Daughters of Charity sues SEIU-UHW, Blue Wolf

GILROY—A Roman Catholic health system has sued opponents who fought the sale of its Gilroy hospital and others, alleging a union and private firm conspired to undermine the $843 million deal.
The lawsuit names as defendants the Service Employees International Union—United Healthcare Workers West and Blue Wolf Capital, a New York private equity firm that lost its bid to buy the system.
The Daughters of Charity Health System filed the lawsuit it Feb. 23 in Santa Clara County Superior Court.
The non-profit hospital system operates Saint Louise Regional Hospital in Gilroy, De Paul Medical Center in Morgan Hill, O’Connor Hospital in San Jose and four others statewide. DCHS officials have said that if the sale falls through, the group will likely file for bankruptcy.
California Attorney General Kamala Harris approved sale of the system to Prime Healthcare, of Ontario, Calif., with tough conditions Jan. 20 after five months of controversy and review of over 14,000 comments submitted to her office and 44 collective hours of public hearings.
The union supported Blue Wolf’s bid and vigorously opposed the sale to Prime, as did the County of Santa Clara. The county only bid for DCHS facilities in the county—Saint Louise and O’Connor Hospital in San Jose—and their offer would have required the system enter bankruptcy first.
The sale is in limbo as Prime decides whether to accept Harris’ non-negotiable conditions. The firm said it hopes to announce a decision the week of March 1.
DCHS’s suit alleges the defendants conspired to “hold hostage” the deal to Prime, which has a reputation for resurrecting struggling hospitals across the country but also has been attacked—including by Kaiser Permanente—for some alleged business practices and fears that as a for-profit firm it cuts services to the poor.
“By using extortionist threats and bid-chilling tactics to frustrate this sale as leverage for other commercial gains they seek, the defendants have cost DCHS at a minimum tens of millions of dollars in continuing operational losses and professional fees,” the lawsuit alleges.
“DCHS continues to face the possibility that the sale will not close, with potentially catastrophic consequences for DCHS’ six California hospitals, thousands of employees and retirees of those hospitals, and the patients and communities whom the hospitals serve,” the lawsuit reads.
Some South County leaders have expressed concerns that conditions imposed by Harris will kill the deal; some would lock Prime into expensive, 10-year legal commitments.
SEIU-UHW President Dave Regan called the suit a “legal hissy fit” in an emailed statement Thursday.
“Daughters of Charity is losing $10 million a month and threatening bankruptcy, yet CEO Robert Issai decided it would be a good idea to spend the company’s precious and dwindling resources on a frivolous lawsuit designed to punish workers for speaking out against selling the system to Prime Healthcare,” Regan said.
His union accuses DCHS management of intimidating employees into supporting the sale to Prime by threatening job loss if the sale was rejected by the state. DCHS officials deny the claim.
Regan said union members opposed to Prime’s takeover will continue to voice their concerns.
“No lawsuit is going to stop healthcare workers from speaking up to protect patients, workers and communities,” he said.