St Paul Ramsey Medical Center

ST PAUL RAMSEY MEDICAL CENTER 755 St Paul Ramsey Medical Center and American Fed eration of State, County and Municipal Employ ees, Council 14 and State of Minnesota Bureau of Mediation Services, Petitioner Case AO-264 November 21 1988 ADVISORY OPINION BY CHAIRMAN STEPHENS AND MEMBERS JOHANSEN CRACRAFF AND HIGGINS Pursuant to Section 102 98(b) of the Board s Rules and Regulations on August 1 1988 the State of Minnesota Bureau of Mediation Services (the State Bureau) filed a petition for an advisory opinion whether the Board would decline to assert jurisdiction over the St Paul Ramsey Medical Center (the Medical Center) because it is not an employer within the jurisdiction of the National Labor Relations Act (NLRA) In pertinent part the petition alleges that a proceeding (Case 88-N- 578) is currently pending before the State Bureau involving a collective bargaining dispute between the American Federation of State County and Mu nicipal Employees Council 14 (the Union) and the Medical Center that the parties rights and/or obli gations with respect to that dispute may turn at least in part on whether the Medical Center is an employer within the jurisdiction of the NLRA and that this jurisdictional issue can be most expedi tiously resolved through the Board s advisory opin ion procedures Both the Medical Center and the Union submitted briefs supporting the petition and setting forth relevant facts regarding the manage ment and operation of the Medical Center Section 102 98(b) of the Board s Rules and Regu lations provides that any state or territorial agency or court may petition the Board for an advisory opinion whether it would decline to assert jurisdic tion over parties then before the agency or court either (1) on the basis of its current standards or (2) because the employing enterprise is not within the jurisdiction of the NLRA As the petition here was filed by the State Bureau and specifically re quests an advisory opinion whether the Medical Center is an employer within the jurisdiction of the NLRA i and as the relevant facts alleged in the pe tition and the parties briefs are essentially undis puted we find that the petition was properly filed and that the jurisdictional issue raised is appropri ' The issue whether the Medical Center satisfies the Board s current monetary jurisdictional standards was recently addressed on a petition for an advisory opinion filed by the Medical Center See St Paul Ramsey Medical Center 288 NLRB 913 (1988) (finding based on the allegations in the petition that the Medical Center satisfies the Board s monetary standards but ultimately dismissing the petition because it improperly raised the instant jurisdictional issue as well) ately addressed through the Board s advisory opin ion procedures 2 We accordingly proceed to do so The Medical Center is a full service health care hospital and education and research facility Prior to 1986 the Medical Center was managed and op erated by the St Paul Ramsey Medical Center commission The commission was specifically cre ated for that purpose in 1974 by an act of the state legislature 3 As subsequently amended 4 the act provided that the commission would be composed of 15 members 4 of whom were members of the board of the Ramsey county commissioners and the remaining 11 of whom were citizens appointed by the board of the Ramsey county commissioners The act granted the commission as constituted all the powers necessary and convenient to manage and operate the Medical Center including the power to appoint a chief executive officer of the Medical Center and to employ such other person nel as it determined were necessary Other relevant provisions of the act included a provision subject ing the commissions employees to the Ramsey county civil service personnel system law and re lated rules a provision designating the commis sion s meetings as meetings of a public body and requiring that they be open to the public a provi sion requiring the commission to submit an annual budget to the Ramsey county board of commission ers for approval provisions requiring the commis sion to obtain the approval of the same board before borrowing funds or purchasing real proper ty, a provision requiring the commission to provide hospital and medical services to county indigents and city and county prisoners and a provision des ignating the Ramsey county attorney as the coin missions attorney and legal advisor In 1986 the state legislature repealed the forego ing act and passed a new act in its stead 5 As sub sequently amended 6 this new act created a non profit public corporation known as Ramsey Health Care Inc (RHC) The act declared that the purpose of RHC was to engage in the provision and delivery of health care and related services in cluding education and research It provided that 2 The parties have not advised us nor are we aware of any unfair labor practice or representation proceeding involving the same dispute pending before the Board or its Regional Office 3 See 1974 Minn Laws Ch 435 § 3 14 The commission was originally named the St Paul Ramsey Hospital and Sanitarium Commission under the 1974 act However in 1978 the state legislature amended the act and changed the commissions name to the St Paul Ramsey Medical Center commission See 1978 Minn Laws Ch 545 § 1 4 Following the 1978 amendment noted above the act was amended again in 1982 1983 and 1985 See 1982 Minn Laws Ch 418 § 1 1983 Minn Laws Ch 155 §§ 1-3 and 1985 Minn Laws Ch 89 § 21 The amended act was codified at Minn Stat § 383A 41 (repealed 1986) 5 See 1986 Minn Laws Ch 462 §§ 1-27 32-33 9 The 1986 act was amended in various respects in 1987 The amended act is codified at Minn Stat Ann § 246A 01 et seq (West 1988) 291 NLRB No 114 756 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD RHC would be governed by a 15 member board of directors whose initial members would be named by a selection panel two thirds of whom were ap pointed by the chair of the Ramsey county board of commissioners and the chair of the St Paul Ramsey Medical Center commission and whose subsequent members would be elected by the board of directors from a list of candidates nominated by a five member board appointed committee at least one of whose members was a member of the Ramsey county board of commissioners The act granted RHC through its board of directors the authority and all necessary power to prepare an annual budget to hire a chief executive officer and any other employees deemed necessary to set wages and establish personnel policies for such em ployees to acquire real and personal property to incorporate other nonprofit or for profit corpora tions to sue or be sued to merge or consolidate with other foreign or domestic health care corpora tions to borrow funds or to take any other action relative to the delivery of health care services that could be taken by a private nonprofit corporation Other relevant provisions of the act included provi lions that RHC was a municipality for purposes of the state municipal bond code and tort liability act (granting such entities the authority to issue bonds and limiting their tort liability respectively) but was not a municipality for purposes of the state uniform municipal contracting law (requiring competitive bidding for certain municipal con tracts) a provision that RHC was a public body for purposes of the state open meeting law (requir mg such entities to meet with certain exceptions in open session) a provision that RHC was a po litical subdivision for purposes of the state gov ernment data practices act (requiring such entities to make certain records available to the public) a provision that RHC was an organization exempt from taxation under the state sales and income tax laws a provision that RHC was not a public em ployer and that its employees were not public employees for purposes of the state public em ployment labor relations act and public employees retirement act and a provision that RHC may retain the Ramsey county attorney as its attorney and legal advisor The act also contained several provisions specifi cally relating to the continued operation of the Medical Center First the act transferred to RHC all the real and personal property formerly held by the St Paul Ramsey commission Second the act directed RHC to create a so called hospital subsidi ary corporation to assume responsibility from the commission for the governance and operation of the Medical Center The act provided that this hos petal subsidiary corporation would be considered a continuation of the St Paul Ramsey Medical Center commission and not the creation of a new authority that the subsidiary corporation would succeed to all rights and contractual obligations of the commission and that all the commission s employees documents and unspent funds would be transferred to the subsidiary As with RHC the act contained various provi sions regarding the hospital subsidiary corpora tion s organization and functions The act provided that the hospital subsidiary corporations board of directors would be elected by and its bylaws rati feed by RHC s board of directors The act further provided that like RHC the hospital subsidiary corporation would be a municipality for pur poses of the state tort liability act but would not be a municipality for purposes of the state uni form municipal contracting law 7 that it would be a public body for purposes of the state open meeting law and a political subdivision for pur poses of the state government data practices act 8 that it would not be subject to the provisions of the state public employment labor relations act and its employees would be excluded from the definition of public employee pursuant to the state public employees retirement act 9 and that it may retain the Ramsey county attorney as its attorney and legal advisor In addition the act provided that the hospital subsidiary corporation would be consid ered a political subdivision for purposes of the state equitable compensation statute (requiring such entities to assure that any employee compensation plan that is established or negotiated is equitable with respect to positions of comparable work value) 10 but would not be considered a political subdivision for any other purpose unless expressly provided otherwise in the act that it would be considered a county affiliated public teaching hos The act was silent as to whether the hospital subsidiary corporation would be a municipality for purposes of the state municipal bond code The act was also silent as to whether the subsidiary corporation would be exempt from state sales and income taxes a But see § 246A 06(4) (providing in pertinent part that any corpora tmn created by RHC would not be subject to either of those statutes) This portion of § 246A 06(4) was probably not intended to apply to the hospital subsidiary corporation since it not only includes provisions that would directly conflict with provisions specifically addressed to the sub sidiary corporation but also includes provisions that would be redundant of other provisions pertaining to the subsidiary-some of which are con tamed in the immediately preceding portion of the same section s The act allowed former employees of the commission who were transferred to the hospital subsidiary corporation to elect whether to con tune participation in the public employee retirement association The act also allowed such employees to elect whether to continue participation in deferred compensation programs The act provided however that such employees would no longer be subject to the Ramsey county civil service personnel system law and related rules 10 As with RHC the act granted the hospital subsidiary corporation the discretionary authority to set salary levels for its employees ST PAUL RAMSEY MEDICAL CENTER 757 petal for purposes of certain statutory provisions relating to prepaid health plans under the state gen eral assistance act that its employees would be sub ject to the state chartable hospitals act (prohibiting employees of charitable hospitals from engaging in work stoppages and providing for mandatory ar bitration of labor disputes) and that like the com mission it would be required to provide hospital and medical services to county indigents 11 Pursuant to the foregoing provisions the hospital subsidiary corporation was officially organized by RHC under the general Minnesota nonprofit corpo ration statute on September 6 1986 The question presented is whether the Medical Center as man aged and operated by RHC and this subsidiary cor poration is an employer within the jurisdiction of the NLRA For the reasons discussed below we find that it is Section 2(2) of the NLRA provides that the term employer shall include any person acting as an agent of an employer directly or indirectly but shall not include any State or political subdivi sion thereof Although the NLRA does not define what constitutes an exempt state political subdivision the exemption has historically been in terpreted to include only those entities that are either (1) created directly by the State so as to constitute departments or administrative arms of the government or (2) administered by individuals who are responsible to public officials or to the general electorate 12 All parties agree and we find that the Medical Center was an exempt political subdivision under the first of these tests prior to 1986 when it was managed and operated by the St Paul Ramsey Medical Center commission As outlined above however the 1986 act effected significant changes in the management and operation of the Medical Center The Medical Center is now managed and operated by RHC and its subsidiary the hospital subsidiary corporation Like the commission both RHC and the hospital subsidiary corporation had a statutory genesis Unlike the commission however the balance of the relevant statutory provisions in dicate that the State did not intend RHC and the hospital subsidiary corporation to be established as departments or administrative arms of the govern ment For example the act expressly provided that RHC s powers would be equal to those of a private nonprofit corporation and would specifi cally include powers that had been withheld from I I The act was silent with respect to whether the hospital subsidiary corporation would also be required to provide such services to city and county prisoners 2 See NLRB v Natural Gas Utility District of Hawkins County 402 U S 600 (1971) the commission such as the power to prepare an annual budget to borrow funds and to purchase real property Further the act provided that the hospital subsidiary corporation the entity immedi ately responsible for operating the Medical Center would be separately organized and incorporated by RHC rather than directly created by the State Sig nificantly the act also provided that the employees of both RHC and the hospital subsidiary corpora tion would be excluded from coverage under the state public employment labor relations act and the state public employees retirement act 13 Provisions such as these clearly indicate an intent on the part of the State to privatize the day to day operations of the Medical Center 14 We recognize of course that there are several other provisions in the act that could be cited to support the opposite conclusion Thus the act de scribed RHC as a public corporation and ex empted it from state sales and income taxes pro vided that the hospital subsidiary corporation was a continuation of the commission and not the creation of a new authority declared RHC and/or the hospital subsidiary corporation to be a municipality a public body a political subdi vision and a county affiliated public teaching hospital under various state statutes relating to such entities subjected the hospital subsidiary cor poration s employees to the state charitable hospi tals act required the hospital subsidiary corpora tion to continue providing indigent care and al lowed RHC and the hospital subsidiary corporation to continue to retain the Ramsey county attorney as their attorney and legal advisor However we find that none of these provisions either individually or cumulatively are sufficient to outweigh the other provisions cited above Thus although RHC is designated a public corpora tion as indicated above its employees are not public employees The provision exempting RHC from state sales and income taxes is similarly incon clusive such a provision is consistent with RHC s charitable educational and scientific purpose and 19 As previously noted the act also removed the former commission employees from coverage under the Ramsey county personnel system law and related rules Although the act allowed such employees to elect to continue participating in the state public employees retirement associa tion this was obviously a transitional measure and says little about the State s intentions with respect to the jurisdictional issue 14 Cf Truman Medical Center 239 NLRB 1067 (1978) enfd 641 F 2d 570 (8th Cir 1981) (finding based on similar changed circumstances that hospital was no longer a subdivision of the city) Cases reaching a con trary result are distinguishable For example in Camden Clark Memorial Hospital 221 NLRB 945 (1975) the hospital was not separately mcorpo rated or otherwise organized so as to have a separate legal identity apart from the city And although the hospital in Madison County Mental Health Center 253 NLRB 258 (1980) was separately incorporated the county board retained significant control over the hospitals day to day operations including its labor relations policies 758 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD does not necessarily indicate an intention to estab lash RHC as an administrative arm of the State 15 As for the provision stating that the hospital sub sidiary corporation is a continuation of the com mission and not the creation of a new authority given the other provisions outlined above this was obviously not intended to mean that the subsidiary corporation would retain all the commissions char acteristics The fact that the act declared RHC and/or the hospital subsidiary corporation to be a municipality, a public body a political subdi vision and a county affiliated public teaching hospital under various state statutes also does not necessarily establish that they were intended to be administrative arms of the State Indeed the act si multaneously declared that neither RHC nor the hospital subsidiary corporation was a municipal ity or a public employer under other state stat utes and further provided that the subsidiary cor poration was not to be considered a political sub division for any purpose other than that specifical ly provided Under these circumstances the most that can be said is that the State intended RHC and the hospital subsidiary corporation to have some of the attributes of public entities and not to have others The provision subjecting the hospital sub sidiary corporations employees to the state charita ble hospitals act likewise says little about the State S intention with respect to the Medical Cen ter s status since that act by its own terms applies to private nonprofit hospitals as well as to county and municipal hospitals 16 Finally the provisions requiring the hospital subsidiary corporation to provide indigent care and permitting RHC and the subsidiary corporation to retain the Ramsey county attorney do not appear particularly significant under the circumstances We note for example 1 See Morristown Hamblen Hospital Assn 226 NLRB 76 (1976) It is undisputed that RHC is also exempt from Federal income taxes under § 501(c)(3) of the Internal Revenue Code 16 Although the Board in 1975 issued an opinion declaring that the state charitable hospitals act was preempted to the extent it applied to private nonprofit hospitals (see State of Minnesota 219 NLRB 1095) the State has neve thereafter amended the act in this regard that prior to the 1986 act the commission was re quired to provide care to city and county prisoners as well as to indigents and had no choice but to retain the Ramsey county attorney as its attorney and legal advisor To the extent the present prove sions omit certain of these requirements therefore they actually further evince an intent to relax the governmental ties to the Medical Center We find that the Medical Center is also not an exempt political subdivision under the second test, I e that it is not administered by individuals who are responsible to public officials or to the elector ate There is no requirement under the act that the board of directors of RHC and the hospital subside ary corporation either be themselves public offs cials or be appointed by public officials 17 Nor is there any provision in the act providing for their removal by public officials Further as discussed above the act granted the board of directors of RHC and the hospital subsidiary corporation virtu ally complete autonomy with respect to the man agement and day to day operation of the Medical Center In sum therefore we find that although the Medical Center was once an exempt political subdi vision under Section 2(2) of the NLRA it is no longer As currently managed and operated by RHC and the hospital subsidiary corporation the Medical Center is neither an administrative arm of the Government nor is it administered by individ uals who are responsible to public officials Accordingly the parties are advised that based on the facts presented the Board would assert ju risdiction over the Medical Center Although the act provided that RHC s initial board of directors would be named by a selection panel two thirds of whom were appointed by the chairs of the Ramsey county board of commissioners and the St Paul Ramsey Medical Center commission there was no requirement that those so appointed be public officials Similarly although the act re quired with respect to future vacancies that at least one member of the five member board appointed nominating committee be a member of the Ramsey county board of commissioners there was no requirement that any of the remaining four nominating committee members be public offs cials