State Charities Regulation In A Dynamic Health Care Market

Under the common law in most jurisdictions, the attorney general as charities regulator is mandated to oversee the due application of charitable funds and to ensure that directors, trustees and other fiduciaries of public charities fulfill their fiduciary duties. In the health care context, attorneys general have been called upon most prominently in recent years to apply charities law in proposed “conversions” of charitable health care entities to for-profit ownership and operation. In addition, questions have been raised as to the consistency of certain compensation arrangements with the due application of charitable funds and with fulfillment of fiduciary duties. For example, high executive or physician compensation packages have been questioned as potentially inconsistent with fiduciary duties owed by the executives and the board members approving such arrangements. Compensation and other arrangements between and among charitable health care entities have also been questioned as to whether they violate fiduciary duties. Business conduct of some health care charities has been questioned as to whether it is somehow inconsistent with charitable status or violates a duty to charitable mission