The Nursing Home Nightmare

Labor Costs Killing Nursing Homes

February 25, 2013

Lucrative union contracts have driven five Connecticut nursing homes at the center of a labor dispute into bankruptcy.

HealthBridge Management has entered five of its nursing homes into Chapter 11 bankruptcy to escape labor contracts that left the company losing $1.3 million each month, according to senior vice president of labor relations Lisa Crutchfield.

"The centers have a bright future if they can operate under labor agreements that reflect today's financial realities, but the fact is the centers will not survive unless we have relief from the crushing burden of unsustainable labor costs, especially the spiraling costs of pension and health care obligations," Crutchfield said in a press release.

The nursing homes’ costs have soared after negotiating lush contracts with the politically powerful Service Employees International Union Local 1199 NE in 2004, according to the company. The company spent nearly 50 percent more on employee benefits than the average Connecticut nursing home.

"There is no getting around the fact that SEIU District 1199 labor agreements are the leading reason for nursing home closures in Connecticut. That's bad for patients, employees, physicians and the communities they serve," Ms. Crutchfield said. "In our case, the union's collective bargaining agreements hobble the centers with labor costs that are well above state averages and which are simply unsustainable."

The nursing homes are asking a New Jersey bankruptcy court to amend the contracts since the union has not accepted concessions on pay and benefits.

"This bankruptcy filing is the latest in a long string of actions by HealthBridge aimed at avoiding their legal obligations to more than 600 hardworking nursing home caregivers across Connecticut and at chipping away at the quality of care for patients—a cynical evasion of responsibility to Connecticut working families and their communities," District 1199 president David Pickus said.

HealthBridge was left with few options after the embattled National Labor Relations Board ordered the company to rehire 600 striking union members despite allegations that the workers endangered patients during a July walkout. The Connecticut State Police are investigating whether union members mixed up patient medical records and identification documents during the strike.

Lorraine Mulligan, a veteran nurse, pleaded with the NLRB to keep the accused union members away from patients.

"The nature and severity of the … incidents … put the safety, health, and well-being of the residents of those facilities in immediate jeopardy," she said in a legal brief filed by HealthBridge. "A court order requiring the reinstatement of any of them or additionally those who had knowledge of sabotage and failed to act would expose the residents to immediate danger and put them at risk of suffering serious harm or death."

HealthBridge and CareOne, another nursing home company, are suing the union on charges of racketeering and extortion in connection to the walkout and other instances of alleged vandalism. The bankruptcy declaration will put that suit on hold for the time being, according to a source familiar with the case.

The company claims it is just the latest victim of financial giveaways to the union. SEIU 1199 represents 19,000 workers in Connecticut and has contracts in place at nearly 30 percent of state nursing homes. Nearly 70 percent of state nursing home bankruptcies have emerged in centers with SEIU contracts in place, according to HealthBridge.

Published under: Big Labor , SEIU