Coakley: Compensation Of Nonprofit Board Members Not Justified

Attorney General Martha Coakley is seeking legislation that would prevent Massachusetts charitable organizations from compensating board directors without state approval.

"There is no justification for board members to be compensated at the Commonwealth’s four major not-for-profit health insurers," Coakley said in a statement Thursday, following a review of the practice by her office.

Controversy over the issue has led Blue Cross Blue Shield and Fallon Community Health Plan to stop paying board members. Tufts Health Plan and Harvard Pilgrim Health Care have said they will continue the practice.

In a news conference Thursday, Coakley said the compensation creates conflicts of interest and diverts resources away from the charities' missions.

"We do not believe that they have been able to distinguish themselves in any way from any other volunteer board of directors that serves for hospitals, for instance, in Massachusetts, for educational institutions, all of which have unique and complex issues," she said.

State Sen. Mark Montigny filed the bill that would, in essence, prohibit the compensation of board members.

"You do not compensate voluntary directors," he said. "There are multitudes of really intelligent people currently serving on charitable boards. There are lots of others out there that will do it without compensation. They'll do it with pride."

In addition to the proposed legislation, Coakley said she plans to publish an annual report showing board compensation levels.

Tufts Health Plan said it strongly disagreed with Coakley's findings. Harvard Pilgrim said it "believes that compensating our board is fiscally responsible, and our practice has been externally validated by nationally recognized compensation consultants."

Blue Cross Blue Shield said it is reviewing the report.-- Here's the attorney general's report (on Scribd):

This program aired on April 14, 2011. The audio for this program is not available.


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