Sodexo Sues SEIU Under RICO, Prime Healthcare May Follow Suit

Prime Healthcare vows to fight alleged extortion by SEIU; Union denies extortion.

By Miguel Gonzalez
Editor
High Desert Daily

(Victor Valley) – Sodexo USA, a food services giant recently sued the Service Employees International Union (SEIU) in federal court under the Racketeering Influenced and Corrupt Organizations (RICO) Act. Sodexo claims SEIU has engaged in extortionate threats and barrage of unlawful tactics including blackmail, vandalism, trespass, harassment and lobbying law violations.

“This is about protecting the Company’s business and the rights of our employees to vote freely about union representation,” said Robert Stern, Sodexo’s legal council, “We work constructively with unions every day but the SEIU has crossed the line by breaking the law. We will not tolerate the SEIU’s tactics any longer. Their campaign jeopardizes our Company and our employees’ jobs, and ultimately would rob our employees of their right to vote.”  According to the complaint obtained by High Desert Daily, Sodexo alleges that the SEIU, in face to face meetings, threatened Sodexo’s executives that it would harm Sodexo’s business unless they gave in to the union, and then carried out its threats through egregious behavior, including:  throwing plastic roaches onto food being served by Sodexo at a high profile event. The complaint also alleges scaring hospital patients by insinuating that Sodexo’s food contained bugs, rat droppings, mold and flies; violating lobbying laws to steer business away from Sodexo, even at the risk of costing Sodexo’s employees their jobs; and harassing Sodexo’s employees by threatening to accuse them of wrongdoing.

The complaint, filed in federal court in the Eastern District of Virginia, seeks an injunction against the SEIU and its locals and executives, as well as monetary damages to be determined by the court. SEIU, through a spokesman, has called the lawsuit “bogus litigation meant to deprive workers of the right to bargain collectively with their employers and undermines the middle class in the United States.”

The complaint also refers to other companies like Prime Healthcare Services that have been the victims of similar campaigns by SEIU.  Prime Healthcare, the largest for-profit hospital system in California, has stated it has been subject to similar extortion tactics and a corporate campaign to obtain a neutrality agreement depriving its 9,000 employees of an option to choose freely. According to Prime Healthcare officials interviewed by High Desert Daily, the alleged extortion scheme stems from a series of failed negotiations between Prime Healthcare, which owns 14 hospitals in California, and SEIU at one of Prime’s hospitals, Centinela Hospital Medical Center.  Prime officials claim they are the victim of a corporate campaign waged by SEIU to force it to accede to demands made by the union. Prime Healthcare claims SEIU made false allegations of having one of the highest diagnosis rates of blood poisoning cases, or sepsis, and malnutrition at Prime Healthcare’s hospitals. The union has also alleged Prime Healthcare is guilty of fraudulent Medicare billing, commonly known as “upcoding” in the medical field. The dispute has caused probes from both federal and state regulators.

Prime Healthcare’s legal counsel, Mike Sarrao, after reviewing Sodexo’s lawsuit noted that Prime Healthcare’s experiences with SEIU are remarkably similar to those experienced by Sodexo. “Its déjà vu” he said.

“We take pride in the care we give our patients and this accusation is nothing but a baseless fabrication that was made after we chose not to give in to SEIU demands for a contract,” said Suzanne Richards, Vice-President for Clinical Operations at Prime.  Richards pointed out that Prime Healthcare Services has been ranked by Thomson Reuters as one of the top 10 US Health Systems in 2009, the only for-profit health system in the nation and only health system west of the Mississippi to receive this coveted recognition.

SEIU officials have denied they are behind any extortion campaign against Prime Healthcare and instead say they are simply looking to expose a “gross level of mistreatment of workers and patients by Prime Healthcare,” said SEIU analyst Adam Weisberg. “We don’t know whether these infections are real or whether they represent potential Medicare fraud. Whatever the reason, it is imperative the authorities take a look and figure out what is going on at Prime Healthcare. Until they do, we are going to continue to shine the light on Prime Healthcare.”

Sepsis Campaign

Sepsis is defined as a potentially serious medical condition that is characterized by a whole-body inflammatory state (called a systemic inflammatory response syndrome or SIRS) in the presence of a known or suspected infection.  In layman’s terms, sepsis is considered a form of blood poisoning. Mortality rates from sepsis can be as high as 60%, depending on the age of the patient. However, this high rate is attributable to many cases going undiagnosed because of how difficult it is to differentiate sepsis between other ailments.

Early diagnosis and treatment of sepsis results in better outcomes in terms of patients’ recovery and survival. Prime Healthcare hospitals are not unique in such early interventions. Other hospital chains such as Kaiser Permanente, Sutter Health and Adventist Health have seen their rates of early detection of sepsis cases increase dramatically.

A program implemented by Kaiser Permanente’s Northern California division to speedily diagnose and treat sepsis patients has prevented an estimated 700 deaths and saved the system more than $30 million since it was implemented in late 2008.

“Kaiser Permanente hospitals are in the midst of an aggressive campaign to improve the care of patients with sepsis and to reduce mortality rates,” said Kaiser’s Media Relations director, Jim Anderson,  “Teams of physicians, nurses and other care-givers are working on early detection and optimal treatment of patients who may have sepsis.  Although it is premature to quantify the outcome of the program, early results show improvement in care of patients with sepsis and a decline in mortality rates.”

Joint Commission Reviews Sepsis Claims

In response to claims filed by the SEIU to the Office of the Inspector General (OIG) and the California Department of Public Health, two national hospital accreditation agencies, the Health Facilities Accreditation Program (HFAP) and The Joint Commission conducted unannounced surveys of nearly one dozen Prime hospitals in late November and early December 2010 to review the claims of sepsis. Following extensive evaluations, including the review of hundreds of patient charts, both agencies found no basis for SEIU’s allegations, according to documents obtained by the High Desert Daily.

According to a letter written by accreditation specialist Susan Lautner for the Health Facilities Accreditation Program and obtained by the High Desert Daily, Ms. Lautner wrote, “the allegations contained in the complaint (…upcoding/over-billing for diagnosis and serious infection control issues…) were reviewed and found to be not substantiated…. This complaint is now considered closed….”

The California Department of Public Health also acknowledged it was involved. “Our investigation on PHS’ practices came after the SEIU data was forwarded to us,” the California Department of Public Health spokesperson Ralph Montano told High Desert Daily in a phone interview. Asked if there is a penalty for would-be whistle blowers who falsely report or distort information to the CDPH, Montano said he could not comment.

While preliminary survey findings showed deficiencies, Prime Healthcare’s General Counsel, Mike Sarrao said, “Prime Healthcare is confident that CDPH’s initial findings will be reversed after CDPH has reviewed all of the facts and reviews the matters using correct standards.” The final reports from CDPH are not yet available in this regard.

An Era of Corporate Campaigns

Hospital officials say SEIU began its corporate campaign in February 2010, following a series of false accusations made by SEIU’s pension fund manager, CtW Investment Group, to Medical Properties Trust (MPT), a publicly traded real estate investment trust which serves as Prime’s landlord and/or lender at several of its hospitals. CtW erroneously claimed that Prime’s hospitals did not comply with California’s earthquake safety laws, had infection control problems and engaged in Medicare fraud.  Recently, Community Health Systems, the second largest hospital system in the nation, disclosed that they had also received letters from CtW making false claims about its operations steered by SEIU.

Jarol B. Manheim, an independent professor of Media Public Affairs and Political Science at The George Washington University, has written extensively about “corporate campaigns”, calling them an attack on a company or industry’s ability to conduct its routine business. According to Manheim, the objective of the “campaign” is to generate so much pressure on the “target” that it will give in to demands, in this case promulgated by the union.  Manheim is the author of the 2005 study on corporate campaigns called “Trends in Union Corporate Campaigns” published by the U.S. Chamber of Commerce.

According to the study, corporate campaigns employ “power structure analyses” to identify and exploit vulnerabilities in critical stakeholder relationships on which all companies depend. “This approach is then implemented through tactics that range from highly sophisticated financial and governance initiatives to street theater and even psychological warfare,” Manheim said.

“Typically, the role of the corporate campaign today is to force management to accede to union demands for “card check and neutrality,” added Manheim.

California Hospital Association CEO Duane Dauner has witnessed a number of corporate campaigns and describes them as a way to pressure hospital systems so unions can get a “card check” status. “Corporate campaigns add negative publicity to hospitals. It is a modern technique that to some hospitals it is not worth experiencing so they try to reach a deal with the unions launching these campaigns.”

Dauner explained that historically, many hospitals in California have chosen to fight these campaigns while others have simply reached a deal with the unions.

“Different hospitals view corporate campaigns in different ways. Some have resisted them; some have given into to them. This is a pressure tactic that is so far out of the historic way in which the national labor was organized in1935,” said Dauner.

Manheim’s study reveals that the corporate campaign was invented by the New Left in the 1970s, and by the 1990s was in widespread use by the labor movement. To date, unions have waged nearly 300 campaigns against employers, primarily, though not exclusively, to facilitate organizing, reads the report.

Manheim told High Desert Daily that through corporate campaigns such as “the one being run by SEIU, unions are mounting a new kind of attack on corporations in order to achieve its organizing objectives.” “Employing political, economic and legal pressure tactics built around the media, union corporate campaigns are well-planned assaults on a corporation’s reputation and its business as a means of extorting the ends sought by the corporate campaigner,” Manheim added.

Asked if the attacks would stop if Prime would reach an agreement with the union, Weisberg said the accusations would still not go away. “This is not going away. These guys have to change what they are doing. The light is on them and it is not going off.”

Prime Files Complaint with Federal Officials

In response to the allegations raised, Prime officials recently filed a complaint with the United States Attorney’s Office in Los Angeles, alleging various extortion techniques used by SEIU.  According to its attorney, Russell Hayman of McDermott, Will and Emery, Prime’s complaint alleges a number of violations, including violating the federal Hobbs Act.  When contacted, Thom Mrozekm, spokesman for the Los Angeles Office of the U.S. Attorney said he could not “confirm nor deny that SEIU was under investigation after the complaint filed by Prime.”

Malnutrition Campaign

Undeterred by its allegations surrounding sepsis being disproved, SEIU officials have begun a new campaign against Prime, this time circulating a new “study” focusing on alleged higher incidence of malnutrition at Prime’s hospitals which was published by California Watch. The article states that the malnutrition rates are the highest in California at Prime’s Huntington Beach Hospital. Our review of the same data from OSHPD reveals that Kaiser Foundation Hospital – Woodland Hills reported the highest incidence of malnutrition at 42%. Also, the article claimed that a malnutrition condition called Kwashiorkor “almost exclusively afflicts improvised children in developing countries, especially during famine” and suggested that Kwashiorkor does not exist amongst the elderly. Our review of the same OSHPD data which California Watch purportedly relied upon reveals that over 2,000 cases of Kwashiorkor were reported in 2009 by California hospitals other than Prime Healthcare’s hospitals in elderly patients. Highest number of reported cases of Kwashiorkor occurred in various Kaiser Foundation hospitals, Eisenhower Hospital in Rancho Mirage, St. Joseph Hospital in Orange, Stanford University Hospital in Palo Alto, amongst several other hospitals other than Prime Healthcare’s facilities.

Prime claims that nutritional assessment of all patients is done routinely at its hospitals and malnutrition is highly prevalent among elderly patient populations. Several studies reported the prevalence of malnutrition in 60-80% of elderly patients and malnutrition is a major factor of patient care outcomes.  Prime’s analysts say that hospitals do not diagnosis these conditions, but simply extract what is written in the patient medical charts by physicians. “Hospitals do not practice medicine, doctors do,” said Mike Sarrao, Prime’s legal counsel.

SEIU representatives vow to keep on “exposing” Prime Healthcare and “its backroom negotiations to position itself as a purchaser of ailing hospitals,” concluded SEIU spokeswoman Lisa Hubbard.

Prime Healthcare and its officials charge that despite passing multiple state and federal inquiries, the ongoing perception of investigations affect the chain of hospitals and “unfairly puts the system under a cloud of suspicion.” Suzanne Richards, Vice-President for Clinical Operations at Prime who is also a registered nurse, said that the scare tactics by the SEIU aim to affect the same employees they are looking to represent. “Our hospitals provide high quality healthcare with excellent and devoted healthcare workers. These baseless investigations pull resources away from the patients. It is very upsetting because it is a waste of money, resources, people and the ever shrinking healthcare dollar.”

Prime Healthcare’s legal counsel, Mike Sarrao, said Prime Healthcare is closely watching Sodexo’s lawsuit against SEIU and is considering all of its options, including legal action, to protect the company, its more than 9,000 employees, and communities who rely on Prime Healthcare hospitals for patient care.

4 comments for “Sodexo Sues SEIU Under RICO, Prime Healthcare May Follow Suit

  1. Evans
    May 10, 2011 at 3:37 pm

    It is high time SEIU is brought to book. I will not be surprised if other business entities follow suit. The problem in this country is that these unions are in bed with politicians and they will stop at nothing to get what they want. I thought the right to belong to an association was a personal thing but oh boy how wrong I was! Well, time will tell….

  2. Frank Murphy
    May 10, 2011 at 4:15 pm

    Glad to hear the unions are getting taken down. Good job to Prime Healthcare for standing up for what is right! People really need to start seeing through the smoke screen that the SEIU has been blowing in all of our faces. Enough is enough.

  3. Paul Saabe
    May 10, 2011 at 4:36 pm

    This article reminds me of a very nice book, the devil at my doorstep. It depicts the same story in which how a small company with a very good worker friendly environment and a public imgae had to withstand grueling war to protect its business from falling down by same extortion tactics by SEIU. One word which describes SEIU tactis is: “Oxymoron”, SEIU tries to destroy the company’s image and business in order to gain the rights to “protect rights” of the employees of that company. How are they calling themselves as protector of workers’ rights when SEIU is trying to destroy the very company for which these workers work.

  4. James
    May 10, 2011 at 10:51 pm

    At least someone is able to finally stand up to this SEIU people. This has been their mode of operation for far too long. It will be great to see what the effect of Sodexo and possibly prime healthcare suit will end up in. Some of these unions are just destroying business!

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