Back in Court: California Hospital Association Sues SEIU-UHW for Millions Locked up in Covert Partnership Organization

The California Hospital Association (CHA) has taken SEIU-UHW to court… again.

This time, CHA is trying to recover tens of millions of dollars that SEIU-UHW has locked away inside a secret “partnership” organization, according to records obtained from Sacramento County Superior Court. (Below is a full copy.)

On October 14, CHA’s and SEIU-UHW’s attorneys will face off in a Sacramento courthouse.

Here’s what’s happening.

When SEIU-UHW’s Dave Regan and CHA’s Duane Dauner signed their secret partnership deal in 2014, they also agreed to set up and finance a secret new organization to carry out their joint projects.

The new organization’s first priority was to help SEIU-UHW convince politicians to steer $6 billion a year in new Medicaid funds to California’s giant hospital corporations.

 

Dave Regan and Duane Dauner

If SEIU-UHW had succeeded in this task (they didn’t), then the hospital CEOs would have allowed SEIU-UHW to unionize 30,000 of their employees… but only as long as the workers were banned from striking, forced into cheap labor contracts, and silenced by a massive gag clause.

The covert partnership organization -- ironically named “Caring for Californians” by its founders -- was funded with $50 million that Regan and Dauner diverted from their treasuries in 2014.

With millions in its bank count, “Caring for Californians” leased office space in Sacramento, hired Peter Ragone as its Executive Director, hired attorneys and staff, etc. The organization was soon spending $40,000 a month in operating expenses, according to court filings by the CHA.

For a time, things were going swimmingly for Wall Street Dave. Fantasies of his class-collaborationist partnership danced through his head as he performed late-night lap dances for some of California’s wealthiest corporate CEOs.

Peter Ragone, CFC's Executive Director

By November of 2015, however, Dave’s partnership had exploded in a fiery display that lit up California’s skies. The partnership was dead!  

At the time of the partnership’s demise, “Caring for Californians” still had $34 million in unspent cash sitting in its bank account.

And that’s what the latest lawsuit is all about. The $34 million.

Under the terms of Regan and Dauner’s secret partnership deal, the $34 was supposed to be returned to CHA and SEIU-UHW on January 1, 2016. However, Regan -- in an apparent fit of vindictiveness against his former pin-striped pals -- is refusing to return the money to either organization.

According to CHA’s lawsuit, Regan has vetoed any return of the money to both CHA and SEIU-UHW.

How?

“Caring for Californians” is run by an eight-person Board of Directors, with equal numbers of seats filled by CHA and SEIU-UHW. Regan and Dauner are co-chairs of the board. Since January of 2016, says CHA, Regan has used his four votes (one of them is SEIU-UHW staffer Arianna Jimenez) to block every proposal to return the $34 million.

So what’s happening to the money?

It’s simply swirling down the drain, says CHA. 

Here’s an excerpt from a recent CHA legal filing, which refers to “Caring for Californians” by its initials “CFC.” The term "Code of Conduct" refers to the secret partnership deal signed in 2014.

“On December 31, 2015, the Code of Conduct terminated pursuant to its terms. Since that time, CFC has had no ongoing work, and neither CHA, UHW, nor any CFC Director has made any efforts to initiate new endeavors. Nonetheless, CFC has continued to spend approximately $40,000 each month on operating expenses for resources and services it has not been using. These are not only unnecessary expenditures, but they also decrease the amount available for redistribution to both CHA and UHW as provided by the Code of Conduct.” (p. 3)

Interesting, right?

 

SEIU-UHW's Arianna Jimenez

Regan is so vindictive he’s willing to piss millions of dollars of SEIU-UHW members’ money down the drain to get back at CHA.

How much money do SEIU-UHW members stand to lose? According to the CHA:

“As of September 1, 2016, the CFC has approximately $34 million in its accounts that is not currently encumbered. Pursuant to the terms of the Code of Conduct, approximately $27.2 million would be returned to CHA and approximately $6.8 million would be returned to UHW.” (p. 4)

What’s CHA asking the judge to do?

CHA’s lawsuit asks the judge to force SEIU-UHW into binding arbitration so it can recover its $27.2 million. Plus, it wants SEIU-UHW to pay all of CHA’s attorneys fees.

If history is a judge, it looks like SEIU-UHW’s members will be footing the bill for yet another idiotic blunder by Regan.

Here’s a copy of CHA’s suit filed on September 6, 2016:

  California Hospital Association's lawsuit versus SEIU-UHW over $34 Million Locked in Secret Partnershi...

California Governor: I refuse to meet with SEIU-UHW's Dave Regan

California Gov. Jerry Brown

What do California’s top political and union leaders think about SEIU-UHW President Dave Regan?

Not much.

That’s one of the intriguing findings in a 42-page decision issued last month by the arbitrator who investigated the dispute between SEIU-UHW and the California Hospital Association.

According to the arbitrator’s report, California Gov. Jerry Brown -- who is scheduled to speak at next week’s Democratic National Convention -- refused to be in the same room with Regan. Ditto for the California Teachers Association and the SEIU California State Council.

Why do they dislike Regan so much?

It turns out that Regan betrayed them by attempting to raid billions of dollars set aside for California’s chronically underfunded schools.

Here’s what happened.

In 2012, the governor joined the teachers union and many other civic organizations in successfully passing a ballot initiative that established a “Millionaire’s Tax” to improve funding for California’s schools. The tax, also called “Proposition 30,” will expire in 2018.

Last year, the California Teachers Association began openly preparing to file a new ballot initiative to extend California’s “Millionaire’s Tax” and its funding for schools.

Dave Regan

As the teachers began their efforts, Regan eyed an opportunity. 

Under the terms of his secret partnership with the California Hospital Association, Regan was under the gun to deliver billions of dollars of new government funding to hospital CEOs in order to buy their consent to unionize 30,000 of the hospitals’ non-union employees.

Regan, rather than supporting the schools, introduced a separate ballot initiative to snatch $2.5 billion a year from the schools and put it into the pockets of the hospital CEOs with whom he’d secretly been conspiring.

In June of 2015, Regan asked the California Hospital Association (CHA) to join him in filing the competing ballot initiative. Here’s what happened next, according to the arbitrator’s report:

"CHA representatives expressed surprise and raised a number of concerns about the Union's proposal, including the likelihood that the California Teachers Association (CTA), the so-called "ABC Coalition" and the Governor would be angry and unhappy if the LMC [SEIU-UHW and the CHA] were to file a competing statewide tax increase initiative. In particular, CHA expressed concern that competing Proposition 30 initiatives would undermine each other, decreasing the opportunity of either passing." (pp. 11-12)

SEIU-UHW nonetheless filed its competing ballot initiative.

Next, Regan tried to engage Gov. Brown and the teachers union in negotiations over a compromise ballot initiative that would steer billion to his hospital CEO pals. 

Regan asked CHA CEO Duane Dauner to reach out to the Governor’s office. He also called on Peter Ragone and former California Senate President Darrell Steinberg to reach out to the California Teachers Association (CTA) and the SEIU California State Council, which was working with the CTA.

How did they respond to Regan’s plea?

Here’s what the arbitrator wrote in his decision:

"Despite efforts by CHA to have UHW and the LMC included in the discussions, both the Governor's office and the other stakeholders, including CTA and the SEIU State Council, continued to insist that they would not meet with UHW or the LMC, but only with CHA separately." (p. 13)

Ouch. (The term “LMC” refers to the “Labor-Management Committee” that SEIU-UHW and the CHA set up to carry out their secret partnership deal. Duane Dauner and Dave Regan were the co-chairs of the LMC.)

Gov. Brown campaigning for Prop 30

Several months later, Regan begged the Governor, the CTA, and other “stakeholders” to allow SEIU-UHW to join them in a single ballot initiative. But they again refused. The arbitrator says it was “clear that the other stakeholders would not modify their position of opposition to UHW’s involvement.” (p. 13)

In November, the CHA announced its support for the teachers’ ballot initiative. According to the arbitrator, the CHA’s Duane Dauner phoned Regan on November 3, 2015 and “explained to representatives of UHW that the new coalition was not willing to work with UHW and that they, therefore, could not be part of the coalition.” (p. 19)

The arbitrator’s decision makes multiple other references to statewide leaders’ apparently extreme dislike for Regan:

“...it was the stakeholders that insisted UHW was not welcome.” (p. 22)

“UHW was generally aware that.. the Governor's office, CTA and other stakeholders were unwilling to meet with UHW or to allow UHW to join their coalition.” (pp. 23-24)

Elsewhere, the arbitrator refers to “UHW's apparently strained relationship with the governor and the SEIU State Council.”

We all know what happened next. When Regan failed to deliver the billions of dollars he’d promised to his CEO pals, his secret partnership deal with the Hospital Association exploded in flames.

Dave Regan and the gang that can't shoot straight

In an angry response to his former CEO pals, Regan filed a new ballot initiative designed to cap their salaries at $450,000 a year. 

Unfortunately, Regan forgot to read the gag clause that he’d signed as part of his secret partnership deal, which legally blocked SEIU-UHW from taking any action "adverse" to the interests of the hospital industry.

Last month, after Regan had already wasted $5 million of SEIU-UHW members’ dues money to collect signatures for his doomed executive-compensation ballot initiative, a Superior Court judge ordered Regan to withdraw the initiative or face tens of millions of dollars of penalties.

Altogether, it was quite a remarkable series of failures and f*ck-ups by Regan and his chief political strategist, Dave Kieffer.

As one observer remarked: “It looks like Dave Regan is chief gunner for the gang that can’t shoot straight.”

Lawsuit Spotlights $10 Million of SEIU-UHW Funds Given to Industry Execs

Dave Regan’s lawsuit against Duane Dauner (California Hospital Association) and Greg Adams (Kaiser Permanente) contains interesting details about just how closely SEIU-UHW was working with the CEOs atop California's hospital industry.

According to the lawsuit, Regan funneled $10 million of SEIU-UHW members' union dues into a bank account controlled by fatcat CEOs.

That is... until Regan's secret deal with the hospital bosses exploded in flames.

Now, Regan is suing the CEOs in hopes of recovering $7 million of the $10 million. Here's what SEIU-UHW says in its lawsuit filed Nov. 24 in Sacramento County Superior Court:

CHA and UHW committed to each other to fund CFC. In accordance with this commitment, CHA agreed to provide $80 million in funding to CFC, and UHW agreed to provide $20 million in funding. To date, CHA and UHW have contributed half of their funding obligations to CFC. CFC currently holds more than $7 million dollars of UHW contributions…   (p. 6)

What happened to the other $3 million?

Apparently, it’s already been spent. 

Regan and his CEO pals have reportedly been writing fat checks for consultants, lawyers, offices, trips, fancy meetings, and staff -- including the hiring of Peter Ragone as the Executive Director of Regan's now-defunct "partnership" organization. 

Peter Ragone: Exec Dir. of imploded partnership orgz'n

In total, $3 million of SEIU-UHW members' money has disappeared down the sewer like a prodigious purple bowel movement.

As far as the remaining $7 million, it’s currently frozen beyond SEIU-UHW's reach because, according to the terms of Regan's secret deal with the California Hospital Association, it can only be transferred with the consent of Duane Dauner, says the lawsuit.

CFC owns, possesses, and has a right to possess the funds within its bank account, including those lent to it by UHW. Defendants intentionally and in a gross abuse of their authority as Directors of CFC substantially interfered with CFC's property by terminating all operations of CFC by vetoing any proposed expenditures. (p. 18)

In other words, the $7 million is sequestered beyond SEIU-UHW's reach. "UHW has suffered and will continue to suffer substantial and irreparable harm," says the suit (p. 22).

Will SEIU-UHW members ever recover their $7 million? Good question.

And here's an even bigger question posed by observers: 

Why did SEIU-UHW's Executive Board ever authorize Regan to gamble upwards of $25 million of union members' dues on a hare-brained scheme that has exploded in flames and has landed SEIU-UHW in a desperate and expensive court battle?

Stay tuned!