Prime Healthcare Services-Encino LLC v. Nat'l Labor Relations Bd.

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 6, 2018 May 18, 2018
No. 16-1370
PRIME HEALTHCARE SERVICES - ENCINO LLC, D/B/A ENCINO
HOSPITAL MEDICAL CENTER
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
SEIU LOCAL 121RN,
INTERVENOR
Consolidated with 16-1423
On Petition for Review and Cross-Application
for Enforcement of an Order of
the National Labor Relations Board
Jamie M. Konn argued the cause for petitioner. With him
on the brief were Joseph A. Turzi and Jonathan S. Batten.
Gregoire Sauter, Attorney, National Labor Relations
Board, argued the cause for respondent. With him on the brief
were Richard F. Griffin, Jr., General Counsel, John H.
Ferguson, Associate General Counsel, Linda Dreeben, Deputy
2
Associate General Counsel, and Kira Dellinger Vol,
Supervisory Attorney.
Lisa C. Demidovich argued the cause for intervenor SEIU
Local 121RN. With her on the brief was Ira L. Gottlieb.
Before: GRIFFITH and PILLARD, Circuit Judges, and
EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
EDWARDS.
EDWARDS, Senior Circuit Judge: The National Labor
Relations Act (“Act” or “NLRA”) imposes on employers a
general duty to bargain in good faith with their employees’
representatives over “wages, hours, and other terms and
conditions of employment.” 29 U.S.C. § 158(a)(5), (d).
Pursuant to this duty to bargain, “an employer commits an
unfair labor practice if, without bargaining to impasse, it effects
a unilateral change of an existing term or condition of
employment.” Litton Fin. Printing Div. v. NLRB, 501 U.S. 190,
198 (1991) (citing NLRB v. Katz, 369 U.S. 736 (1962)). This
“[unilateral change] doctrine has been extended as well to cases
where . . . an existing agreement has expired and negotiations
on a new one have yet to be completed.” Id. The duty to bargain
also requires an employer “to provide relevant information
needed by a labor union for the proper performance of its duties
as the employees’ bargaining representative.” Detroit Edison
Co. v. NLRB, 440 U.S. 301, 303 (1979). A failure to comply
with either obligation is a violation of Section 8(a)(5) and (1)
of the Act. 29 U.S.C. § 158(a)(5), (1).
In this case, the National Labor Relations Board (“Board”)
found that the Petitioner, Prime Healthcare Services and its
subsidiary hospitals (together “Prime”), violated both the
3
unilateral change doctrine and the duty to provide relevant
information during negotiations with its employees’ bargaining
representatives, Service Employees International Union
(“SEIU”) Local 121RN (“121RN”) and SEIU United
Healthcare Workers-West (“UHW”) (collectively, “the
Unions”). Prime Healthcare Servs., 364 NLRB No. 128, slip
op. at 1–3 (Oct. 17, 2016). The Board concluded that Prime
unilaterally discontinued anniversary step increases due to unit
employees after its collective bargaining agreements with
121RN and UHW had expired. Id. at 10. The Board also
determined that Prime wrongfully refused to provide
information about employee health care programs in response
to requests from 121RN and UHW. Id. at 13, 16. The Board
ordered Prime to, inter alia, resume granting step increases to
eligible employees; make whole eligible employees for any
loss of earnings resulting from the employer’s failure to grant
anniversary step increases; and furnish 121RN and UHW the
requested information. Id. at 2–3.
After the parties filed their opening briefs, the complaints
relating to UHW’s unfair labor practice charges were settled.
The only matters that are still in issue here are those relating to
the unfair labor practice charges filed by 121RN. Prime has
raised a number of challenges to the Board’s disposition of the
121RN charges. We find no merit in these challenges, however.
Accordingly, we deny the petition for review and grant the
Board’s cross-application for enforcement of its order.
I. BACKGROUND
Prime Healthcare Services, Inc., and its affiliate Prime
Healthcare Foundation, Inc., own and operate numerous
hospitals in various states. In June 2008, Prime acquired two
hospitals in California—Encino Hospital Medical Center
(“Encino”) and Garden Grove Hospital & Medical Center
4
(“Garden Grove”). It adopted three collective bargaining
agreements then in force between the hospitals’ prior owner
and their employees. The first agreement was with 121RN, a
union representing a unit of registered nurses at Encino. The
second and third agreements were with UHW, a union
representing two units of service and technical employees at
Encino and Garden Grove. All three agreements were effective
from January 1, 2007, through March 31, 2011.
A. Negotiations Over New Collective Bargaining Agreements
In late 2010 and early 2011, Prime commenced
negotiations with 121RN and UHW over new collective
bargaining agreements. Although the Unions represented
different bargaining units, both are affiliated with the Service
Employees International Union. Mary Schottmiller was the
hospitals’ principal representative in the negotiations with
121RN and UHW. The existing contracts covering all three
units expired on March 31, 2011, without the parties having
reached any new agreements.
In addition to serving as the bargaining agent for
employees at Prime, UHW also represented employees at
hospitals owned by Kaiser and was a member of the National
Coalition of Kaiser-Permanente Unions. Kaiser and the union
coalition had reached an arrangement in 1997 pursuant to
which the unions agreed to assist Kaiser in maintaining and
improving its position in the marketplace. Part of the agreement
required the unions to “focus . . . on real external threats” to
Kaiser, including “competition.” Prime Healthcare Servs., 364
NLRB No. 128, slip op. at 6. Prime is among Kaiser’s
competitors. During the course of the negotiations between
Prime and UHW, officials at Prime expressed concerns that
bargaining between Prime and UHW had been compromised
because of the Union’s relationship with Kaiser.
5
In 2010, UHW conducted a “corporate accountability
campaign” against Prime. Id. at 7. It publicized labor disputes
with a Prime facility and criticized the company for reducing
wages and benefits, and limiting access to medical care. It also
published several reports questioning the quality of care
provided at Prime hospitals, including allegations of unusually
high rates of septicemia among Medicare patients.
UHW’s corporate accountability campaign caused
officials at Prime to suspect that the Union might be working
with Kaiser to exclude Prime from the California health care
market. Nonetheless, Prime continued to pursue collective
bargaining negotiations with both UHW and 121RN
throughout 2011.
B. Anniversary Step Increases
The UHW and 121RN collective bargaining agreements in
force at the time when Prime acquired the hospitals contained
identical provisions covering wage increases for unit
employees. One provision granted annual increases on specific
dates each year when the contract was in effect, from 2007 to
2010. Another provision granted step increases on the
anniversary of an employee’s hiring date. The contracts further
capped unit employees’ total wage increases to no greater than
9.25% in any twelve-month period. The relevant provisions
read as follows:
3. Annual Hospital Wide Increases:
All members of the bargaining unit shall receive the
following increases . . . [setting forth specific increases
to take effect at contract ratification, on July 1, 2008,
July 1, 2009, and July 1, 2010] . . . . No bargaining unit
6
member will receive a wage increase greater than
9.25% in any twelve (12) month period. . . .
5. Annual Increases/Advancing Through the Steps:
In addition to the above hospital-wide annual increases,
beginning July 1, 2008, individual employees shall
receive Anniversary Step Increases in accordance with
the wage scales in the following manner:
. . . Employees who are at or below the scale on the
anniversary date of their most recent date of hire shall
advance to the next step on the wage scale on that
anniversary date, subject to the annual caps provided in
Section 3 above, which limit the maximum increase any
employee may receive in any twelve (12) month period.
Employees . . . who are less than one full step above
scale shall advance to the next step on their anniversary
date, again subject to the annual caps provided in
Section 3 above.
Joint Appendix (“J.A.”) 151–53.
At the parties’ first bargaining session after the contracts
had expired, Schottmiller agreed with the Unions’
representatives that the employees’ anniversary step increases
under Section 5 would continue. For several months, Encino
continued to approve anniversary step increases for eligible
employees in the 121RN unit without any issues. In late 2011,
however, Schottmiller decided that the step increases under
Section 5 did not survive the contract expiration because
Section 5 referred to Section 3 and the annual increases under
Section 3 concededly did not extend beyond the expiration of
the contracts. In November 2011, Encino discontinued paying
7
step increases to unit employees. The Unions then filed unfair
labor practice charges with the Board.
C. Union Information Requests
On January 1, 2010, the employees represented by UHW
and 121RN began to receive health care benefits under Prime’s
exclusive provider organization (“EPO”) and preferred
provider organization (“PPO”) medical plans. Under the EPO
plan, employees could obtain services at Prime facilities or
from doctors affiliated with Prime hospitals under a fee-for-
service arrangement. Under the PPO plan, employees could
join outside insurance networks.
121RN anticipated that Prime would seek to implement
significant changes to health care benefits under the new
collective bargaining agreements, including increases in
employee copays, deductibles, and premiums. Therefore, in
April 2011, 121RN’s research director submitted a written
request to Schottmiller for certain information relating to the
EPO and PPO plans. Specifically, she requested information
about employer costs for care, employee access to care, and the
quality of care at Prime facilities, including lists of in-patient
discharges organized by Medicare diagnostic code. The request
explained that the Union needed the information to prepare its
bargaining proposals.
Schottmiller responded to the 121RN request by letter,
seeking information from 121RN regarding the Union’s
planned proposals and how the requested information was
relevant to them. She noted that Encino was “not agreeable to
any health care plan other than the EPO and PPO plans already
implemented and agreed to” and was “not inclined to change
. . . coverage regardless of the cost issues that you raise.” J.A.
213–14. Schottmiller’s letter also contested the relevance of the
8
information about employees’ access to care in the Prime
facilities.
The parties subsequently exchanged a series of letters.
121RN explained to Prime that the Union had not yet
determined what proposals it would make regarding the
existing health plans and stated that it sought the information
to facilitate its consideration of bargaining proposals. The
Union described why the requested information was necessary
to evaluate the existing plans and determine whether to propose
changes. Schottmiller continued to refuse to provide the
requested information, rejecting the Union’s explanations as
“conclusory,” J.A. 219, asserting that the information sought
appeared to violate the collective bargaining privilege, id., and
accusing the Union of “engag[ing] in a fishing expedition in an
attempt to create a problem where none exists,” J.A. 225.
During the same period, UHW submitted an information
request similar to 121RN’s and Schottmiller refused to provide
the requested data. Both Unions filed unfair labor practice
charges with the Board in September 2011. While those
charges were pending, the parties continued to bargain over
health care. Encino proposed continuing the current plans with
an increase in employee premiums. 121RN, in turn, raised
concerns about cost, access, and quality of care under Encino’s
proposal.
D. Procedural History
The Board’s Acting General Counsel investigated the
Unions’ unfair labor practice charges and issued a consolidated
complaint against Prime on January 31, 2013. The complaint
alleged that Prime had violated Section 8(a)(5) and (1) of the
Act by ceasing to grant step increases and by failing to furnish
relevant, necessary information requested by the Unions.
9
Following a hearing, an Administrative Law Judge (“ALJ”)
issued a recommended decision and order finding that Prime
had violated the Act.
On October 17, 2016, the Board issued a Decision and
Order adopting the ALJ’s findings and conclusions. Prime
Healthcare Servs., 364 NLRB No. 128, slip op. at 1. It directed
Prime to furnish the information requested by the Unions,
resume granting step increases to eligible employees,
compensate employees for their losses, post a remedial notice,
and cease and desist from refusing to bargain in good faith with
the Unions. Id. at 1–3.
Prime filed a petition for review with this court on October
27, 2016. It challenged the Board’s findings and asserted that
UHW’s charges should have been dismissed because the Union
had a disabling conflict of interest. The NLRB filed a cross-
application for enforcement of its order, the Unions intervened,
and the cases were consolidated.
After the parties filed their opening briefs, Encino, Garden
Grove, and UHW reached a settlement with the Board. Those
parties filed a motion with the court seeking severance and
dismissal of the portion of the consolidated proceeding
stemming from UHW’s charges. On July 11, 2017, the court
granted the motion. The only claims now remaining for our
review are those involving Encino and 121RN.
II. ANALYSIS
A. Standard of Review
Our review of the Board’s judgment is limited. Wilkes-
Barre Hosp. Co., LLC v. NLRB, 857 F.3d 364, 372 (D.C. Cir.
2017). We will overturn the Board’s decision only if,
10
“reviewing the record as a whole, it appears that the Board’s
factual findings are not supported by substantial evidence, or
that the Board acted arbitrarily or otherwise erred in applying
established law to the facts at issue.” S. Nuclear Operating Co.
v. NLRB, 524 F.3d 1350, 1355 (D.C. Cir. 2008).
Although the Board is authorized to interpret a collective
bargaining agreement to resolve unfair labor practice charges,
we owe “no deference to the Board’s interpretation.” NLRB v.
U.S. Postal Serv., 8 F.3d 832, 837 (D.C. Cir. 1993). We
therefore interpret the collective bargaining agreement
between 121RN and Encino de novo. See Wilkes-Barre, 857
F.3d at 373.
B. Unilateral Cessation of Wage Increases
Under the unilateral change doctrine, an employer may not
change a term or condition of employment unless the employer
and the employees’ bargaining agent reach a new agreement or
bargain to impasse. As we explained in Honeywell
International, Inc. v. NRLB, 253 F.3d 125 (D.C. Cir. 2001),
the . . . doctrine is premised on a statutory right. . . . The
right may be waived by contract and it may be vitiated if
the parties reach an impasse in collective bargaining. And
it applies only with respect to mandatory subjects of
bargaining, excluding certain categorical exceptions
recognized by the courts and the Board. See, e.g., Litton,
501 U.S. at 199–200[;] Acme Die Casting v. NLRB, 93 F.3d
854, 857 (D.C. Cir. 1996). Beyond these conditions,
however, the [unilateral change doctrine] is an inviolate
principle of collective bargaining.
Id. at 131.
 11
Prime does not dispute that an anniversary step increase
provision is a mandatory subject of bargaining and that it was
an established term of employment under the agreement
covering the employees represented by 121RN. And Prime
does not claim that the parties reached an impasse in
negotiations over the anniversary step increase provision, that
the parties executed a new agreement on the subject, or that the
Union waived its right to bargain over the subject. Rather,
Prime contends that the anniversary step increase provision
terminated with the expiration of the parties’ collective
bargaining agreement. In support of this position, Prime argues
as follows: anniversary step increases were inexorably tied to
annual increases under the parties’ expired agreement; annual
increases indisputably terminated with the expiration of the
agreement; therefore, step increases terminated as well. We
disagree.
“To avoid running afoul of the unilateral change doctrine,
an employer must maintain the status quo as to terms and
conditions of employment after the expiration of a collective
bargaining agreement.” Wilkes-Barre, 857 F.3d at 373–74. It is
well established that, pursuant to the duty to bargain under the
NLRA, many terms of an expired collective bargaining
agreement extend beyond the contract’s termination date and
continue to “define the status quo.” Litton, 501 U.S. at 206.
Therefore, in order to determine whether Prime violated its
duty to bargain in this case, we must determine whether the
disputed step increase provision was a part of the status quo.
And to do this, “we look to the substantive terms” of the
expired collective bargain agreement. Wilkes-Barre, 857 F.3d
at 374.
As noted above, Prime contends that step increases under
Section 5 of the parties’ expired contract were “inexorably
linked” to the annual increases under Section 3, because
12
Section 5 referenced the total increase cap under Section 3.
Pet’r Reply Br. 4. This argument is unconvincing. The step
increase provision in Section 5 did not by its terms provide for
the cessation of the benefit at the expiration of the agreement.
Employees’ anniversary dates continue for as long as they are
with the employer. By contrast, it is clear from the terms of the
annual increase provision under Section 3 that such increases
were due only in the years indicated in the contract.
In the absence of language in the collective bargaining
agreement providing otherwise, anniversary step increases are
part of the status quo and continue post-expiration.
Furthermore, anniversary step increases and annual increases
are “distinct rights that operate independently of each other.”
Wilkes-Barre, 857 F.3d at 377. Thus, language tying annual
increases to the term of the contract has no bearing on whether
the anniversary step increases also expired. Wilkes-Barre
instead instructs us to assess each contractual provision on its
own terms. Where one of two wage increase provisions in a
collective bargaining agreement includes explicit language
making clear that it will not continue as part of the status quo
post-expiration, and the other increase provision in the contract
does not include such explicit language, the second increase
provision remains part of the status quo and is subject to the
unilateral change doctrine. Under this rule, only the Section 3
increases terminated with the contract. Prime’s Section 5
obligations continued as part of the status quo after the
agreement expired.
Nothing in the agreement between Encino and 121RN
limited the duration of the anniversary step increases. Section
3 provided for annual increases to take effect on four specific
dates prior to the expiration of the contract. J.A. 151–52.
Section 5, in turn, provided for step increases to occur on the
anniversary date of an employee’s hiring “beginning July 1,
13
2008.” J.A. 152. Unlike Section 3, Section 5 provided no date
certain for the increases to end. In these circumstances, our
decision in Wilkes-Barre is controlling, and Prime’s attempts
to distinguish that decision are unavailing.
It is also noteworthy that Section 5 of the parties’
agreement referred to Section 3 to indicate only that the step
increases would be provided “[i]n addition” to the Section 3
annual increases and that step increases were subject to a
9.25% total annual increase cap. J.A. 152. The clear
implication of these contract terms was that anniversary step
increases would be due (subject to the cap) without regard to
whether an employee received an annual increase. The cap on
the total increase level in a 12-month period merely indicated
the maximum increase that an employee could receive in a
year, not whether step increases would continue after the
expiration of the agreement. As in Wilkes-Barre, the disputed
wage increase provisions in this case were plainly “distinct”
and “operate[d] independently of each other.” 857 F.3d at 377.
On the record at hand, we agree with the Board that Prime
breached its duty to bargain when it unilaterally terminated
employee anniversary step increases after the expiration of the
parties’ agreement.
C. Refusal to Provide Requested Information
Prime also challenges the Board’s determination that
Encino was required to provide 121RN with the information it
requested. Because the Board’s decision was consistent with
established precedent and is supported by substantial evidence,
we have no cause to disturb it.
An employer’s statutory duty to bargain in good faith
“includes a duty to provide relevant information needed by a
14
labor union for the proper performance of its duties.” Detroit
Edison Co., 440 U.S. at 303. Refusing to provide relevant
information upon request is a violation of the Act. Country
Ford Trucks, Inc. v. NLRB, 229 F.3d 1184, 1191 (D.C. Cir.
2000). Information related to employee benefits is
presumptively relevant, id., and an employer must produce
presumptively relevant information unless it rebuts the
presumption or asserts a valid countervailing interest, see Oil,
Chem. & Atomic Workers Local Union No. 6-418 v. NLRB, 711
F.2d 348, 359–60 (D.C. Cir. 1983). In order to withhold
presumptively relevant information, an employer must “prove
either lack of relevance or . . . provide adequate reasons why it
cannot, in good faith, supply the information.” Hondo, Inc.,
311 N.L.R.B. 424, 425 (1993).
Prime first contends that the information 121RN requested
was “facially irrelevant” to bargaining and, therefore, the
hospital had no duty to produce it. Pet’r Reply Br. 9. According
to Prime, because Encino had made clear that it was not going
to purchase insurance from a competitor regardless of what
cost issues the Union raised, cost of care was not at issue. This
is a specious claim. Prime’s preference to provide health care
itself surely did not nullify the Union’s right to bargain over
the subject. See Katz, 369 U.S. at 743 (“A refusal to negotiate
. . . as to any subject which is within § 8(d) . . . violates
§ 8(a)(5).”). Health care benefits are a mandatory subject of
bargaining. Oak Harbor Freight Lines, Inc. v. NLRB, 855 F.3d
436, 438 (D.C. Cir. 2017). Therefore, the Union had a right to
seek the relevant data. See Oil, Chem. & Atomic Workers, 711
F.2d at 359. Indeed, in this case, Prime put the issue of cost in
play when, during contract negotiations, it raised the possibility
of increasing health care costs for the employees. See J.A. 815–
16. In any event, it appears that Prime abandoned this argument
before the Board. See Prime Healthcare Servs., 364 NLRB No.
128, slip op. at 13, n.25. Therefore, we need not address it for
15
lack of jurisdiction. See 29 U.S.C. § 160(e); Alden Leeds, Inc.
v. NLRB, 812 F.3d 159, 166–67 (D.C. Cir. 2016).
Prime also contends that even if the requested information
was presumptively relevant, the presumption of relevance was
rebutted by Encino’s concern that 121RN’s requests for
information were for illegitimate purposes. Encino points out
that 121RN sought the same type of coding information that
UHW had requested. And, as noted above, Encino was
concerned that UHW’s requests were improper in light of
UHW’s relationship with Kaiser. Relying on the Board’s
opinion in Hondo, Inc., 311 N.L.R.B. 424, Prime claims that,
given its legitimate competitive concerns, the Union was
obliged to better explain its need for the disputed information.
In Hondo, Inc., the Board held that, where it was obvious
that a union was seeking information for an improper purpose,
the union was required to “do more than provide general
avowals of relevance in order to establish its need for the
information.” Id. at 426. In such a situation, the union was
obligated to “articulate how it would use the information to
fulfill its duties.” Id. Prime contends that, because it raised
legitimate concerns about the Union’s purpose in making the
information requests at issue in this case, the Union was
required to demonstrate more precisely the relevance of the
data that it sought. Prime asserts that the Union’s explanations
were too conclusory to meet the standard enunciated in Hondo,
Inc.
In rejecting Prime’s claims, the Board adopted the ALJ’s
finding that “[t]here was nothing unusual about [121RN]’s
request for information,” and “the mere fact that UHW had
used similar . . . data to issue critical reports about Prime was
insufficient to rebut [the] presumption [that the union acts in
good faith in requesting information] or justify [Prime’s]
16
failure to provide the information to 121RN.” Prime
Healthcare Servs., 364 NLRB No. 128, slip op. at 13–14.
Accordingly, the Board concluded that 121RN had no duty to
provide any further explanation to justify the relevance of its
information requests. Id. at 13.
The Board’s conclusion is perfectly consistent with
established precedent, and it is supported by substantial
evidence in the record. The disputed information pertained to
the costs and quality of care at Prime facilities, which were
“obviously relevant given that the employees were required
under the Prime EPO plan to obtain medical treatment at Prime
facilities,” id., and because the health plans were a likely
subject of bargaining. Like 121RN, UHW was in the midst of
negotiations with the hospital about health care issues. The
Board thus reasonably concluded that the mere similarity in the
information requested by the two Unions was insufficient to
rebut the presumption that the information was relevant to
bargaining, or to suggest that it was requested for an improper
purpose. See DaimlerChrysler Corp. v. NLRB, 288 F.3d 434,
443 (D.C. Cir. 2002) (noting that relevant information requests
are presumed to have been made in good faith “until the
company demonstrates otherwise”); Country Ford Trucks, 229
F.3d at 1192 (explaining that “[v]ague allegations of a union’s
bad faith” do not affect the employer’s obligation to turn over
presumptively relevant information). Therefore, Prime had a
statutory duty to comply with 121RN’s requests.
Finally, Prime vaguely suggests that the disputed cost-of-
care information might be privileged, confidential financial
information. Pet’r Br. 49. However, Prime did not expressly
press this argument in response to 121RN’s (as distinguished
from UHW’s) requests for information. Therefore, Prime’s
passing references to “privilege” and “proprietary
information,” id., are insufficient to merit our review. See Am.
17
Wildlands v. Kempthorne, 530 F.3d 991, 1001 (D.C. Cir. 2008)
(collecting cases in which this court has refused to consider
arguments only cursorily mentioned in the briefs).
Moreover, if the information was somehow privileged or
confidential, Prime would have been required to provide the
Union with a reasonable accommodation to ensure it received
the information it needed to perform its duties. See, e.g., U.S.
Testing Co., Inc. v. NLRB, 160 F.3d 14, 20–21 (D.C. Cir.
1998); Tritac Corp., 286 N.L.R.B. 522, 522 (1987). Therefore,
we reject Prime’s challenge to the Board’s determination
regarding the requested information.
III. CONCLUSION
For the reasons explained above, we hereby deny the
petition for review and grant the Board’s cross-application for
enforcement of its order.
So ordered.