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Prime files suit against SEIU, Kaiser


By Vince Galloro
Posted: November 16, 2011 - 3:45 pm ET
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Prime Healthcare Services, Ontario, Calif., has taken its feud with the Service Employees International Union to a new arena—federal court—with the filing Tuesday of an antitrust lawsuit alleging that the union and Kaiser Permanente have colluded to restrain trade in the markets for emergency and other acute-care services and for healthcare labor in four California counties, according to the lawsuit.

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The 60-page complaint lays out Prime’s charges that the SEIU has a strategy of “market domination,” in which it seeks to ensure that most of the companies in a service sector are under its contracts in order to remove competitive pressures that keep wages and benefits down. Prime alleges that the SEIU has followed this strategy in sectors such as office cleaning and building security contractors. In the California hospital market, according to the lawsuit, the SEIU first unionized Kaiser’s California hospitals in the early 1990s and then campaigned to organize workers at Kaiser competitors such as HCA, Tenet Healthcare Corp. and Catholic Healthcare West, reeling in contracts with all of them over time.

Because Prime refused to play along, the lawsuit alleges, starting in 2010, Kaiser and the SEIU conspired to either force Prime to adjust its business practices, including its labor relations, or to go out of business. Kaiser and Prime have more than $100 million in unpaid claims for Kaiser health plan members at issue in a state lawsuit filed in Los Angeles County Superior Court, according to the federal lawsuit. In 2010, according to the lawsuit, the SEIU began misleading public campaigns alleging that its analyses of Medicare data show that Prime either has poor infection-prevention and malnutrition procedures or is upcoding charges to boost its financial results. Prime alleges in the lawsuit that this campaign is designed to punish Prime for its refusal to make a companywide labor agreement with the SEIU.

Prime also alleges in the lawsuit that the Kaiser-SEIU labor-management partnership violates labor laws because payments from Kaiser to the partnership’s trust eventually pass to member labor unions.

Neither Kaiser nor the SEIU responded to requests for comment at deadline.

Prime seeks injunctions forcing Kaiser and the SEIU to stop the behavior described in the lawsuit and a trial to determine actual damages, which would be trebled if Kaiser and the SEIU were found to have violated the antitrust laws, according to the lawsuit.

Prime filed the lawsuit in U.S. District Court in San Diego. The court assigned the case to Judge M. James Lorenz, who coincidentally presided over the federal government’s two unsuccessful attempts to prosecute Tenet Healthcare Corp., Alvarado Hospital Medical Center and Alvarado’s CEO on criminal anti-kickback charges. Dallas-based Tenet sold Alvarado to a physician-owned company in 2007 as part of a settlement of the charges in the case. Prime bought the hospital in November 2010, even after, Prime alleges in the lawsuit, the SEIU tried to intercede with regulators to halt the sale.


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