private gain of an officer or his principal will turn in part on the size of the class of persons who stand to benefit from the measure.

Where the class of persons is large, a special gain will result only if there are circumstances unique to the officer or principal under which he stands to gain more than the other members

of the class. Where the class of persons bene- fiting from the measure is extremely small, the possibility of special private gain is much more likely.

(emphasis in text) Gonzales, L.A. and Claypool, P.C., "Voting Conflicts of Interest Under Florida's Code of Ethics for Public Officers and Employees," 15 Stetson L.Rev. 675.692. See also, CEO 77-129.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-6732EC

The following constitute specific rulings on the findings of fact proposed by the parties:

The Advocate's Findings

1.-4. Rejected as irrelevant.

5. Adopted in paragraph 9.

6.-8. Adopted in paragraph 10.

1. Adopted in paragraph 3.

2. Adopted in paragraph 15.

3. Adopted in paragraphs 5.-7.

4. Adopted in paragraph 7.

5. Adopted in paragraph 3.

6. Adopted in substance in paragraphs 3. and 12. 15.-17. Adopted in substance in paragraph 12.

1. Rejected as immaterial.

2. Adopted in paragraph 18. 20.-21. Rejected as immaterial.

1. Adopted in paragraph 1.

2. Adopted in part in paragraph 17. (as to when the issue was before the board); otherwise rejected as unnecessary and immaterial.

3. Adopted in paragraph 18 Respondent's Findings

The Findings of Fact proposed by Respondent, including the parties' stipulated facts, have been substantially adopted in their entirety above.

COPIES FURNISHED:

Laura Rush, Esquire Department of Legal Affairs The Capitol

Tallahassee, Florida 32399-1050

Mark Herron, Esquire Post Office Box 10555

Tallahassee, Florida 32302-2555

Bonnie Williams, Executive Director Ethics Commission

Post Office Drawer 15709 Tallahassee, Florida 32317-5709

Phil Claypool, General Counsel Ethics Commission

Post Office Drawer 15709 Tallahassee, Florida 32317-5709

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 92-006732EC

Orders for Case No: 92-006732EC