Board Pay Suspended at Blue Cross Amid Questions of Nonprofitness and Protests from Unions

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March 9, 2011; Source: Boston Herald | Just days after declarations by board members of Blue Cross of Massachusetts that they would not give up their board pay, the organization has suspended those payments indefinitely. And it seems as though Tufts Health Plan may be right behind it.

Blue Cross of Massachusetts has been embroiled in a public controversy since it came to light last week that the former CEO had walked away from the organization with a severance package of $11.3 million. When the media started to consider how that had happened, they discovered that the four nonprofit health care plans in the state are, according to the state attorney general, the only nonprofits in Massachusetts who pay board members.

Blue Cross of Massachusetts pays a total of $1.2 million to 18 board members and the press has intimated that the cozy relationships between a well-connected and -compensated board and well-compensated staff have resulted in an unusual – for a nonprofit – culture of extravagance.

Tufts Health Plan, which pays a total of $300,000 to 12 board members, now has reported that it is also reconsidering the practice. While it does at least one of those board members, Thomas P. O’Neill III, eldest son of former Massachusetts Congressman and longtime Speaker of the House Tip O’Neill, has declared that he will donate his compensation to Boston Health Care to the Homeless until the issue is resolved.

Among the factors that may have contributed to Blue Cross’ decision to eliminate board pay is the anger of unions over the fact that two of their representatives were on the board and being paid handsome sums even while premiums were rising for the working man and woman. The New England Police Benevolent Association which boasts 3,500 members demanded that AFL-CIO President Robert Haynes and AFL-CIO Vice President George Alcott III return all past pay – $72,700 and $61,900 per year respectively. In a statement by Gerald Flynn, executive director of the Association, “As the ‘watchdog for labor’ President Haynes and Vice President Alcott somehow thought it was a good idea to support their fellow board members and give the outgoing CEO of Blue Cross & Blue of Massachusetts an $11 million platinum parachute…These two titans of labor should NOT be padding their own pockets at the detriment of our union brethren.”

Meanwhile, Blue Cross of Massachusetts is making noises that maybe it is not so nonprofit after all and maybe it wants to become more of a business/nonprofit hybrid. It’s an idea that Massachusetts Attorney General Martha Coakley has quickly responded to with warnings that she will “not tolerate any end runs to avoid accountability.” You can see Coakley discussing the whole situation here with local broadcaster, Jim Braude.—Ruth McCambridge