The plot thickens in the saga surrounding Southern California-based Prime Healthcare’s rumored acquisition of struggling nonprofit Daughters of Charity and its six hospitals.
Earlier this week, Prime Healthcare Services filed a lawsuit against California’s biggest healthcare union, SEIU-UHW, claiming the union is “conspiring to extort, threaten and force Prime Healthcare to enter into a ‘neutrality agreement’ that would enable SEIU to force all employees into the union regardless of choice,” according to an announcement from Prime.
The lawsuit comes as SEIU has been in engaged in an effort to block Prime from acquiring six Daughters of Charity hospitals in Northern California, claiming Prime would be ill-suited to run the safety-net hospitals, in part because of a 2013 whistle-blower suit that alleges Prime fraudulently over-billed CMS by some $50 million.
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The announcement on the lawsuit makes no specific mention of SEIU’s vocal stance against Prime’s potential ownership of the Daughter’s hospitals, which has included urging several California politicians, including California Attorney General Kamala Harris, to join to block any purchase. Harris must approve any final acquisition.
But the lawsuit does confirm that Prime put forward a bid, the San Jose Mercury news reported, and Prime does go on to claim the union has “issued malicious and false statements, funded operations with money unlawfully received in violation of federal law … and threatened to prevent acquisitions of hospitals by Prime Healthcare unless it concedes to defendants’ demands and provide them control of all Prime Healthcare hospitals.”
Steve Trossman, a spokesman for SEIU-UHW, said in a statement that the lawsuit is unfounded.
“The allegations in Prime Healthcare’s lawsuit against SEIU and related groups and individuals simply do not hold up to scrutiny,” he said. “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.”
It’s not the first time Prime has sued SEIU, having filed an anti-trust suit in 2011 alleging the union and Kaiser Permanente conspired to block Prime from competing in certain hospital markets, according to Modern Healthcare. The suit was dismissed last year but it currently is in appeal.
Daughters’ CEO Robert Issai told California Healthline recently that “unfounded criticisms” of potential acquirers were “dangerous to the future of healthcare needs of the local communities.”
Prime is seeking general damages, claiming the union’s conduct has caused financial harm. The suit against the union falls under the Racketeering Influenced and Corrupt Organizations Act, or RICO, alleging the union conspired to “target and attack Prime with the ultimate objective of either unionizing Prime, thereby altering its cost structure and business model, or eliminating Prime from the market altogether.”
The small health system did not comment on Prime’s lawsuit and said it has received interest from seven total parties interested in acquiring the system. The winning bid will be announced this fall.
