Union Accuses Hospital of Overstating Charity Care

The Service Employees International union — which has 1.9 million members — thinks that nonprofit groups such as hospitals should comply with the standards of the federal 2002 Sarbanes-Oxley Act that govern private companies, reports The New York Times.

The union stated its position in a letter to directors of a Boston hospital, Beth Israel Deaconess Medical Center, who also sit on the boards of for-profit companies. Although the union acknowledged in the letter that the Sarbanes-Oxley Act does not apply to nonprofit groups, it said that under Massachusetts law, directors of nonprofit institutions who also work for corporations must “use the specialized knowledge they have from their position in the for-profit world” in governing the nonprofit group.

In particular, the union argued that the hospital violated those governing standards by including its losses from bad debts in its tally of the charity care it provides. It suggested that the hospital restate the value it placed on the charitable care it provided in 2005 and 2006, which the union estimated would drop the value of the hospital’s charity care by 16 percent in 2005 alone.

While the Internal Revenue Service made clear in December that it did not consider bad debt a part of charity care, the agency’s new treatment of bad debt is not retroactive.

Judy Glasser, a spokeswoman for Beth Israel Deaconess, said the hospital had not violated any laws. “We follow all the reporting requirements of the uncompensated-care rules,” Ms. Glasser said, “and we’ve never been given any indication by any of the regulatory agencies we report to that anything is not according to the regulations.”

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