Did a commission member's community-property share of her husband's fixed salary disqualify her from the Texas Health Facilities Commission?

Texas AG Opinion JM-126: Health Commission Member and Spouse's Salary

Plain-English summary

JM-126 concluded that Dora McDonald's community-property interest in one-half of her husband's fixed salary did not disqualify her from serving on the Texas Health Facilities Commission.

"An individual's limited, non-managerial, 'abstract' community property interest in one-half of her husband's salary does not disqualify her from serving on the Texas Health Facilities Commission."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

Her husband worked for Horizon Health Corporation, which owned one Texas treatment facility and managed specialty units in three Texas hospitals. Neither spouse owned an interest in the company, and the husband received a fixed salary without sharing directly in profits or losses.

"Neither Mr. nor Ms. McDonald owns any interest in Horizon Health. Mr. McDonald is on a fixed salary, sharing directly in neither the profits nor losses of Horizon Health."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

The opinion characterized Ms. McDonald's legal interest in that salary as abstract ownership without management power and found it insufficiently substantial to bar her appointment.

"Applying the Fifth Circuit's construction of subsection (a)(2) to subsection (a)(1), we conclude that Ms. McDonald has only abstract ownership of one-half of her husband's salary."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

"This is not a sufficiently 'substantial pecuniary interest in a facility' to disqualify Ms. McDonald's appointment under article 4418h."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

Currency note

This opinion was issued in 1984. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What connection did the commission member have to a health-care facility?

Her only interest came through community-property law: one-half of her husband's fixed salary from Horizon Health.

"Thus, Ms. McDonald's only interest in a health care facility stems from her community property portion of her husband's fixed salary."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

Why was the interest considered abstract and nonmanagerial?

The opinion said each spouse owned a present one-half community interest, but Family Code section 5.22 gave the earning spouse sole management of personal earnings. The other spouse had no direct management rights.

"The other spouse, receiving a community property interest by operation of law, 'has only ownership in an almost abstract sense, with no concomitant direct management rights.'"
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

"Mr. McDonald may deal with his salary 'free from any participation, consent, or interference' by Ms. McDonald."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

Did the state ethics statute separately disqualify her?

No. Under the stated facts, the opinion found that her limited, nonmanagerial interest did not meet the statute's substantial-interest tests.

"Under these tests, considering Ms. McDonald's limited, non-management community property interest in one-half of her husband's salary, she is not disqualified from serving on the commission."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

What did the opinion say about abstention and disclosure?

Ms. McDonald had agreed to abstain when her husband's employer was an applicant, party, or interested person. The opinion assumed those occasions would be infrequent and also recorded her agreement to disclose potential conflicts.

"Because Ms. McDonald agreed to abstain in any matters in which her husband's employer is an applicant, a party, or an interested person, the necessity of such abstention under article 6252-9b is not in issue."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

"Ms. McDonald has further agreed to disclose all potential conflicts."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

Background and legal framework

Article 4418h barred the governor from appointing a person who was actively engaged as a health-care provider or had a substantial pecuniary interest in a facility. Ms. McDonald was neither a provider nor the holder of a direct pecuniary interest.

"[T]he governor shall not appoint to the commission any person who is actively engaged as a health care provider or who has any substantial pecuniary interest in a facility."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

"Ms. McDonald is not a health care provider, nor does she have a direct pecuniary interest in a health care facility."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

Article 6252-9b stated the conflict-of-interest policy for state officers and employees and defined substantial interests in business entities. The opinion applied those tests to the limited interest in the salary.

"[N]o state officer or state employee shall have any interest, financial or otherwise, direct or indirect, or engage in any business transaction or professional activity or incur any obligation of any nature which is in substantial conflict with the proper discharge of his duties in the public interest."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

Holding

"Based upon the given facts, we perceive no additional impediments to Ms. McDonald's appointment and service on the Texas Health Facilities Commission."
Source: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-0126
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1984/jm0126.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain. The linked PDF is authoritative.

The Attorney General of Texas

JIM MATTOX
Attorney General

February 21, 1984

Mr. W. G. Kirklin
Chairman
Texas Health Facilities Commission
P. O. Box 50049
Austin, Texas 78763

Opinion No. JM-126

Re: Eligibility of an individual to serve on the Texas Health Facilities Commission

Dear Mr. Kirklin:

You ask whether Ms. Dora McDonald's appointment and continued service on the Texas Health Facilities Commission comply with article 4418h, section 2.02, V.T.C.S., and article 6252-9b, V.T.C.S., respectively. Additionally, you ask whether any related constitutional or statutory impediments exist.

Article 4418h, section 2.02, V.T.C.S., provides in pertinent part that

[T]he governor shall not appoint to the commission any person who is actively engaged as a health care provider or who has any substantial pecuniary interest in a facility.

Ms. McDonald is not a health care provider, nor does she have a direct pecuniary interest in a health care facility.

Mr. McDonald is a program consultant for Horizon Health Corporation, a corporation that provides specialized treatment services in psychiatry and in substance abuse. Horizon Health owns one treatment facility in Texas and manages specialty units in three Texas hospitals. Mr. McDonald does no hiring or firing, nor is he engaged in expansion, purchasing, acquisition, or financial management activities. Neither Mr. nor Ms. McDonald owns any interest in Horizon Health. Mr. McDonald is on a fixed salary, sharing directly in neither the profits nor losses of Horizon Health. Thus, Ms. McDonald's only interest in a health care facility stems from her community property portion of her husband's fixed salary.

Whether Ms. McDonald's community interest in her husband's salary constitutes a "substantial pecuniary interest" in a health care facility depends upon the extent of that interest under Texas law. The earnings of each spouse during marriage are community property. Family Code § 5.01; Commissioner of Internal Revenue v. Chase Manhattan Bank, 259 F.2d 231, 239 (5th Cir. 1958); Vallone v. Vallone, 644 S.W.2d 455, 458 (Tex. 1982); Maben v. Maben, 574 S.W.2d 229, 232 (Tex. Civ. App. - Fort Worth 1978, no writ).

Under Texas law each spouse owns a present, vested, undivided one-half interest in all community property, but the husband is the sole authorized manager of the general community property. However, the wife has managerial power over a special community composed of her income and the income of her separate property. Free v. Bland, 369 U.S. 663 (1962), conformed to in 359 S.W.2d 297 (Tex. 1962); Chase Manhattan Bank, supra. The Texas Family Code, section 5.22, provides for separate management of certain community property:

(a) During marriage, each spouse has the sole management, control, and disposition of the community property that he or she would have owned if single, including but not limited to:

(1) personal earnings;

(2) revenue from separate property;

(3) recoveries for personal injuries; and

(4) the increase and mutations of, and the revenue from, all property subject to his or her sole management, control and disposition.

The court in Estate of Wyly v. Commissioner of Internal Revenue, 610 F.2d 1282, 1288 (5th Cir. 1980), construed subsection (a)(2) of section 5.22 to create a "special community" or "sole management community" interest in the earning spouse. The other spouse, receiving a community property interest by operation of law, "has only 'ownership' in an almost abstract sense, with no concomitant direct management rights." The court noted that a spouse's management powers over his or her "sole management" portion of community property are described in exactly the same terms which section 5.21 uses for separate property. Thus, in Texas,

a spouse is able, in the absence of fraud, to deal with sole management community as he or she might with his or her own separate property, free from any participation, consent, or interference by the other spouse.

Id. at 1289.

Applying the Fifth Circuit's construction of subsection (a)(2) to subsection (a)(1), we conclude that Ms. McDonald has only abstract ownership of one-half of her husband's salary. Mr. McDonald may deal with his salary "free from any participation, consent, or interference" by Ms. McDonald. This is not a sufficiently "substantial pecuniary interest in a facility" to disqualify Ms. McDonald's appointment under article 4418h.

Article 6252-9b, section 1, V.T.C.S., states the Texas conflict of interest policy regarding the conduct of state officers and employees:

[N]o state officer or state employee shall have any interest, financial or otherwise, direct or indirect, or engage in any business transaction or professional activity or incur any obligation of any nature which is in substantial conflict with the proper discharge of his duties in the public interest. (Emphasis added).

Section 2(12) refers to a "substantial interest" rather than "any interest" and defines it as follows:

An individual has a 'substantial interest' in a business entity if he:

(A) has controlling interest in the business entity;

(B) has ownership in excess of 10 percent of the voting interest in the business entity or in excess of $25,000 of the fair market value of the business entity;

(C) has any participating interest, either direct or indirect, by shares, stock, or otherwise, whether or not voting rights are included, in the profits, proceeds, or capital gains of the business entity in excess of 10 percent of them;

(D) holds the position of a member of the board of directors or other governing board of the business entity;

(E) serves as an elected officer of the business entity;

(F) is an employee of the business entity.

(Emphasis added).

Under these tests, considering Ms. McDonald's limited, non-management community property interest in one-half of her husband's salary, she is not disqualified from serving on the commission.

Because Ms. McDonald agreed to abstain in any matters in which her husband's employer is an applicant, a party, or an interested person, the necessity of such abstention under article 6252-9b is not in issue. Assuming that the occasions for such abstention are infrequent, they will not substantially "conflict with the proper discharge of [her] duties in the public interest." See V.T.C.S. art. 6252-9b, § 1.

Ms. McDonald has further agreed to disclose all potential conflicts. Disclosure and abstention in particular proceedings wherein conflict exists are the primary concerns of the statute. See Final Report of the Public Servant Standards of Conduct Advisory Committee (Aug. 1983); see also Attorney General Opinion H-269 (1974). Additionally, Ms. McDonald must comply with the financial disclosure provisions of article 6252-9b. However, she need only file a financial statement of her own possibly conflicting financial activities and those activities of her spouse over which she has the right to exercise any degree of actual control. Attorney General Opinion H-269.

Based upon the given facts, we perceive no additional impediments to Ms. McDonald's appointment and service on the Texas Health Facilities Commission.

SUMMARY

An individual's limited, non-managerial, "abstract" community property interest in one-half of her husband's salary does not disqualify her from serving on the Texas Health Facilities Commission.

JIM MATTOX
Attorney General of Texas

TOM GREEN
First Assistant Attorney General

DAVID R. RICHARDS
Executive Assistant Attorney General

Prepared by Rick Gilpin
Assistant Attorney General

APPROVED:
OPINION COMMITTEE

Rick Gilpin, Chairman
Jon Bible
Colin Carl
Susan Garrison
Jim Moellinger
Nancy Sutton
Bruce Youngblood