Sun Harbor Manor

SUN HARBOR MANOR 945 Sun Harbor Manor and Local 1115, Joint Board, Nursing Home and Hospital Employees Division. Case 29-CA-5106 March 21, 1977 DECISION AND ORDER BY CHAIRMAN MURPHY AND MEMBERS FANNING AND JENKINS were committed. After close of the hearing briefs were filed by the Charging Party and Respondent. Upon the entire record 1 in this proceeding, including my observation of the witnesses while testifying, and after due consideration of the posthearing briefs, I make the follow- Fit-DINGS OF FACT 1. JURISDICTION On November 24, 1976, Administrative Law Judge Joel A. Harmatz issued the attached Decision in this proceeding. Thereafter, Respondent filed exceptions and a brief, the Charging Party filed cross-exceptions and a supporting memorandum, and Respondent filed an answering brief. Pursuant to the provisions of Section 3(b) of the National Labor Relations Act, as amended, the National Labor Relations Board has delegated its authority in this proceeding to a three-member panel. The Board has considered the record and the attached Decision in light of the exceptions and briefs and has decided to affirm the rulings, findings, and conclusions 1 of the Administrative Law Judge and to adopt his recommended Order. ORDER Pursuant to Section 10(c) of the National Labor Relations Act, as amended, the National Labor Relations Board adopts as its Order the recommend- ed Order of the Administrative Law Judge and hereby orders that the Respondent, Sun Harbor Manor, Roslyn Heights, Nassau County, New York, its officers, agents, successors, and assigns, shall take the action set forth in the said recommended Order. I In adopting the Administrative Law Judge's Decision, we find it unnecessary to pass upon, or adopt, his interpretation of Washington Employers, Inc, 200 NLRB 825 (1972). DECISION STATEMENT OF THE CASE JOEL A. HARMATZ, Administrative Law Judge: A hearing in this proceeding was held in Brooklyn, New York, on September 13, 1976, upon a charge filed on July 14, 1976, and a complaint issued on August 10, 1976, alleging that Respondent violated Section 8(a)(5) and (1) of the Act, by failing to pay employees wage increases provided in governing collective-bargaining contracts. In its duly filed answer, Respondent denied that any unfair labor practices i Certain errors in the transcript have been noted and are hereby corrected. 2 See Fairfield Nursing Home, 228 NLRB 1208 (1977), issued by me simultaneously herewith . See also Nassau County Health Facilities Associa- tion, Inc., and its Employees Members, et al., 227 NLRB No. 249 (1977), issued by Administrative Law Judge Herzel Plaine on November 18, 1976. In addition a consolidated proceeding involving two additional nursing homes, 228 NLRB No. 118 Respondent is a sole proprietorship with a place of business in the county of Nassau, the State of New York, where it is engaged in the operation of a nursing home and health related facility. During the 12-month period preced- ing issuance of the complaint, a representative period, Respondent derived gross revenues from said operation in excess of $100,000. Also during said period, Respondent purchased and caused to be transported and delivered to said place of business, goods and materials valued in excess of $50,000, which were transferred and delivered directly from States of the United States other than the State of New York. The complaint alleges, the answer admits, and I fmd, that Respondent is, and has been at all times material, an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. II. THE LABOR ORGANIZATION INVOLVED The complaint alleges, the answer admits, and I fmd that Local 1115, Joint Board, Nursing Home and Hospital Employees Division, is, and has been at all times material herein, a labor organization within the meaning of Section 2(5) of the Act. III. THE ALLEGED UNFAIR LABOR PRACTICES This is another in a series of cases involving the failure by a nursing facility to pay wage increases when due under the terms of an applicable collective -bargaining agreement, following the imposition of a freeze by the State of New York on the reimbursement rate paid to such facilities by various governmental agencies to cover the cost of care for medicaid patients.2 The General Counsel asserts that said failure to observe the contract violated Section 8(a)(5) and (1) of the Act under the Board's decision in Oak Cliff- GoIntan Baking Company, 207 NLRB 1063 (1973). Respondent is a sole proprietorship owned and operated by Jerald Osinoff. The nursing care facility in question was opened on October 17, 1974. On March 10, 1975, Respondent executed collective- bargaining agreements with the Union covering separate units of its blue collar employees and licensed practical nurses, respectively,3 which provided for general wage Rego Park Nursing Home, {230 NLRB No.105 ( 1977)1, and Van Doren Nursing Home (Case 29-CA-5030) is presently pending before Administrative Law Judge Sidney Barban. 3 Those agreements incorporated by reference the provisions of master contract between the Union and the Nassau County Health Facilities Association, Inc., which has a 4-year term commencing on January 1, 1975. 946 DECISIONS OF NATIONAL LABOR RELATIONS BOARD increases due on the following dates: April 1 and October 1, 1975; April 1 and July 1, 1976. Respondent paid the wage increases called for by the contract on April 1 and October 1, 1975, and April 1, 1976. The complaint herein relates solely to Respondent's admitted failure to pay the wage increases due on July 1, 1976, in both units. Osinoff attributed his failure to pay the increase to the freeze imposed by the State of New York upon medicaid reimbursement rate levels, which was implemented in the late fall of 1975. The importance of such reimbursements to Respondent's financial position is evident from the fact that 85 to 90 percent of Respondent's patients are covered by medicaid. Respondent, by law, is precluded from retaining any fees whatever from such patients, and its revenues from providing care to this group are derived from medicaid reimbursements in their entirety. The reimbursement rate is established by the State of New York. The cost of the reimbursement is financed on a shared basis with the Federal government paying 50 percent of the cost and the state and local governments each contributing 25 percent thereof. Prior to 1975, the operators of skilled nursing facilities were able to obtain upward adjustments in the rate of reimbursement to cover increases in labor cost through an appeals procedure pursuant to regulations of the State of New York and the medicaid program, which are and have been administered by the commissioner of health for the State of New York. In the fall of 1975, because of the fiscal plight of the State of New York, New York City, and other local governments within the State, the commissioner of health took unprece- dented action by, in effect, imposing a freeze on reimburse- ment rate levels. In consequence, the operators of nursing facilities were precluded from obtaining upward adjust- ments in their reimbursement rates.' On July 7, 1976, Osinoff admittedly informed Alex DeLaurentis, vice president of the Union, that it would be impossible to provide the general increases scheduled under the contracts for July 1, 1976, at then present reimburse- ment rate levels. Without passing on his credibility in this respect, it is noted that Osinoff testified that the cost of the increases due on that date would be $400,000 and that his operation could not survive by expenditure of such sums without an upward revision in the reimbursement rate. The General Counsel's case draws force from the Board's decision in Oak Cl Golman Baking Company, supra. There the Board found that an employer violated Section 8(aX5) 4 The action by the commissioner of health in establishing the freeze on reimbursement levels has been the object ofa thus far successful challenge in the courts. Thus, on September 14, 1976, Justice Ellis J. Stalur, Jr., on behalf of the New York State Supreme Court, ruled unlawful the action by the comnussioner of health and budget director of the State of New York in freezing the medicaid reimbursement rate levels. 5 207 NLRB at 1064 The fact that an employer's failure to abide by contractual wage standards is only intended to relieve a temporary condi- tion, does not remove such action from the intended scope of Sec . 8(d) of the Act. See Washington Employers, Inc., 200 NLRB 825 (1972). 6 Aside from Respondent's position in this regard it urges the Board to decline to assert jurisdiction because the Umon has already invoked the processes of the New York State Department of Labor . That agency is authorized to proceed in the courts against employers who fail to pay wages due their employees. The short answer to this view is that there is no evidence whatever that the Umon has elected to pursue such a course against the instant Respondent . Furthermore, the Board expressed its position in Oak and (1) of the Act solely by virtue of its unilateral downward revision of wage standards called for by a subsisting collective-bargaining agreement. In that case, the operative conduct giving rise to the unfair labor practice charge consisted of a breach of contract. In addition, the Board acknowledged that said breach stemmed from an economic crisis and was not discriminatorily motivated. Nonetheless, the Board in finding the violation viewed the dishonor of the contractual wage provisions as striking at the heart of the statutory process of collective bargaining, stating: " [it] is not just a mere breach of the contract, but amounts, as a practical matter, to the striking of a death blow to the contract as a whole, and is thus, in reality, a basic repudiation of the bargaining relationship." 5 Respondent, in recognizing the impact of Oak Cl Golman, seeks to distinguish that decision on a number of grounds .6 First, Respondent contends that the bargaining history reflects an understanding of the parties that implementation of the wage increases were contingent upon upward revision of the medicaid rates. Additionally, Respondent contends that the health care industry is different from "ordinary mercantile establishments," and that these differences render Oak Cliff-Golman inapposite herein. Upon consideration of Respondent's defenses, I find Oak Cl Golman controlling. Firstly, with respect to the negoti- ation history, the evidence does not substantiate the existence of conditions on the contractual requirement that wage increases be paid when due. None of the contracts here, or in the record in other cases considered in conjunction with this proceeding, include language sup- porting Respondent's contention. Furthermore, the bar- gaining history relevant to this proceeding included no reference to any such condition, or expression by Respon- dent as to the need for such a condition. Osinoff simply executed the agreements without demanding, or obtaining a concession, conditioning the general increases on in- creased reimbursement rates. Indeed, Respondent's conten- tion in this regard carries the earmark of afterthought when considered against Osinoti's own conduct. Thus, Osinoff some 5 months after imposition of the wage freeze, granted the increase due under the contract on April 1, 1976. This, despite the fact that Osinoff had been denied an adjustment in his reimbursement rate to cover the two separate increases given employees in April and October 1975.7 It is difficult to imagine that Osinoff would have met his obligation in April 1976, if an understanding had existed CliGolman, fully mindful of the existence of alternative forums for enforcement of collective-bargaining agreements. This contention is rejected as lacking in merit. Also unpersuasive is the claim that the Board should not assert jurisdic- tion in this case because the Federal government, through the Department of Health, Education and Welfare, has a pecuniary interest in imposition of the freeze. This gives rise to no perceptible conflict which could be viewed as a bar to an assertion of jurisdiction in this proceeding . At best, the conflict between the State of New York and the operators of nursing care facilities, though related, is collateral to the issues presented herein . In any event, contrary to Respondent, the Federal government's financial interest in the freeze would be prejudiced, rather than aided, were the Board to assert jurisdiction and sustain the complaint, a result which would serve to increase the potential liability of HEW for its share of the cost of reimbursement. 7 The testimony of Burtell Cutler, the principal negotiator for the Nassau County Health Facilities Association, and its Members, et al., 227 NLRB No. 249, is of no avail to the Respondent in the instant proceeding. Based on that SUN HARBOR MANOR relieving payment of that increase. Accordingly, the evi- dence fails to substantiate that the agreements, or the prior dealings between the Union and Osinoff reflected an understanding, whereby Osinoff's obligations under the contract were conditional. It is true that the freeze imposed in the fall of 1975 involved a change in past practice on the part of the State, and that theretofore, employers were in a position to obtain relief from climbing wage levels through increased reimbursement rates. Nonetheless, absent ex- pressed or implied contractual protection against such a risk, it is one that must be taken to have been assumed. The fact that the unanticipated freeze made it difficult for Respondent to fulfill its cost obligations under the contract, warrants no different treatment than that accorded employ- ers in other industries whose ability to finance periodic increases is seriously compromised or precluded by an unexpected decline in revenues. The policy expressed in Oak CIfGolman is applicable in either case. Equally unpersuasive is Respondent's plea that the health care industry be exempted from Board policy in this area. In support of this contention, Respondent cites the special consideration given that industry in the 1974 amendments to the Act. Respondent also cites the degree to which proprietory nursing homes and other health related institu- tions are regulated. Contrary to Respondent, the protection of the collective-bargaining process is no less a priority in the health care field than other industries. The primary thrust of the amendments extending jurisdiction over the former was to mitigate the adverse effects of labor strife on such institutions. An employer' s unilateral frustration of negotiated wage gains is hardly conducive to industrial peace. Application of the Board's established policy to the conduct involved here is more consistent with, than offensive to, the objectives of the 1974 amendments. Nor may Respondent gain solace from the highly regulated nature of institutions dealing essentially with medicaid patients. In this respect Respondent points to the fact that (1) reimbursement from the State is the sole source of income for medicaid patients; (2) such institutions are forbidden from requiring supplementary payments from medicaid patients; (3) such institutions are precluded by law from selectively denying their services to medicaid patients; and (4) the staffing and standard of care provided is closely regulated by Federal and state authority, with penalties up to $10,000 a day for failure to conform with established standards. Here again, Respondent's arguments furnish no rational basis for an exception to Board policy. testimony, Respondent asserts that the bargaining history relative to the multiemployer contract , evidences union assent to the view held by the operators that wage increases were contingent on revision of the medicaid rates. This contention rests essentially on representations made by DeLau- rentis at the bargaining table in the course of the multiemployer negotiations. Without passing on whether the Union's conduct in those negotiations raised an estoppel against its denial of such a condition , I fail to see how this could be taken as relieving the instant Respondent. The contracts to which Respondent is bound are a product of separate negotiations in separate collective-bargaining units. While Osinoffs own conduct indicates that he understood his commitment to be unconditional, there is no evidence that his assumption of those obligations, upon execution of the contracts with the Union, occurred with knowledge or in reliance upon what had transpired during the multiemployer negotiations . In the circumstances, the multiem- ployer negotiations are deemed extraneous to an assessment of the bargain struck between Osinoff and the Union. 8 1 do not pass on the claim by Osinoff that his facility could not survive 947 Once the bargaining process has ended, employees in this industry too are entitled to look forward to timely payment of unconditional and duly negotiated periodic increases. The anticipation and ultimate enjoyment of those benefits, absent agreement from their bargaining agent, ought not be subject to compromise by a health care center which acts out of either an intent to increase profit margins, or to hedge against declining profits, or to survive. In sum, any finding that nurse care facilities are to be the beneficiaries of a special limitation on Section 8(d) would turn upon irrelevancies and, as such, would constitute arbitrary administrative action. Based on the foregoing, I find that Respondent, by failing to pay employees the general wage increases due on July 1, 1976, under the terms of subsisting contracts, violated Section 8(a)(5) and (1) of the Act .8 Upon the basis of the foregoing findings of fact and the entire record in this case, I make the following: CONCLUSIONS OF LAW 1. Respondent is an employer engaged in commerce within the meaning of Section 2(6) and (7) of the Act. 2. The Union is a labor organization within the mean- ing of Section 2(5) of the Act. 3. The following constitute units appropriate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act: (a) All license practical nurses employed by the Employ- er, excluding all other employees, registered nurses, confi- dential employees, office clerical employees, guards, watch- men, and supervisors as defined in the Act. (b) All employees (blue collar) workers employed by the Employer, excluding all license practical nurses, registered nurses, confidential employees, office clerical employees, guards, watchmen and supervisors as defined in the Act. 4. At all times material herein the Union has been the exclusive bargaining representative of the employees in the aforesaid units within the meaning of Section 9(a) of the Act. 5. By refusing to pay general wage increases at the time required by the terms of collective-bargaining agreements in said units, Respondent has engaged in, and is engaging in, unfair labor practices within the meaning of Section 8(ax5) and (1) of the Act. 6. The aforesaid unfair labor practices affect commerce within the meaning of Section 2(6) and (7) of the Act. and pay the increase due on July 1, 1976, without a further adjustment in his reimbursement rate. It need not be gainsaid that if this proves to be the case, subsequent negotiation, rather than strict enforcement of the instant remedy, leading to a reformation of the agreements might well be the only salutary basis for vindicating the interests of the affected employees. It is entirely possible that presentation of documented financial data to the Union rather than shotgun, self-serving claims of distress, would encourage the Union to make a concerned judgment as to the manner in which the interests of representated employees are best served. The problems confronting Respon- dent are not isolated, as is evident from the vanous cases attributing similar violations to other nurse care facilities in the Greater New York City area. Absent a change in reimbursement policy on the part of the State, the economic problems underlying Respondent's dilemma, if genuine, must be left to resolution through open and frank communication of facts, reasonable interpretation of them, and remedial action effected within the framework of the bargaining process. 948 DECISIONS OF NATIONAL LABOR RELATIONS BOARD THE REMEDY Having found that Respondent has engaged in certain unfair labor practices, I shall recommend that it cease and desist therefrom and take certain affirmative action de- signed to effectuate the purposes of the Act, including the posting of the notice attached to this decision. Having found that Respondent failed to make timely payment of wage increases under the terms of the collec- tive-bargaining agreement, it shall be recommended that Respondent be directed to restore wage rates as required by the collective-bargaining agreements, and to refrain from refusing to comply with the terms thereof, without first reaching an agreement with the Union. Further, it shall be recommended that Respondent make whole the employees in the above-described appropriate units for any losses suffered as a result of the unilateral refusal to pay benefits when due, with interest at the rate of 6 percent per annum, as set forth in Isis Plumbing & Heating Co., 138 NLRB 716 (1962), subject of course to any other accommodation that might be reached through further collective-bargaining negotiations. For the reasons stated in Fair.fleld Nursing Home, supra, issued simultaneously herewith, the Charging Party's re- quest for remedial provisions patterned after those in Mackie's Roofing and Sheet Metal Co. Inc., and Mackie's Roofing and Sheet Metal Works, 221 NLRB 277 (1975), and Tiidee Products, Inc., 194 NLRB 1234, 1236 (1972), is denied. Upon the basis of the foregoing findings of fact, conclu- sions of law, and the entire record in this proceeding, and pursuant to Section 10(c) of the Act, I hereby issue the following recommended: ORDERS The Respondent, Sun Harbor Manor, county of Nassau, New York, its officers, agents, successors, and assigns, shall: 1. Cease and desist from: (a) Refusing to bargain collectively with Local 1115, Joint Board, Nursing Home and Hospital Employees Division, as the exclusive representative of its employees in the following units with respect to rates of pay, wages, hours of employment, and other terms and conditions of employ- ment: (1) All license practical nurses employed by the Employer, excluding all other employees, registered nurses, confidential employees, office clerical employ- ees, guards, watchmen, and supervisors as defined in the Act. (ii) All employees (blue collar), excluding licensed practical nurses, registered nurses, confidential employ- ees, office clerical employees, guards watchmen, and supervisors as defined in the Act. (b) Refusing to comply with the terms of existing bargaining agreements by failing to pay general wage increases on a timely basis, or by refusing to pay other negotiated terms and conditions of employment to employ- ees in the above-described appropriate units, during the effective terms of the contracts covering said employees, without first reaching agreement with the Union concern- ing such modifications. (c) In any like or related manner interfering with, restraining, or coercing employees in the exercise of rights guaranteed by Section 7 of the Act. 2. Take the following affirmative action which I find necessary to effectuate the policies of the Act: (a) Immediately put into effect wage rates called for by the terms of the collective-bargaining agreements covering employees in the above-described units, and make said employees whole for any loss of pay that they may have suffered by failure to provide such benefits on a timely basis, with interest at the rate of 6 percent per annum, as set forth in Isis Plumbing & Heating Co., 138 NLRB 716 (1962), unless through good-faith negotiations Respondent and the Union reach some other final accommodation. (b) Preserve and, upon request, make available to the Board or its agents, for examination and copying, all payroll records, social security payments records, time- cards, personnel records and reports, and other records necessary to analyze the backpay due under the terms of this recommended Order. (c) Post at its health facility in Roslyn Heights, county of Nassau, State of New York, copies of the attached notice marked "Appendix." 10 Copies of said notice, on forms provided by the Regional Director for Region 29, after being duly signed by Respondent's authorized representa- tives, shall be posted immediately upon receipt thereof and be maintained by Respondent for 60 consecutive days thereafter, in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken by Respondent to insure that said notices are not altered, defaced, or covered by any other material. (d) Notify the Regional Director for Region 29, in writing, within 20 days from the date of this Order, what steps Respondent has taken to comply herewith. s In the event no exceptions are filed as provided by Sec. 102.46 of the Rules and Regulations of the National Labor Relations Board, the findings, conclusions, and recommended Order herein shall, as provided in Sec . 102.48 of the Rules and Regulations, be adopted by the Board and become its findings, conclusions, and Order, and all objections thereto shall be deemed waived for all purposes. 10 In the event the Board's Order is enforced by a Judgment of the United States Court of Appeals, the words in the notice reading "Posted by Order of the National Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board." APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government After a hearing at which all sides had a chance to give evidence, an Administrative Law Judge of the National Labor Relations Board has found that we violated the National Labor Relations Act, and has ordered us to post this notice. SUN HARBOR MANOR The National Labor Relations Act, as amended, gives you, as employees, certain rights, including the right: To engage in self-organization To form, join, or help a union To bargain collectively through a representa- tive of their own choosing To act together for collective bargaining or other mutual aid or protection To refrain from any or all of these things. Accordingly, we give you these assurances. WE WILL NOT refuse to bargain collectively with Local 1115, Joint Board, Nursing Home and Hospital Employees Division, as exclusive representative of employees in the units described below, concerning rates of pay, wages, and hours of employment and other conditions of employment. The units are: All license practical nurses employed by the Employer, excluding all other employees, regis- tered nurses, confidential employees, office cleri- 949 cal employees, guards, watchmen, and supervisors as defined in the Act. All employees (blue collar) workers employed by the Employer, excluding all license practical nurses, registered nurses , confidential employees, office clerical employees, guards, watchmen and supervisors as defined in the Act. WE WILL NOT refuse to pay wages or refuse any other terms and conditions of employment due under the terms of collective-bargaining agreements covering employees in the above-described units, without first reaching agreement with the Union. WE wiLL immediately provide employees in the above-described units the wages called for by the contracts and make them whole for any loss of pay they may have suffered as a result of our failure to on a timely basis provide such benefits, unless through good- faith negotiation, the Union agrees to some other accommodation. SUN HARBOR MANOR