Effort could force Sarbox on MA non-profit hospital

As FierceHealthFinance readers doubtless know, the Sarbanes-Oxley Act imposes strict financial disclosure rules on public companies--but not non-profits. In Massachusetts, however, a healthcare workers' union is arguing that under Massachusetts law, board members of non-profit Beth Israel Deaconess Medical Center should be required to follow Sarbox disclosure rules with its audits. The request springs out of a long-standing battle between the 1199 SEIU United Healthcare Workers East, which has been organizing at the Harvard-affiliated facility.

The SEIU is arguing that under state law, nonprofit directors who observe Sarbox rules when sitting on public-company boards are required to do the same on Beth Israel's board. That includes six of Beth Israel's members, who sit on the boards of such public firms as Staples, Brooks Automation and Charles River Laboratories. The SEIU's leaders are pushing the issue, they say, because they believe Beth Israel has been commingling bad debt and charity care expenses in its 2005 and 2006 annual reports, a move which would make it look less healthy than it is and give it more leverage against unionization.

To date, it appears that this is largely a war of words. There's little doubt, however, that lawyers and regulators will get involved at some point soon if the SEIU presses its argument. If the SEIU succeeds, meanwhile, heaven knows where it will end. This should be an interesting (and important) battle to watch.

To learn more about this dispute:
- read this CFO article

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