12 N.Y.3d 423 (2009)

To impose a civil penalty under Public Officers Law § 73(18) for violating the lifetime bar, the New York State Ethics Commission need only prove that the individual was aware of the conduct and intended to engage in it; the Commission is not required to prove that the individual knew the conduct was prohibited or acted with the conscious objective of violating the statute.

Summary

Gormley, a former state health department employee, was penalized by the Ethics Commission for violating the lifetime bar after he prepared an expert affidavit challenging a system he helped develop while in state service. The Commission found that Gormley used his insider knowledge unfairly. Gormley argued the penalty was inappropriate because the Commission did not prove he knowingly and intentionally violated the law. The Court of Appeals held that the “knowingly and intentionally” requirement of Public Officers Law § 73(18) only requires awareness of the conduct and intent to engage in it, not knowledge that the conduct is illegal. This ruling clarifies the standard for imposing civil penalties for ethics violations by former state employees.

Facts

Petitioner Gormley worked for the New York State Department of Health (DOH) for 22 years. He held senior management positions and directed the development of the RUGS-II system, which determines Medicaid reimbursement rates for nursing homes. After leaving DOH, Gormley established a consulting firm. In 2004, he was paid to prepare an expert affidavit for a group of nursing homes challenging the RUGS-II system. In the affidavit, Gormley made statements about his intentions regarding the base year used in the RUGS-II system, stating he “never envisioned or intended the base year to continue in perpetuity.”

Procedural History

The Ethics Commission notified Gormley that his affidavit may have violated the lifetime bar under Public Officers Law § 73(8)(a)(ii). After investigation and a hearing, the Commission determined that Gormley’s statements took unfair advantage of his insider knowledge and imposed a civil penalty. Gormley filed an Article 78 proceeding challenging the Commission’s determination. The Appellate Division upheld the Commission’s decision. Gormley appealed to the Court of Appeals, conceding the violation but contesting the penalty.

Issue(s)

Whether imposition of a civil penalty under Public Officers Law § 73(18) requires the New York State Ethics Commission to prove that petitioner knew the conduct was prohibited and acted intentionally to violate the statute.

Holding

No, because Public Officers Law § 73(18)’s requirement of “knowingly and intentionally” violating the law only requires that the individual was aware of the conduct and intended to engage in it, not that the individual knew the conduct was illegal.

Court’s Reasoning

The Court of Appeals analyzed the language and history of Public Officers Law § 73(18). Referencing Penal Law § 15.05, the Court stated that “A person acts knowingly with respect to conduct or to a circumstance . . . when he is aware that his conduct is of such nature or that such circumstance exists.” Similarly, “[a] person acts intentionally with respect to . . . conduct . . . when his conscious objective is to . . . engage in such conduct.” The Court emphasized that neither mental state requires knowledge of illegality; that requirement is typically embodied in the term “willfully.” The Court distinguished cases requiring a higher showing of scienter based on different statutory language and legislative history. It reasoned that Gormley’s interpretation would allow former state employees to avoid liability by claiming ignorance of the law, thus hindering enforcement of the lifetime ban. The Court concluded that the Commission only needed to show Gormley was aware of the nature and circumstances surrounding the affidavit and consciously intended to prepare it. The Commission did not need to prove Gormley knew his statements violated the lifetime ban or acted to violate the law. As Gormley conceded that his actions violated the lifetime bar, the imposition of the civil penalty was appropriate.