Department of Health and Human Services (HHS) employees, including special Government employees (SGE) serving as subject-matter experts on Federal advisory committees (committees), play an influential role in the Federal Government’s public health policies. However, HHS employees may have conflicts of interest that prohibit them from participating in certain official Government matters affecting their personal financial interests.
The mission of the Office of Inspector General (OIG) is to protect the integrity of HHS programs, as well as the health and welfare of beneficiaries served by those programs. This statutory mission is carried out through a nationwide network of audits, investigations, and inspections conducted by following operating components.
The Office of Government Ethics (OGE) promulgates Government wide Federal ethics regulations for all Executive Branch employees and oversees all Federal agencies’ ethics programs.
According to a recent report from the OIG, the term “conflict of interest” refers to financial interests covered by the criminal conflict-of-interest statute (I8 U.S.C. § 208). This includes both actual and potential financial conflicts of interest.
These interests may include outside employment, grants, assets, board membership, or ownership of publicly traded stock in excess of minimal values. The employee must withdraw (i.e., recuse himself or herself from matters relating to the interest, unless he or she receives a conflict-of-interest waiver.
The impact of conflict of interest policies at HHS and the Food and Drug Administration (FDA) in particular has been significant over the past few years. For example, since 2007, committee vacancy rates have steadily increased. The most recently released data for overall FDA committee membership from the third quarter of 2010 show vacancy rates ranging from 25% to 27%. The Center for Biologics Evaluation and Research (CBER) vacancy rates are markedly worse, reaching 32% for the last three months of 2010.
Consequently, the objective of the OIG report was to assess the extent to which conflict-of-interest waivers granted to HHS employees were documented as recommended in provisions of selected Government wide Federal ethics regulations and the instructions of the Secretary of HHS (Secretary) to describe:
- The employee’s specific financial interest that poses the conflict of interest;
- The particular matter(s) in which the employee is permitted to participate; and
- The particular matter(s), if any, in which the employee is prohibited from participating.
The report also sought to determine whether HHS employees signed and dated their conflict-of-interest waivers.
Background
With oversight and guidance from the HHS Office of the General Counsel (OGC), an HHS Operating Division (OPDIV) or Staff Division (STAFFDIV) may grant conflict-of-interest waivers to its employees if the OPDIV or STAFFDIV determines that the conflict or financial interest is not so substantial as to be deemed likely to affect the integrity of the employees’ services to the Government.
For SGEs on committees, in particular, an OPDIV or STAFFDIV may grant a waiver if the need for an SGE’s services outweighs the potential for a conflict of interest created by the financial interest involved.
Waivers permit employees who have conflicts of interest to act in an official Government capacity on matters in which they would otherwise be prohibited from participating. According to OGE, evaluating whether to grant a waiver is: “one of the more significant duties that (OPDIV or STAFFDIV) ethics officials perform to ensure public confidence in the Government’s operations and programs.”
Both the individual employee’s interests and those of the OPDIVs and STAFFDIVs should document waivers in a manner that allows all interested parties (e.g., the HHS employees receiving the waivers, their supervisors, the Designated Federal Official assigned to the SGE’s committee, the general public) to understand the specific conflicts of interest and their effect on employees’ official Government duties.
Signature and Date of Waiver
While it is not a Federal requirement that waivers be signed and dated by employees, waivers can be documented with the employees’ signatures and dates to indicate when the employees received and acknowledged the waivers. Employees’ signatures and dates also document that they are accountable for complying with the waivers.
Additionally, waivers that do not contain employees’ signatures and dates may raise questions about whether the HHS OPDIVs or STAFFDIVs actually presented the waivers to the employees and whether the employees had a chance to review and understand them.
If employees do not comply with their waivers, they may be in violation of the criminal conflict-of-interest statute and can be prosecuted by the Federal Government. In HHS, alleged violations of criminal conflict-of-interest statutes must be reported to the OIG.
As an alternative to obtaining employees’ signatures and dates, OPDIV s and STAFFDIVs can email employees to notify them about their waivers, receive emails from employees to confirm that they understand their waivers, and/or document that the employees received oral counseling about their waivers. However, regardless of when the employee signs the waiver, it is not considered effective until the OPDIV or STAFFDIV granting official signs and dates it.
If OPDIVs and STAFFDIVs do not clearly document waivers to show that employees understand their conflicts of interest and the matters, if any, in which they are prohibited from participating, employees may inadvertently violate the criminal conflict-of-interest statute. In addition, if waivers do not clearly describe the particular matters in which employees are permitted to participate, employees may incorrectly refrain from providing their expertise when it could benefit HHS’s programs.
The Secretary’s January 2009 instructions state that, among other things, waivers “must fully describe the potential conflict (and) document the basis for the waiver” and “must. . . reflect an individualized assessment of the (employee’s) circumstances.”
Further, if waivers are not documented so that the public understands employees’ specific conflicts of interest and their effect on the employees’ official Government duties, the public may question the integrity of the employees’ services to the Government.
According to Government wide Federal ethics regulations and the Secretary’s instructions, all waivers should describe, among other things, employees’ specific conflicts of interest and the particular matters in which employees are permitted to participate. The waiver must provide a clear understanding of the nature and identity of the employee’s financial interest that poses the conflict, the matters to which the waiver applies, and the employee’s role in such matters.
Further, in proposing these regulations in 1995, OGE stated, “agencies should endeavor to formulate waivers with enough specificity that a member of the public would have a clear understanding of the circumstances to which the waiver applies.”
Waivers may apply to present and future interests (e.g., future receipt of grant funds or appointment as a board member), provided the interests are described with sufficient specificity.
If the OPDIV or STAFFDIV determines that employees are not permitted to fully participate in particular matters related to their conflicts of interest, the employees’ waivers are considered “limited.” Limited waivers should describe the particular matters related to the conflicts of interest in which the employees are prohibited from participating, regardless of the other matters being waived.
HHS OGC Ethics Division
With oversight and guidance from the HHS OGC Ethics Division, each HHS OPDIV and STAFFDIV administers an ethics program for its employees. Ethics programs are administered pursuant to the criminal conflict-of-interest statute, 18 U.S.C. § 208 and in accordance with Government wide Federal ethics regulations and the Secretary’s January 2009 instructions.
HHS OPDIV and STAFFDIV ethics programs rely on HHS employees’ disclosing their personal financial interests. HHS employees who serve in certain positions must file financial disclosure reports either publicly or confidentially. In addition, OPDIVs and STAFFDIVs may collect other documents, such as employees’ curricula vitae or résumés, to supplement information in the financial disclosure reports.
Once employees disclose their interests, ethics officials can assist them in avoiding conflicts between their official Government duties and their personal financial interests. To do this, ethics officials review an employee’s financial disclosure file, which includes financial disclosure forms and other documents (e.g., the employee’s curriculum vitae), to determine whether the employee has any conflicts of interest. The granting official in the OPDIV or STAFFDIV then determines case by case whether to grant a waiver.
Unless an employee who has a conflict of interest receives a waiver, he or she is prohibited from participating in certain official matters affecting the interest. HHS OPDIV and STAFFDIV ethics officials may consult with the HHS OGC Ethics Division and other appropriate parties to determine whether waivers may be needed and for assistance documenting them.
In accordance with the Secretary’s instructions, the OGC Ethics Division is required to review SGEs’ waivers “where practicable” prior to an OPDIV or STAFFDIV granting the waivers. An April 2010 OGE memorandum notes that “where practicable” is a “high standard requiring agencies to consult (with OGE) in all but the most exigent circumstances. Waiving a criminal conflict of interest statute is not to be taken lightly.” Once an SGE’s waiver has been finalized, a copy must be provided to the OGC Ethics Division.
OIG Report: Methodology
342 conflict-of-interest waivers were granted to HHS employees at nine OPDIVs and STAFFDIVs in 2009. OIG reviewed a stratified, random sample of 50 conflict-of-interest waivers that OPDIVs and STAFFDIVs granted to HHS employees in 2009, including 42 waivers for SGEs on committees. OIG determined whether the waivers in the sample were documented as recommended in three provisions of selected Government wide Federal ethics regulations and the Secretary’s instructions. They also determined whether employees signed and dated the waivers in the sample. OIG did not generalize the findings of this report to all HHS waivers granted in 2009.
OIG selected the most waivers from the NIH stratum because it granted the largest number of HHS waivers in 2009—84% of HHS’s waivers were for SGEs on committees at NIH in 24 of NIH’s 27 Institutes and Centers. The next highest number of waivers from FDA stratum because it granted the second –largest number of HHS waivers in 2009. The fewest waivers were from the Agency for Healthcare Research and Quality (AHRQ) and the Health Resources and Services Administration (HRSA).
Findings
- 56% of the 50 HHS conflict-of-interest waivers were not documented as recommended in provisions of selected Government wide Federal ethics regulations and the Secretary’s instructions.
- 14% of the sampled waivers did not describe employees’ specific interests that posed conflicts.
- 46% did not describe the particular matters in which employees were permitted to participate.
- 28% were limited waivers that did not describe the particular matters in which the employees were prohibited from participating.
- 24% were not documented as recommended in at least two of the three selected provisions and the Secretary’s instructions, and 8% were not documented as recommended in any of these provisions or instructions.
- Although not required, 18% of the 50 HHS conflict-of-interest waivers in our review included employees’ signatures and dates.
- 82% of the waivers did not include employees’ signatures and/or dates.
Twenty-four of the waivers that were not signed and/or dated were also not documented as recommended in at least 1 of the 3 provisions of selected Government wide Federal ethics regulations and the Secretary’s instructions, and 14 of these 24 were limited waivers. These 14 limited waivers represent the greatest vulnerability. The employees receiving them may not know they have waivers or understand the limitations imposed on their participation in official duties. If these employees are not aware of their waivers or do not clearly understand them, they may violate the criminal conflict-of-interest statute by participating in prohibited matters.
RECOMMENDATIONS
The OIG report recognized that HHS employees, including SGEs serving as subject-matter experts on committees, play an influential role in the Federal Government’s public health policies. While they noted that HHS OPDIV and STAFFDIV should continue to grant waivers in line with federal ethics regulations, OIG also offered several recommendations.
OGC only agreed with two of OIG’s recommendations: expanding review of waivers for SGEs on committees and develop additional guidance and training for HHS OPDIV and STAFFDIV.
Require OPDIVs and STAFFDIVs to document conflict-of-interest waivers as recommended in Government wide Federal ethics regulations and the Secretary’s instructions.
OIG recommended that OGC work with the Office of the Secretary to reaffirm the Secretary’s January 2009 instructions and/or issue a new HHS policy requiring that all waivers be clearly documented to describe:
- The employee’s specific financial interest that poses the conflict of interest;
- The particular matter(s) in which the employee is permitted to participate; and
- The particular matter(s), if any, in which the employee is prohibited from participating.
As an alternative to documenting the waivers as recommended in the selected regulatory provisions and the Secretary’s instructions, other documents could be attached to or associated with the waivers to assist employees and other stakeholders in understanding them.
Develop additional guidance and training to assist OPDIVs and STAFFDIVs in documenting conflict-of-interest waivers as recommended in Government wide Federal ethics regulations and the Secretary’s instructions.
OIG recommended that OGC revise existing or create new guidance and training for OPDIV and STAFFDIV ethics officials to ensure that waivers meet the requirements and recommendations set forth in the criminal conflict-of-interest statute, Government wide Federal ethics regulations, and the Secretary’s instructions. This guidance and training should educate ethics officials on how to draft waivers that are individualized for each employee.
In addition to including the required legal language, some section of waivers should contain clear, plain (i.e., nonlegal) language that employees and other stakeholders, including employees’ supervisors, can easily understand and apply to the employees’ work circumstances. Each waiver should also include an individualized interpretation of how it applies to the employees’ unique work circumstances and should provide a clear understanding of the circumstances to which the waiver applies or does not apply. Providing clear and understandable guidance would also serve to prevent inadvertent violations of the criminal conflict-of-interest statute.
Guidance should also include a detailed description of the applicable Federal ethics regulations and should provide examples and sample language to illustrate how waivers should be documented, specifically for the 3 categories noted above.
OIG recommended that OGC revise existing training or provide additional training to ethics officials in OPDIVs and STAFFDIVs. The training should include an overview of the process for developing and granting waivers to comply with Government wide Federal ethics regulations and the Secretary’s instructions. The training should also provide hypothetical examples of HHS employees who have conflicts of interest and should educate ethics officials on whether a waiver should be granted and, if so, how to clearly document it.
Take action to revise the conflict-of-interest waivers that were not documented as recommended in Government wide Federal ethics regulations and the Secretary’s instructions, if the waivers are still in effect.
OIG recommended that OGC should work with OPDIVs and STAFFDIVs to determine if any waivers in OIG’s review are still in effect (i.e., if the employee is still working for HHS, if the employee still has the same conflict of interest and is working on the same official duties). If any of the waivers are still in effect, OGC should assist OPDIVs and STAFFDIVs in their revision of these waivers to document them according to the three selected regulatory provisions and the Secretary’s instructions.
OIG also recommended that OGC focus first on the 14 limited waivers that were not documented as recommended in at least 1 of the 3 selected regulatory provisions and the Secretary’s instructions and were also not signed and/or dated by the employee receiving the waiver.
Expand the review of conflict-of-interest waivers for SGEs on committees.
OIG recommended that when OGC receives copies of HHS waivers that were granted by OPDIVs and STAFFDIVs, it should thoroughly check a sample-if not all-of the waivers from each OPDIV or STAFFDIV, particularly focusing on waivers for SGEs, to ensure that the waivers are documented as recommended in Federal ethics regulations and the Secretary’s instructions. As part of this review, OGC should obtain the employee’s financial disclosure file from the OPDIV or STAFFDIV to fully understand the nature of the employee’s conflicts of interest.
Require all employees to sign and date their conflict-of-interest waivers or otherwise document that they received and acknowledged them.
OIG recommended that OGC work with the Office of the Secretary to issue official HHS policy that requires all employees to sign and date their waivers. OGC should also require that waivers have a line for the employee’s signature and date so that it is clear that the document must be signed and dated, as demonstrated in the OGC Ethics Division’s sample waivers.
As an alternative to signing and dating waivers, the policy could permit other methods for documenting that employees received and acknowledged their waivers, such as by retaining emails from employees confirming that they understand their waivers and/or documenting oral counseling provided to employees about their waivers. OIG wants signatures to (1) acknowledge the waivers, (2) document when they understood any limitations on their participation in official Government duties, and (3) confirm that the waivers accurately describe their specific circumstances and conflicts of interest.
Discussion
With all that is simultanously being implemented at HHS for the Afforadable Care Act, it is not suprising that handing in conflict of interest forms has risen to the top of the priority list. The report focused on missing forms, this is a huge difference than finding actual problems with the work that is being performed.
The OIG report recognized that HHS employees, including SGEs serving as subject-matter experts on committees.
OIG(Offici of Inspector General) is used to protect the integrity of HHS(Health and Human Services).
Thanks.