Prime Healthcare Services has long responded to the Service Employees International Union in much stronger and more public ways than its fellow hospital operators in California. The hospital chain now has moved the feud to federal court, filing 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.
Regional News/West: Prime strikes back
Lawsuit accuses Kaiser, SEIU of antitrust violations
The 60-page complaint lays out Ontario, Calif.-based 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. 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 Oakland, Calif.-based 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 a statement, Kaiser suggested that Prime's “deeply puzzling” federal lawsuit is an attempt to deflect attention from that state court case dealing with “Prime's wrongful and fraudulent practices.” Prime's allegations suggest that Kaiser's integrated delivery and financing model and its labor partnership, both nationally recognized, are somehow a conspiracy against Prime, according to the statement.
In 2010, according to Prime's 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.
The California arm of the union, SEIU-United Healthcare Workers West, stands by its allegations that Prime's hospitals are either unsafe or committing coding fraud, according to a statement. “Rather than file suit against healthcare workers who are blowing the whistle on Prime,” the statement reads in part, “the company ought to come clean, repay the public and patients, and fundamentally change its business model.”
Prime also alleges in the lawsuit that the Kaiser-SEIU partnership violates labor laws because payments from Kaiser to the partnership's trust eventually pass to member labor unions.
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 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 Dallas-based Tenet, Alvarado Hospital Medical Center, San Diego, and Alvarado's CEO on criminal anti-kickback charges (May 1, 2006).
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.
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.