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In an apparent case of first impression, a Nassau County judge has barred attorneys for a public hospital corporation from attending the State Ethics Commission’s interviews of its employees, who are the subject of an investigation for allegedly receiving gifts from vendors competing for a lucrative business contract. State Supreme Court Justice Leonard B. Austin determined that corporate counsel for Nassau Health Care Corp. (NHCC) could not appear at the interviews of some of the public benefit corporation’s top officials conducted by the Ethics Commission. The commission issued notices in April to seven NHCC employees, stating they were under investigation for receiving gifts and benefits — including trips, hockey tickets and dinners — from vendors vying for a multimillion-dollar computer system contract at Nassau University Medical Center. The NHCC also runs a handful of other facilities for the county’s public hospital system. NHCC’s chief executive, vice president, chief financial officer and four other employees are involved in the probe. In denying NHCC’s Article 78 action to set aside the Ethics Commission’s decision to bar its lawyers from the interviews, Justice Austin relied on a 2002 Maryland Court of Appeals decision, which he cited due to an absence of cases on point in New York. The judge concluded that allowing the presence of counsel for NHCC would create a “chilling effect” on the investigation by possibly compromising the employees’ candor with the commission. In NHCC v. New York State Ethics Commission, 3178-03, the commission had argued that the facts were similar to those in State of Maryland Commission on Human Relations v. Talbot County Detention Center, 803 A2d 527 (Ct. App. 2002), which held that a detention center, under investigation for employment discrimination, had no statutory authority to have its own attorneys present during preliminary interviews. The court determined that detention center attorneys would have the effect of intimidating or influencing witnesses, which would frustrate the truth-seeking process. NHCC, in attempting to distinguish the Maryland ruling, argued that its case involved confidential information falling within the physician-patient privilege, the attorney-client privilege or the confidentiality of protected trade secrets. Justice Austin was not persuaded. “NHCC’s insistence that corporate counsel’s presence is imperative … is simply not borne out by this record where the issues are gifts and benefits improperly received by NHCC employees from vendors,” he wrote. He also said that the employees could be instructed about disclosing confidential information, and that they were entitled to have their own lawyers with them during questioning. Arguing to vacate the Ethics Commission’s decision to bar corporate counsel, NHCC had asserted that such action would violate lawyers’ ethical rules. Specifically, NHCC argued that the situation implicated the rule prohibiting attorneys for one side from communicating with adverse parties in the absence of their attorneys. But Justice Austin rejected that argument, concluding that NHCC’s employees — not NHCC itself — were parties to the investigation, since the commission, under state law, has no authority over state agencies such as the NHCC. The judge also was not convinced by NHCC’s argument that the Ethics Commission’s decision to ban the attorneys was arbitrary and capricious because the commission had permitted attorneys for the vendors to be present while it interviewed their employees. “That there is evidence that the vendors’ corporate counsel appeared in a dual capacity representing the interests of both the vendor and the vendors’ employees individually is of no moment,” Justice Austin wrote. He added that the situations with NHCC and the vendors’ employees were “not comparable” since, again, the Ethics Commission did not have the authority to investigate NHCC itself. Steven Cohn of Carle Place represented NHCC. The State Attorney General’s Office represented the Ethics Commission.

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