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What receivership means for hospital employees

December 9, 2011

Yesterday’s post about the hospital receivership process was so popular I decided to write a follow up on a more specific topic- what does receivership mean for hospital employees?

Our expert today is Attorney Chris Callaci. He’s the general counsel for the United Nurses and Allied Professionals union, which has employees at both Landmark Medical Center and Westerly Hospital. I asked him about what happened to employee salaries and benefit plans at Landmark when its special master took control of the hospital.

Chris Callaci: At Landmark, the special master there, Jon Savage, honored the terms and conditions of the collective bargaining agreements at both Landmark and the Rehabilitation Hospital of Rhode Island. I don’t pretend to speak for Jon Savage, but I think what was at work there is that we’re dealing not with liquidating a Borders Books and selling inventory, you know, you’re dealing with an acute care community hospital providing critical health care services, so you’ve got to have a stabilized work force of skilled, licensed people to provide that care.

I’m assuming that the calculation there was, ‘Look, I’ve got to maintain a competitive level of wages and benefits for those guys because if I don’t, it’s the one growth area in the economy and people will leave.’

The Pulse: Can the special master change employee contracts?

Chris Callaci: A special master does not have the right to just simply unilaterally decide that he or she is going to change terms and conditions of employment in the collective bargaining agreement. So for example, I don’t get to just come in and say ‘OK, well I’m gonna get rid of their medical insurance plan.’ Or, ‘I’m gonna freeze out their wages.” Or, ‘I’m gonna do away with their pension.’ I mean, that’s just illegal.

The Pulse: What can the special master do?

Chris Callaci: You can’t just suspend the contract. Now there’s nothing to preclude a special master from coming to the union and saying, ‘Look, here’s the lay of the land here and we’d like to renegotiate terms and conditions of employment.’ The special master could make that request of the union, and then the union would naturally say, ‘OK, well let’s think this through. Maybe we will do that, maybe we won’t.”

The Pulse: When I spoke with Attorney Gerard Goulet he told me that “Any of the contracts could be reversed upon court approval.” Is that correct?

Chris Callaci: Well, I guess I would agree. Here’s my hesitation. Because a special master or a receiver can’t make unilateral changes to a contract, as I said, they’re not precluded from coming to the union and saying, ‘Look, we’re gonna need some relief and we want to sit down and negotiate with you.’

I think it’s technically correct that if the parties sat down and bargained in good faith and they couldn’t come to an agreement, I think the special master could seek relief with the court and say, ‘Look, we reached out to the union, we sat down and bargained, we bargained in good faith, we couldn’t quite come to an agreement, and we believe your honor that we should get some relief under the contract, in the following respect.’ And then the judge would have to have a hearing on that. And he or she would hear both sides.

The Pulse: So, I guess what you’re saying is, it’s not like the special master is gonna say one day, ‘Ok, turns out we’re going to pay you less and no health care benefits. I’m the special master and I can do whatever I want.’

Chris Callaci: Exactly. You hit the nail on the head. And, again, there’s two reasons, if a special master did that, he or she would demonstrate a complete and fundamental lack of understanding of how you stabilize a hospital. You’d drive the work force out. From a practical stand point, you wouldn’t do it. But then again, the second piece is the legal part of it.

The Pulse: Are hospitals still able to negotiate new contracts under receivership?

Chris Callaci: Once they go into receivership, the special master is the board of trustees, is the CEO. So if there’s a contract in effect, we’d live by the terms unless we mutually agreed to change them. If the contract expired, by law the contract would remain in effect until a successor agreement would be negotiated between the union and the special master.

So whether there’s a contract in effect, or a contract in effect that eventually expires during the special mastership proceeding, unilateral changes can’t be made. Anything that affects terms and conditions of employment has to be negotiated. There has to be an agreement.

The Pulse: What would you say to one of my readers who is worried about his spouse’s job and salary at Westerly?

Chris Callaci: I’d tell you what I tell the members at Landmark all the time. The union’s position is as follows- the special master is obligated to honor the contract. If he or she wants to makes changes, they have to negotiate that with us… And that as a union we’ll make sure that process is preserved…

But clearly, this is going to be a difficult process because we’re dealing with an employer that appears to be insolvent. And most definitely the hospital is not going to look exactly the same when it comes out of this proceeding as it does today. And there are going to be some difficult decisions to make.

The Pulse: Anything else you’d like to say about this situation in Westerly?

Chris Callaci: Our union’s position in Westerly is the same exact position that we took and have taken at Landmark. And that is that these community hospitals are critical community assets. You talk about facilities that are big employers. Both hospitals are economic engines that drive the local and state economies. So, these are places, whether it’s Westerly Hospital or Landmark Medical Center, that are vital community aspects and we’ve got to preserve them.  And our position as a union is going to be that they should remain as full service hospitals and honor the integrity of the contract.

Listen in at 5:45pm tonight for my live debrief explaining hospital receiverships. There’s still time to send me your questions!

2 Comments leave one →
  1. Steven permalink
    December 11, 2011 2:26 am


    Thank you so much for this very informative post!!! The one question my spouse wanted me to ask you is she is not a unionized the same rules apply as mentioned in the post??? Again, I thank you…I’ve learned a lot from your blog!!

    • December 12, 2011 3:39 pm

      No problem Steven!

      I’m glad you’re enjoying the blog!

      I should be clear- Chris Callaci talked about what’s likely to happen under a special master. Last time, employee contracts stayed the same. BUT in the end, the special master does have the right to cancel or renegotiate any contracts as long as he/she has permission from the court.

      That’s the only hard and fast rule. As for non union employees, the same rule holds.

      Hope that helps!

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