The Case for and Against Minimum Director Independence Requirements

Houston Medical Times March 2017

Anjana D. Patel, a Member of the Firm in the Health Care and Life Sciences and Litigation practices, in firm’s the Newark and New York offices, and Anjali N.C. Downs, a Member of the Firm in the Health Care and Life Sciences practice, in the firm’s Washington, DC, office, authored an article in Houston Medical Times, titled “The Case for and Against Minimum Director Independence Requirements.”

Following is an excerpt (see below to download the full article in PDF format):

Since Sarbanes-Oxley Act (“SOX”) became law in 2002, more and more for-profits mandated having more independent directors on their boards. In the non-profit sector, which is where most hospitals operate, the Internal Revenue Service (“IRS”) does not mandate a particular board structure. Rather, the IRS will analyze a non-profit’s board structure, its conflicts of interest policy and disclosures to ensure that the board is not dominated by non-independent directors. However, many hospitals continue to review their board composition, including whether to mandate a minimum number of independent directors, especially in light of the ever-changing regulatory landscape and government enforcement that dominates the healthcare industry.

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