Federal labor board upholds charges against Westerly Hospital’s new owner

NLRB charges Lawrence & Memorial Hospital with violating workers’ rights

By Will Collette

As I predicted, the charges filed by American Federation of Teachers (AFT) Local 5049 against Lawrence & Memorial (L&M) Hospital of Stonington, the new owner of Westerly Hospital, were upheld by the National Labor Relations Board (NLRB).

The AFT filed union-busting charges against L&M for a practice often called “double-breasting.” This occurs when an employer sets up a non-union “alter ego” company to subvert a union contract. The employer starts shifting jobs and work from the unionized business to the non-union business. This practice is illegal under the federal National Labor Relations Act.

L&M Hospital, which is unionized, set up the Lawrence & Memorial Medical Group next to the hospital and started shifting patient care from the hospital to the medical group and then laid off unionized hospital workers.

Lawrence & Memorial has set up a similar structure at Westerly Hospital when it absorbed the Westerly Hospital physicians who were part of Westerly Hospital’s Atlantic Medical Group into the L&M Medical Group.

Westerly Hospital’s affiliated medical group was the subject of a murky $500,000 settlement of a pending federal investigation that was completed just before L&M took over Westerly Hospital on June 1. 

Westerly Sun investigative reporter Dale Faulkner reported on some of the details of the irregularities that led to the settlement, which included improper agreements between the Hospital and several affiliated medical groups that could have violated federal anti-fraud provisions of Medicare and Medicaid.

The case was settled to clear the way for closure of L&M’s buy-out of Westerly Hospital. However, Faulkner reported, the federal government reserves the right to exclude Westerly Hospital, L&M or its doctors from the Medicare and Medicaid programs, as well as pursue IRS violations or criminal prosecutions. 

The hospital claimed that this was simply “boilerplate language” with no particular meaning. However, a spokesperson for the US Attorney said that none of the language in the settlement was “boilerplate” and that the investigation of potential wrong-doing was still open.

The new NLRB labor charges against Lawrence & Memorial raise the likelihood of more trouble arising from management’s practice of creating complex, interlocked corporate entities.

At a news conference, AFT Local 5049 President Lisa D’Abrosca said, “they’re basically outsourcing to themselves…The Labor Board ruled that this is not acceptable.”

The union is currently organizing the workers at L&M Medical Group where the 150 health care workers receive far less pay and benefits than the unionized L&M Hospital workers they replaced. For example, nurses working for the Medical Group are paid $20 while the nurses at the Hospital are paid $28-$45 an hour for the same work.

The union says a good sized majority of the workers at the Medical Group have said they want to join the union.

At that same news conference, AFT organizer Greg Kotecki said “This [practice] is also expanding out to Westerly Hospital” and called it a “shell game.”

The NLRB also upheld union charges that L&M has stonewalled union requests for information on the nature and quantity of services being transferred from the Hospital to the Medical Group, information the union is legally entitled to receive.

The case now goes before an NLRB Administrative Law Judge on October 21. The Hospital administration denies all charges and is signaling that they intend to drag out the process.

Lawrence & Memorial’s PR flak Michael O’Farrell said on behalf of the hospital:

“While we are disappointed that the local office of the NLRB has decided to issue a complaint directed to Lawrence + Memorial Hospital, this is not a decision based on merits. Rather, it is just the first step in what no doubt will be a lengthy process. Our hope is that the union will be respectful of that process, which includes a full hearing before an administrative law judge where Lawrence + Memorial Hospital will have the opportunity to present its case.”

Well, Mike, respect is a two-way street. “Double-breasting” to undermine a union contract has been an illegal practice for decades and L&M’s blatant use of this illegal practice stands as a pretty good example of disrespect. Mike, if you expect respect, you’ve got to be prepared to give it.

Further, his depiction of the charges is highly inaccurate. The action by the NLRB to uphold the union's charges is similar to that of a prosecutor securing an indictment. In the next step, the NLRB judge will determine whether the charges are accurate - and when the NLRB brings charges forward like this, they usually are - and then assesses the penalty.

Many bad employers prefer to fight the outcome of an NLRB trial in the courts, often for years, rather than acknowledging their guilt, fixing the problem and mending relationships with its workers. L&M is signalling that this as their game plan, and that's not good for the hospital, the workers or the patients.

During the union news conference, the leaders stressed their commitment to patient care and stressed that this dispute is directly tied to quality of care since decent and honorable treatment of health care workers is one way to motivate staff excellence.

If you have doubts about how labor-management relations can factor in, just compare the rankings of South County Hospital, with its long history of good labor relations, with both Westerly Hospital and Lawrence & Memorial.

In the most recent Consumer Reports, hospitals around the country were ranked state by state and by types of service. South County Hospital once again was rated the best in Rhode Island. Westerly Hospital was far back in the pack as was L&M Hospital when compared to other Connecticut hospitals.

The new Westerly Hospital board

The new Westerly Hospital board recently installed by Lawrence & Memorial should pay close attention to these developments although it is unclear whether they have either the inclination or the power to do anything about them. 

Many of the new board members were drawn from the Westerly Area Residents Committee (WARC) which was formed to try to save the hospital from closure.

Other new board members come from L&M management and from the affiliated medical groups.

I can understand the interest of the former WARC members in wanting to stay focused on keeping Westerly Hospital alive, even if that means knuckling under to the new masters. 

In the recent news coverage of the hospital, the unions representing Westerly Hospital workers have also maintained an almost invisible profile. I can also understand with L&M management’s aggressive pursuit of the bottom line, even if I don’t agree with it.

However, playing the "shell game" of setting up alter ego corporations and setting up dubious business relationships among these entities has gotten the hospital in trouble with the US Attorney, IRS, Medicare, Medicaid and now the National Labor Relations Board. 

There are challenges Westerly/L&M need to address if the marriage is to succeed and quality of patient care is to be raised from mediocre to good. Obeying the law and cleaning up the organizational structure to avoid further violations of the law would be good places to start.