Prime Healthcare sues SEIU under racketeering law, and other news

Prime Healthcare Services is suing a union it says is waging an ongoing smear campaign to pressure the chain into unionizing its workforce.

The closely held hospital operator has a strategy of buying up failing hospitals and then restoring them to profitability. In 2011, it launched a nationwide expansion plan that took it far beyond its California roots. It now operates 28 hospitals in seven states.

But its tactics have raised the ire of the SEIU-United Healthcare Workers West, which has accused the Ontario, Calif.-based chain of a number of misdeeds, including overbilling Medicare, unsafe patient-care practices, cutting services and laying off large numbers of workers. The union is seeking to rally support to block Prime's acquisition of Daughters of Charity Health System in Los Altos Hills, Calif.

In the 69-page lawsuit filed in U.S. District Court in San Francisco, Prime accuses the SEIU chapter of violating the federal Racketeer Influenced and Corrupt Organizations Act.

“While defendants' methods are wide-ranging and elaborate, their purpose is straightforward: Defendants have met with and told Prime that if it does not turn over the nonunion healthcare workers at its hospitals on terms dictated by defendants, they will destroy Prime and ruin the lives of its executives,” according to the suit. “To make good on their threats, defendants have embarked on a campaign of extortionate assaults on virtually every aspect of Prime's business.”

Those methods include manipulating California Watch, a media outlet founded by the Center for Investigative Reporting, into serving as the SEIU's “ally and spokesperson,” Prime alleges. It also accuses the union of having close financial ties with two California legislators—Dr. Ed Hernandez, a state senator, and Dr. Richard Pan, who chairs the Assembly's health committee—to champion bills that expressly target the company. And Prime alleges that the union pressured Truven Health Analytics to rescind its quality awards.

“The allegations in Prime Healthcare's lawsuit against SEIU and related groups and individuals simply do not hold up to scrutiny,” said Steve Trossman, director of public affairs at SEIU-UHW in a statement. “Many of them were contained in a previous lawsuit against SEIU that was dismissed multiple times by a federal judge. SEIU will seek a fast dismissal of this complaint as well.”

A day after the lawsuit was filed, the union launched a media campaign stepping up its fight against Prime's deal for the Daughters of Charity system.

Presbyterian Healthcare Services, a New Mexico system with hospital and health plan operations, reported that the state's revamped Medicaid program led to a larger surplus in its second quarter.

Albuquerque-based Presbyterian reported that its second-quarter operating margin improved to 6.9%, up from 4% during the same period in 2013. In total, the group reported a surplus of $84.6 million on revenue of $621.6 million compared with a surplus of $11 million on revenue of $533.6 million in the prior-year period.

Presbyterian is one of four health plans that were selected last year to manage medical, long-term care and behavioral health services for Medicaid beneficiaries under the state's revamped Centennial Care program. The redesigned plan—which offers Medicaid services through managed-care organizations—went into effect Jan. 1 and also expanded Medicaid eligibility for low-income adults.

Premium revenue at Presbyterian increased 21.5% in the second quarter, as its at-risk health plan membership increased 6.5% year over year. Although it saw a 1.5% decrease in members in its commercial business, Medicaid beneficiaries increased 10.1% and individual memberships increased 7.1%.

In its eight hospitals, inpatient discharges increased 2.9% year over year while outpatient visits were up 5.3%. Revenue from patient care increased 6.5% in the second quarter compared with the prior-year period.

Follow Beth Kutscher on Twitter: @MHbkutscher