LOUISIANA PRIMARY CARE ASSOCIATION

LOUISIANA GOVERNANCE AUTHORITY

BOARD TRAINING

Legal Responsibilities of Health

Center Board Members

David Adams, President/CEO

Health Care & Mgt. Strategies, LLC

LEGAL RESPONSIBILITIES OF HEALTH

CENTER BOARD MEMBERS

Objectives

To have an understanding of the Governance,

Administrative, Fiscal, and Clinical responsibilities of the

Board.

To understand the duty of care, duty of loyalty, and duty of

obedience in the role of board member

To gain knowledge about the importance of Corporate

Compliance programs.

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GOVERNANCE RESPONSIBILITIES

Define and preserve the mission of the

Board

Formulate and Approve Policy

Safeguard Assets of the Health Center

Select, Evaluate and Support CEO

Monitor and Evaluate Performance

Plan

3

DEFINE AND PRESERVE THE MISSION

Clarity and understanding of the purpose

of the organization

Mission fulfilled through realistic goals

and objectives

Organization’s activities are consistent

with the mission

4

FORMULATE AND APPROVE POLICY

Operations

Personnel Management

Fiscal Management

Clinical

By-Laws 5

PLAN FOR THE LONG RANGE FUTURE

OF THE ORGANIZATION

Board and staff commitment is key

Strategic Plan: 3 year time frame

Short term planning: annual sessions

(retreat)

Evaluation strategy is essential to the

process 6

GOVERNANCE RESPONSIBILITIES

(ADMINISTRATIVE)

Select, Evaluate, and Support the CEO

Monitor and Evaluate the Organization

and Board Performance

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SELECT, EVALUATE, AND SUPPORT

THE CEO

Selection is the responsibility of the entire

board.

Only employee of the Board

Empowers and delegates responsibility and

authority for the day-to-day leadership and

management to the CEO

Evaluation of the CEO

o Done annually

o Consistent with job description or goals set

forth in contract

Support the CEO with necessary resources 8

MONITOR AND EVALUATE THE

ORGANIZATION AND BOARD

PERFORMANCE

Mission, goals/objectives accomplished

Industry performance standards

Budget, financial plan, business plan, clinical

measures

Past performance

Strategic Plan

Annual Board Self Evaluation

Written policy

Board’s goals/organization goals

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GOVERNANCE RESPONSIBILITIES

(FINANCIAL)

Formulate and approve Financial Policies

Safeguard the Assets

Review and approve the Health Center

Budget

10

GOVERNANCE RESPONSIBILITIES

(CLINICAL)

Approve Credentials and Privileges of All

Licensed Personnel

Review and approve the organizational QI

Plan at least every two years

Review and approved the organizational

Credentialing and Privileging Policy and

Procedure

Receive QI reports at least quarterly

inclusive of data on UDS Clinical

Measures and Performance Initiatives 11

INDIVIDUAL RESPONSIBILITIES OF

BOARD MEMBERS

The Duty of Care

Reasonably careful when making a decision

Acquire necessary information to make necessary

decisions through reasonable inquiry

The Duty of Loyalty

Allegiance to the organization

Regularly attend meetings

Conflict of Interest

The Duty of Obedience

Behavior is reflects a code of conduct that aligns with the

bylaws and policies of the organization

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CORPORATE COMPLIANCE

Duty of Care: how is this exercised in overseeing

the organization’s compliance system

Reasonable inquiry: enough to satisfy duty of

care.

Organizations should have a reasonable

compliance oversight process

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DUTY OF CARE

The one duty specifically implicated by corporate

compliance programs.

Involves determining whether the directors acted

1) in “good faith”

2) with that level of care that an ordinarily

prudent person would exercise in like

circumstances

3) in a manner that they reasonably believe is in

the best interest of the corporation.

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ANALYZING DIRECTOR’S ROLE

1. Good faith

• Improper financial benefit

• Intent to take advantage of corporation

2. Reasonable inquiry

• Appropriate level of due diligence

3. Best interest of the corporation

• State of mind

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DIRECTOR’S FIDUCIARY

OBLIGATIONS

Not “Perfection

Rely on advice of management and outside

advisors

Decisions made in good faith

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DIRECTOR OBLIGATIONS

Duty of care arise in two distinct contexts:

1. Decision-making function

2. Oversight function

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DIRECTORS’ OBLIGATIONS TO

CORPORATE COMPLIANCE

Oversight: Two principle obligations

1. A corporate information and reporting system

exists.

2. Reporting system adequate to assure the board

that appropriate information as to compliance

with applicable laws will come to its attention

in a timely manner as a matter of ordinatry

operations

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REASONABLE INQUIRY

Does not include:

Exercising “proactive vigilance

Anticipating future problems of the

corporation

Does include:

Raising level of inquiry when director is

presented with extraordinary facts or

circumstance of a material nature

Relying of senior leadership team in

performance of its duties 19

CHALLENGES OF HEALTH CARE

ORGANIZATION DIRECTORS

Health care industry operates in heavily

regulated environment with identifiable risk

areas

Patient care

Rules governing coverage and reimbursement of medical

services

Material non-compliance with state and federal health

care rules presents substantial risks to the health care

provider

Lack of carrying out the duty to oversee corporate

compliance programs

Criminal investigation and prosecution 20

PENALTIES ASSOCIATED WITH

NONCOMPLIANCE

Recoupment of improper payments

Providers liable for submitting claims for

reimbursement in reckless disregard or

deliberate ignorance of the truth, as well as

intentional fraud

State attorney general (depending on state law)

against the board

Exclusion from participation in Medicare and

Medicaid mandatory for 5 years from OIG, but

could potentially be more.

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CORPORATE COMPLIANCE

PROGRAMS

Helps mitigate risks

Improves compliance with state and federal

health care programs

Enables board to fulfill its fiduciary

responsibility of oversight.

Active compliance programs grown from 55

percent in 1999 to 87 percent in 2002.

Promotes an environment of corporate

responsibility that protects the mission of the

corporation and the health care consumers it

serves.

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Questions?