Correctional Medical Systems, Inc.

654 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD Correctional Medical Systems, Inc. and Illinois Nurses Association and Illinois State Labor Relations Board, Petitioner. Case A0-278 August 31, 1990 ADVISORY OPINION BY CHAIRMAN STEPHENS AND MEMBERS CRACRAFT, DEVANEY, AND OVIATT Pursuant to Section 102 98(b) of the Board's Rules and Regulations, on June 25, 1990, the Illi- nois State Labor Relations Board (ISLRB) filed a petition for an advisory opinion as to whether the Board would assert jurisdiction over Correctional Medical Systems, Inc (the Company) In pertinent part, the petition alleges that an unfair labor prac- tice proceeding involving the Company (Case No S-CA-100) is currently pending before the ISLRB, 1 that the rights and/or obligations of the parties to that proceeding turn on whether the Board would assert jurisdiction over the Company, and that this jurisdictional issue can be most expe- ditiously resolved through the Board's advisory opinion procedures The Company, the Union, and the American Federation of State, County, and Municipal Employees, Council 31, AFL-CIO, as amicus cunae, 2 submitted statements responding to the ISLRB's petition 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 on whether it would decline to assert juris- diction over parties then before the agency or court either (1) on the basis of its current stand- ards, or (2) because the employing enterprise is not within the jurisdiction of the National Labor Rela- tions Act Here, the petition was filed by the ISLRB and specifically requests an opinion on whether the Company is within the jurisdiction of the NLRA 3 Further, as fully discussed below, the ISLRB has already conducted a hearing and set forth relevant factual findings concerning the juns- dictional issue, and these factual findings have been upheld by the Illinois Appellate Court 4 Accord- ' The petition indicates that the unfair labor practice charge (alleging a refusal to bargain) was actually filed by the Umon against the State of Illinois, Departments of Central Management Services and Corrections (DOC), and that the Company subsequently intervened Aside from noti- fying the Board that it "concurs in the Petition for Advisory Opinion," DOC has not participated in the Instant proceeding 2 No party objects to AFSCME Council 31's participation as amicus cunae in this proceeding and such participation is granted 3 It is undisputed that the Company satisfies the Board's current com- merce standards for asserting jurisdiction 4 Although the Union insists that we review afresh the hearing record if we decide to entertain the petition, we find that this would serve no useful purpose Both the ISLRB and the Illinois Appellate Court have reviewed the record in the state proceeding, and both have reached es- sentially the same factual findings For us to now review the record de mgly, we find that the petition was properly filed and that the jurisdictional issue raised may proper- ly be addressed through the Board's advisory opin- ion procedures 5 I THE RELEVANT FACTS The ISLRB's decision issued in July 1988, on ex- ceptions to the hearing officer's recommended opinion and order 6 As noted by the Illinois Appel- late Court on appea1, 7 the factual findmgs of the hearing officer and the ISLRB were for the most part similar, except that the hearing officer's find- ings were more comprehensive The court summa- rized the relevant facts as follows It is undisputed that [the Union] is the exclu- sive bargaining representative for nurses em- ployed by the State, including nurses em- ployed by the State to work at its correctional centers In 1985, DOC entered into a non-bid contract with [the Company], a private corpo- ration licensed to do business in Illinois and based in St Louis, Missouri [The Company], described in the contract as an independent contractor, has contracts to provide health services to correctional facilities in 16 states, including contracts with nine Illinois correc- tional facilities Between April 1985 and June 1986, [the Company] was compensated on a cost-plus plan and provided all health care staff at [the Shawnee Correctional Center, a state facility in Vienna, Illinois], except for the health Care Unit Administrator, who was a DOC employee (Since July 1987, this position has been staffed by a [company] employee ) Included among [company] staff are doctors, nurses, a dentist, psychiatrist and psychologist, a pharmacist, technicians, and clerical staff Since July 1986, the contracts have provided that [the Company] is to be compensated on the basis of the number of inmates at Shawnee Quarterly performance level adjustments may be made, as determined by DOC and [the Company] and approved by the Warden, if there are any deficiencies in the agreed-upon novo and Issue Independent or contrary factual findings in this proceed- ing would simply muddy the waters—a result which both armcus and the Union itself strenuously argue we should avoid For the purposes of this advisory opinion proceeding, therefore, we adopt the factual findings in the state proceeding as our own 5 The parties have not advised us, nor are we aware, of any unfair labor practice or representation proceedings involving the parties cur- rently pending before the Board or its Regional Office 6 State of Illinois, Departments of Central Management Services and Cor- rections, 4 PER! pars 2034 (IL SLRB 1988) Illinois Nurses Assn v Illinois State Labor Relations Board, 196 Ill App 3d 576, 554 NE 2d 404 (Ill App Ct 1990) 299 NLRB No 95 CORRECTIONAL MEDICAL SYSTEMS 655 staffing level All health equipment costing over $100 is owned by the State [The Company's] staff is required to repre- sent DOC with local groups [The Company] solicits, interviews, and hires the nurses DOC has the nght to approve the "initial and con- tinued employment" of nurses and sets the minimum qualifications for them, e g, Illinois license, one-year experience, CPR certification with correctional nursing experience preferred The contract also states certain details that the interviewer should focus on when questionmg job applicants Prior to starting work, each person hired by [the Company] must pass a DOC background check (for security pur- poses) The final hiring selection is subject to DOC's approval (The [ISLRB] found that DOC did not exercise this right but rather lim- ited its involvement to overseeing security and professional licensing matters ) The contract also gives DOC complete dis- cretion to remove a nurse from Shawnee, al- though only [the Company] can terminate a staff member If [the Company] does not remove the nurse from Shawnee at DOC's re- quest, DOC can lock her out In one case, [the Company] termmated a nurse after DOC con- ducted an investigation which resulted in the assistant warden requestmg her termination Nurses' personnel files must be kept at Shaw- nee, [the Company] keeps duplicate files in its St Louis office DOC sets the minimum staffing and schedul- ing requirements, and specifies how many hours a week a nurse may work, approves all hours that have been worked, and the length of the meal period DOC provides the meals on site (for security reasons) Requests for all absences and overtime must be processed ac- cording to DOC requirements and procedures DOC requires that all nurses must be evaluat- ed annually in accordance with applicable state rules Although, in fact, [the Company] conducts the evaluations, DOC must verify them DOC must approve all hours worked which must be kept on DOC timekeeping forms DOC requires all nurses to wear white uniforms and its identification badges which identify them as contractual employees New nurses must attend 40 hours of orientation given [sic] by DOC at the State of Illinois Training Academy in Spnngfield Further, each year DOC requires all nurses to complete 40 hours of in-service training The contract states that nurses must comply with Administrative Regulations and Admims- trative Directives, as well as policies and pro- cedures of DOC and Shawnee The directives for the health care unit were written by DOC Medical Director and approved by the Direc- tor of Corrections From these directives, each institution develops its own Institutional Direc- tives, at Shawnee, these were mostly written by a DOC employee and approved by the warden Pursuant to these directives, the con- tract provides for a Health Care Services Review Committee which is made up of both DOC and [company] administrators Its func- tion is to review inmate complaints, infirmary care, mental health responses, health records, etc Meeting minutes are given to the warden The Shawnee nurse's manual "is the how-to guide for organizing, planning and administer- ing" health care, and incorporates applicable directives in addition to other details as to how the work is to be performed The manual was written by a [Company] employee, but after DOC's approval, became the property of DOC Nurses are hired as [Company] employees [The Company] determines their pay rate and issues the checks from St Louis It provides all benefits, e g health insurance, retirement plan Vacation time, sick leave, etc are estab- lished by [the Company] Only [the Company] can transfer, promote, discipline, and terminate a nurse [The Company] pays unemployment and workers' compensation insurance premi- ums and all required employee taxes Howev- er, the contract provides that [the Company] has a right to "seek representation and indem- nification from the Attorney General's Office" 554 N E 2d at 406-407 On June 1, 1990, the Illi- nois Supreme Court denied leave to appeal the de- cision of the appellate court, 8 and thus the forego- ing factual findings are appropriately considered final II THE POSITIONS OF THE PARTIES Based on its factual findings, the ISLRB con- cluded that it lacked jurisdiction over the Shawnee matter Applying a "degree of control" test, the ISLRB found that the Company rather than the State was the employer of the nurses at Shawnee, and that the Company was not the State's "agent" within the meaning of the Illinois Public Labor Re- lations Act Both the ISLRB and the Company take essentially the same position here, arguing that 8 132 Ill 2d 545, 555 NE 2d 376 (III S Ct 1990) On July 19, 1990, the Ilhnon Supreme Court further denied leave to file a motion for reconsid- eration of the order denying leave to appeal 656 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD the State lacks sufficient control over the Shawnee nurses' primary terms and conditions of employ- ment to preclude meaningful bargaining by the Company, and that the Board and not the ISLRB therefore has junsdiction under the standards set forth m Res-Care, Inc , 280 NLRB 670 (1986), and Long Stretch Youth Home, 280 NLRB 678 (1986) The Union and animus, on the other hand, take the position that the Board should decline to even entertain the ISLRB's petition for advisory opin- ion Notmg that the Illmms Appellate Court ulti- mately reversed the ISLRB's conclusions and held that the Company was the State's agent as a matter of law (because it was performing statutorily and constitutionally mandated government duties, and because the State, while permittmg the Company to control the nurses, retained the right and/or duty to control), the Union and amicus argue that the Board should defer to the court's ruling and dismiss the petition Alternatively, the Union argues that the Board should find that the Compa- ny is exempt from NLRA jurisdiction III ANALYSIS AND CONCLUSIONS Although the Board has traditionally given care- ful consideration to state law declarations and in- terpretations, in the final analysis it is Federal rather than state law which governs whether an employer is within the Board's jurisdiction 9 Fur- ther, while the Board has in certain circumstances declined to issue an advisory opinion in deference to state proceedmgs, 1° this is not such a circum- stance Accordmgly, contrary to the urgings of the Union and amicus, we decline to defer to the Illi- nois Appellate Court's rulmg 11 As for the substantive issue presented, we fmd, m agreement with the ISLRB and the Company, that we would assert jurisdiction over the Compa- ny The Company is clearly not an exempt "politi- cal subdivision" under Section 2(2) of the Act That exemption has historically been mterpreted to include only those entities that are either (1) cre- ated 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 As See New York Institute for the Blind, 254 NLRB 664, 665 and 667 (1981) (citing NLRB v Natural Gas Utilities District of Hawkins County, 402 US 600 (1971)) 10 See SHA Realty, 299 NLRB No 41 (July 31, 1990), and Box Tree Restaurant, 235 NLRB 926 (1978), and cases cited there (dechnmg to Issue an advisory opinion where the State had conducted a representation election within the previous year and thus It was clear the the Board Itself would not, at that tune, entertain a representation petition among the same employees) "As indicated earlier, however, we will defer to the court's underly- ing factual findings for the purposes of this proceeding 1° See Hawkins County, supra indicated by the court, the Company here is a pn- vate corporation doing business in several different States, and m fact is described as an independent contractor in its contract with DOC Nor is the Company exempt from jurisdiction under the principles of Res-Care and Long Stretch Youth Home, supra In those cases, both of which issued the same day, the Board reaffirmed the hold- ing of National Transportation Service, 240 NLRB 565 (1979), and rejected the so-called "mtimate connection" test under which jurisdiction was withheld if the private employer performed func- tions that were intimately related to allegedly tradi- tional government functions of the exempt entity The Board held that the proper focus was rather on the extent of control retained by the employer over essential terms and conditions of employment and on the degree of control exercised by the exempt entity over the employer's labor relations policies, in short, on whether the employer re- tained "sufficient control over the employment conditions of its employees to engage m meaningful collective bargaining" Res-Care, 280 NLRB at 674, Long Stretch Youth Home, 280 NLRB at 681-682 Applying this test, the Board in Res-Care declmed jurisdiction because the exempt entity m that case approved the mitial wages, wage ranges, and bene- fits contained in the employer's proposed operating budget, and also retained the discretion, pursuant to the contractual cost-plus-fixed-fee compensation system, to approve or disapprove any subsequent changes in those terms In contrast, the Board in Long Stretch Youth Home asserted jurisdiction be- cause, although the per-resident compensation system m that case effectively imposed a ceiling on the employer's total operating budget, there were no specific limits on employee compensation, i e, the employer was free to pay either more or less than what the exempt entity suggested m its cost guidelines Based on the facts as found in the state proceed- ing, we find the mstant case more like Long Stretch Youth Home than Res-Care Thus, although the Company used to be compensated on a cost-plus basis, it is now compensated on a per-inmate basis by DOC Moreover, as stated by the court, the Company determines the nurses' pay rate and pro- vides all benefits, mcludmg health insurance 13 As 1° The ISLRB's complete findings concerning employee compensation were as follows The record reveals that the Company has sole and complete control over the wages and fnnge benefits received by the nursing staff Salary ranges are set by the Company for each job classification based on surveys that It alone conducts Annual Increases are also determined by the Company based on job performance evaluations performed by Company employees The State has no authority to Continued CORRECTIONAL MEDICAL SYSTEMS 657 in Long Stretch Youth Home, therefore, it is clear that the Company retains extensive if not exclusive control over employee compensation 14 As outlined by the court, DOC does exercise a significant degree of control over certain personnel policies such as hiring selection, staffing, schedul- recommend or review wage rates set by the Company Paychecks are issued by the Company and it pays all unemployment and work- ers' compensation insurance, withholds Income taxes and pays the employer's portion of social security secunty tax The Company pro- vides the staff with medical, dental and life Insurance, a retirement plan, vacations and funeral and sick leave The State has no input in establishing these benefits The hearing officer's findings were essentially the same as the ISLRB's The nurses are paid pursuant to the Company's pay schedule, and their pay checks are on Company checks Issued out of St Louis The nurses receive the same benefit package that the Company pro- vides its employees (health and dental plan, life Insurance, and retire- ment plan), and their right to receive paid holidays and vacations, sick leave, and leaves of absence are governed by the Company's rules In addition, the Company is responsible for paying unem- ployment and workers' compensation insurance for the nurses and withholds their state and federal taxes and remits the monies to the appropriate federal and state agencies and pays the employer's por- tion for their social security tax 14 It is this fact which primarily distinguishes this case from Correction- al Medical Systems, 289 NLRB 810 (1988), a case in which the Board de- clined to assert jurisdiction over the Company with respect to its oper- ations at an Iowa correctional facility In that case, the contract between the Company and the Iowa State Penitentiary incorporated a civil rights consent decree which effectively limited the Company's discretion over wages and benefits, thus making that case more like Res-Care mg, and umforms However, we find that this oper- ational control would not preclude meaningful bar- gaining As indicated by the court, the control is exercised largely for security reasons, and although DOC could go so far as to remove a nurse from Shawnee, only the Company could actually termi- nate the nurse's employment The Board has assert- ed Junsdiction under similar circumstances in sev- eral previous cases following Res-Care and Long Stretch Youth Home,' 5 and we accordingly would do likewise here In sum, we find that the Company is an employ- er within the meaning of Section 2(2) of the Act, that the Company retains sufficient control over the Shawnee nurses' terms and conditions of em- ployment to engage in meaningful collective bar- gaining, and that it would therefore effectuate the purposes and policies of the Act to assert Junsdic- tion over the Company Accordingly, the parties are advised that, based on the facts as found in the state proceedmg, the Board would assert Jurisdiction over the Company '5 See Koba Associates 289 NLRB 390 (1988), Old Dominion Security, 289 NLRB 81 (1988), Dynaelectron Corp. 286 NLRB 302 (1987), and Rustman Bus Co, 282 NLRB 152 (1986)