This post is from The Business Ethics Exchange, the newsletter from the Center for Ethical Business Cultures. Let us know your opinion in the comments.

“No good deed goes unpunished.” That’s the message Nancy Feldman, president and CEO of UCare gave to the commissioner of Human Services for the State of Minnesota as her organization returned profits (surplus gains for a nonprofit) to the state. Speaking to a packed house at the 12th Annual Minnesota Business Ethics Awards co-sponsored by the Center for Ethical Business Cultures, Feldman provided insights into her organization’s ethical culture, an ethical dilemma UCare faced and the resulting aftermath following its decision to return $30 million of gains to the State of Minnesota.

UCare is a unique health plan serving 225,000 low-income families and children, and Medicare and Medicaid members in Minnesota. Of its $1.7 billion in revenue last year, 40 percent came from state government and 60 percent from the federal government, placing government in the dual role of regulator and purchaser of its services. As the leader of this mission-based nonprofit, Feldman personally meets with all new employees to plant the seeds of the UCare mission and values into their hearts and minds. Integrity is the first key value.

Earlier this year, the value of integrity was placed in the spotlight. Due to a number of factors, including better efficiencies, improving the health care of its members, healthier people coming into the plans because of the recession and decreases in health care utilization, UCare realized strong “earnings after expenses” gains. This resulted in $30 million beyond the “two months reserves” it normally sets aside. Stimulated by a board of directors discussion, UCare considered a range of options to utilize the additional gains. But given the State of Minnesota’s $5 billion budget shortfall, UCare ultimately decided to return it to the state’s treasury.

Despite UCare’s best intentions, many voices emerged with a variety of agendas attempting to use the contribution for a variety of purposes. Feldman explained that given their unique relationship with the state government as a funder, this was the right thing to do for UCare and that this may not be applicable to other situations. But once started, the events took on a life of their own.

Feldman found herself under scrutiny from UCare stakeholders (members, government officials, other health plans, the media, etc.) with opinionated and strong messages about what should be done with the money. And support can come from unexpected places…such as the 91-year-old (same age as Feldman’s mom) expressing feelings of trust, protection, safety and gratitude. But Feldman learned that if integrity is developed, nurtured and practiced; raging controversy cannot shake the ethical core of the individual or the organization!

Updates from the Star Tribune:

April 23: Minnesota officials reversed course on last month and said the state will give the federal government half of the $30 million contribution. “In recent months federal lawmakers questioned whether the U.S. Treasury should receive a portion of the money because Medicaid is funded jointly by the state and federal governments.”

April 25: Gov. Dayton’s administration in the sights of a congressional investigation, with lawmakers examining whether state officials tried to shortchange the federal government for medical services to the poor and disabled.

Did UCare do the right thing? How about the state? What would you have done with the surplus profits? Let us know in the comments!