Wednesday, June 22, 2016

Arbitrator: SEIU-UHW Could Face Tens of Millions of Dollars in Fines

How big are the fines that SEIU-UHW could face if Dave Regan refuses to withdraw his statewide ballot initiative by June 30?

“Tens of millions of dollars,” according to an arbitrator’s decision issued June 6.

How did the arbitrator come up with this figure?

If the Hospital Executive Compensation Act of 2016 appears on the November 2016 ballot, says the arbitrator, the California Hospital Association (CHA) will be forced to mount a statewide campaign to oppose it. In addition, a public debate about CEO compensation will damage the hospital industry’s reputation, according to the arbitrator.

Here’s an excerpt from the arbitrator’s decision:
Further, calculation of the precise harm to CHA is difficult at best. Clearly, any campaign at the statewide level is extremely costly, with estimates in the tens of millions of dollars. (p. 40)

The arbitrator cites one of the CHA’s witnesses who testified at the seven-day arbitration hearing:
In addition, according to [Gail] Blanchard-Saiger's testimony, beyond the millions of dollars that would be incurred in opposing an initiative, there would also be incalculable damage to the reputation of the hospital industry as a result of any campaign. (p. 37)

Regan is fully aware of the possible fines.

On Monday (June 20), SEIU-UHW’s attorneys delivered a legal brief to a Sacramento County Superior Court judge stating that the arbitrator’s decision “threatens UHW with substantial damage if the initiative remains on the November 2016 ballot.”

In his June 6 decision, the arbitrator ruled that Regan’s filing of the ballot initiative was a direct violation of a gag clause that Regan himself negotiated and signed as part of his secret partnership deal with the CHA. Regan’s gag clause prohibits SEIU-UHW from filing ballot initiatives (or, for that matter, any legislation, litigation, or regulatory actions) that are “adverse to the California hospital industry.”

In fact, Regan’s gag clause even blocks SEIU-UHW from making comments “raising concerns about… executive compensation in health care.”

So... in a major f*ck-up of colossal proportions, Regan appears to have backed SEIU-UHW into a no-win situation that’ll inevitably cost the union’s members millions of dollars.
SEIU-UHW's Dave Regan
If Regan withdraws the initiative before June 30, he’ll flush an estimated $5 million down the toilet. That’s the money Regan spent earlier this year to collect voters’ signatures to qualify the measure for the ballot. Furthermore, Regan will be unable to place a similar measure on the California ballot until November 2018, the next statewide election.

If Regan refuses to withdraw his initiative, SEIU-UHW’s members could face tens of millions of dollars in fines and penalties. The risk is huge. For example, how much would SEIU-UHW be forced to pay for the “incalculable” (p. 37) and “irreparable harm” (p. 39) to the hospital industry’s reputation?

This Friday, Regan’s attorneys will make a last-ditch attempt to overturn the arbitrator’s decision at a hearing in Sacramento County Superior Court scheduled for June 24 at 2:00pm.

Stay tuned.