Massachusetts Attorney General Martha Coakley says she'll file a bill that would allow her to block payment for board members of nonprofit health insurers. The move follows a public outcry over an $11 million pay package given to Blue Cross Blue Shield's CEO.
"Compensation of board members creates unavoidable conflicts of interest and diverts resources otherwise focused on achieving the mission of the charity," Coakley said.
In a new report, the state attorney general's office said nonprofit health insurance companies aren't justified in compensating board members, despite the current practice of some to pay directors five-figure annual fees for their part-time service, the Boston Globe reports.
Blue Cross Blue Shield and Fallon Community Health Plan have since suspended their board payments. But two other payers, Harvard Pilgrim Health Plan and Tufts Health Plan, said they will continue compensating board members.
Coakley said Harvard Pilgrim and Tufts had the opportunity to provide their rationales for paying directors, but they failed to convince her, according to the Boston Business Journal. "We do not believe that Harvard Pilgrim nor Tufts have an adequate basis to continue to pay their board members, and we once again urge them to discontinue the practice in the interest of their charitable purpose," she said, adding that their reasoning to keep the pay flowing was "irrelevant," notes the Boston Herald.
The attorney general's office also will publish an annual report "detailing board compensation" to expose the payouts she said go against the spirit of charity work.