Financial Conflict of Interest Policy
Conflicts of Interest Policy, Procedure & Disclosure
The purpose of the following policy and procedures is to prevent the personal interest of staff members from interfering with the performance of their duties to Purchaser Business Group on Health (“PBGH”), or result in personal financial, professional, or political gain on the part of such persons at the expense of Purchaser Business Group on Health or its supporters and other stakeholders.
Definitions:
- Conflict of Interest (also Conflict) means a conflict, or the appearance of a conflict, between the private interests and official responsibilities of a person in a position of trust. Persons in a position of trust include PBGH’s senior managers and staff members with purchasing authority and/or influence over purchasing, and their close relatives, domestic partners, and/or those individuals in which they deem to have a close personal relationship.
- Staff Member means a person in a position of trust as defined above.
- Supporter means corporations, foundations, individuals and other nonprofit organizations who contribute to PBGH
1. Introduction
PBGH, a California nonprofit corporation, and its directors and officers, are dedicated to serving the interests of Californians in the most honorable and ethical manner possible. One of PBGH’s responsibilities is to provide assurance to the public that PBGH’s debates, decision-making and governance are conducted solely to accomplish PBGH’s purposes and not to benefit other persons or businesses. Among the duties of PBGH’s “Officials” (defined in Section 3 of this Policy) is a duty of loyalty – to place the best interests of PBGH uppermost when acting on PBGH’s behalf. This duty of loyalty, or “fiduciary” duty, encompasses the obligation to avoid or disclose any “other interests” that could dilute, diminish or divide an Official’s unqualified loyalty and complete commitment to PBGH. Where such interests exist or even appear to exist, they are “conflicts of interest” that PBGH is responsible to identify, manage and assure that they do not interfere with proper
governance.
2. Summary of Policy
PBGH’s policy is to require that all PBGH Officials disclose “Other Interests” (as defined in Section 4 of this Policy) upon joining PBGH and annually thereafter. In addition, Officials are required to update their disclosures of “Other Interests” each time a previously-undisclosed Other Interest arises or otherwise becomes known, or when previously disclosed Other Interests change materially. In turn, PBGH’s Board of Directors, or delegated representatives of the Board of Directors (in either case, the “Board of Directors” or “Board”), shall review those disclosures and to decide upon the appropriate response to the information disclosed, in accordance with PBGH’s procedures for doing so. It is expected that, in most cases, the proper response will be disclosure of the Other Interests to the Board of Directors. In some cases, however, the appropriate response may be to require that the Official “recuse” himself or herself from – to refrain from participating in – debate or resolution of matters in which the Official has Other Interests. In unusual cases, the appropriate response may be to require that the Official end one or more Other Interests or, in other cases, resign or otherwise be removed from his or her position in PBGH.
3. Application of Policy
This Policy applies to officers, directors, committee members, senior employees and senior volunteers (individually and collectively, “Officials”) of PBGH.
4. Disclosure of Other Interests
Each Official shall disclose any and all of the following (individually and collectively, “Other Interests”) to the Board of Directors:
4.1 An ownership, employment, volunteer or agency interest or involvement in an enterprise, commercial entity or nonprofit organization that is engaged in conducting, facilitating or promoting the electronic exchange of health information, including without limitation one that competes with PBGH;
4.2 An ownership, employment, volunteer or agency interest or involvement in an enterprise, commercial entity or nonprofit organization that is, or seeks to be, a vendor of products or services to PBGH;
4.3 A position as spokesperson, consultant or employee or agent for an enterprise, commercial entity or nonprofit organization that advances opposing or adverse public policy positions from those of PBGH;
4.4 An ownership, employment, volunteer or agency interest or involvement with an enterprise, commercial entity or nonprofit organization that is a healthcare provider, a third party payor for healthcare services, or any other provider or user of health information;
4.5 An ownership, employment, volunteer or agency interest or involvement with an enterprise, commercial entity or nonprofit organization that is a developer, provider or vendor of health information technology;
4.6 An ownership, employment, volunteer or agency interest or involvement with an enterprise, commercial entity or nonprofit organization that provides consulting services in healthcare management or other related healthcare services;
4.7 An ownership, employment, volunteer or agency interest or involvement with an enterprise, commercial entity or nonprofit organization that receives funding or other support from PBGH;
4.8 A membership or other participation on any board, commission or committee organized or constituted by an agency of federal, state or local government; and
4.9 Any of the other interests identified in Sections 4.1 through 4.8 of this Policy held by a spouse, registered domestic partner, parent or dependent child of the Official.
5. Timing of Disclosure
The Board of Directors shall require each Official to disclose all Other Interests at the time he or she becomes an Official. Thereafter, each Official shall disclose all Other Interests not less often than annually (“Annual Disclosure”), when requested by the Board of Directors. In addition, each Official shall during the year disclose any additional Other Interest that was not disclosed in the most recent Annual Disclosure if and when that Other Interest arises or becomes known, or if and when any previously disclosed Other Interest changes materially. Each Official shall make a final disclosure of all Other Interests at such time, if any, when he or she ceases to be an Official. Annual Disclosures and other disclosures shall be made in writing and on the form attached to this Policy (“Disclosure Form”), or in another form (e.g., California Fair Political Practices Commission Form 700) as and when approved in advance by the Board of Directors. Officials should feel free to provide additional information as appropriate.
6. Contents of Disclosure
Each disclosure by an Official shall provide sufficient information about each Other Interest to permit an evaluation of the effect that interest may have on the Official’s participation in PBGH’s governance. Any confidential information should be clearly marked as such on the disclosure. PBGH shall use reasonable efforts to maintain the confidentiality of confidential information. However, if confidentiality precludes the Board of Directors from fairly evaluating the disclosure, the Board shall respond accordingly in its recommendation on the corrective measures.
7. Responsive and Corrective Measures
It is PBGH’s prerogative and responsibility, and not that of the disclosing Official, to determine the responsive and/or corrective measures that are appropriate with respect to Other Interests. In applying this Policy, the Board shall endeavor to assure that Officials’ Other Interests, including without limitation interests in or relationships with organizations that may receive economic benefits from PBGH, will not taint or appear to taint PBGH’s decision-making with respect to matters involving those Other Interests. Among the responsive and
corrective measures available to be recommended are the following:
7.1 Disclosure to Board of Directors. In most cases, it is expected that the possibility of subjectivity or bias will be sufficiently offset by disclosing the Other Interest to the entire Board of Directors. The Board will be expected to take the individual’s Other Interests into consideration when discussions, debates or decisions occur.
7.2 Recusal. In some cases, it may be determined that the avoidance of conflicts of interest, or even the appearance of conflicts of interest, will dictate that the Official with Other Interests avoid discussions, debates, and decision-making on subjects related to the Other Interests. The Official will remain an Official, but shall withdraw from portions of meetings, decision-making and/or other activities as the Board determines is appropriate.
7.3 Disengagement/Divestiture. There may be situations, expected to be rare, in which the Board determines that the Official’s Other Interests will adversely affect the Official’s ability, or perceived ability, to participate in a broad range of discussions, debates or decision-making without bias or inappropriate subjectivity. In such cases, the Official shall be asked to terminate some or all of such Other Interests. If the Official does not do so, the Board shall decide upon alternatives, including without limitation the possibility of requesting the Official’s resignation, consistent with PBGH’s Bylaws and applicable laws.
7.4 Resignation. There may be situations, expected to be rare, in which Board of Directors determines that the Official’s Other Interests are so extensive or pervasive that the Official’s involvement in discussions, debates or decision-making will be adversely affected. In such cases, the Official shall be asked to resign. If resignation is not forthcoming, the Board shall decide upon alternatives consistent with PBGH’s
Bylaws and applicable laws.
8. Procedures
This Policy shall be implemented in accordance with the following procedures:
8.1 Annual Disclosure. Officials shall be required to complete the Disclosure Form upon joining the Board and annually thereafter. Officials shall submit additional Disclosure Forms at other times if and when previously undisclosed Other Interests arise or become known, or when previously disclosed Other Interests change materially. The Board, or its designee, shall review all Disclosure Forms, and determine the
responsive or corrective measures to be taken with respect to the Other Interests disclosed thereby. The Chair, or the Co-Chairs, of the Board shall direct the dissemination of responsive or corrective measures decided upon to the affected Officials and to others within PBGH, as the Chair or Co-Chairs determine appropriate.
8.2 Disclosure in Context.
(a) Prior to engaging in substantive discussion or action on any matter, an Official having an Other Interest in the matter shall disclose that Other Interest, either by reference to the appropriate Disclosure Form or by other appropriate facts.
(b) If the matter arises in the context of a meeting of the Board, a Committee or a Work Group, the Official shall make that disclosure to the Chair thereof. Such disclosure shall be reflected in the minutes of the Board, Committees or Working Group, as applicable.
(c) If the matter arises in any other context, the Official shall make that disclosure to the organization employee or officer to whom the Official reports or to the Chief Executive Officer. Any employee or officer receiving such a disclosure shall report that disclosure to the Chief Executive Officer.
(d) The Chief Executive Officer shall review each such disclosure received, and, subject to paragraph (f), shall either determine the appropriate measures to take with respect thereto, subject to and in accordance with this Policy, or refer the matter to the Chair, or any Co-Chair, of the Board.
(e) If the Official having the Other Interest is the Chief Executive Officer, he shall make the disclosure described in paragraph (a) to the Chair, or a Co-Chair, of the Board.
(f) The disclosure described in paragraph (a) shall be disclosed to the persons responsible for approving or taking other action upon the matter(s) to which the facts described in that disclosure pertain. For example, if the determination of whether to approve or take other action is to be made by the Board, or a Committee or Working Group, the relevant facts in the disclosure shall be disclosed to the members of the
Board, Committee or Working Group.
(g) The party(ies) receiving the disclosure as described in paragraph (f) shall evaluate the facts disclosed by determine the responsive or corrective action to be taken with respect thereto. The determination so made shall be communicated to the affected Official, to others within PBGH as determined appropriate by the party making that determination, and to the Chair, or Co-Chairs, of the Board and the Chief Executive Officer.
8.3 Role of Recused Officials. If it is determined that an Official is to be recused from participation in debates, discussion or decision-making with respect to a matter, then that Official shall not participate in or be present for the debate, discussion or decision-making with respect to that matter, except to respond to questions. Such Official shall not attempt to exert his or her personal influence with respect to the matter, either at or outside of a meeting, or through other communications with others either within or outside of PBGH.
(a) A person who has been recused from participation shall not be required for purposes of determining the presence of a quorum for the transaction of business by the Board or any Committee or Working Group.
(b) The recusal of any member of the Board or any Committee or Working Group, and that person’s exclusion from participation in debate, discussion and decision-making, shall be reflected in the minutes of the Board, Committee or Working Group.
8.4 Actions by Board and Committees. The Board, and any Committee exercising the powers of the Board, shall, with respect to any action on a matter in which a member of the Board or the Committee has an Other Interest, document in a resolution the following:
(a) The Board’s or Committee’s awareness of the Other Interest and the nature of that Other Interest.
(b) The Board’s determination in good faith that the action approved by that resolution was in PBGH’s interest and in furtherance of its purposes.
(c) If a member of the Board or Committee has been recused from participation with respect to that matter, that such member did not participate and was not present for the debate, discussion or decision-making with respect to that matter, including without limitation any vote thereon.
8.5 Compliance with Laws and Regulations. Without limiting any other provision of this Policy, PBGH shall comply with the requirements of all applicable laws and regulations affecting any and all matters with respect to which Officials have Other Interests. Without limiting the generality of the foregoing, PBGH shall comply with the specific requirements of California Corporations Code Section 5233 with respect to “selfdealing transactions” described in that statute, and with the requirements of Treasury Regulation Section 53.4958-6 with respect to “compensation arrangements” involving a “disqualified person.”
8.6 Limited Delegation to Committee. The Board shall assign to a committee of the Board (the “Committee”) responsibility for performing the functions of the Board described in this Policy, as described in this Section 8.4. Without limiting the generality of the foregoing, the Committee shall review all Disclosure Forms and other disclosures of Other Interests directed to the Board (collectively, “Conflict Review”). The Committee shall consult with legal counsel as needed. Based on its Conflict Review, the Committee shall develop recommendations on responsive or corrective action to be taken with respect to each Other Interest, in accordance with this Policy, and shall present those recommendations to the Board. The Board may approve, reject or modify any such recommendation. The Board shall make the final determination of the appropriate responsive or corrective action to be taken in each instance.
8.7 Officials’ Other Disclosure Obligations. Without limiting the obligations of any Official under this Policy, each Official (the “Reporting Official”) shall disclose to the Board any Other Interests of another Official of which the Reporting Official becomes aware and which the Reporting Official believes has not been disclosed pursuant to this Policy. This additional disclosure obligation of each Official helps assure that the Conflict Review process does not rely inappropriately upon any one Official’s judgment alone.
9. Gifts, Gratuities and Entertainment
Accepting gifts, entertainment and other favors from individuals, entities or organizations with which an Official has an Other Interest may also result in a conflict or duality of interest when the party providing the gift, entertainment or favor does so under circumstances in which it might be inferred that such action was intended to influence or possibly would influence the Official in the performance of his or duties for PBGH. Officials shall not accept such gifts, entertainment or other favors. This rule does not preclude the acceptance of items of nominal or insignificant value or entertainment of nominal or insignificant value.
10. Sanctions for Non-Compliance
Any Official that does not endeavor in good faith to comply with this Policy shall be subject to sanctions by PBGH. An Official shall be subject to sanctions for non-compliance, up to and including removal from their respective positions, and if the Official is an employee of PBGH, termination of employment.
11. Confidentiality
Each Official shall not disclose confidential information acquired in connection with disclosures of Other
Interests pursuant to this Policy.
12. Questions
Any questions regarding this Policy shall be directed to the Chair or any Co-Chair of the Board.