Three configurations: (1) Can public assistance pay for care in a rest home owned by an employee of a State Alcoholic Rehabilitation Center? (2) Same, but the home is owned by a corporation where the employee is officer or shareholder? (3) The home is rented from an employee of an area mental health, mental retardation and substance abuse authority?

Plain-English summary

Pitt County's attorney asked whether public assistance could pay for care in three types of homes with connections to public employees. In 1979, G.S. 108-65.2 barred payment for care in a home for the aged, family care home, or other domiciliary facility owned or operated in whole or part by certain social-services officials, employees of the Department of Human Resources (DHR) or county social-services departments, or their spouses.

The Attorney General answered no when the home was owned by an employee of a State Alcoholic Rehabilitation Center. The opinion says those centers were an integral part of DHR, making their employees DHR employees for this purpose.

The AG also answered no when the home was owned or operated by a corporation in which such an employee was an officer or shareholder. It said the statutory prohibition "would also seem to apply" to that arrangement, drawing on earlier opinions under G.S. 14-234. It did not discuss the size of a shareholding or define a minimum percentage.

The AG answered yes when the facility was rented from an employee of an area mental health, mental retardation and substance abuse authority. The opinion treated that authority as a local political subdivision and its employee as neither a state nor county official or employee for the statutory bar.

Currency note

This opinion was issued in 1979 under the quoted version of G.S. 108-65.2. Check current North Carolina law before applying its answers to a present facility or payment.

What this means for you

Public assistance administrators. The opinion's three answers turn on the person's employer and connection to the facility. A DHR employee's direct ownership, or officer or shareholder role in an owning corporation, produced a no-payment answer in the stated scenarios. An area authority employee's rental relationship produced a yes answer.

Employees and operators. The opinion does not set a share-ownership threshold or address every indirect ownership arrangement. It also does not decide whether renting a home from a DHR employee would be covered.

Common questions

Did the AG set a minimum corporate share percentage for the bar?

No. It discussed a DHR employee who was an officer or shareholder of a corporation owning or operating the home, without analyzing minority holdings or share size.

Why did the area authority employee receive a different answer?

The opinion says an area authority is a local political subdivision of the state. Its employee was not a state or county official or employee within the categories the quoted statute listed.

Did the opinion decide every rent-versus-ownership question?

No. The rental scenario involved an area authority employee. The first two questions concerned direct ownership or a corporation's ownership or operation involving an Alcoholic Rehabilitation Center employee.

Background and statutory framework

G.S. 108-65.2, as quoted in the opinion, prohibited public assistance payment for care in specified facilities owned or operated in whole or part by listed officials, employees, and spouses. G.S. 122-7.1 supported the AG's treatment of State Alcoholic Rehabilitation Centers as part of DHR. The AG referred to earlier G.S. 14-234 opinions when considering a DHR employee's corporate officer or shareholder status. It cited G.S. 122-35.36(1) and G.S. 122-35.45(b) for the separate status of area authorities and their employees.

Citations

• G.S. 108-65.2
• G.S. 122-7.1
• G.S. 14-234
• G.S. 122-35.36(1)
• G.S. 122-35.45(b)
• 1979 Session Laws, Chapter 702

Source

• Landing page: https://ncdoj.gov/opinions/conflict-of-interest-payment-of-public-assistance-to-persons-in-rest-homes/

Original opinion text

Requested By: W. W. Speight County Attorney for Pitt County

Questions: May payment of public assistance be made for the care of a person in a home for the aged, family care home, or other domiciliary facility which is owned or operated in whole or in part by an employee of a State Alcoholic Rehabilitation Center?

• May payment of public assistance be made for the care of a person in a home for the aged, family care home, or other domiciliary facility which is owned or operated in whole or in part by a corporation of which an employee of a State Alcoholic Rehabilitation Center is an officer or a shareholder?
• May payment of public assistance be made for the care of a person in a home for the aged, family care home, or other domiciliary facility which is rented from an employee of an area mental health, mental retardation and substance abuse authority?

Conclusion: No.

• No.
• Yes.

G.S. 108-65.2, as amended by 1979 Session Laws, Chapter 702, effective May 30, 1979, provides as follows:

"108-65.2. Limitations on payments. — No payment of public assistance under this Part shall be made for the care of any person in a home for the aged, family care home, or other domiciliary facility which is owned or operated in whole or in part by any of the following:

• a member of the Social Services Commission, of any county board of social services, or of any board of county commissioners;
• an official or employee of the Department of Human Resources or of any county department of social services;
• a spouse of a person designated in subdivisions (1) and (2)."

The State Alcoholic Rehabilitation Centers are set up by the Department of Human Resources and are an integral part of that department. See G.S. 122-7.1. Since the clinical director is an employee of the Department of Human Resources, the proscriptions of G.S. 108-65.2 apply to any home of the type described therein which is owned by that employee. Similarly, these prohibitions would also seem to apply to situations wherein an employee of an Alcoholic Rehabilitation Center is an officer or a shareholder of a corporation which owns or operates, in whole or in part, one of these types of homes. That conclusion has been reached with regard to the interpretation of the language of G.S. 14-234 and no distinction can logically be made here. For prior opinions of this Office in comparable situations, see 44 N.C.A.G. 128 1974), 42 N.C.A.G., 180 (1973); N.C.A.G. 9 (1972); 40 N.C.A.G. 565 (1970); 40 N.C.A.C. 561 (1969).

On the other hand, an area mental health, mental retardation and substance abuse authority is a local political subdivision of the State. See G.S. 122-35.36(1)). As a result an employee of an area mental health, mental retardation and substance abuse authority is not an employee or an official of the State or of any county. See G.S. 122-35.45(b); 47 N.C.A.G. 8 (1977); 45 N.C.A.G. 70 (1975). Thus the provisions of G.S. 180.65.2 would be inapplicable to such an employee.

Rufus L. Edmisten
Attorney General

William F. O'Connell
Special Deputy Attorney General