South Florida Hospital News
Thursday August 13, 2020

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June 2014 - Volume 10 - Issue 12


The Role of the Board of Directors in Compliance in Health Care Organizations

Directors of health care organizations have important responsibilities related to corporate compliance. The risks of noncompliance have grown dramatically over the last decade as the government has dedicated substantial resources to respond to health care fraud and abuse. Moreover, private whistleblowers are all too anxious to bring actions for suspected improper practices. To minimize these risks, health care companies need effective corporate compliance and ethics programs.
The board of directors must play a central role in a company's compliance program. The board has a duty of care related to the implementation and oversight of the compliance program. The duty of care arises in the board's decision-making and oversight functions. The decision-making function applies to a particular situation or a specific action, like refunding an overpayment received from the Medicare program. The oversight function pertains to the general activity of overseeing the day-to-day activities of the business. The oversight duty is satisfied if the director assures that a compliance program exists and is adequate to provide the board with information relevant to make its decisions.
A board's failure to implement a compliance program will not only put the organization at risk, but also may create personal liability for directors. The responsibilities imposed on directors may seem great, but the duty of care inquiry has not been extended to require that directors engage in proactive vigilance. Simply put, a director need not act as an internal investigator. Rather, the duty of care arises when a red flag is raised or suspicions are or should be aroused. Generally, a director will only have violated his duty of care if he fails to act after he has information that causes some concern. A compliance program is a process by which to find the "red flags" or suspicions and address them.
Tips and Resources for Boards of Directors Monitoring Compliance Program
• Promote an ethical culture – Directors should be conscious of the “tone at the top” by acting with integrity related to company business. Also, the board must foster an organizational culture that promotes ethical conduct and compliance through appropriate incentives and disciplinary measures.
• Devote resources to the compliance program – The board must commit time, energy, and company resources to make the program effective.
• Educate the board as well as the employees – The organization's governing body must be knowledgeable about the content and operation of the compliance program. The board should ensure that compliance and ethics program training is provided to board members as well as employees.
• Update the compliance program periodically – The program should be reviewed and revised at least annually to take changes in law, government enforcement initiatives and the company's compliance history into consideration. The Board should direct and oversee this process.
• Provide direct access to the board – Individuals with day-to-day responsibility for compliance activities, such as the Compliance Officer, should have direct access to the board or the board’s compliance and/or audit committee.
• Tailor the compliance program to the organization – Different organizations may have different risk areas. To assess the risk areas specific to the organization, the board can look to the organization’s prior compliance history and common industry risks.
• Utilize the resources provided by the government – Government websites such as those of the Office of Inspector General and the Department of Health and Human Services provide information, advisory opinions, fraud alerts, educational podcasts, and guidelines that are useful to boards in their compliance oversight function.
The board’s oversight of the compliance program helps to promote an environment of greater corporate responsibility while, at the same time, protecting the organization and its directors from liability. In today's climate, a corporation simply cannot run the risk of failing to implement an effective compliance and ethics program. The benefits of these programs are too great to ignore.
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Anne Novick Branan is a health law attorney and Of Counsel for the Fort Lauderdale office of the statewide law firm Broad and Cassel. She can be reached at or (954) 764-7060.
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