Workers Ask SEC to Force Daughters of Charity to Correct Misleading Information It Gave to Investors

[Oct. 29, 2014] OAKLAND, Calif.Healthcare workers are asking the Securities and Exchange Commission (SEC) to force their employer, Daughters of Charity Health System, to come clean about the true state of its labor relations after the company’s CEO misled investors on a recent call in an effort to calm concerns about the hospital system’s sale to Prime Healthcare.

During an Oct. 15 conference call with Daughters of Charity municipal bond investors, one participant inquired about opposition to the sale from the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), which has 2,700 members at the six hospitals. In response, Daughters of Charity CEO Robert Issai said, “…we have had a great labor-management partnership for years, working together.”

Labor relations at the company, however, have been rocky in recent months as workers strongly and publicly opposed the sale to Prime. Issai himself has lashed out at SEIU-UHW in the media. This week SEIU-UHW members at St. Francis Medical Center, a Daughters facility in Lynwood, Calif., are voting to picket the hospital over concerns regarding their pension plan and job security. Workers also picketed three Daughters’ hospitals in June.

Last week nurses and other healthcare workers at Daughters filed a class action lawsuit to protect the pensions of nearly 9,000 workers. The suit alleges that Daughters improperly evaded federal pension law requirements, allowing it to underfund its pension plan by an estimated $229 million.

“There have been many points of dispute between our union and Daughters that should have been disclosed to investors concerned about the sale to Prime,” said Dave Regan, president of SEIU-UHW. “Bondholders and everyone who has a stake in the organization should be fully informed about the circumstances of its sale.”

Daughters of Charity announced Oct. 10 that it chose Prime Healthcare as the lead bidder for the safety-net hospital system and would negotiate with Prime exclusively. The deal must be approved by California Attorney General Kamala Harris, and healthcare workers are airing TV ads in Sacramento and San Francisco urging her to reject the sale.

Opposition to Prime’s takeover plans is broad. Two U.S. representatives, 31 state legislators, Los Angeles County and Santa Clara County supervisors, the San Jose Mercury News, the City of Lynwood, labor unions and many community organizations across California have urged Harris to block the sale to Prime Healthcare, saying its acquisition would undermine access to healthcare for low-income people and likely result in significant layoffs.

Prime has admitted that it is under federal investigation for allegedly overbilling Medicare, and has threatened to take the Daughters hospitals into bankruptcy. Healthcare workers believe Prime – with a record of ignoring community needs, eliminating health services and laying off caregivers in its quest to maximize profits – is unfit to carry on Daughters’ historic mission to serve low-income patients.

Daughters of Charity owns Seton Medical Center, Daly City; Seton Coastside, Moss Beach; O’Connor Hospital, San Jose; Saint Louise Regional Hospital, Gilroy; St. Vincent Medical Center, Los Angeles; and St. Francis Medical Center, Lynwood.

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