Opinion ID: 1823927
Heading Depth: 2
Heading Rank: 1

Heading: , ii, & i cross-appeal

Text: ¶ 22. At issue in this case is the proper interpretation of Article 4, Section 109 of the Mississippi Constitution of 1890 which states: No public officer or member of the legislature shall be interested, directly, or indirectly, in any contract with the state, or any district, county, city, or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term. The landmark case interpreting Section 109 is Frazier v. State ex rel. Pittman, 504 So.2d 675 (Miss.1987). In Frazier, this Court stated that Section 109 prohibits any member of the Legislature from: (a) having any direct or indirect interest in any contract (b) with the state or any political subdivision (c) executed during his term of office or one year thereafter, and (d) authorized by any law, or order of any board of which he was a member. Id. at 693. ¶ 23. This Court has noted that while there is no difficulty in ascertaining (b) and (c) of the above factors, it is (a) and (d) where the gray areas are encountered. Id. The case at hand involves an interpretation of factor (a). There is no issue regarding factor (d) as this Court has clearly held that legislative appropriations to state agencies authorize contracts funded by those appropriations. Cassibry v. State, 404 So.2d 1360, 1365-66 (Miss. 1981). ¶ 24. This Court observed in Frazier: [I]t is clear this section is to protect the government. It is not a provision to protect individual rights. It is not concerned with whether some individual or class of individuals may suffer from its enforcement. As noted in Noxubee County Hardware Co., ... the transgression test is intended to be mechanistic and objective, and motives and intentions of persons who violate it are immaterial. Its purpose is to remove any temptation to invade its proscription. It is also a self-executing section.... It prohibits an individual having an interest in a contract when he as a public officer served on the official body which enabled the contract to come into being. It is that simple.... Frazier, 504 So.2d at 694. ¶ 25. Howell and Read contend that, in this case, it is not that simple. In fact, we note initially that the participation agreements, which are the sole basis for the alleged violation of Section 109, are totally unlike any contract previously found by this Court to be within the scope of Section 109. None of the cases relied on by the chancellor involved the type of government welfare assistance program as exists in the case at bar. This Court has stated that while the effect of Section 109 must be ascertained from the plain meaning of the words and terms used within it, the Court should look to the evils to be avoided or cured, and thereby arrive at the reasonable meaning. Id. at 694 (quoting Ex parte Dennis, 334 So.2d 369, 373 (Miss. 1976); Trahan v. State Highway Comm'n, 169 Miss. 732, 749, 151 So. 178, 182 (1933)). Though Section 109 sweeps broadly, this Court has acknowledged that there is an edge to [its] target. Frazier, 504 So.2d at 695 (citing Cassibry, 404 So.2d at 1368). It is not required that one be a party to the contract in question to have an interest in the contract that violates Section 109. See, e.g., Cassibry, 404 So.2d at 1365-67 (holding that state senator who was attorney for party to contract with state was in violation of § 109). ¶ 26. Applying the factors set forth in Frazier, the chancellor found that the participation of Howell and Read in Medicaid appropriations directly or indirectly affect[ed] the availability of state funds for Medicaid reimbursements to Medicaid providers. The chancellor concluded that the participation agreements are contracts with the state that are authorized by the Medicaid appropriation bills. The chancellor concluded that Howell had and continues to have a direct financial interest in Medicaid reimbursements. The chancellor also concluded that Read had and continues to have an indirect financial interest in Medicaid reimbursements. ¶ 27. On cross-appeal, Howell and Read (hereinafter legislators) argue that their participation as Medicaid providers does not create a conflict of interest in violation of Section 109. They argue that the chancellor's application of the four-part test set forth in Frazier is overly expansive. For example, they contend that it fails to take into account modern developments in the Medicaid program and ignores the common-sense manner in which Section 109 should be applied. It is the following language from Frazier upon which they rely: Our interpretation [of § 109] should not be too literal, and we have recognized that no constitutional prevision [sic] requires to be done that which is thoroughly impracticable. We have likewise stated that our Constitution should be interpreted: ... In the light of developments which have appeared at the time of interpretation, and may therefore include things and conditions which not only did not exist but were not contemplated when it was drafted, so long as the new developments are in their nature within the scope of the purposes and powers for the furtherance of which the constitution was established. .... [N]o meaning, however abstractly valid should be carried into practical effect if doing so would cause grave risks to be imposed on the government of the people of this State. Such an interpretation would insult the common sense of our predecessors when they adopted § 109. Frazier, 504 So.2d at 694-95 (citations omitted). ¶ 28. The legislators contend that Section 109 should be interpreted in light of the role of government and the private sector in the provision of aid to the poor. They explain that the participation agreements are simply means of providing financial aid to the needy. They argue that they are merely conduits that distribute the medication. The State provides the funding for the health care, and the needy choose from whom they will obtain the services. ¶ 29. The legislators state that the purpose of Section 109 is to protect the public interest by preventing graft of every possible sort, and securing the honest and clean administration of municipal affairs. Noxubee County Hardware Co. v. City of Macon, 90 Miss. 636, 43 So. 304, 305 (1907). They contend that there is no danger of self-dealing by Medicaid providers in legislative roles because the appropriations to Medicaid do not affect the amount that the providers are reimbursed. Similarly, there is no incentive for them to vote one way or the other on appropriation bills because the amount of money they make depends, not on how much money is appropriated, but on how many Medicaid recipients choose to use their pharmacy. We agree. ¶ 30. The purposes of Section 109 are to instill public confidence in the integrity of government and to remove any temptation to invade its proscription. Hinds Community College Dist. v. Muse, 725 So.2d 207, 211 (Miss.1998); State ex rel. Miss. Ethics Comm'n v. Aseme, 583 So.2d 955, 958 (Miss.1991). The questions are whether Howell and Read, by voting on appropriations to the Medicaid program, are guilty of self-dealing and whether their interests could reasonably be expected to influence their judgment. Smith v. Dorsey, 530 So.2d 5, 12-13 (Miss.1988) (Prather, J., concurring in part and dissenting in part). ¶ 31. The decision of the Georgia Supreme Court in Georgia Dep't of Med. Assistance v. Allgood, 253 Ga. 370, 320 S.E.2d 155 (1984), supports the legislators' interpretation of the participation agreements. The question in Allgood was whether nursing homes and pharmacies owned by members of the state legislature or their spouses may, consistent with Georgia's Code of Ethics, receive Medicaid reimbursements from the state. The Georgia Supreme Court held that the legislators' interests did not violate the Code of Ethics. The court determined that the pharmacies were selling property to the Medicaid recipients, not to the state. The Allgood court also referred to various opinions holding that the state is not a purchaser of prescription drugs dispensed to medicaid recipients because the state never obtains title to or possession of the drugs; and therefore, the state does not have a proprietary interest in the drugs. Allgood, 320 S.E.2d at 158-59. In the case at bar, likewise the reality is that funds appropriated to Medicaid are for the benefit of the poor and needy recipients, not the providers. Thus, pharmacists like Howell and Read are mere conduits of medical assistance to these poor people who are eligible for Medicaid. ¶ 32. In the case at bar, we find that the legislators' interest in Medicaid appropriations is so remote as to remove them from the purpose of Section 109. We accept the legislators' argument that no decision Howell or Read make in voting on a Medicaid appropriation bill can affect the amount of reimbursements they receive. They cannot negotiate a contract with the state for a better or different price which they can charge. The reimbursement rates for prescription drugs are fixed by law. Miss.Code Ann. § 43-13-117(9). In their individual decisions to purchase medications, Medicaid recipients themselves, not the Legislature, control whether Howell and Read receive reimbursements. A Medicaid recipient is entitled to choose to purchase drugs from the legislators' respective pharmacies before the State is obligated to pay the provider. Therefore, neither Howell nor Read can affect the level of reimbursements they individually might receive by a vote appropriating funds to the state's Medicaid program. They have absolutely no control over this situation. ¶ 33. As we stated in Frazier, [N]o meaning, however abstractly valid, should be carried into practical effect if doing so would cause grave risks to be imposed on the government of the people of this State. Such an interpretation would insult the common sense of our predecessors when they adopted § 109. 504 So.2d at 695. This Court cannot fathom that the framers of our Constitution intended such an interpretation and harsh result as the chancellor imposed upon these two legislators. Id. Thus, there are practical limits to the application of Section 109. Common sense dictates that the Medicaid participation agreements simply are not the types of contracts contemplated by the framers of Section 109. Rather, as the legislators contend, the Medicaid program and the participation agreements under which Howell and Read operate are simply means of providing financial aid to the needy. Pharmacists like Read and Howell do, in fact, serve as conduits for the provision of benefits to the needy for health care. Certainly no one denies the fact that the provider agreements allow the providers to be reimbursed for Medicaid prescriptions. However, when the Court examines the substance, as opposed to the form, of the agreements between the pharmacies and the Division of Medicaid, it becomes clear that the agreements are merely a means of assuring that providers comply with Medicaid laws and regulations and that they are not the types of contracts contemplated by Section 109. A similar situation is existed in Aseme, 583 So.2d 955. There, a physician obtained benefits due to having public hospital staff privileges and yet he served on the hospital's board of trustees. This Court held that such was not a contract for Section 109 purposes because his compensation was not dependent on these privileges and the danger of graft and self-dealing arising from simultaneous service on the board is too attenuated. Id. at 959-60. Here, we also note that there is no danger of graft or self-dealing arising from these two legislator pharmacists participating in the Medicaid program as providers. ¶ 34. We decline to place Howell and Read in the same category with the attorney/senator in Cassibry v. State, 404 So.2d 1360 (Miss.1981), who was the as corporate counsel for a company named Developmental Learning Associates (DLA), which contracted with the State Department of Public Welfare. Cassibry was held to be directly interested in the contract. Cassibry is distinguishable from the case sub judice because any compensation received by Cassibry from DLA came from profits from the contract with the Welfare Department, as the company had no other sources of income. We conclude that neither Howell nor Read is in the same category with Cassibry. They both merely receive reimbursements for prescriptions they fill for Medicaid recipients. As previously mentioned, the individual recipients themselves, in effect, determine the number of reimbursements they receive. Regardless of their ability to vote in the Legislature for Medicaid funding, they do not have control, either direct or indirect, over the amount of compensation their respective pharmacy receives from the state agency. This was not the case in Cassibry. ¶ 35. Also distinguishable in favor of the legislators is Frazier. In that case teachers/legislators benefitted from a simple direct line of appropriationfrom the Legislature to the employer of the teachers/legislators for the purpose of funding their salaries. The line of appropriation in the case at hand is not that direct nor is the purpose that significant. After legislative approval, the appropriations go to the Division of Medicaid. The pharmacist must submit claims to the Division of Medicaid, which then reimburses the pharmacist. Again, a significant link in this chain is the role of the Medicaid recipients who may or may not choose to submit prescriptions to the particular pharmacist. Also, noteworthy is the fact that the reimbursements do not constitute the pharmacist's total income as was the case of the appropriations at issue in both Frazier and Cassibry. In Frazier, the appropriations, once approved by the Legislature, went directly to the employer of the teachers/legislators for the purpose of totally funding their salaries. Also, in Cassibry, DLA's contracts with the Department of Welfare were DLA's sole source of income. Id. at 1364. Here, the legislators' salaries are not linked to or based upon the amount of Medicaid reimbursements their pharmacies receive. ¶ 36. If the legislators had used their position in the Legislature to gain special privileges that were not available to all others in his class, a true conflict of interest would exist. For instance, if they had entered into a contract made available to them because of their position and that contract gave them pricing advantages over other licensed pharmacists, then a genuine conflict would exist. If they obtained a specific certificate to operate a privately-owned business exclusive of the rights of others, then a conflict would exist. If, while serving in the Legislature, they had in any way assisted to modify their rights to act and practice as a pharmacist in Mississippi, then a conflict would exist. Under the facts of the case at hand, however, the legislators have neither modified nor gained any rights that are not identical to the rights of all others in their class. Equally important is the fact that the Medicaid program allows them no right to negotiate a contract that is any different from those entered into by every other member of their class, nor are they granted any exclusive privilege or contract to singly represent any state or other governmental agency. In fact, they cannot negotiate at all. Their alleged sin in this case was the execution of a form Participation Agreement authorizing them to directly receive Medicaid reimbursements. The form they signed was identical to the same forms executed by all other Mississippi pharmacists who would agree to service Medicaid clients. This form amounted to nothing more than a license to fill prescriptions for Medicaid clients. They received no special preference over other pharmacists unlike the situation in Cassibry, 404 So.2d at 1365-66, nor did their licensing prohibit others from serving in a public position unlike the situation in Frazier, 504 So.2d 675, and Muse, 725 So.2d at 213. ¶ 37. Strong public policy considerations undergird the need for a reasonable interpretation of Section 109. Nor should Section 109 be applied in a manner which would render vast sectors of our society ineligible for service in our Legislature. As we noted in Frazier, No social, political or economic section should be precluded by law from running for the Legislature without good reason. Any evil sought to be avoided by § 109 would become attenuated by prohibiting a prospective legislator from serving the public. Such a prohibition, when balanced against the potential harm to our people, goes beyond any possible intent or purpose of this section.... Frazier, 504 So.2d at 696-98. In a representative democracy the legislative branch of government should be sprinkled with members from all walks of life. Representative democracy is strengthened when representatives and senators truly reflect the professional, gender, racial, and geographic diversity of the population at large. The need for members who possess particular skills as a result of education and training cannot be overemphasized. Neither should we be blind to the fact that members from isolated or rural areas of the state may be unfairly prohibited from serving simply because of a radical interpretation of Section 109 which wholly fails to apply common sense with consideration of modern economic, cultural and political circumstances or conditions. ¶ 38. If the trial court's interpretation were to prevail, the legislators would be faced with the dilemma of either resigning from the Legislature or refusing to provide a valuable service to the citizens of their respective districts. Such an outcome could not have been considered, much less have been the intent of the framers of our 1890 Constitution when they adopted Section 109. In those days society did not enjoy the overlapping rights, privileges, and responsibilities found in today's world where oftentimes local, state, and federal governmental programs interrelate and interact. The concept of a welfare state and various programs for the needy did not emerge until the 1930's. If these legislators are in violation of Section 109, so too would any legislators who are Medicaid recipients, Medicaid doctors, or shareholders in other companies which provide Medicaid services. Other examples which would be problematic: (1) Legislators/attorneys would not be eligible to be appointed to represent indigent defendants in criminal cases who are paid with county or state funds appropriated in whole or in part by the Legislature. (2) Neither legislators nor their family members would be eligible for student loans pursuant to Miss.Code Ann. §§ 37-51-1 to -21 §§ 37-145-1 to -73 (2001) because they are funded by legislative appropriations. Thus, while Section 109 is laudable, its application must be tempered and balanced according to the facts of each case. The need for honesty in government must be balanced against the legitimacy of public officials having private interests. Otherwise, [restrictions like § 109 and implementing statutes] could effectively deter qualified people with expertise in their respective fields from entering public office for fear that any private interest could result in a conviction for having a conflict of interest. Susan Denise Morgan Guerieri & George Mitchell Simmerman, Jr., Recent Decision, 52 Miss. L.J. 659, 677 (1982) (footnotes omitted). ¶ 39. Simply put, Section 109 must only be interpreted by this Court to provide a rational prohibition against self-dealing and abuse of power. We find that the best analysis hinges upon whether an individual member of the Legislature was in a position to advance the rights and benefits for himself, his friends and family beyond common rights and responsibilities provided to other members of his professional class. We hold that there is no violation of Section 109 by either Howell or Read. Accordingly, we reverse and render the chancellor on his finding that the legislators violated Section 109.