Employee lawsuit could complicate sale of California hospital chain

Employees of a network of Catholic hospitals in California filed a lawsuit that could complicate a planned sale of the hospitals to Prime Healthcare Services Inc.

The lawsuit, filed Tuesday in federal court in San Francisco, seeks to protect the pensions of thousands of employees and retirees at six hospitals from the Daughters of Charity Health System, including St. Vincent and St. Francis medical centers in Los Angeles County.

Prime, a for-profit chain based in Ontario, agreed to buy the hospitals in a deal announced Oct. 10. It vowed to keep all the hospitals open and maintain their existing services, including emergency rooms and trauma centers, for at least five years.

Prime also said it would assume about $300 million in pension liabilities for 17,000 current employees and retirees of the hospitals, which have been struggling financially.

The lawsuit, filed against Daughters of Charity and supported by the Service Employees International Union-United Healthcare Workers West, seeks to guarantee pension benefits for the hospitals’ employees, even after the sale.

“Daughters of Charity’s decision to sell to Prime puts the future of … employees and retirees at grave risk,” said Dave Regan, president of the SEIU’s United Healthcare Workers West. “This lawsuit will ensure that the obligations to people who have devoted their lives to serving the sick and poor at Daughters facilities, and who have done their life planning around receiving a pension, do not have the rug pulled out from under them.”

Daughters of Charity said employee pensions would be protected under the terms of the proposed sale.

“The lawsuit filed today by the SEIU is nothing more than an unfortunate scare tactic by a union waging a corporate campaign against Prime Healthcare that will do whatever it can to stop its purchase of Daughters of Charity Health System, including jeopardizing the pensions of its own members,” the hospital chain said in a statement. “Prime Healthcare has agreed to take 100% responsibility for all pension obligations for past and current Daughters of Charity employees.

“This is a dangerous and unacceptable action by the SEIU and we are confident that the suit will be thrown out of court quickly.”

Prime Healthcare also criticized the lawsuit, saying it was assuming $312 million in pension obligations for the hospital chain’s workers.

“SEIU’s lawsuit puts the well-being of its own members at risk, and nothing more,” Prime said in a statement. “Prime Healthcare has already guaranteed in its purchase agreement with the Daughters of Charity that it will protect the pensions of more than 17,000 union and non-union active and retired workers.’’

The SEIU said in a news release that the pension benefits could be jeopardized if Prime puts any of the hospitals into bankruptcy.

The SEIU has been attacking the proposed sale for weeks, even before it was announced, accusing Prime of putting profits ahead of patient care. The union recruited state lawmakers and community groups to oppose the sale, which still must be approved by California Atty. Gen. Kamala D. Harris.

In addition to St. Vincent near downtown Los Angeles and St. Francis in Lynwood, Daughters of Charity owns four San Francisco Bay Area hospitals: O’Connor Hospital in San Jose, Saint Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City and Seton Coastside in Moss Beach.

Prime owns 29 hospitals in California and eight other states.