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DAN MORALES 

AlToRN* OENLRAL 

April 22,199l 

Honorable Bruce Gibson 

Chairman 

Government Organization 

Texas House of Representatives 

P. 0. Box 2910 

Austin, Texas 78768-2910 

Opinion No. DM-18 

Re: Whether an individual who is an 

audiologist member of the Board of 

Examiners in the Fitting and Dispensing of 

Hearing Aids may be employed by a retail 

hearing aid company (RQ-2180) 

Dear Representative Gibson: 

You have requested our opinion as to whether an individual who serves as 

the audiologist member of the Board of Examiners in the Fitting and Dispensing of 

Hearing Aids may be employed by a retail hearing aid company. Article 4566-1.02, 

V.T.C.S., creates the board and provides that its nine members must have the 

following qualifications: 

(1) Five of such members shall possess the necessary 

qualifications to fit and dispense hearing aids in this state and 

have been residents of this state actually engaged in fitting and 

dispensing hearing aids for at least five years immediately 

preceding their appointment. No more than two of such five 

members shall be employed by, franchised by, or associated 

exclusively with the same hearing aid manufacturer; 

(2) Two Board members must be members of the general 

public. A person is eligible for appointment as a public member 

if the person and the person’s spouse are not licensed by an 

occupational regulatory agency in the field of health care; are 

not employed by and do not participate in the management of a 

business entity or other organization that provides health-care 

services or that sells, manufactures, or distributes health-care 

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Honorable Bruce Gibson - Page 2 (DM-18 ) 

supplies or equipment; and do not own, control, or have, directly 

or indirectly, an interest in a business entity or other 

organization that provides health-care services or that sells, 

manufactures, or distributes health-care supplies or equipment; 

(3) One of such members shall be a citizen of the United 

States and a resident of this state for a period of at least two 

years immediately preceding his appointment, shall be an active 

practicing physician or surgeon duly licensed to practice in this 

state by the Texas State Board of Medical Examiners, and 

specialize in the practice of otolaryngology. Such member shall 

not have a financial interest in a hearing aid manufacturing 

company or a wholesale or retail hearing aid company; and 

(4) One of such members shall be a citizen of the United 

States and a resident of this state for a period of at least two 

years immediately preceding his appointment and shall be an 

active practicing audiologist. Such member shall not have a 

financial interest in a hearing aid manufacturing company or a 

wholesale or retail hearing aid company. 

Subsection (a)(4) prohibits the audiologist member from having “a financial 

interest in a hearing aid manufacturing company or a wholesale or retail hearing aid 

company.” Under the facts you present, the audiologist member is an employee of 

such a company. You ask whether an employee. has a “financial interest” in his 

company for purposes of subsection (a)(4). 

Article 4566-1.02 does not define “financial interest.” Black’s Law 

Dictionary, however, defines “financial interest” as “an interest equated with money 

or its equivalent.” BLACK’S LAW DICTIONARY 568 (5th ed. 1979). Article 6252:9b, 

V.T.C.S., defines “substantial interest” in a business entity to include any individual 

who is an employee of the business entity. Another statute, section 171.002 of the 

Local Government Code, declares that a person has a substantial interest in a 

business entity if, inter ufia, “funds received by the person from the business entity 

exceed 10 percent of the person’s gross income.” For most “employees,” their 

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Honorable Bruce Gibson - Page 3 ( DM- 18 ) 

income from that employment would ordinarily exceed ten percent of their gross 

income for a particular year. 

Furthermore, this office has long held that mere employment is sufficient to 

trigger the common law prohibition against conflicts of interest on the part of public 

officials. Mevers v. Walker, 276 S.W. 305 (Tex. Civ. App.--Eastland 1925, no writ), 

stands for the proposition that 

[i]f a public official directly or indirectly has a pecuniary interest 

in a contract, no matter how honest he may be, and although he 

may not be influenced by the interest, such a contract so made is 

violative of the spirit and letter of our law, and is against public 

policy. 

276 S.W. at 307. 

In Attorney General Opinion H-916 (1976), this office said that a school 

district official should not contract with a company that employs a member of the 

district’s board of trustees in a managerial capacity, even though the trustee derives 

no direct financial benefit from the contract. The opinion relied on a series of court 

decisions from other jurisdictions which had held that mere employment is sufficient 

to invoke the common law prohibition against conflict of interest. See, e.g., Edward 

E. Gillen Co. . C tv of Milwaukee 183 N.W. 679,681 (Wis. 1921); Miller v. Citv of 

Martinez. 82 i2dr519. 523 (Cal. D;st. Ct. App. 1938); Stockton Plumbing & St&y 

Co. v. Wheeler, 229 P. 1020, 1024 (Cal. Dist. Ct. App. 1924); Peoule ex rel.Pearsall v. 

m, 145 N.E. 344,345-46 (Ill. 1924). 

Likewise, in Attorney General Opinion JM-171 (1984), this office, “[rlelying 

on Attorney General Opinion H-916,” concluded 

that the conflict of interest prohibition is triggered when a 

member of the governing body of a political subdivision . . . is an 

officer or employee of a firm seeking to do business with that 

political subdivision. (Emphasis added.) 

Finally, in Attorney General Opinion JM-884 (1988), this office said that the 

common law prohibition against conflict of interest. prevents the Texas Commission 

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Honorable Bruce Gibson - Page 4 (DM- 18 1 

for the Deaf from contracting with a local council for the deaf if a commission 

member serves the local council as a paid employee or in a decision-making capacity 

that authorizes him to contract for the council. 

It has been suggested that the term “financial interest” was not meant to 

include employment, because subsection (a)(2) provides that the lay members of the 

board may neither be employed by nor “own, control, or have, directly or indirectly, 

an interest in a business entity or other organization that provides health-care 

services or that sells, manufactures, or distributes health-care supplies or equipment.” According to this argument, the statute recognizes a distinction between 

employment and having an interest in a company, and the failure to include a 

prohibition against employment in subsection (a)(4) indicates that the legislature 

did not intend that “financial interest” be construed as encompassing employment. 

We disagree with this argument. A more reasonable approach is to view the 

prohibitions listed in subsection (a)(2) as overlapping rather than discrete. Clearly, 

some of the specific prohibitions in subsection (a)(2) are also included in the more 

general ones. We do not believe it can be reasonably argued that employment in a 

company would not constitute at least an indirect interest in it, but subsection (a)(2) 

sets out separately its prohibitions against these connections. 

Moreover, subsection (a)(2) was drafted at a different time than subsections 

(a)(3) and (a)(4). Before revision, the statute provided that neither the lay member, 

the physician, nor the audiologist could have a “financial interest” in a wholesale 

hearing aid company (the audiologist and physician members could not have a 

financial interest in a retail hearing aid company either). A 1981 amendment of the 

statute changed subsection (a)(2) by adding another lay member, broadening the 

prohibition against industry affiliation by extending it to all health-care related 

businesses, and specifying various types of forbidden connections. Acts 1981, 67th 

Leg., ch. 774, at 2903, 9 1, eff. Sept. 1, 1981. Subsections (a)(3) and (a)(4) remained 

the same. The amendment was clearly intended to strengthen the provisions against 

conflict of interest (a specific conflict of interest provision was also added as section 

(g)); it would be ironic if the addition of language to accomplish this purpose were 

used as evidence for allowing additional industry affiliation under subsection (a)(4). 

Furthermore, construction of “financial interest” to include employment 

seems necessary to preserve the legislature’s intent in carefully structuring the 

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Honorable Bruce Gibson - Page 5 ( DM- 18 1 

composition of the board. The statute lays out a specific structure for the board, 

balancing the need for expertise in the field against the need for independence from 

the industry as a whole and impartiality toward individual entities within it. Thus, 

subsection (a)( 1), which presupposes that members within it will be affiliated with 

the hearing aid industry, provides that no more than two of such members may be 

employed or associated exclusively with the same hearing aid manufacturer. It 

could destroy this scheme if members within other sections were also permitted to 

have such industry ties. In such a scenario, the audiologist member could be 

affiliated with the same hearing aid manufacturer as two of the subsection (a)(l) 

members, defeating the purpose of the subsection (a)(l) provision. This cannot 

have been the intent of the legislature. Rather, the legislature seems to have 

intended that only subsection (a)( 1) members, the fitters and dispensers of hearing 

aids, who inevitably have ties to the manufacturers and retailers of hearing aids, be 

industry-affiliated. An audiologist meeting the requirements of subsection (a)(l), 

and employed by a hearing aid company, may be a member of the board, but only in 

a subsection (a)( 1) position. 

On the basis of the prior decisions of this office ‘which construe the term 

“pecuniary interest” for purposes of common law conflict of interest, as well as what 

we deem to be the intent of the legislature in enacting article 4566-1.02, we 

conclude that “financial interest” as used in that statute encompasses employment. 

As a result, it is our opinion that an individual who serves as the audiologist member 

of the Board of Examiners in the Fitting and Dispensing of Hearing Aids may not be 

employed by a hearing aid manufacturing company or a wholesale or retail hearing 

aid company. 

SUMMARY 

An individual who serves .as the audiologist member of the 

Board of Examiners in the Fitting and Dispensing of Hearing 

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Honorable Bruce Gibson - Page 6 ( DM-18 ) 

Aids may not be employed by a hearing aid manufacturing 

company or a wholesale or retail hearing aid company. 

DAN MORALES 

Attorney General of Texas 

WILLPRYOR 

First Assistant Attorney General 

MARY KELLER 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAKLEY (Ret.) 

Special Assistant Attorney General 

RENEA HICKS 

Special Assistant Attorney General 

MADELEINE B. JOHNSON 

Chair, Opinion Committee 

Prepared by Rick Gilpin & Faith Steinberg 

Assistant Attorneys General 

p. 86