For Immediate Release - September 02, 2009

Massachusetts Attorney General Martha Coakley Announces Enhanced Oversight of Non-Profit Executive and Board Compensation

BOSTON - Massachusetts Attorney General Martha Coakley announced today that her office will increase its oversight of compensation practices for executives and directors in Massachusetts non-profit charitable health care organizations. The Attorney General's Office issued a memorandum today to the Massachusetts Hospital Association and to the state's four largest charitable health insurance providers outlining this expanded effort.

"Despite over a decade of significant efforts at the federal level, executive compensation levels at our larger charitable institutions remain an area of significant public concern. While it is not the role of this office to set compensation levels, we are entrusted with the responsibility to assure that governance practice in this area is open, transparent and for the exclusive benefit of our charitable organizations and the public they serve," said Attorney General Coakley. "The importance of these institutions to the state cannot be overstated. It is therefore critical that the public understand how these decisions are made and have confidence in them. We look forward to working with these institutions and members of the public in this complicated, but very important area."

As detailed in today's memorandum, the Attorney General's Office will address executive compensation through a periodic examination of the executive compensation practices, procedures, and outcomes within a cross section of the state's larger and more significant public charities. While the initial focus will be on the state's larger health care providers and insurers, the examination of executive compensation may later be extended to other sectors.

The Attorney General's Office will also conduct a focused examination of independent director compensation practices at the four charitable health insurance providers that compensate directors: Blue Cross Blue Shield of Massachusetts, Fallon Health Plan, Harvard Pilgrim Health Plan, and Tufts Health Plan. "Voluntary service is the hallmark of virtually all our charitable boards," said the Attorney General. "When boards depart from this traditional approach, it is incumbent upon them to fully explain to the public the basis for such a decision."

This expanded oversight will be conducted by the Attorney General's Non-Profit Organizations/Public Charities Division. The Non-Profit Organizations/Public Charities Division supervises non-profit organizations that are public charities to safeguard the public's interest in these organizations and to ensure the proper solicitation and use of charitable funds. The Division reviews annual public charity filings, works with organizations to address and cure potential violations, and, when necessary, conducts civil investigations and enforcement actions.