LLC Key Decision Points Operating Agreement Core Elements

Transcription

1 Overarching Goals/Structure Single-Member LLC under CHOICE with CHOICE as the sole Member LLC Manager = LLC Governing Board High degree of autonomy in decision making for LLC governing board ( single point of accountability ) CPAA Council = Advisory to LLC Governing Board CHOICE Board (sole Member ) delegates day-to-day management authority of the LLC to CHOICE Exec. Dir. Term Exists in perpetuity; no time limit; Sole Member in consultation with LLC Governing Board (GB) reviews usefulness from time to time Purpose Broad purpose statement, not limited to Global Waiver: To improve individual and community health and well-being in Central Western Washington through aligned cross-sector action. Members Sole Member = CHOICE Governing Board (GB) Size 17 governing board members proposed Small enough to allow for rapid decision making but large enough to be inclusive and cross-sectoral GB Composition At least 51% = CHOICE members (organizations); CHOICE members may choose as the GB member an individual representative of their organization other than the individual representative who serves on the CHOICE board of directors. If a representative other than the individual representing the CHOICE member organization on the CHOICE board of Balanced composition (sectors and geography); no one sector in the majority; at least 50 percent of the primary decision-making body must be represented by non-clinical, non-payer participants (Draft ACH Decision-Making Expectations, 9/23/16). directors is chosen to serve on the LLC GB, there is an expectation that CHOICE member organization representatives will be in regular Ensure adequate representation of the region communications with each other on LLC matters. Individual representatives of CHOICE member organizations serving on GB must have decision making authority and should be active in CPAA. Active = Describe how sub-regions and/or populations within the region will be considered in the work of the ACH Attendance of at least 50% of CPAA Council mtgs. Clinical = a stakeholder s primary function is to provide clinical services. Sectors represented: Behavioral Health Organization (1) Behavioral Health Provider (1), CHOICE Criminal Justice or a First Responder (1) Consumer/Medicaid Beneficiary (1) Critical Access Hospital, rural (1), CHOICE Education (1) FQHC (1), CHOICE Commented [WD1]: To be discussed by CHOICE Board

2 Health System, urban (1), CHOICE Independent Hospital (1), CHOICE Managed Care Organization (1) Provider Network/PCP (1), CHOICE Public Health (3, rural urban mix), CHOICE Social Services/Housing (1) Tribes Tribal Government Services (1) At Large or Economic Development (1) Combined Total: 17 GB Member Selection Each sector chooses their representative/s ( Caucus ) by 2/3 supermajority When (annually?) and how (process) are GB members selected? With the exception of Tribes, CPAA Council appoints if a sector Define sector. is unable to agree on a representative unless sector is identified as CHOICE in which case CHOICE Board appoints representative/s. Tribes Tribal Government Services appoint their representative. At least 51% of GB members must be CHOICE members. GB Member Terms In general, 2-yr renewable terms; no term limits. However, 50% of initial terms are 2-yr terms with the other 50% being three-year terms in order to achieve staggered terms and continuity over time. Initial term length is determined by drawing lots. GB Vacancies Vacancies are filled using the same methodology as that used to make the initial appointment (see GB Member Selection above). GB Decision Making Each GB member has one vote. Given the large geographic area covered by As a matter of practice, LLC GB members may consult with their sector before casting a vote; however, there is no right of consultation and the LLC GB member must honor his/her duty of loyalty and duty of care to the LLC, including fiduciary responsibilities. Adequate notice (7 days notice) of pending actions must be given to GB members in order to provide for consultation with their sector if desired. the CPAA, frequent meetings require remote meeting capabilities. Quorum: A quorum is present when 51% of GB members (or 9 members) are present at a mtg. If quorum is established, decisions are made by consensus with fallback simple majority vote (>50% of GB members present at a mtg or 5 members) except for major decisions which 2 Commented [WD2]: Additional thought needs to be given how to define sector.

3 require 2/3 supermajority of all GB members (or 12 members), not just those present at a mtg. Major decisions include: o Approving the LLC budget o Awarding contracts o Appointment of GB Members if a sector cannot agree on a representative o Removal of GB Members o Appointment of Officers o Removal of Officers There is no proxy voting b/c fiduciary responsibilities are not delegable. Voting is allowable in person, by or using other remote decision-making methods; however, strong preference is given to in-person meetings or meetings by teleconference to provide an opportunity for dialogue before decision making. If voting by means other than in person, 30 7 days notice must be provided to give opportunity to discuss the issue on which a vote is to be taken. For votes requiring a 2/3 supermajority, if voting by means other than in person, the vote only passes if the vote is unanimous. If the vote is not unanimous, an in-person meeting of the GB must be called at which a 2/3 supermajority is sufficient to pass the vote. For votes requiring a simple majority, if voting by means other than in person, the vote does not need to be unanimous in order to pass. Add a screen to BG decision making to assess whether the action to be taken might be inconsistent with the Member status as a Section 501(c)(3) organization. GB Rights & Responsibilities/Powers Powers: All customary rights & responsibilities for LLC boards Detail fiduciary responsibilities; what are the exact rights & responsibilities of the GB? E.g., entering into contracts, taking on debt,. Detail performance responsibilities Establishment of committees and work groups Key financial functions per HCA: 3 Commented [WD3]: It was suggested that there be only one standard for voting by , i.e., a simple majority. However, this would be inconsistent with the 2/3 supermajority requirement for major decisions. I suggest the following language: If voting by means other than in person, a simple majority is sufficient unless a 2/3 supermajority is required. I m sure the attorney can help with wording.

4 o Budgeting o Funds distribution oversight o Use of internal and/or external auditors o Establish financial compliance program in adherence with state law o Shared savings determination and reinvestment o Planning for financial sustainability Process for selection of transformation projects Process for monitoring transformation project performance Process for responding to projects that are underperforming/not meeting established performance milestones/metrics Process for removing projects that fail to address/remediate identified issues Process for completing Regional Health Needs Inventory and Regional Health Improvement Plan Mechanism for spreading learning across projects and ACHs Limitations of GB Powers The following decisions are reserved for CHOICE as the sole Member of the LLC: LLC Operating Agr. changes, incl. change in no. of LLC GB members LLC Dissolution LLC sale LLC Day-to-day management authority Taking on debt Additionally, as the sole Member, CHOICE reserves the right to override any decision of the GB and the EC that would be inconsistent with the Member status as a Section 501(c)(3) organization. Mechanism for raising potential reserve right: 4 Develop clear, transparent process for invoking the reserve right and detail the exact circumstances when CHOICE can invoke this reserve right so that this right cannot be abused or applied arbitrarily. This includes providing an opportunity to discuss the situation with the GB. Add a screen to BG decision making to assess whether the action to be taken might be inconsistent with the Member status as a Section 501(c)(3) organization. If so, this would trigger consultation with CHOICE Board and decision making would be suspended. Require legal counsel s assessment? If the CHOICE Board determines Commented [WD4]: What if anything needs to be specified around this?

5 Before any decision is made, LLC GB, aided by LLC CEO, will assess whether the contemplated action might be inconsistent with the Member status as a Section 501(c)(3) organization. If so, LLC decision making will be suspended and the following process will be applied. that the action to be taken is inconsistent with the Member status as a 501(c)(3) organization, a written rationale needs to be provided to the GB. GB Member Resignation or Removal Process for invoking reserve right: 1. CHOICE Board enters into dialogue with LLC GB over concerns. 2. If the concern cannot be resolved through discussion b/w CHOICE board and LLC board, CHOICE will seek legal advice to determine whether contemplated action is inconsistent with the Member status as a Section 501(c)(3) organization; attorney will generate written opinion and attorney costs will be split equally b/w CHOICE and LLC CHOICE exercises reserve right if legal counsel advises that the contemplated action is inconsistent with the Member status as a Section 501(c)(3) organization. Resignation: Resigning GB member serves written notice to LLC Chair. Formal request is made by the LLC Secretary to the sector that appointed the resigning GB member to replace the GB. The methodology for filling vacancies will be applied. If a GB member is no longer employed by the organization that the sector appointed to serve on the GB, he or she shall be considered as having resigned from the GB. The methodology for filling vacancies will be applied. Removal (with cause only): LLC GB Executive Committee (EC) monitors GB member behaviors and active participation (member in good standing); if a GB member is not actively participating (attending at least 50% of GB meetings) or exhibits problem behaviors, the EC Chair clarifies expectations w/ the GB member in question. If behaviors persist or participation does not improve, GB is notified and removal proceedings are initiated. Removal proceedings: 1. LLC Secretary serves notice of pending removal to GB member; 5 Clarify active participation standards and behavior expectations (policy).

6 2. GB member is given the opportunity to contest pending removal at a meeting of the GB; 3. 2/3 of GB (supermajority) must vote in favor of removal for removal to take effect. If removal vote passes, formal request is made by the LLC Secretary to the sector that appointed the removed GB member to replace the GB. The methodology for filling vacancies will be applied. GB Officers LLC GB selects the following officers that form the LLC GB Executive Committee; officers serve renewable 1-yr terms: Is there any minimum requirement of CHOICE membership, e.g., certain number of officers must be Chair CHOICE members b/c of potential decision making Vice Chair authority (see EC Powers & Limitations) that could Treasurer bind CHOICE? Secretary Past Chair In the selection of officers, the GB will be guided by the principle of balanced representation, ensuring diversity of both sectors and geographic representation to the greatest extent possible; no sector will have more than 1 officer position at any given time. GB Executive Committee Powers & Limitations GB Officer Resignation or Removal The EC reports to the LLC GB. To the extent the GB expressly delegates decision-making authority to the EC, the EC will be able to make binding decisions on behalf of the LLC. Otherwise, the EC will prepare decisions of the GB, but ultimate decision-making authority rests with the GB. Resignation: Resigning officer serves written notice to LLC Chair. A mtg of the GB is called to replace the resigning officer; the methodology for electing officers will be applied. Removal (with cause only): LLC GB has the authority to remove officers. If an officer is not actively participating (attending at least 50% of GB and EC meetings) or exhibits problem behaviors, the GB may initiate removal proceedings. Removal proceedings: 1. LLC Secretary serves notice of pending removal to officer unless the Secretary is to be removed in which case the LLC Chair serves notice; 2. Officer is given the opportunity to contest pending removal at a meeting of the GB; 6

7 3. 2/3 of GB (supermajority) must vote in favor of removal for removal to take effect. If removal vote passes, GB replace the officer. The methodology for selecting officers will be applied. GB Member Resignation or Removal 4. LLC GB Executive Committee (EC) monitors GB Member behaviors and active participation; if a GB member is not actively participating or exhibits problem behaviors, the EC Chair clarifies expectations. If behaviors persist or participation does not improve, GB is notified and formal request is made to the sector that appointed the GB member to replace the GB. The methodology for filling vacancies will be applied. Clarify active participation standards and behavior expectations (policy). GB Meetings In-person GB meetings are open to the public except for executive sessions. Describe how the ACH will ensure a transparent governing process (e.g., Will board meetings be GB determines frequency of meetings; at a minimum GB meets public? How will the board decisions be shared?) once a quarter. How often will the GB meet? (at least Meetings can be held in person, as teleconferences or through ) other virtual means (e.g., video or Skype calls). Are LLC meetings public? (Always? Whenever possible, GB meets in-person immediately after Exceptions?) CPAA Council meetings in the same location to foster transparency and provide Council members the opportunity to attend GB meetings. Manager/ Manager = LLC GB No compensation for LLC GB members Management Day-to-day mgmt. = CEO of LLC = CEO of CHOICE Executive Dir. (or his/her designee) who is a full-time employee of CHOICE; CHOICE board of directors retains authority to hire and fire; additional CHOICE personnel may be engaged to assist with the running of the LLC. LLC pays CHOICE for CEO services, other CHOICE personnel used by the LLC, and other expenses incurred in running the affairs of the LLC (direct and indirect expenses). LLC director regularly reports to LLC board and CHOICE board on LLC business. Conflict of Interests Establish strong COI policies and practices Determine how COIs will be identified and managed/mitigated 7

8 Transactions b/w the LLC and the Sole Member (i.e., CHOICE) and/or CHOICE members? Conflict Resolution Require use of a mediator to reach collaborative decision b/w CHOICE and LLC GB in case of major disagreement; define narrowly Define major disagreement ; what specific circumstances trigger mediation? Relationship of GB w/ CPAA Council CPAA Council will be advisory to the LLC GB. The Council will help prepare major decisions and provides strategic direction to the GB; GB regularly reports to Council on decisions made and provides rationale to Council if any decisions are made that differ from the Council s strategic direction. Maintain tiered/shared decision making and engagement to the greatest extent possible in order to maintain established CPAA culture. Other Accounting, Records, Reporting by Member Dissolution and Winding Up Indemnification Miscellaneous 8