Section 4. (a) The trust shall be managed by a board to be known as the Health Care Security Trust board of trustees, which shall have general supervision of the investment and reinvestment of said trust. The duties and obligations of said board shall be set forth in a declaration of trust to be adopted by the board. Said declaration of trust and any amendments thereto shall be filed with the general court but if the general court takes no final action relative thereto within 60 days of the date of the filing thereof with the clerk of the house of representatives and the clerk of the senate, the declaration or amendments thereto shall be deemed to be approved.
(b) The trustees shall discharge their duties for the primary purpose of enhancing the value of the trust and shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims and by diversifying the investments of the trust so as to minimize the risk of large losses unless under the circumstances it is clearly prudent not to do so. When investing the monies comprising said trust fund, the trustees shall not be bound by the provisions of section 38 of chapter 29.
(c) Any appropriation by the general court of monies transferred by the comptroller from the trust to the General Fund pursuant to section 3 shall be used for health related purposes, including tobacco control, and shall not be used to supplant or replace other health related or nonhealth related expenditures or obligations of the commonwealth.
(d) The board of trustees shall consist of 7 trustees, including the secretary of administration and finance or a designee, the executive director of the group insurance commission or a designee, the executive director of the public employee retirement administration commission or a designee, the state treasurer or a designee, the comptroller or a designee and 2 additional trustees, 1 of whom shall be appointed by the governor and 1 of whom shall be appointed by the state treasurer. The appointed trustees shall serve for terms of 5 years and shall be experienced in the field of investment, financial management, law and public management. Trustees shall be eligible for reappointment.
(e) A trustee shall disclose in advance to the board any interest or involvement in any matter that is before the board. The disclosure shall be contemporaneously recorded in the minutes of the board. A trustee having such an interest or involvement shall not participate in any such matter.
(f) The board shall select an executive director who shall serve at the pleasure of the board. The provisions of sections 9A, 45, 46 and 46C of chapter 30, chapter 31 and chapter 150E shall not apply to the executive director or any other employees of the board. The executive director shall, with the approval of the board: (i) plan, direct, coordinate and execute administrative and investment functions in conformity with the policies and directives of the board; (ii) employ professional and clerical staff as necessary; (iii) report to the board on all operations under his control and supervision; (iv) prepare an annual budget and manage the administrative expenses of the trust; and (v) undertake any other activities necessary to implement the powers and duties set forth herein.
(g) In addition to the other powers and duties defined in this chapter, the board shall approve or ratify decisions of the executive director, formulate policies and procedures deemed necessary and appropriate to carry out the purposes of the trust, maintain a record of its proceedings and undertake any other activities necessary to implement the duties and powers set forth herein.
(h) The board shall adopt an annual budget and supplemental budgets as the board deems necessary subject to the approval of the general court. If the general court take no final action to disapprove any such budget within 60 days of its filing with the clerk of the house of representatives and the clerk of the senate, such budget shall be deemed to be approved. If the general court disapproves any such budget within such 60 days, the board shall operate under the annualized budgetary level most recently approved pending the filing and subsequent approval of any other such annual or supplemental request.
(i) The board shall invest and reinvest amounts received by the trust in the Health Care Security Fund. The executive director may invest and reinvest such funds held by the trust, subject to the approval or ratification of the board by a vote of 5 of the 7 trustees, and the board may, subject to such a vote of 5 of 7 trustees, (1) employ any qualified bank, trust company, corporation, firm or person, including the Pension Reserves Investment Trust Fund, to make any or all of such investments, to manage the funds or to advise it on investments, and (2) if appropriate under the circumstances, utilize existing resources and staff of the state treasurer or the Pension Reserves Investment Management board to carry out its mission.
The expenses of any such qualified bank, trust company or other party compensated to manage the trust fund shall not exceed the fee paid by the pension reserves investment management board for advice and management relative to the Pension Reserves Investment Trust Fund established pursuant to subsection (8) of section 22 of chapter 32.
(j) Notwithstanding the provisions of any general or special law to the contrary, no monies comprising the Health Care Security Trust Fund shall be invested in stocks, securities, or other obligations of any company which manufactures or distributes tobacco products.
(k) The board shall prepare quarterly statements on or before March 1, June 1, September 1 and December 1 of each year, to be filed with the fiscal affairs division, the house and senate committees on ways and means, the joint committee on health care and the advisory committee on health care and tobacco control established by section 5. The statements shall: (i) summarize the performance results of the trust’s investments for the quarter and year-to-date; (ii) provide a summary investment portfolio analysis describing the holdings of the trust fund; (iii) identify fees and other costs incurred in employing investment consultants, fund managers and other parties compensated for managing or advising the board; (iv) provide a budget status report detailing expenses by month; and (v) provide any information relating to the status and estimated amount of the next payment made pursuant to the master settlement agreement in the tobacco action, or any other such payment.
(l) All records of the trust, including the transactions of the trust fund, shall be a public record as defined in clause Twenty-sixth of section 7 of chapter 4.
(m) In any civil action brought against a trustee or employee of the Health Care Security Trust, acting within the scope of his official duties, the defense or settlement of which is made by the attorney general or by an attorney employed by said board, such trustee or employee shall be indemnified for all expenses incurred in the defense thereof and shall be indemnified for damages to the same extent as provided for public employees in chapter 258. No trustee or employee shall be indemnified for expenses in an action or damages awarded in such action in which there is shown to be a breach of fiduciary duty, an act of willful dishonesty or an intentional violation of law by such trustee or employee.