The Union Racket

Push for new members opens SEIU chapter up to charges of extortion

October 18, 2012

The union that launched the career of Democratic National Committee executive director Patrick Gaspard is being accused of strong-arming a group of nursing homes to increase membership rolls.

HealthBridge and CareOne, two nursing home companies, are suing the New England Health Care Employees Union (Service Employees International Union Chapter 1199 New England), accusing the labor leaders of using political threats and dangerous workplace sabotage to force several non-union shops into their ranks.

The explosive charges stem from a July labor walkout in which identification badges were removed from elderly patients’ doors, including from some who suffer from dementia and Alzheimer’s, and medical records were mixed up. The lawsuit alleges that such tactics constitute the same sort of intimidation that the Racketeer Influenced and Corrupt Organizations Act (RICO) were designed to prevent.

"The cycle of extortion will continue indefinitely," the complaint reads. "The most likely results of extended extortionate campaigns are poor patient care, unprofitable facilities that may be forced to close, layoffs of union and non-union employees, and monetary losses for the owners of the plaintiffs."

SEIU did not return calls seeking comment.

"SEIU has a pattern of pushing the envelope in terms of intimidation, using political muscle against companies," said Dr. Steven Allen of the Capital Research Center. "They have pioneered a new tactic … pickets have moved from company headquarters to executives’ homes and sabotage has moved from attacking machinery to potentially putting people in danger."

The 1199 is one of the largest local labor union chapters in the country, with nearly 345,000 active and retired members and nearly $50 million in assets. The union is confronting a massive pension shortfall despite its size thanks to years of accounting gimmicks designed to show a well funded system.

The union has attempted to renegotiate pension contributions from HealthBridge and increase the number of dues-paying members.

The second effort stands at the center of the lawsuit.

The company alleges that the union attempted to negotiate a scheme behind the backs of workers through a "corporate campaign." Rather than bringing union membership to a vote among employees, corporate campaigning tactics can force companies to unilaterally push workers into the union and automatically deduct dues from paychecks.

Labor leaders pursued this path to unionization, according to the suit, and turned "union organizing and contract negotiations … from being fair processes with uncertain outcomes to being old-fashioned, mafia-style shakedowns in which the employer has no choice but to surrender its money to the unions in return for a temporary end to an extortionate campaign."

SEIU represents more than 2 million public and private sector workers. Former SEIU president Andy Stern perfected the art of corporate campaigning.

"He gave this watershed speech … saying that he preferred top-down organizing to bottom up organizing," said J. Justin Wilson of the Center for Union Facts. "Unions are losing the ability to win elections because there are fewer things to use as a selling point, but employers are reluctant to anger unions."

Stern has backed card check legislation that would take the secret ballot out of organizing, a proposal that has won the support of prominent Democrats including President Barack Obama.

SEIU and Local 1199 are among the most politically connected labor organizations in America. Stern visited the White House more than any other public figure during the first six months of the Obama administration. DNC chief Gaspard spent nearly a decade serving as 1199’s executive vice president for politics and legislation before becoming then-Illinois Sen. Barack Obama’s national political director during the 2008 campaign.

The DNC did not return calls seeking comment.

The union spent more than $13 million on political activism in 2011, making it among the most expensive local operations in the nation. Its pot of money has earned it some well-placed friends.

The 1199 spent $7 million on the 2010 election, including $400,000 to Connecticut Gov. Dannell Malloy’s election efforts. In July, the governor joined an anti-HealthBridge picket line with 1199 members.

HealthBridge charges that the governor attempted to pressure the company to work with the unions or sell its Connecticut facilities.

"[The] defendants were able to persuade Connecticut Democratic Gov. Dannell Malloy and the Connecticut attorney general’s office to threaten to take the assets of the Connecticut facilities managed by plaintiff HealthBridge under receivership," the complaint states.

Malloy later dispatched a deputy to deliver "an unsolicited message from Gov. Malloy’s office to contact a prospective purchaser’s counsel for the sale of the Connecticut plaintiff’s facilities."

Malloy’s union advocacy is symptomatic of the larger problems that emerge when labor unions collude with public officials whose elections they help fund, according to Wilson.

"The people charged with protecting the interests of the taxpayers have received copious amounts of campaign cash from public sector union interests," Wilson said. "It would be seen as a huge conflict of interest anywhere else … [because] officials can intervene to prevent the union from getting in trouble."

Connecticut Attorney General George Jepsen recused himself from the HealthBridge case after revealing his sympathies to SEIU’s cause. HealthBridge attorneys, led by Rosemary Alito, sister of U.S. Supreme Court judge Samuel Alito, filed the suit in a New Jersey federal court, rather than Connecticut.

The neutral site, however, is unlikely to lead to a crackdown on the union’s strong-arm tactics, according to Wilson.

The healthcare companies are not the first to invoke RICO to fight against union pressure. Smithfield Foods of North Carolina attempted to end a boycott organized by the United Food and Commercial Workers Union by suing the labor group on RICO grounds in 2007. The suit ended the boycott, but not the unionization effort.

"The history of these RICO lawsuits [against unions] ends in settlement largely," Wilson said. "It’s frustrating insofar as it does nothing to curb some of the union’s more despicable tactics."

HealthBridge and CareOne are remaining silent on the lawsuit and its impact on future labor negotiations.

"The companies are committed to providing our patients in Connecticut and New Jersey with the highest quality of care in spite of the challenges we have faced in both states," HealthBridge spokeswoman Lisa Crutchfield said in an email.

Dr. Allen said the companies will set major precedent if they succeed against 1199 in open court.

"Often the companies back down, but here we’re seeing one draw a line in the sand, which may allow for a legal determination that you wouldn’t otherwise have," he said. "You don’t set common law by settling; ultimately the courts will decide if [the union] crossed the line."