FPPC Finds Potential Conflict of Interest Based on Elected Officials’ Spouses’ Positions

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The Spouses Work at Health Care Facilities that Compete with Project Under City Council Consideration

The Fair Political Practices Commission has advised that two Elk Grove city councilmembers must recuse themselves from a controversial hospital project due to their spouse’s employment at competing health care systems. The FPPC opinion shows that conflict of interest analyses can turn on subtle facts — such as an elected official’s spouse’s employment.

California Northstate University seeks to build a 12-story medical center and campus, including a teaching hospital, in the City of Elk Grove. The University will need City Council approval for its land use entitlements. Residents nearby have opposed the project.

The city attorney concluded the City’s councilmembers did not have any conflicts that would preclude them from considering and voting on the project. To confirm, he requested advice from the FPPC. However, the FPPC concluded otherwise, advising that the two councilmembers have conflicts due to their spouses’ employment.

One councilmember’s wife is a director of philanthropy and works out of Sutter Health Memorial Medical Center in Modesto. Another councilmember’s wife works in a lab at St. Joseph’s Medical Center in Stockton, which is a Dignity Health member facility. The City earlier approved a Dignity project for a new hospital in the City that will open sometime in 2026.

As the University’s proposed project is “significant in scale,” the FPPC concluded that decisions on the project would have a reasonably foreseeable, material financial effect on Dignity and Sutter, in which the councilmembers have a source of income conflict of interest through their spouses. (See FPPC Regulation 18701(b) and Regulation 18702.3(a)(3).)

This is because, the FPPC reasoned, an academic medical center located in the City would be a significant competitor to other hospital providers. The University could provide less expensive and a wider range of goods and services to City residents. This would result in competition and losses for hospitals like Sutter and Dignity. For Dignity, especially, the operation of another hospital within the City would reasonably and foreseeably financially affect its new hospital. (See FPPC Regulation 18701(b).) Accordingly, the FPPC advised that the councilmembers should not take part in considering and voting on the University project.

The FPPC opinion is an example of how nuanced conflicts of interest analyses can be, and that even a relationship as attenuated as a spouse’s employment with a large health care employer could give rise to a conflict. It also illustrates the significant impact a conflict can have. One of the councilmembers determined to have a conflict had hosted a series of town halls on the project, and expressed dismay at the FPPC’s advice, stating that his recusal would take away needed voices on the project from residents in his district.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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