Despite the recent trend of successes in decertifying wage and hour class actions in healthcare and other sectors, the number of lawsuits seeking to certify class actions in the healthcare industry continues to grow. As a result, we also continue to see settlement of these costly and time consuming lawsuits. In one recent case, U.S. Nursing Corp. has agreed to pay $1.77 million to quickly settle claims that it failed to pay the replacement registered nurses that it provided to hospitals during labor strikes for the all-too common claims of wages owed for travel time and automatic meal period deductions. The nurses also claimed that they should have been paid daily, rather than weekly. The settlement was filed for preliminary approval on May 2, 2013, and a hearing to preliminarily approve the settlement is scheduled for June 6, 2013. (Bolton v. U.S. Nursing Corp., N.D. Cal., No. 3:12-cv-04466).

In the suit, Shameka Bolton asserts that U.S. Nursing did not pay the replacement nurses for the time they spent traveling from their hotels to the hospitals. Ms. Bolton also asserts a claim that U.S. Nursing was automatically deducting for a 30 minute meal period each day, a claim that is extremely common in many of the suits against healthcare employers. Finally, the suit alleges that under California law, the nurses should have been paid daily, rather than weekly.

Interestingly, the settlement was reached quickly after the case was first filed in July 2012 in California state court and then removed to federal court in the Northern District of California in August 2012. By February 2013, the case was referred to private alternative dispute resolution. The settlement comes before any motions for conditional certification under the FLSA or state class certification have been filed.

The settlement covers a group of more than 2,500 nurses who were paid by U.S. Nursing to work at various hospitals in Northern and Central California during labor strikes starting in 2008. In addition, the settlement includes a subclass of nearly 500 employees for meal period deduction claims.

For more information on the growing trend of suits alleging unpaid travel time, missed meal break and other similar claims, you will find useful guidance in Littler’s Hot Wage and Hour Issues for Home Healthcare Employers.

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On May 16, 2013, the U.S. Equal Employment Opportunity Commission filed its first class action lawsuit under the Genetic Information Nondiscrimination Act (GINA) against a nursing and rehabilitation center. The EEOC filed this class action just 11 days after it filed—and then immediately settled—its very first lawsuit alleging genetic bias. The EEOC’s filing of these two lawsuits in such close succession signals to employers its commitment to pursuing genetic discrimination claims.

In Equal Employment Opportunity Commission v. Founders Pavilion, the EEOC alleges that Founders Pavilion, Inc., a 120-bed skilled nursing and rehabilitation facility in Corning, New York, violated GINA by conducting a post-offer, pre-employment medical exam that included questions about the applicant’s family medical history and requiring employees to repeat this exam annually. In addition to GINA violations, the EEOC further alleges that Founders Pavilion violated Title VII of the Civil Rights Act and the Americans with Disabilities Act by refusing to hire and/or firing women because they were pregnant or had perceived disabilities. This litigation is pending in the United States District Court for the Western District of New York.

GINA went into effect on November 21, 2009 and makes it illegal for employers to request, require or purchase genetic information relating to an applicant for employment and to discriminate against applicants or employees because of genetic information. GINA’s prohibition on employers requesting genetic information covers not only the genetic information of applicants and employees, but also the genetic information of the family members of applicants and employees.

Equal Employment Opportunity Commission v. Founders Pavilion serves as an excellent reminder to employers that their policies and procedures must be compliant with GINA guidelines. Employers cannot request information regarding medical history at any time during the hiring process or employment, including through a third-party provider or examiner.

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The Pennsylvania Supreme Court’s recent decision not to reconsider a lower court ruling that a hospital was not entitled to immunity under the federal Health Care Quality Improvement Act of 1986 (“HCQIA”) could have important implications for entities seeking protection under this Act.

HCQIA was enacted, in part, to encourage candid and critical peer review of physicians without fear of creating a damaging record for potential malpractice lawsuits or a floodgate of employment, tort or contractual actions by the physician whose conduct is being reviewed. To achieve this, the HCQIA provides healthcare employers with immunity from adverse actions taken as a result of professional peer reviews. A professional review action subject to immunity must, however, meet certain standards. Notably, the healthcare employer must establish that the peer review action was taken:

• In the reasonable belief that the action was in furtherance of quality health care;
• After a reasonable effort to obtain the facts of the matter;
• After adequate notice and a hearing that was fair to the physician under the circumstances; and
• In the reasonable belief that the action was warranted by the facts known after such reasonable efforts to obtain facts and after the hearing specified above.

Courts uniformly recognize that addressing disruptive physician behavior is “in furtherance of quality health care.”

In Babb v. Centre Community Hospital, the plaintiff doctor sued his health clinic employer for, among other claims, wrongful termination, breach of contract and defamation. The clinic, in turn, claimed it was immune from the lawsuit under the HCQIA because a peer review committee concluded that the plaintiff “had been unable to work cooperatively and effectively with his colleagues and office staff” as well as – based on a review of medical charts – failed to properly diagnose patients. The committee concluded that such conduct adversely impacted the quality of his patient care, thus justifying his termination. The doctor, however, claimed that he presented sufficient expert evidence showing that the alleged medical deficiencies “were pretextual, retaliatory, and trivial.”

The trial court judge, in line with past precedent, determined that immunity was available under HCQIA as a matter of law if there was any evidence to support the finding that the plaintiff’s termination was based upon improper patient care. Specifically, the court stated:

there are no genuine issues of material fact as to whether Defendants believed that there were patient quality issues relating to Dr. Babb’s employment . . . There are obviously other issues surrounding the relationships between Dr. Babb and the administrators and doctors . . . but those issues do not negate the fact that there were patient quality issues as well.

The Superior Court disagreed, concluding it was not enough that the hospital merely believed that improper patient care issues were implicated, “but rather that their belief, and the efforts made to adduce the facts supporting their belief, were reasonable.” The court explained:

The proper focus for the trial court was whether, viewing all of the information available to it, the peer review body conducted a fair proceeding, made a reasonable effort to obtain the facts and possessed a reasonable belief its action was in furtherance of patient care. . . . Absent such fair proceeding, reasonable effort, or reasonable belief, immunity will not attach.

The Superior Court reasoned that the doctor and the expert opinions he presented raised sufficient material issues of fact as to whether the doctor had shown that the peer review process or his employer’s belief that its actions “were in furtherance of patient care” was unreasonable. Thus, it is up to a jury to decide whether the clinic is entitled to HCQIA immunity.

In upholding the Superior Court’s determinations, the Pennsylvania Supreme Court has reaffirmed a more stringent standard for applying HCQIA immunity. Healthcare employers seeking to avail themselves of such immunity in similar circumstances should be prepared to prove that the conduct of the peer review process and the resulting conclusions are objectively reasonable.

Practical tips providers might consider to avoid the result in Babb include insuring a greater emphasis during the course of the physician’s due process hearing(s) on how the offending behavior (including disruptive conduct) could adversely impact patient outcomes. It is not necessary that an adverse outcome actually result from the offending conduct, only that the physician created a risk thereof. There must be evidence in the record on this crucial point. Likewise, the factual findings the deliberative body must make should include a specific determination linking the conduct at issue with patient care. Finally, to the extent the offending conduct and its link to adverse clinical outcomes is in dispute, the hearing officer and panel should render factual determinations on the strength and credibility of the evidence on this issue.

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Updated: May 10, 2013

Earlier this year we reported on the aggressive efforts of nursing unions to push nurse-to-patient staffing ratios through collective bargaining and by exerting political pressure on state legislatures. To date, California is the only state to pass legislation mandating that a certain number of nurses be staffed for every patient. But as we reported, the National Nurses United (NNU) and affiliated state unions were pushing similar legislative proposals in the District of Columbia, Michigan, New Jersey and Minnesota.

Since our last report, similar bills have been proposed in Florida, Texas, New York, and Iowa, as well as one reintroduced in the U.S. Senate that would apply nationwide.

The common purpose of these laws is to ensure a fixed number of nurses per patient, though there is some variation in the ratios and how they would be established.

Federal Bill

The federal legislation – the National Nursing Shortage Reform and Patient Advocacy Act (S. 739) – would, in addition to establishing minimum direct care registered nurse-to-patient ratios, require hospitals to implement nurse-to-patient staffing plans, and provide whistleblower protections for nurses who refuse to accept an assignment if they believe doing so would violate the requirements of the nurse staffing law or if they do not have the qualifications or experience necessary to perform the assignment. Specifically, the bill would:

• Establish minimum direct care registered nurse-to-patient ratios for particular hospital units, subject to exemptions in emergency situations;
• Prohibit hospitals from averaging the number of patients and nurses during any one shift or imposing mandatory overtime in order to meet the minimum ratios;
• Require hospitals to develop, maintain, and make available to the public a nurse staffing plan developed in conjunction with direct care registered nurses working at the hospital and, where applicable, with the collective bargaining representative of the nurses;
• Require hospitals to maintain records of the actual direct care registered nurse-to-patient ratio in each unit for each shift, and to make these available to the public for no less than 2 years;
• Make hospitals that take adverse action against a nurse for refusing an assignment under these conditions, or for filing a complaint about such assignments, liable for reinstatement, lost wages, other damages and attorneys’ fees;
• Subject hospitals found in violation of the law to civil monetary penalties of up to $25,000 for each knowing violation, or to greater, unspecified monetary penalties if the Secretary of Health and Human Services determines the hospital has a pattern or practice of such violation; and
• Subject individual employees of the hospital found in willful violation of the law to civil monetary penalties of up to $20,000 for each such violation.

If enacted, the federal bill would not preempt more stringent state nurse-to-patient ratio requirements.

While expansive, the National Nursing Shortage Reform and Patient Advocacy Act’s chance of passage this term is slim. Smaller-scale state bills have a greater chance of advancing.

State Bills

On May 14, 2013, the DC Council is scheduled to consider the DC Patient Protection Act. The nurse-to-patient ratios that would be established by this bill are modeled after those established in California. The proposed legislation in Minnesota, on the other hand, would base staffing level requirements on the recommendations of nursing specialty organizations. Many of the proposed state bills would also ban mandatory overtime for nurses, except in emergency situations.

Several of the state measures introduced earlier this year, including the Florida Hospital Patient Protection Act and Texas House Bill 2880, would impose a number of specific staffing ratio requirements, including a minimum nurse-to-patient ratio of 1:1 for active labor patients and 1:2 ratio for critical care patients. New York’s Safe Staffing for Quality Care Act’s requirement for critical care patients would be more stringent, requiring at least one nurse per patient, while the proposed bill in Iowa would allow a more relaxed 2:1 ratio in critical care and labor and delivery units.

Nursing unions and other proponents of the staffing laws argue such laws are necessary for adequate nursing care. Titles of several of the proposed bills, including the Patient Protection Act in the District of Columbia and the Michigan Safe Patient Care Act, prominently emphasize patient safety. But hospital administrators fiercely oppose mandatory staffing laws. They argue that such laws strip them of autonomy in making basic staffing decisions, create undue financial burdens, and impose arbitrary staffing requirements bereft of data establishing appropriate staffing levels. They further argue that federal laws imposing penalties for negative patient outcomes have spurred hospitals to create minimum staffing levels on their own initiative. The American Nurses Association (ANA), which advocates on behalf all nurses – union and non-union – opposes legislatively mandated, “one size fits all” fixed ratios, instead favoring staffing decisions made through a cooperative effort between nurses and hospital administrators that consider the level of patient sickness, the nursing staff’s training and experience, technology, and support services.

It remains to be seen whether these proposed laws will gain the political traction necessary to be the first passed into law since California’s in 2004. The growing number of states in which fixed nurse-to-patient ratio laws have been proposed suggests this battle between nursing unions and hospital administrators will continue to open on new fronts, including picket lines and in federal and state legislatures.

Update: On May 9, 2013, Rep. Jan Schakowsky (D-IL) introduced the Nurse Staffing Standards for Patient Safety and Quality Care Act (H.R. 1907) in the House of Representatives. This bill is substantively similar to the National Nursing Shortage Reform and Patient Advocacy Act.

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Blowing the whistle on Medicare fraud may become dramatically more lucrative. On April 29, 2013, the Department of Health and Human Services (HHS) announced its intention to elevate the maximum payout for whistleblowers by a multiple of nearly one million. Specifically, the HHS’s Centers for Medicare and Medicaid Services (CMS) announced it would raise the ceiling for whistleblower payouts to nearly $10 million from the current cap of $1,000. By revising the Incentive Reward Program provisions in § 420.405 of the Code of Federal Regulations, the proposal would entitle any Medicare fraud whistleblower whose tip leads to a recovery to 15 percent of the overpayments recovered, with a cap of $9.9 million. The goal, according to CMS, is to “increase the incentive for individuals to report information on individuals and entities that have or are engaged in sanctionable conduct; improve our ability to detect new fraud schemes; and help us ensure that fraudulent entities and individuals do not enroll in or maintain their enrollment in the Medicare program.”

The proposed rule contains additional provisions designed to decrease Medicare fraud, including:

• expanding the instances in which a felony conviction can serve as a basis for disbarment of a provider or supplier’s enrollment;
• denying enrollment if the enrolling provider, supplier, or owner had an ownership relationship with a previously enrolled provider or supplier that had a Medicare debt;
• revocation of Medicare billing privileges upon a determination that the provider or supplier has a pattern or practice of submitting claims for services that fail to meet Medicare requirements; and
• limiting the ability of ambulance suppliers to “backbill” for services performed prior to enrollment.

According to HHS Secretary Kathleen Sebelius, the proposed rule is a “signal to Medicare beneficiaries and caregivers, who are on the frontlines of this fight, that they are critical partners in helping protect taxpayer dollars.”

Many observers, however, are wary of the potential negative consequences of the proposed rule. Primary among the concerns is a potential avalanche of mistaken or perhaps even fabricated claims. With a possible windfall of $10 million dollars, employees will have little to no incentive to pursue internal reporting mechanisms, such as company hotlines. By going directly to the government and bypassing the company entirely, the target of the tip will lose the opportunity to remediate the problem (if a problem indeed exists). And, whistleblowers often have only partial or bad information. The proposed rule provides a powerful disincentive for the tipster to check the veracity of his claims internally before contacting CMS.

Another concern is CMS is ill equipped to handle the thousands of tips which will doubtlessly be received by the government once the lucrative potential recovery for whistleblowers becomes more widely known.

A final note: the enhanced award created in the proposed rule is an alternative to a financial recovery under the False Claims Act (FCA). It is not intended to be in addition to awards provided to whistleblowers under the FCA. The proposed rule clearly provides that “an individual is not eligible for an [HHS] reward if he or she has filed a qui tam lawsuit under the federal or any state False Claims Act,” and that the agency will not “give a reward for the same or substantially similar information that is the basis of a payment of a share of the amounts collected under the False Claims Act.”

It is uncertain whether this proposed rule will open the floodgates of unsubstantiated fraud claims. What is clear is Secretary Sebelius and HHS are intensifying the fight to prevent Medicare fraud and abuse.

Interested parties may submit comments on this proposal by June 28, 2013. Comments must refer to the file code CMS-6045-P, and may be submitted electronically through the federal eRulemaking portal, or by regular mail to Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-6045-P, P.O. Box 8013, Baltimore, MD 21244-8013 or Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201.

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As previously discussed, the U.S. Department of Veterans Affairs (the “VA”) issued a proposed rule in February providing long-awaited guidance regarding an exemption to the Service Contract Act (“SCA”) for certain providers of extended care programs entering into agreements with the VA under the Veterans Health Care, Capital Asset and Business Improvement Act. The SCA imposes prevailing wage rate and fringe benefit standards, as well as various reporting requirements, on certain contractors and subcontractors.

We recently interviewed the Director of the Purchased Long-Term Care Group at the VA regarding implications of the proposed rule and steps providers can take to begin preparing for the changes. Highlights of our interview appear below:

• What are the implications of the new rule? Providers will be exempt from the SCA’s reporting and wage payment requirements, effectively removing the ability of the Department of Labor to audit them for SCA compliance. Providers therefore have discretion to determine their own wages. The removal of these reporting requirements will likely result in increased veteran care by small providers of extended care services. Such providers were previously unable or unwilling to admit VA patients, concluding that reimbursement from VA for caring for one or two veterans was not worth the cost of compiling and reporting the data required by general federal contract law.
• What is the status of the final rule? The final rule should be issued within three months, and the new provider agreement released shortly thereafter. The Director’s office is developing the agreement, which will not be reviewed by the Office of Management and Budget prior to issuance.
• What are the anticipated changes to the final rule based on the public comments? The final rule will respond to certain significant public comments which were raised prior to the conclusion of the comment period on March 15, 2013. First, the adult day healthcare community commented that the rule’s reimbursement procedures, whereby either the higher of Medicare or Medicaid rates would be reimbursed to providers by the VA, would not sufficiently cover costs. Second, the hospice community requested clarity regarding whether all four levels of hospice care would be covered by the rule’s procedures (routine home care, in-patient care, respite care and continuous nursing care). Third, the Aging and Disability Network commented that the proposed rule focuses too narrowly on Medicare and Medicaid agencies and requested explicit mention of its work with the VA in the rule, which will likely affect private agencies. The final rule will likely also address several other significant comments.
• What will provider agreements look like?The VA intends to create simple, streamlined agreements. There should not be any surprises, as most of what is currently in the agreements is taken directly from the statute, which has now been around for ten years. The agreements likely will contain the following provisions and/or changes:
  •  The proposed rule expressly states that even though the SCA requirements would not apply, providers are still expected to comply with applicable federal laws concerning employment and hiring practices. To avoid redundancy, the agreements themselves likely will not reiterate this exact statement.
  • The Form 10-1170 Application for Furnishing Long-Term Care Services to Beneficiaries of Veterans Affairs has fallen out of favor, and will be replaced by a cover page stating simply: “A provider agreement exists between [agency] and the VA of [location] for the purpose of [services] effective [date.] See attachment for details,” and signature blocks for the hospital director or designee and for the agency.
  • The agreement will not contain an end date.
  • The new agreement will likely contain a more substantial provision regarding reimbursement, billing and invoicing, including the VA’s new electronic billing scheme which promises payment within five days. Providers are advised to pay close attention to this provision.
  • The agreement will set forth points of contact and attach a rate sheet. If Medicare rates apply, the rates initially will use the low utilization payment rates (LUPA) which operate as a cap on payments made, until the VA’s prospective payment is up and running.
  • The VA will likely not request copies of liability insurance from providers. If the provider is working with the state, the VA may request a copy of a state and/or business license to confirm the provider is in good standing.
  • The new agreement will still contain standard provisions concerning referrals, termination, oversight function, etc. It will likely have modified quality standards for skilled nurses working in the home health care community. The VA is considering removing the standards regarding an agency’s performance on Medicare Home Health Compare and will likely include satisfaction scores as a quality standard.
  • The termination provision will likely not change substantially. The VA will follow the regulation unless there is a specific reason not to do so, particularly for home healthcare. Providers may voluntarily terminate agreements provided they give the VA at least 15 days advance notice. The VA is also required to give providers at least 15 days advance notice, unless the health of a veteran is in immediate jeopardy, in which case two days advance notice is sufficient. However, according to the Director, if the agency is not satisfied with a provider, for simplicity’s sake it will likely discontinue using that provider without actually terminating the agreement. Agreements may also be terminated by mutual consent. Additionally, if a veteran expresses a preference for a particular provider, the local VA medical center will take this into consideration and try to honor that preference. Providers may appeal the VA’s decision to terminate an agreement.
• What will be the process for approving and authorizing services under a provider agreement? The local VA medical centers will determine whether there is a need for provider agreements in particular areas, and if so, how many agreements are needed. The Director believes there is a pressing need for such agreements in the home health care community in particular. The local center will send written notification to providers identifying the proposed agreement, and will request written acceptance from the provider. The Director noted the VA is concerned about the over-medicalization of home health aide services and is considering whether it should provide more opportunities to non-Medicare personal care services providers. Providers may appeal the VA’s decision not to enter into a provider agreement.
• What should providers do in the interim? Providers should await the final rule and pay particular attention to the VA’s forthcoming guidance regarding the new electronic billing scheme. Once the medical centers determine the need for provider agreements, smarter medical centers will likely have open houses soliciting interested providers, and providers should take steps to get themselves noticed. The Director encourages eligible providers to write directly to the head of geriatrics and extended care, the head of social work and/or the head of community health at their local VA hospital, emphasizing how the provider is uniquely positioned to serve the needs of the VA and how the provider’s mission supports veteran care.

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As previously reported, effective November 5, 2012, Massachusetts law prohibits hospitals from requiring nurses to work mandatory overtime except in “emergency situations” where “the safety of a patient requires its use and when there is no reasonable alternative.” The new law, which was buried in the lengthy healthcare cost containment legislation enacted in August 2012, created a new Health Policy Commission (“Commission”) to issue guidelines defining what constitutes “emergency situations.” The Commission recently published its proposed guidelines.  A public hearing for the guidelines is scheduled for April 26, 2013.

The proposed guidelines define “emergency situation” as “an unforeseen event that could not be prudently planned for or anticipated by a hospital and affects patient safety in the hospital and where there is a (a) government declaration of emergency;¹ (b) catastrophic event;² or (c) patient care emergency.”

A “patient care emergency” under the proposed guidelines is defined as “a situation that is unforeseen and could not be prudently planned for or anticipated by the hospital, and that requires the continued presence of a nurse to provide safe patient care.” For example, the guidelines describe the situation when a nurse is engaged in an ongoing medical or surgical procedure that lasts beyond the end of the nurse’s shift. Determining whether a patient care emergency exists would be made by the hospital’s chief executive officer or a specific designee. The guidelines provide, however, that a patient care emergency shall not include situations that result from routine staffing needs, typical levels of absenteeism, or approved time off such as vacation, holidays, or sick leave.

The guidelines also require hospitals to make reasonable efforts to avoid mandatory overtime. The guidelines identify the following examples of reasonable alternatives:

1) maintaining a “float pool”; 2) creating and posting schedules with minimal staffing gaps at least four weeks in advance of scheduled shifts for the purpose of filling any vacant shifts; 3) taking action to fill any remaining vacancies before such shifts occur; 4) establishing an “availability list” or “on-call” list of nurses who may be available to volunteer for unexpected vacancies; 5) convening daily pre-shift huddles to determine patient placement and staffing requirements; and 6) ensuring the hospital’s “emergency operations plan” or “disaster plan” provides for staffing assignments during an emergency situation.

Hospitals are required to make additional good faith efforts prior to mandating overtime. Examples of good faith efforts include:

1) reaching out to all available qualified staff who are working at the time of the emergency situation; 2) contacting qualified employees who have made themselves available to work extra time; 3) seeking the use of off-duty, per diem, and part-time nurses; 4) seeking personnel from a contracted temporary agency when such staff is permitted by law or regulation; and 5) determining whether coverage is available from other units in the hospital.

The Commission scheduled an April 26, 2013 public hearing to consider the proposed guidelines. The hearing will take place from 9 a.m. to 11 a.m. at the Gardner Auditorium, State House, Boston, MA 02133. Interested parties may submit written comments regarding the proposed guidelines to Health Policy Commission, 2 Boylston Street, 6th floor, Boston, MA 02116, Attention Lois H. Johnson. Written comments must be postmarked by May 8 or hand-delivered to the Commission by the close of business on May 10, 2013.

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¹ A government declaration of emergency is defined as “a federal, state, municipal, or local declaration of emergency that takes effect pursuant to applicable federal or state law.”

² A catastrophic event is defined as “an unforeseen event that substantially affects or increases the need for health care services, such as a natural disaster, an act of terrorism, or an extended power outage.”

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Last week, a divided U.S. Supreme Court ruled in Genesis HealthCare Corporation v. Symczyk, that if the Fair Labor Standards Act (FLSA) claim of a lead plaintiff in an FLSA collective action becomes moot before anyone else opts in, the mere presence of collective action allegations in the complaint is not sufficient to make the FLSA claim justiciable, and the FLSA claim should be dismissed for lack of subject matter jurisdiction.

Background

Laura Symczyk was employed as a registered nurse by Genesis Healthcare Corp. in Philadelphia for eight months during 2007. Two years after she left, Symczyk filed a collective action against Genesis in federal district court, claiming Genesis had violated the FLSA by automatically deducting 30 minutes of time per shift for meal breaks, during which she claimed compensable work had been performed. Symczyk asserted her claims on behalf of herself and all employees similarly situated, seeking back pay, liquidated damages and attorney’s fees. When it answered the complaint, Genesis served Symczyk with an offer of judgment under Federal Rule of Civil Procedure 68, offering her $7,500 for alleged unpaid wages, plus attorney’s fees, costs, and expenses as determined by the court. Under Rule 68, a plaintiff who rejects an offer of judgment and then secures less at trial is liable for post-offer costs (such as expert witness fees, mileage fees to subpoenaed witnesses, court filing fees, and costs for transcripts and photocopying). Symczyk did not accept Genesis’ offer of judgment, and it expired.  Continue reading this entry at Littler’s Wage and Hour Counsel.

A National Labor Relations Board Administrative Law Judge (“ALJ”) recently held that Petaluma Valley Hospital violated the National Labor Relations Act by refusing to provide the California Nurses Association/National Nurses United (“CNA/NNU”) with information regarding strike replacements. This decision is of particular importance to unionized hospitals that are faced with increasingly common nursing strikes.

The hospital and NNU were involved in contract negotiations and – in what is becoming a familiar NNU bargaining tactic – the NNU notified the hospital that nurses would engage in a one-day strike. In response, the hospital engaged a staffing agency to supply replacement nurses. Because the staffing agency required a five-day minimum for replacement nurses, the hospital informed NNU that nurses could not return to work until after the five-day period.

Asserting the information was relevant to evaluate the hospital’s claim, the NNU sent an information request to the hospital seeking a copy of the contract with the staffing agency; any and all documents related to the negotiation of the agreement with the staffing agency; and copies of all contracts the hospital entered with staffing agencies for the past three years. The hospital refused to produce the requested documents, objecting that the information sought did not relate to the terms and conditions of employment for bargaining unit members and that the information was confidential, proprietary business and/or financial information and protected by the attorney-client and/or work product privileges.

In ruling on the NNU’s resulting unfair labor practice charge against the hospital for failure to provide the information, the ALJ rejected the hospital’s justifications for refusing to produce the staffing contract, finding that “[b]ecause a hospital has a right to delay reinstatement of striking workers when it has guaranteed temporary replacement workers minimum work days, the [CNA/NNU’s] request for the temporary staffing contract is especially relevant in determining whether [the hospital] was contractually obligated to employ the replacement workers for five days and delay the reinstatement of the strikers.” Applying this reasoning, the ALJ similarly held that documents related to the negotiation of the staffing contract and prior staffing contracts were relevant. The ALJ concluded that the hospital violated the Act and ordered the hospital to produce the documents. It is unclear at this point whether the hospital will appeal the ALJ’s decision to the National Labor Relations Board (“Board”).

Although the ALJ’s decision is not binding legal precedent unless the decision is adopted by the Board, employers should exercise caution when responding to a union’s request for information related to strike replacements.

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The Third Circuit recently upheld the National Labor Relations Board’s finding that a separately organized nursing home facility is properly considered a single employer with its parent company. The case, Grane Health Care v. NLRB, involved a nursing home that was purchased by Grane Healthcare Co. Grane subsequently established a new entity called Cambria Care Center to operate the facility. The facility’s employees had been represented by two unions. Grane refused to recognize those unions after it purchased the nursing home. Grane also extended employment offers to most of the facility’s employees, but did not offer employment to four out of the five officers of one union and an employee represented by the other union who was active in an earlier strike.

The unions filed unfair labor practice charges over Grane’s decision not to recognize the unions as the exclusive bargaining representatives and not to hire the five individuals. Perhaps unsurprisingly, the Board found in favor of the unions. Notably, the Board found that Grane and Cambria were single employers and were therefore jointly and severally liable for the violations. Under the “single employer” doctrine, the Board may treat two different corporate entities as one employer for liability purposes under the National Labor Relations Act.

Grane and Cambria sought relief from the Third Circuit, but found none. The Third Circuit held that the Board properly applied its familiar four-part test for determining single employer status. Specifically, the factors it considers are: (1) functional integration of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership.

The finding that the healthcare facilities were a single employer under the NLRA is not a shocking result, as the Third Circuit identified a number of factors pointing to single employer status, such as: the fact that Grane owned 99.5% of Cambria; the existence of a management agreement between Grane and Cambria; significant overlap between officers of the two corporations; and the fact that the Cambria administrator reported directly to a Grane vice president.

The employers’ appeal of the single employer determination was based largely on the argument that Grane did not control labor relations at Cambria – the most important factor in the Board’s four-part test. However, the Third Circuit swatted this argument aside, noting that the administrator who purportedly did control labor relations lacked knowledge regarding much of the facility’s operations.

Based on the facts recounted by the Third Circuit, this is not a terribly close case. However, it does serve as a useful reminder that simply maintaining corporate formalities will not guarantee that distinct corporate entities cannot be reached for liability purposes.

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