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Corporate Authority for Extraordinary Delivery of Care Decisions

Healthcare providers facing emergency requests from government agencies in response to the Coronavirus (COVID-19) crisis — including critical issues such as transfers of COVID-19 patients, opening closed facilities and increasing bed capacity — should clarify their internal lines of authority (i.e., CEO v. Board) for authorizing extraordinary decisions regarding delivery of care.

IN DEPTH


Healthcare providers and their board and executive leadership may want to clarify their internal lines of authority for authorizing exceptional Coronavirus (COVID-19) decisions regarding the delivery of care in their facilities.

Many providers are facing, or may soon face, extraordinary emergency requests from governmental agencies relating to critical issues such as accepting transfers of COVID-19 patients, opening closed facilities, increasing bed capacity to address anticipated inpatient flow needs and other fundamental issues regarding the allocation of scarce resources. Responding to these requests casts the board and executive leadership team into uncharted waters in terms of organizational decision making.

From a governance perspective, the key legal question involves determining the appropriate leadership level(s) at which the decision is most appropriately made: (i) solely by the chief executive officer; (ii) by the CEO in consultation with the board chair, a board committee or the board of directors; (iii) by a special committee of the board; (iv) by formal decision of the full board of directors; or (v) though some other means. Presumably, medical and nursing staff leadership will be consulted in whatever process is decided upon. The answer should be the byproduct of board and/or CEO discussion (with general counsel input) reflecting the particular circumstances.

For these unique, COVID-19-related issues, there is no “one size fits all” answer, no “best practice.” Multiple factors may be taken into consideration when clarifying where the decision-making responsibility falls: the materiality of the pending decision, applicable state law, the scope of the provider’s statement of corporate purposes, federal tax exempt status, corporate social responsibility considerations, corporate reputation, etc.

Every organization’s approach is likely to be different and reflective of expectations based on past practice for the allocation of authority between the board and executive leadership.

The ultimate goal is a decision-making protocol for these critical yet novel issues that reflects thoughtful discussion between executive management and the board and demonstrates an informed board exercising its fiduciary responsibilities in a manner it deems appropriate for the circumstances. In other words, ensuring that the question — “Who makes the call?” — is raised, and considered, in a timely manner.

© 2020 McDermott Will & Emery

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About this Author

Michael Peregrine Corporate Governance Lawyer McDermott
Partner

Michael W. Peregrine is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  He represents corporations (and their officers and directors) in connection with governance, corporate structure, fiduciary duties, officer-director liability issues and charitable trust law.  Michael is recognized as one of the leading national practitioners in corporate governance law.

Michael is outside governance counsel to many prominent corporations, including hospitals and health systems, voluntary health...

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Sandra DiVarco Healthcare Attorney Health Systems Lawyer McDermott Will Emery Law Firm
Partner

Sandra DiVarco is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office. Sandy focuses her practice on the representation of hospitals and health systems. She has counseled health care facility and system clients regarding all aspects of health law transactions and health system restructurings. As a registered nurse, Sandy regularly advises clients on the legal aspects of clinical issues and policy/procedure matters. Sandy also has significant experience in assisting clients with regulatory, licensure and accreditation issues, including state-level and CMS survey responses, formulation of successful Plans of Correction, Joint Commission complaint responses and EMTALA/regulatory investigations. Sandy is a member of the Firm’s Catholic Organizations Practice Group, and has experience working with Catholic organizations within health care and other business areas. She is also co-leader of the Firm’s General Institutional Provider affinity group. 

In addition to maintaining an active transactional practice, Sandy has a deep knowledge of regulatory, licensing and accreditation issues of particular concern to health care providers in today’s heightened enforcement climate. Sandy regularly advises clients on the legal aspects of clinical regulatory issues and policy/procedure and operational matters. A significant component of her practice involves assisting health care provider clients across the United States with regulatory, licensure and accreditation issues, including state-level and Centers for Medicare and Medicaid Services (CMS) survey responses, formulation of successful plans of correction, Joint Commission complaint responses and Emergency Medical Treatment and Active Labor Act (EMTALA)/regulatory investigations. Drawing on her experience as a registered nurse, and holding a current license in the state of Illinois, Sandy brings a pragmatic perspective and first-hand knowledge of health care operations to these complex and mission-critical matters.

312-984-2006
Partner

Robert C. Louthian is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Washington, D.C. office.  He focuses his practice on the representation of exempt organizations on a wide range of tax and related issues, including determinations of exempt status, securing private letter rulings on proposed transaction, and preparing and representing clients who are under audit by the Internal Revenue Service.  He works primarily with hospitals and other institutional providers, private foundations, scientific research organizations, universities and trade...

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