Summarize the account of conflict of interest we have examined in the readings. Second, argue whether the case of Qual Plus HMO contains a conflict of interest and, if so, who faces them. Finally, discuss the methods of addressing conflicts of interest and propose a resolution to the conflicts of interest in the case and a discussion of the moral status of the people involved in the case.Your discussion must include:An introduction An account of the meaning of “conflict of interestAn argument for whether or not the case contains conflicts of interest, and why An account of methods for addressing conflicts of interest An application of the methods to the case A conclusion CHAPTER 4Conflicting Moral Demands:Qual Plus HMOFOR TEN YEARS, Jim Goodrich has been the chief operating officer (COO) of Qual CasePlus, a successful not-for-profit, staff-model managed care organization (MCO) with Study275,000 members in a major metropolitan area on the West Coast. The organizationhas been so financially successful, in some measure because of Jim's efforts, that itis about to embark on the construction of a $12 million corporate office complex tohouse its business activities. As COO, Jim has been responsible for the planning anddevelopment of the project, the purchase of the land, and the presentation of theconstruction proposal to the 12-member board of directors. Following the board'sapproval, the building and grounds committee of the board will select a generalcontractor and submit the construction contract to the entire board for its approval.The committee-established selection criteria for the general contractor includeddemonstrated quality of work, ability to meet construction deadlines and workwithin budget, financial solvency of the firm, and competitive costs. Only local firmsknown to adhere to ethical business practices were asked to bid on the project.The request for bids indicated that all bids must be sealed and delivered bynoon on December 9 to the COO's office. Bids received after this designated timeor not in this designated manner would not be considered. The committee wasscheduled to meet at 1:00 pm that day to open the bids, review them, and select ageneral contractor to submit for board approval.Joe Smith had served on the building and grounds committee for a number ofyears. Well liked by the other members of the board, he had been appointed to thiscommittee because, as the owner of Smith Masonry, he had expert knowledge ofconstruction and related fields.At the appointed time, the committee met, opened the bids, and began its review.of the bids received, three met all criteria. The costs associated with two of the bids41Case were close. The cost of the third bid, offered by Acme Construction, was considerablyStudy higher. Joe was visibly shaken. Knowing that Acme subcontracted with Joe's firm formasonry work, Jim assumed Joe would declare a conflict of interest and abstain whenit came time for a vote. Jim did not anticipate what happened next.As the discussion was about to begin, Joe moved that the committee take aten-minute recess before continuing its deliberations. When the committee recon-vened, Joe made a motion that the three contractors who had made the final cut beoffered the opportunity to submit a "final" bid in 24 hours. The committee wouldthen reconvene the next day to review these final bids. Jim was astonished at themotion and at its immediate support from the rest of the committee and ques-tioned the rationale, legality, and ethical implications of this action. He was toldquite simply that because all three finalists were being given the same opportunity,it should not be considered illegal or improper. As for rationale, the committeebelieved that Acme Construction, which met all of the other criteria, may haveinadvertently made a calculation error that placed its bid so much higher than theother two finalists. Joe indicated that it would, in fact, be unfair and unethical notto allow a final bid from a contractor known to be competitive in pricing and highlyregarded in the building community when the difference in the bid was obviouslygreat enough to be a miscalculation. The motion was quickly called, and the votewas unanimous that "final" bids would be sought from the three contractors.Jim was shocked and angry that the board committee would take action thathe believed to be blatantly unethical, if not illegal. Furthermore, as the executiveresponsible for this project, he was expected to concur with their decision, anexpectation that he was uncomfortable with and believed to be in conflict with his .responsibility as an administrator. As soon as he was in his office, Jim called theorganization's attorney and reviewed the committee action with him. When askedabout the legality of this action, the attorney said he believed it to be a bit unusualbut not illegal. Jim suspected that the attorney was reluctant to explore the mattermore fully because it was individual board members' actions that were being ques-tioned, rather than the action of the board as a whole.At this point, Jim knew he had to report the events of the afternoon to BrentWilliams, his boss. Brent had been CEO of Qual Plus since its inception 15 yearsago and had the unfailing support of the board of directors. Jim liked Brent, and hisreporting relationship with him had been mutually satisfying. Brent trusted Jim andgave him the latitude to run the operations of the organization. At times Jim felt thatBrent might play a little fast and loose with propriety, but the issues were always per-sonal ones that did not really affect Jim or the operations of the organization. Rumorshad circulated that Brent's home had been remodeled at no cost to him through Joe'slargesse and that his automobiles were provided at no cost to him by another board42 Part II: Case Studies and Moral Challengesmember. He was also known to vacation often in a luxury condo in the Caribbean Caseowned by yet another board member. More disturbing to Jim, however, was the fact Studythat Brent's administrative assistant took care of all of his personal errands andbusiness and was often gone from the office for extended periods of time.When Jim told Brent about the committee action, Brent dismissed it with a shrug."It's a board committee-it's their call," he said. Jim persisted and told Brent thathe was not comfortable with the committee's actions, especially because he was theone expected to execute their decision, and that he was going to request an opinionfrom the Qual Plus ethics committee. Brent appeared agitated at this suggestion andsaid abruptly, "I would not recommend that, but if you feel you must, go ahead. Justremember, it's your job that's on the line here." He then stood up, indicating that thediscussion was over.Jim was disappointed with Brent's reaction. With a mortgage, twin girls in col-lege, a son in high school, and a wife with professional ties to the community, Jim wasnot prepared to relocate. He doubted he could match his current salary in anotherposition. Brent and the board had been extremely generous with his compensationpackage. Jim did not want to jeopardize his position at Qual Plus. On the other hand,he was seriously troubled by his dilemma.He called the chair of the organization's ethics committee, who said she did notbelieve this situation fell within the purview of her committee because it was a boardaction but agreed to poll her committee and get back to Jim with a response by lateafternoon. Jim was not surprised when she called back to say that her committeeagreed with her earlier assessment. Jim had come to the conclusion that no one atQual Plus was ready to take on the board members over this issue. Frustrated, Jimknew that he was expected to keep his mouth shut and carry out the board commit-tee's wishes. He also knew that if he did this, he would be violating his personal princi-ples and would make himself vulnerable to future expectations of unethical behavior.ETHICS ISSUESConflict of interest: Do Joe's actions constitute a flagrant conflict of interest?Docs Qual Plus have an organizational policy on conflicts of interest thatspecifically provides guidance and direction for governing board members?Management's role and responsibility: What is management's role and responsibilityin this matter? Specifically, what is the role of the CEO related to actions ofgoverning board members? Have Brent's special relationships with boardmembers compromised his position and authority as CEO? Is management'sprimary responsibility to the governing board or to the organization?Chapter 4: Conflicting Moral Demand

Conflicts of interest refer to circumstances where an individual or organisation may have…

Answered: Summarize the account of conflict of…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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