ONTARIO, Calif.--(BUSINESS WIRE)--A groundbreaking federal civil rights action filed today by Prime Healthcare claims California Attorney General Kamala Harris abused her constitutional powers by imposing unprecedented conditions on the sale of Daughters of Charity Health System (DCHS) and by placing the interests of a labor union over the health-care needs of communities across the state.
Prime Healthcare filed its lawsuit in US District Court for the Central District of California, calling the legal action “a sweeping indictment of governmental overreach and the California regulatory system and the unlawful influence of the Service Employees International Union – United Healthcare Workers West (SEIU-UHW).” According to the complaint, Harris sold her political office to UHW by conditioning her regulatory approval of the DCHS purchase on Prime’s agreement to accept UHW unionization demands.
The lawsuit names Harris as defendant and seeks immediate injunctive relief on numerous constitutional grounds, including violations under the due process and equal protection clauses of the U.S. and California constitutions.
“Attorney General Harris abused her constitutional authority by placing her need for political financial support over the health-care needs of the people,” said Troy Schell, general counsel for Prime Healthcare. “By imposing restrictive conditions on Prime and only Prime, she forced the company to withdraw its offer for the DCHS hospitals, jeopardizing health care in these underserved communities.”
The detailed 62-page lawsuit filed by Ontario-based Prime accuses Harris of being the puppet of the SEIU-UHW, which has waged a years-long corporate campaign against Prime in order to force the company to allow the SEIU-UHW to unionize all its hospitals. The lawsuit alleges that the SEIU-UHW promised to support Harris using up to $25 million in political contributions through an independent expenditure fund if she denied the DCHS-Prime sale or imposed deal-killing conditions.
“Harris’ unlawful, unethical and corrupt conduct provides a stark example of the governmental misconduct that (the U.S and California constitutions) were designed to protect against,” the lawsuit states.
Prime was selected by the DCHS board of directors to take over the financially failing hospitals in October 2014 after an exhaustive search that included consideration of hundreds of competing bids. Board members said Prime’s $843 million offer, which protected the unfunded pensions of 17,000 current and former employees, preserved charity care and essential services and continued the Daughters of Charity’s health-care mission, far exceeded all other proposals.
The sale had the overwhelming support of the public, physicians and nurses --including the California Nurses Association. The only organized opposition was created by the SEIU-UHW.
According to the complaint, during Prime’s negotiations with SEIU-UHW, Dave Regan, the union president, repeatedly told Prime that Harris would deny or effectively deny with onerous conditions the DCHS sale if Prime did not agree to SEIU-UHW’s demands. Regan said Harris would “do what [he] told her to.” Regan also told Prime that a UHW deal was the price of doing business in California. Prime was told the same thing by DCHS and various political consultants and confidants of Harris.
After Prime refused to give in to the SEIU-UHW demands, Harris ignored the pleas and petitions of the public and imposed a litany of conditions that essentially forced Prime to continue hospital operations unchanged for 10 years, “a requirement that would have made it impossible to save the hospitals,” according to the suit. In all other hospital transactions before or since, Harris has placed only five-year conditions on services, which is considered the national standard.
Prime, which has rescued more than 35 failing hospitals nationwide, was forced to withdraw its purchase offer due to Harris' sale conditions. In the months since, mitigation plans have been put in place to eliminate many essential services at the DCHS hospitals – services that Prime had pledged to keep open, including women's health and pediatrics. The hospitals continue to lose millions of dollars a month.
“This lawsuit reveals that the attorney general cares more about her political health and the support of the SEIU-UHW than the health of the people she is sworn by law to serve,” Schell said. "Prime is taking this legal action to protect against such unjust and undemocratic regulation."
The lawsuit details how the regulatory authority given the attorney general under the Non-Profit Hospital Transfer Statute lacks transparency and is easily abused. The act gives the attorney general limitless discretion to impose her will without establishing objective criteria and without making the reasons for her decisions public. There is no appeal process. The lawsuit asks the court to rule the transfer statute unconstitutional.
The DCHS decision was not the first time that Attorney General Harris caved to the SEIU-UHW and rejected a bid by Prime to save a failing hospital in California. In a case described in detail for the first time in the lawsuit, Harris in 2011 overruled the recommendations of her own staff and without explanation denied Prime’s purchase of Victor Valley Community Hospital (VVCH).
The VVCH decision was particularly egregious because Harris denied the sale of non-profit VVCH to the non-profit Prime Healthcare Foundation, the first and only time the sale of a non-profit hospital to another non-profit buyer was denied. Instead, Harris gave her support to a controversial company that converted VVCH to a for-profit hospital.
“It is the sworn duty of the attorney general of the state of California to uphold the law and not act based on personal prejudice or for political gain,” said Mike Sarian, President of Prime Healthcare. “Time and again, this attorney general has abused her authority, unlike any other attorney general we deal with across the country. In state after state, Prime has been able to save hospitals, provide award-winning care and preserve health-care access. But Attorney General Harris placed political interests above what was right and best for these hospitals and the people of California."
About Prime Healthcare
Prime
Healthcare Services
Prime Healthcare is an award-winning national hospital system with 35 acute-care hospitals providing more than 35,000 jobs in 11 states. Based in California and one of the largest hospital systems in the country, Prime Healthcare is committed to ensuring access to quality healthcare. It has been recognized as among the “100 Top Hospitals” in the nation 33 times and among the “15 Top Health Systems” three times, and is the only "10 Top Health System" west of the Mississippi. Our hospitals have been recognized by The Joint Commission among the "Top Performers on Key Quality Measures" in 2014. For more information, please visit www.primehealthcare.com
