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How Unions are Using the Sherman Antitrust Act and Wage Surveys to Organize the Healthcare Industry

HealthLeaders Magazine , By Mark Peters and Charles Williamson, for HealthLeaders News, March 9, 2007

The Service Employees International Union on Jan. 29, 2007, intensified its efforts to organize in the healthcare industry by forming SEIU Healthcare, which it describes as a “new national union of nearly one million healthcare members.” Focusing on traditional organizing issues such as pay, benefits and job safety, SEIU Healthcare is the most recent and direct effort by a union to organize the healthcare industry and obtain dues from its more than 13 million employees. Like other unions, traditional direct organizing campaigns are but one arrow in the SEIU’s quiver. Others include asking healthcare facilities for voluntary recognition and crafting public relations campaigns ranging from “mock funerals” to inflating giant rats in an effort to dramatize quality of care issues and decry what they perceive to be excessive executive compensation. Recently, the SEIU has taken a new and indirect approach to organizing by supporting plaintiffs in class-action antitrust lawsuits filed against healthcare companies in San Antonio, Chicago, Memphis, Detroit and Albany. The plaintiffs in all five cases claim that the healthcare facility defendants and other “unidentified co-conspirators” violated the Sherman Antitrust Act by engaging in a conspiracy to exchange compensation information and depress nurse wages. As a general rule, the Sherman Antitrust Act prohibits companies from acting together in a way that restrains trade by monopolizing a market, fixing prices and excluding competitors. Penalties for violations include civil damages and criminal sanctions. The SEIU-backed plaintiffs argue that the defendants’ alleged activities have negatively affected patient care, speculating that “if nurses were paid better, fewer would leave the profession, and in the long run, more would be encouraged to go into the profession in the first place.” As those in the healthcare industry know, the SEIU’s theory dramatically oversimplifies the current nursing shortage and portrays the millions of hard-working healthcare employees and their employers in a false and undeserved negative light. To determine if sharing compensation information violates antitrust law, courts focus on the market power of the companies involved and the nature of the information exchanged. Recognizing the positive benefits of sharing wage information, the Department of Justice and the Federal Trade Commission established an “Antitrust Safety Zone” for companies that share wage information under the following conditions:

  1. The survey must be managed by a third party who does not participate in the survey.
  2. The information submitted by survey participants must be at least three months old.
  3. The survey must include data from five providers for each reported statistic.
  4. No single provider’s data may represent more than 25 percent of any reported statistic.
  5. The survey data may not be disseminated in such a way that would permit any data to be identified by the survey participant who provided it.
The plaintiffs’ theory in these cases places a unique spin on the Sherman Antitrust Act, leaving many commentators to question whether a court should even apply antitrust law to the SEIU’s transparent attempt to use the lawsuits to put economic pressure on the hospitals for union recognition. That attempt became even more apparent when--perhaps not coincidentally less than a week before announcing the formation of SEIU Healthcare--the plaintiffs in the San Antonio case served subpoenas on 14 other healthcare facilities (ranging from hospitals to psychiatric facilities to rehab centers), requesting nearly 30 categories of information, including staffing ratios, compensation data for nurses, personnel files (including name, address and telephone number) and a variety of other proprietary and confidential information. If your company is not one of the defendants in the five cases, what do you have to worry about? Plenty! Here are three reasons why you should be concerned and what you can do to minimize your company’s risk of antitrust liability and union organization:
  1. Nearly all healthcare facilities participate in and use the results from wage surveys. If your company does so, it may be at risk. You should review your compensation process to ensure that any wage surveys in which your company participates fall in the Antitrust Safety Zone and that wage survey data is only one factor in the ultimate compensation decision.

  2. Your company may be on the SEIU’s list of targeted “unidentified co-conspirators,” particularly if you have operations in or around San Antonio, Chicago, Memphis, Detroit or Albany. You may first learn of this threat when served with a subpoena in one of the pending antitrust cases. If you receive such a subpoena, you should contact your labor and employment counsel immediately. Time is of the essence. Failure to object to the subpoena within 14 days may require you either to respond or spend your time and resources filing a Motion to Quash.

  3. Healthcare facilities with unions operate differently than those without. Having a union means losing the ability to talk to your hourly employees on a one-on-one basis, work collaboratively with your employees to solve problems and provide flexibility in policies and procedures (many of which can impact patient care and operational efficiency). If you wait until you know that your facility is a target, it is often too late. You should remain attentive to what is going on in your facility and be proactive in your union-free training and other efforts to maintain control of your facility.
An ancient Chinese proverb says, “It is easy to dodge a spear that comes in front of you but hard to keep harm away from an arrow shot from behind.” The SEIU-backed nurse antitrust cases are an arrow shot from behind the healthcare industry. Traps for the unwary abound--wage surveys, third-party subpoenas, seemingly innocent requests for staffing ratios--and healthcare companies must remain ever vigilant. There is no doubt that the healthcare industry is the unions’ primary target for 2007 and beyond.
Mark Peters may be reached at mark.peters@wallerlaw.com, and Charles Williamson may be reached at charley.williamson@wallerlaw.com. They are both partners with the Nashville, Tenn., lawfirm of Waller Lansden Dortch & Davis.

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