Thursday, March 31, 2011

Compensation for Nonprofit Board Members

I often tell my students that, in many states, enforcement of nonprofit law happens only when a newspaper reporter sniffs out a scandal or the A.G. wants to be governor and thinks he/she can get mileage out of whipping up public outrage.  In Massachusetts, the Boston Globe reports that the state's A.G., Martha Coakley, is putting pressure on nonprofit health insurance providers to stop paying generous fees to their board members.  This recent focus on nonprofit health insurance companies arose when it was revealed earlier this month that Blue Cross Blue Shield of Massachusetts graced its departing chief executive with an $11 million payout.  Under pressure from Coakley, BCBS and another large health plan announced that they would suspend paying fees to their board members.

In recent days, the state's second largest health insurer, Harvard Pilgrim Health Care, along with Tufts Health Plan, threw it back in Coakley's face and announced that they would not stop paying generous stipends to their nonprofit board members.  The now controversial payments range from $19k to $83k annually for part-time work.  In the seemingly clueless words of Thomas P. O'Neill III, former Massachusetts lieutenant governor who now serves on the board of Tufts Health Plan, "[t]hese are people from various walks of life who bring a skill set.  These are not political hacks . . ."

It would be interesting to know how these payments would be evaluated under the federal Intermediate Sanctions Doctrine.  I suspect they would pass muster, and I suspect the companies have already paid high priced lawyers to give the payments a stamp of approval.

TAK

http://lawprofessors.typepad.com/nonprofit/2011/03/compensation-for-nonprofit-board-members.html

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