AGs in Action: California Settles with Foundation; Minnesota Settles with Mayo Clinic and Separately Dissolves Five Nonprofits

Attorneys general in several states continue to address a myriad of nonprofit legal issues even as federal oversight appears to be waning even further. Notable recent developments include:

• The California Attorney General reached a settlement with the Valley Rock Foundation and two of its directors to resolve allegations of self-dealing, unjust enrichment, and breach of fiduciary duty. While the directors did not admit any wrongdoing, the Foundation agreed to make various grants and payments and then dissolve, with any remaining assets to be distributed to Westmont College.

• The Minnesota Attorney General reached a settlement with the Mayo Clinic under which the Clinic will change its charity care and debt collection practices to ease access to charity care for eligible patients and prohibit suing to collect medical debt in other than extraordinary circumstances.

• Separately, the Minnesota Attorney General filed a consent judgment that dissolves five nonprofits and bans their president from incorporating or serving as an officer or director of nonprofits in the future. The judgment arose out of a lawsuit by the attorney general alleging that the president had engaged in a deceptive pattern of behavior “by founding or taking over nonprofits with governmental sounding names to sow confusion for his own profit.”

Lloyd Mayer