Coakley: Pay For Nonprofit Directors Unjustified

By Bob Salsberg, Associated Press

BOSTON (AP) – Attorney General Martha Coakley said Thursday she would file legislation to outlaw public charities in Massachusetts from compensating directors after a review by her office found no justification for the state’s four largest nonprofit health insurers to continue paying board members.

Coakley has been sharply critical of those firms in recent weeks for paying five-figure salaries to its directors while health care costs were soaring in Massachusetts. Since her review began, Blue Cross and Blue Shield of Massachusetts — the state’s largest insurer — and Fallon Community Health Plan announced they would suspend compensation to board members.

WBZ NewsRadio 1030’s Mark Katic reports.

But Harvard Pilgrim Health Care and Tufts Health Plan said they would continue the practice.

Coakley said the companies, which enjoy tax and other benefits provided to nonprofits, were given an opportunity to provide a rationale for paying directors but failed to do so.

“We did not believe in the course of the investigation there was an adequate response or justification for why those board members as opposed to any others in Massachusetts should be compensated,” she said.

The insurers had defended the compensation by claiming their boards deal with highly complex issues that require directors to devote considerable time and effort to their duties. The companies also argued that they compete for board members with national, for-profit insurance firms.

Coakley said her review found no evidence that directors faced tasks more unique or complex than boards of other nonprofits, such as hospitals, that have uncompensated boards.

In the case of Harvard Pilgrim, the report found that its directors worked a total of about 2,000 hours last year, averaging about three or four hours per week, per board member.

Coakley said compensation also increases the potential for conflict of interest among directors.

Officials of Harvard Pilgrim and Tufts did not immediately return calls seeking comment on the report.
Coakley said her legislation would bar nonprofits from paying board members unless they sought and received permission from her office. She said there might be “rare instances” in which such a waiver is warranted.

The legislation would apply to all of the approximately 22,000 registered public charities in Massachusetts, but the attorney general said her office’s review identified only a handful aside from the health insurers that maintained anything other than volunteer boards.

“Companies like Harvard and Tufts have just not gotten with the program,” said Sen. Mark Montigny, D-New Bedford, who agreed to sponsor the bill in the Senate.

Montigny, who along with Coakley commended Blue Cross and Blue Shield of Massachusetts and Fallon for suspending board pay, said there are plenty of intelligent and accomplished people serving voluntarily without pay on charitable boards, and noted that many of those people are highly paid in their own jobs.

Rep. Martha Walz, D-Boston, who is sponsoring the bill in the House, said the notion of compensation for voluntary directors is a contradiction in terms. She said service on a nonprofit board is a prestigious honor that many seek out.

“For most directors, the expectation is that you give financially, not that you take financially from that nonprofit organization,” Walz said.

Coakley also said Thursday that her office would begin publishing an annual report detailing any payments given to
charitable board members and the rationale provided by those boards for the compensation.

The attorney general and the lawmakers both stressed that they support the not-for-profit model for health care in Massachusetts and do not want to see more hospitals or insurers swallowed up by private, for-profit firms.

Veronica Miller, executive vice president of the state’s largest union of health care workers, said in a statement that she supports Coakley’s actions.

“The attorney general is correct that board member compensation is a potential barrier to independent oversight and governance in the case of these health insurers,” Miller said.

(Copyright 2011 by The Associated Press.  All Rights Reserved.)

  • emom

    Ok ask yourself ,, WHERE DOES THIS SALARY COME FROM, the people that pay the HIGH OVER RATED PREMIUMS, thats where,, maybe if this practice stops , premiums would drop,,,, these insurance comapanies charge so much to have their insurance BUT pay very little to help the patients when needed and I have seen it first hand especially with the seniors, their plans LIMIT them big time. they pay a deductable every year and then pay more for meds and the doctors and on top of that are limited on where they can go to see a doctor or hospital…. lets hope it works and it benifits the ones that pay their premiums,,,,

  • Chuck Chuckerson

    Maybe she was not a great Senate candidate but she is an awesome AG !

  • Trying to Survive on 2%

    As an employee of BCBSMA we all are very dishearten & shocked over the news of Cleve\’s payout and what they are paying the Board Members.
    We employees all work very hard at our jobs to \”Keep\” our jobs with all the guidelines you put on us such as=quota, goals, quality performance guidelines etc etc, you except from us everyday just to stay on top of our job positions,
    We do all that for the company we have had PRIDE TO WORK FOR. But after this news and the hardship we now have faced these past too years of \’NO RAISES,Small Yearly Review %, Change in employees insurance=to deductible plans, again it all makes sense, You needed to save $$ to pay Cleve off & Board Directors.
    We EMPLOYEES are what keep BCBSMA going, NOT your BOARD MEMBERS that only work 26 days a year and make up to 90,000.00. Don\’t you think its a little backwards not to compensate more then you do for your 5 days a week, 12 months a year employees?
    THE PAY RAISE CAP THIS YEAR FOR EMPLOYEES WAS A LOVELY 2%. How sad when we all now KNOW what you are paying the Board Of Directors. Again us employees are what KEEP BCBSMA GOING.
    Maybe someone can ask Andrew How he compensates his employees and to JUSTIFY THE REASON FOR ONLY 2% .

  • emom

    TRYING TO SURVIVE,,, first of all your guidelines and quotas are the direct result of the hire ups,., they are the ones that SET THE BAR OF PERFORMANCE<, and if you dont MEET that bar, you get NOTHING.. Oh it only took someone to finallly bring to life the REAL reasons the employees suffer and are made to believe they are expendible… No raises for two year swow , not a real surprise there, I remember you had only a 3% point system to stay in If you fell below a 97% accuracy you got nothing but a reprimand and put on notice… what a way to work.,, never knowing if you have a job because of what you do.. ALl the while the hire ups REAP the rewards of profit, laugh at you and pay others extravagant bonuses,,,, Now maybe the workers can see thru the shroad of lies ,,, and now realize that the ones that also suffer pays their salary thru premiums… try talking to a few hundred seniors on what they pay and wat they dont recieve…. they pay out way more in premiums , co-pays and deductables, than what they get for healthcare,,, SO glad this story came to life …. now the people can see the truth.

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