The nations anemic supply of nurses is a familiar headache for recruiters or executives who grapple with hospitals daily operations and budget.
Now its an issue for hospitals general counsels as well.
Lawsuits in a handful of states allege that hospital executives conspired to hold down wages amid a national nursing shortage, just when economic theory says demand should be pushing pay upward. Separately, legal action against a California hospital trade group contends the association helped hospitals collude to illegally fix overtime wages despite demand.
At stake are millions of dollars in alleged lost wages if judges in Albany, N.Y.; Chicago; Detroit; Memphis, Tenn.; and San Antonio grant plaintiffs class-action status.
Nurses yearly wages fell thousands of dollars short of where they should have been, lawyers contend. In Albany that amounted to $6,200 per nurse, per year; in Chicago it was $5,400; in Detroit, $5,000; and in Memphis, a whopping $14,100 per nurse, according to initial estimates, says Daniel Small, a Washington attorney with Cohen, Milstein, Hausfeld & Toll, who is representing nurses in all five cities. Even in San Antonio, the city with the lowest estimated losses, nurses wages were depressed by $1,334 per nurse annually, preliminary figures from the lawyers show.
Lost wages in three cities could total at least $376.9 million, based on the plaintiffs estimate of how many nurses worked in Albany, Memphis and San Antonio in 2005 and the percentage who were employed by defendants. In Detroit, rough estimates of the nursing workforce could put losses as high as $200 million. No estimates were available for Chicago.
The lawsuits, filed since June 2006, name 73 hospitals and 16 health systems and allege hospital executives agreed to regularly swap nonpublic figures on pay and anticipated raises for nurses and agreed not to compete on compensation. The lawsuits contend that hospital officials relied on informal and commercial wage surveys and professional meetings to exchange information on nurses compensation, anticipated raises and bonuses.
The defendants have rejected the claims. Employers contend they set nurses pay and benefits independently using legitimate, competitive compensation strategies, according to court filings. Lawsuits fail to cite direct evidence of a conspiracy for actions that could just as easily be competitive, note attorneys for Baptist Health System based in San Antonio. Nearly every defendant dismisses the lawsuits as an organizing vehicle for the Service Employees International Union, one of the nations largest nurses unions. The union backed an inquiry into nurses wages that prompted the lawsuits.
Small rejects the claims of union organizing as distractions from the lawsuits collusion allegations. Thats what these cases are about, Small says. Thats why they were brought.
Cathy Glasson, president of the unions 85,000-member nursing arm, defends the unions inquiry into nurses wages as necessary to address a critical issue that undermines nurses working conditions and exacerbates the U.S. nursing shortage. Its reasonable for us to examine those issues very closely, she says.
Meanwhile, the Hospital Association of Southern California and a half-dozen hospitals and systems face allegations that they conspired to curb overtime pay for nurses and respiratory-care providers.
Employers used the Los Angeles-based trade groups wage surveys to fix nurses pay, the complaint alleges, and the association orchestrated meetings where hospital officials colluded. In a market characterized by an extreme shortage of nursing and technical-care specialists, defendants price-fixing arrangement has and continues to artificially and seriously reduce the income and benefits of nurses, according to the complaint. James Lott, an association spokesman, declined to comment on a case thats still pending.