Mass. AG Files Bill to Prohibit Nonprofit Board Pay

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April 14, 2011; Source: NECN | As you can see in the interview linked to above, the Massachusetts Attorney General Martha Coakley yesterday issued a report that presented the findings of her review of high payments to trustees at the state’s four nonprofit health insurers. Coakley has been pursuing the question after the board member pay practice surfaced in conjunction with the story about an $11 million severance package paid to a former executive at Blue Cross of Massachusetts. All this while health insurance rates have continued to rise.

As a part of her review, Coakley asked the health insurers to justify their payments to board members and says that they were unable to make the case despite their claims of extraordinary complexity. “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 stated.

Coakley, who found only a handful of compensated boards in the state is now backing a bill that prohibits payments to nonprofit board members unless the attorney general’s office reviews the situation and finds that the circumstances justify it. The bill will be supported in the House by Representative Martha Walz, who says that paying board members is a contradiction of terms, in that most board members of charitable organizations would be expected to give to the organizations on which they serve – not take.

Coakley has clearly stated that, in general, she does not believe that paying nonprofit board members is wise, saying that it can lead to conflicts of interest. Two of the state’s four insurers have discontinued board payments while two are holding on to the practice.

Meanwhile, Coakley plans to issue an annual report detailing any payments to nonprofit board members and the rationales for those payments.—Ruth McCambridge