Prime Healthcare extortion suit against union largely thrown out by judge

Prime claimed SEIU and Healthcare Workers of the West were guilty of extortion and other illegal methods in their attempts to unionize hospital employees and challenge the company’s $843 million acquisition of the Daughters of Charity Health System in California.

Prime Healthcare Services’ lawsuit against Service Employees International Union in the wake of a ruined Catholic health system takeover is hanging on by a string after a federal judge in California has dismissed most of the suit.

Prime claims SEIU and Healthcare Workers of the West are guilty of extortion and other illegal methods in their attempts to unionize hospital employees and challenge the company’s $843 million acquisition of the Daughters of Charity Health System in California.

[Also: Daughter's of Charity sues SEIU for fouling up Prime deal]

U.S. District Court Judge Gonzalo Curiel in San Diego dismissed many of Prime’s allegations and determined that others were still barred because of another antitrust lawsuit filed by Prime. The company will have 30 days to file an amended complaint.

Prime recently backed out of its bid for Daughters of Charity over strict conditions on the takeover imposed by the state attorney general.The SEIU waged a campaign to stop the takeover, or at least get major concessions.

[Also: UPDATED: Prime backs out of Daughters of Charity deal]

Prime had filed a prior lawsuit last fall against the SEIU alleging violations of the Racketeering Influenced and Corrupt Organizations Act and the Labor Management and Relations Act.

SEIU, Prime alleged, tried to kill the company’s acquisition of Daughters and other hospitals through “false and disparaging public accusations of wrongdoing,” such as using misleading reports and studies and initiating fake complaints that caused regulatory and administrative hurdles. Prime also accused the SEIU-UHW of harassing and threatening patients, alleging that union representatives suggested in community forums and in the media that patients in Prime facilities had an above average rate of contracting life-threatening sepsis.

Curiel dismissed most of those claims, ruling that they had largely been addressed by another dismissed antitrust lawsuit filed by Prime in 2011 accusing the SEIU and several Kaiser Permanente facilities of conspiring to keep Prime out of the California healthcare market.

[Also: Kaiser Permanente: No we don't back Prime's bid for Daughter's of Charity]

But Curiel did allow one of the allegations to go forward if Prime files an amended suit: the argument that the SEIU-UHW violated section 303 of the Labor Management Relations Act barring unions from using secondary boycotts against firms.

Prime argued that the SEIU-UHW violated the LMRA by protesting at a Daughters hospital, backing a pension-related lawsuit filed by union members against Daughters and attempting to coerce Prime into joining a multi-employer bargaining group.

The workers who filed that suit, who were separate from the union but had its backing, argued that Daughters had underfunded the system’s pension plan by $229 million, and that the Prime takeover would increase the risk of a pension shortfall.

Prime has until May to file the amended complaint. As for the Daughters of Charity Health System, the hospitals may end up going bankrupt amid losses up to $10 million a month. Other buyers may step up for the whole system, or more likely certain facilities. Among the potential buyers are Alecto Healthcare Services, which is owned by the brother-in-law of Prime founder and CEO Prem Reddy, MD, and the Hospital Corporation of America, which owns the Good Samaritan Hospital and Regional Medical Center in San Jose, according to the San Jose Mercury News. 

Twitter: @AnthonyBrino