                                      The Attorney           General of Texas

     JIM MATTOX                                      February 21, 1984
     Attorney General


     SupremeCourt     Building      Mr. W. G. Kirklin                             Opinion No. ~~-126
     P. 0. BOX 12548                Chairman
     Austin. TX. 78711. 254S
                                    Texas Health Facilities Commission            Re:    Eligibility of    an
     51214752501
     Telex 9101874.1387
                                    P. 0. Box 50049                               individual to serve on the
     Telecopier  512,4750280        Austin, Texas   78763                         Texas   Health   Facilities
                                                                                  Commission
     714 Jackson, Suite 700
                                    Dear   Mr.   Kirklin:
     Dallas, TX. 752U2-4506
     214/742-8944
                                         You ask whether Ms. Dora McDonald's appointment and continued
                                    service on the Texas Health Facilities Commission comply with article
     4824 Alberta Ave., Suite 160   4418h. section 202, V.T.C.S., and article 6252-9b, V.T.C.S.,
     El Paso, TX. 79905.2793
                                    respectively.    Additionally,   YOU    ask    whether  w     related
     9151533.3484
                                    constitutional or statutory impediments exist.
I”
       3, Texas, Suite 700                 Article 4418h, section 2.02, V.T.C.S., provides in pertinent part
     HOUS,O~. TX. 77002-3111        that
     713/2236SB8
                                                  [t]he governor shall not appoint to the commission
     806 Broadway, Suite 312
                                                  any person who is actively engaged as a health
     Lubbock, TX. 79401-3479                      care provider or who has any substantial pecuniary
     806/747-5238                                 interest in a facility.

                                    Ms. McDonald is not a health care provider, nor does she have a direct
     4309 N. Tenth, Suite B
     McAlle”, TX. 78501-1685
                                    pecuniary interest in a health care facility.
     512/682-4547
                                         Mr. McDonald is a program consultant for Horizon Health
                                    Corporation, a corporation that provides specialized treatment
     200 Main Plaza, Suite 400
     San Antonio, TX. 78205-2797
                                    serviced in psychiatry and in substance abuse. Horizon Health owns
     5121225.4191
                                    one treatment facility in Texas and manages speciality units in three
                                    Texas hospitals. Mr. McDonald does no hiring or firing, nor is he
                                    engaged in expansion, purchasing, acquisition, or financial management
     An Equal OpportunityI          activities. Neither Mr. nor Ms. McDonald owns any interest in Horizon
     Affirmative Action Employer
                                    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 Q5.01; Commissioner of Internal Revenue v. Chase Manhattan



                                                               p. 533
Mr. W. G. Kirklin - Page 2      (J&l&) ,'1,,,.,

                                     ,.,



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.
Cl". 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    Estate of Wyly v. Commissioner of Internal Revenue,
                 in




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.



                                p. 534
Mr. W. G. Kirklin - Page 3           (JM-126)




     Applying the Fifth Circuit's construction of subsection (a)(2) to
subsection (a)(l), 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 w          participstion, 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 441811.

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

          [Nlo ,state~.officeror 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;

                 (0    has any participating interest, either
                       direct or indirect, by shares, stock, x
                       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;

                 @‘)   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).



                                       p. 535
                                                                         .


Mr. W. G. Kirklin - Page 4   (~~-126)




Under these tests, considering Ms. McDonald's limited, non-managment
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. 01.

     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 AdvisG
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 snouss over which she has the
right to exercise any degree of act&       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 Cosxnission.

                             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




                              p. 536
Mr.   W. G. Kirklin - Page 5   (JM-126)




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




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