State Senate Bill 631 is bipartisan legislation to make a change in Delta Dental of Michigan’s Enabling Act. Delta Dental is supporting this legislation in order to resolve a corporate governance problem that has cropped up in recent years.
Currently, the state law under which Delta Dental does business in Michigan – officially known as Public Act 125 of 1963, the Nonprofit Dental Care Corporations Act –requires that at least 40 percent but not more than 60 percent of the company’s board of directors be dentists who are approved by the Michigan Dental Association (MDA).
For decades, the involvement of the MDA has been workable because its stated preference and historical practice was to approve Delta Dental nominees based on the sole criterion that the nominee was an MDA member in good standing (or a member of the nominee’s home dental association). In the past three years, however, MDA has worked very aggressively to gain control of the board appointment and approval process in an effort to force its own candidates onto the Delta Dental board so as to exert greater – and improper – influence on the board and the company in order to meet its own goals.
Senate Bill 631 will not change the language requiring that 40 to 60 percent of the Delta Dental Board of Directors be dentists, but the bill will eliminate the need for dentist board members to be approved by the MDA, which only represents about two-thirds of Michigan’s actively practicing dentists.
Delta Dental highly values our participating dentists, and dentists have played a valuable role on our board ever since the company was founded 60 years ago. We are not seeking to change that. However, it is critical that the company have the authority to independently select dentist candidates for the board who support our mission. Governance of the company, including selection of board members, should be the responsibility of Delta Dental solely, just as it is for other corporations.
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