Prime Healthcare Services-Encino LLC v. Nat'l Labor Relations Bd.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 6, 2018 May 18, 2018

No. 16-1370

PRIME HEALTHCARE SERVICES - ENCINO LLC, D/B/A ENCINO

HOSPITAL MEDICAL CENTER

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

SEIU LOCAL 121RN,

INTERVENOR

Consolidated with 16-1423

On Petition for Review and Cross-Application

for Enforcement of an Order of

the National Labor Relations Board

Jamie M. Konn argued the cause for petitioner. With him

on the brief were Joseph A. Turzi and Jonathan S. Batten.

Gregoire Sauter, Attorney, National Labor Relations

Board, argued the cause for respondent. With him on the brief

were Richard F. Griffin, Jr., General Counsel, John H.

Ferguson, Associate General Counsel, Linda Dreeben, Deputy

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Associate General Counsel, and Kira Dellinger Vol,

Supervisory Attorney.

Lisa C. Demidovich argued the cause for intervenor SEIU

Local 121RN. With her on the brief was Ira L. Gottlieb.

Before: GRIFFITH and PILLARD, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

EDWARDS, Senior Circuit Judge: The National Labor

Relations Act (“Act” or “NLRA”) imposes on employers a

general duty to bargain in good faith with their employees’

representatives over “wages, hours, and other terms and

conditions of employment.” 29 U.S.C. § 158(a)(5), (d).

Pursuant to this duty to bargain, “an employer commits an

unfair labor practice if, without bargaining to impasse, it effects

a unilateral change of an existing term or condition of

employment.” Litton Fin. Printing Div. v. NLRB, 501 U.S. 190,

198 (1991) (citing NLRB v. Katz, 369 U.S. 736 (1962)). This

“[unilateral change] doctrine has been extended as well to cases

where . . . an existing agreement has expired and negotiations

on a new one have yet to be completed.” Id. The duty to bargain

also requires an employer “to provide relevant information

needed by a labor union for the proper performance of its duties

as the employees’ bargaining representative.” Detroit Edison

Co. v. NLRB, 440 U.S. 301, 303 (1979). A failure to comply

with either obligation is a violation of Section 8(a)(5) and (1)

of the Act. 29 U.S.C. § 158(a)(5), (1).

In this case, the National Labor Relations Board (“Board”)

found that the Petitioner, Prime Healthcare Services and its

subsidiary hospitals (together “Prime”), violated both the

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unilateral change doctrine and the duty to provide relevant

information during negotiations with its employees’ bargaining

representatives, Service Employees International Union

(“SEIU”) Local 121RN (“121RN”) and SEIU United

Healthcare Workers-West (“UHW”) (collectively, “the

Unions”). Prime Healthcare Servs., 364 NLRB No. 128, slip

op. at 1–3 (Oct. 17, 2016). The Board concluded that Prime

unilaterally discontinued anniversary step increases due to unit

employees after its collective bargaining agreements with

121RN and UHW had expired. Id. at 10. The Board also

determined that Prime wrongfully refused to provide

information about employee health care programs in response

to requests from 121RN and UHW. Id. at 13, 16. The Board

ordered Prime to, inter alia, resume granting step increases to

eligible employees; make whole eligible employees for any

loss of earnings resulting from the employer’s failure to grant

anniversary step increases; and furnish 121RN and UHW the

requested information. Id. at 2–3.

After the parties filed their opening briefs, the complaints

relating to UHW’s unfair labor practice charges were settled.

The only matters that are still in issue here are those relating to

the unfair labor practice charges filed by 121RN. Prime has

raised a number of challenges to the Board’s disposition of the

121RN charges. We find no merit in these challenges, however.

Accordingly, we deny the petition for review and grant the

Board’s cross-application for enforcement of its order.

I. BACKGROUND

Prime Healthcare Services, Inc., and its affiliate Prime

Healthcare Foundation, Inc., own and operate numerous

hospitals in various states. In June 2008, Prime acquired two

hospitals in California—Encino Hospital Medical Center

(“Encino”) and Garden Grove Hospital & Medical Center

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(“Garden Grove”). It adopted three collective bargaining

agreements then in force between the hospitals’ prior owner

and their employees. The first agreement was with 121RN, a

union representing a unit of registered nurses at Encino. The

second and third agreements were with UHW, a union

representing two units of service and technical employees at

Encino and Garden Grove. All three agreements were effective

from January 1, 2007, through March 31, 2011.

A. Negotiations Over New Collective Bargaining Agreements

In late 2010 and early 2011, Prime commenced

negotiations with 121RN and UHW over new collective

bargaining agreements. Although the Unions represented

different bargaining units, both are affiliated with the Service

Employees International Union. Mary Schottmiller was the

hospitals’ principal representative in the negotiations with

121RN and UHW. The existing contracts covering all three

units expired on March 31, 2011, without the parties having

reached any new agreements.

In addition to serving as the bargaining agent for

employees at Prime, UHW also represented employees at

hospitals owned by Kaiser and was a member of the National

Coalition of Kaiser-Permanente Unions. Kaiser and the union

coalition had reached an arrangement in 1997 pursuant to

which the unions agreed to assist Kaiser in maintaining and

improving its position in the marketplace. Part of the agreement

required the unions to “focus . . . on real external threats” to

Kaiser, including “competition.” Prime Healthcare Servs., 364

NLRB No. 128, slip op. at 6. Prime is among Kaiser’s

competitors. During the course of the negotiations between

Prime and UHW, officials at Prime expressed concerns that

bargaining between Prime and UHW had been compromised

because of the Union’s relationship with Kaiser.

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In 2010, UHW conducted a “corporate accountability

campaign” against Prime. Id. at 7. It publicized labor disputes

with a Prime facility and criticized the company for reducing

wages and benefits, and limiting access to medical care. It also

published several reports questioning the quality of care

provided at Prime hospitals, including allegations of unusually

high rates of septicemia among Medicare patients.

UHW’s corporate accountability campaign caused

officials at Prime to suspect that the Union might be working

with Kaiser to exclude Prime from the California health care

market. Nonetheless, Prime continued to pursue collective

bargaining negotiations with both UHW and 121RN

throughout 2011.

B. Anniversary Step Increases

The UHW and 121RN collective bargaining agreements in

force at the time when Prime acquired the hospitals contained

identical provisions covering wage increases for unit

employees. One provision granted annual increases on specific

dates each year when the contract was in effect, from 2007 to

2010. Another provision granted step increases on the

anniversary of an employee’s hiring date. The contracts further

capped unit employees’ total wage increases to no greater than

9.25% in any twelve-month period. The relevant provisions

read as follows:

3. Annual Hospital Wide Increases:

All members of the bargaining unit shall receive the

following increases . . . [setting forth specific increases

to take effect at contract ratification, on July 1, 2008,

July 1, 2009, and July 1, 2010] . . . . No bargaining unit

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member will receive a wage increase greater than

9.25% in any twelve (12) month period. . . .

5. Annual Increases/Advancing Through the Steps:

In addition to the above hospital-wide annual increases,

beginning July 1, 2008, individual employees shall

receive Anniversary Step Increases in accordance with

the wage scales in the following manner:

. . . Employees who are at or below the scale on the

anniversary date of their most recent date of hire shall

advance to the next step on the wage scale on that

anniversary date, subject to the annual caps provided in

Section 3 above, which limit the maximum increase any

employee may receive in any twelve (12) month period.

Employees . . . who are less than one full step above

scale shall advance to the next step on their anniversary

date, again subject to the annual caps provided in

Section 3 above.

Joint Appendix (“J.A.”) 151–53.

At the parties’ first bargaining session after the contracts

had expired, Schottmiller agreed with the Unions’

representatives that the employees’ anniversary step increases

under Section 5 would continue. For several months, Encino

continued to approve anniversary step increases for eligible

employees in the 121RN unit without any issues. In late 2011,

however, Schottmiller decided that the step increases under

Section 5 did not survive the contract expiration because

Section 5 referred to Section 3 and the annual increases under

Section 3 concededly did not extend beyond the expiration of

the contracts. In November 2011, Encino discontinued paying

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step increases to unit employees. The Unions then filed unfair

labor practice charges with the Board.

C. Union Information Requests

On January 1, 2010, the employees represented by UHW

and 121RN began to receive health care benefits under Prime’s

exclusive provider organization (“EPO”) and preferred

provider organization (“PPO”) medical plans. Under the EPO

plan, employees could obtain services at Prime facilities or

from doctors affiliated with Prime hospitals under a fee-for-

service arrangement. Under the PPO plan, employees could

join outside insurance networks.

121RN anticipated that Prime would seek to implement

significant changes to health care benefits under the new

collective bargaining agreements, including increases in

employee copays, deductibles, and premiums. Therefore, in

April 2011, 121RN’s research director submitted a written

request to Schottmiller for certain information relating to the

EPO and PPO plans. Specifically, she requested information

about employer costs for care, employee access to care, and the

quality of care at Prime facilities, including lists of in-patient

discharges organized by Medicare diagnostic code. The request

explained that the Union needed the information to prepare its

bargaining proposals.

Schottmiller responded to the 121RN request by letter,

seeking information from 121RN regarding the Union’s

planned proposals and how the requested information was

relevant to them. She noted that Encino was “not agreeable to

any health care plan other than the EPO and PPO plans already

implemented and agreed to” and was “not inclined to change

. . . coverage regardless of the cost issues that you raise.” J.A.

213–14. Schottmiller’s letter also contested the relevance of the

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information about employees’ access to care in the Prime

facilities.

The parties subsequently exchanged a series of letters.

121RN explained to Prime that the Union had not yet

determined what proposals it would make regarding the

existing health plans and stated that it sought the information

to facilitate its consideration of bargaining proposals. The

Union described why the requested information was necessary

to evaluate the existing plans and determine whether to propose

changes. Schottmiller continued to refuse to provide the

requested information, rejecting the Union’s explanations as

“conclusory,” J.A. 219, asserting that the information sought

appeared to violate the collective bargaining privilege, id., and

accusing the Union of “engag[ing] in a fishing expedition in an

attempt to create a problem where none exists,” J.A. 225.

During the same period, UHW submitted an information

request similar to 121RN’s and Schottmiller refused to provide

the requested data. Both Unions filed unfair labor practice

charges with the Board in September 2011. While those

charges were pending, the parties continued to bargain over

health care. Encino proposed continuing the current plans with

an increase in employee premiums. 121RN, in turn, raised

concerns about cost, access, and quality of care under Encino’s

proposal.

D. Procedural History

The Board’s Acting General Counsel investigated the

Unions’ unfair labor practice charges and issued a consolidated

complaint against Prime on January 31, 2013. The complaint

alleged that Prime had violated Section 8(a)(5) and (1) of the

Act by ceasing to grant step increases and by failing to furnish

relevant, necessary information requested by the Unions.

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Following a hearing, an Administrative Law Judge (“ALJ”)

issued a recommended decision and order finding that Prime

had violated the Act.

On October 17, 2016, the Board issued a Decision and

Order adopting the ALJ’s findings and conclusions. Prime

Healthcare Servs., 364 NLRB No. 128, slip op. at 1. It directed

Prime to furnish the information requested by the Unions,

resume granting step increases to eligible employees,

compensate employees for their losses, post a remedial notice,

and cease and desist from refusing to bargain in good faith with

the Unions. Id. at 1–3.

Prime filed a petition for review with this court on October

27, 2016. It challenged the Board’s findings and asserted that

UHW’s charges should have been dismissed because the Union

had a disabling conflict of interest. The NLRB filed a cross-

application for enforcement of its order, the Unions intervened,

and the cases were consolidated.

After the parties filed their opening briefs, Encino, Garden

Grove, and UHW reached a settlement with the Board. Those

parties filed a motion with the court seeking severance and

dismissal of the portion of the consolidated proceeding

stemming from UHW’s charges. On July 11, 2017, the court

granted the motion. The only claims now remaining for our

review are those involving Encino and 121RN.

II. ANALYSIS

A. Standard of Review

Our review of the Board’s judgment is limited. Wilkes-

Barre Hosp. Co., LLC v. NLRB, 857 F.3d 364, 372 (D.C. Cir.

2017). We will overturn the Board’s decision only if,

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“reviewing the record as a whole, it appears that the Board’s

factual findings are not supported by substantial evidence, or

that the Board acted arbitrarily or otherwise erred in applying

established law to the facts at issue.” S. Nuclear Operating Co.

v. NLRB, 524 F.3d 1350, 1355 (D.C. Cir. 2008).

Although the Board is authorized to interpret a collective

bargaining agreement to resolve unfair labor practice charges,

we owe “no deference to the Board’s interpretation.” NLRB v.

U.S. Postal Serv., 8 F.3d 832, 837 (D.C. Cir. 1993). We

therefore interpret the collective bargaining agreement

between 121RN and Encino de novo. See Wilkes-Barre, 857

F.3d at 373.

B. Unilateral Cessation of Wage Increases

Under the unilateral change doctrine, an employer may not

change a term or condition of employment unless the employer

and the employees’ bargaining agent reach a new agreement or

bargain to impasse. As we explained in Honeywell

International, Inc. v. NRLB, 253 F.3d 125 (D.C. Cir. 2001),

the . . . doctrine is premised on a statutory right. . . . The

right may be waived by contract and it may be vitiated if

the parties reach an impasse in collective bargaining. And

it applies only with respect to mandatory subjects of

bargaining, excluding certain categorical exceptions

recognized by the courts and the Board. See, e.g., Litton,

501 U.S. at 199–200[;] Acme Die Casting v. NLRB, 93 F.3d

854, 857 (D.C. Cir. 1996). Beyond these conditions,

however, the [unilateral change doctrine] is an inviolate

principle of collective bargaining.

Id. at 131.

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Prime does not dispute that an anniversary step increase

provision is a mandatory subject of bargaining and that it was

an established term of employment under the agreement

covering the employees represented by 121RN. And Prime

does not claim that the parties reached an impasse in

negotiations over the anniversary step increase provision, that

the parties executed a new agreement on the subject, or that the

Union waived its right to bargain over the subject. Rather,

Prime contends that the anniversary step increase provision

terminated with the expiration of the parties’ collective

bargaining agreement. In support of this position, Prime argues

as follows: anniversary step increases were inexorably tied to

annual increases under the parties’ expired agreement; annual

increases indisputably terminated with the expiration of the

agreement; therefore, step increases terminated as well. We

disagree.

“To avoid running afoul of the unilateral change doctrine,

an employer must maintain the status quo as to terms and

conditions of employment after the expiration of a collective

bargaining agreement.” Wilkes-Barre, 857 F.3d at 373–74. It is

well established that, pursuant to the duty to bargain under the

NLRA, many terms of an expired collective bargaining

agreement extend beyond the contract’s termination date and

continue to “define the status quo.” Litton, 501 U.S. at 206.

Therefore, in order to determine whether Prime violated its

duty to bargain in this case, we must determine whether the

disputed step increase provision was a part of the status quo.

And to do this, “we look to the substantive terms” of the

expired collective bargain agreement. Wilkes-Barre, 857 F.3d

at 374.

As noted above, Prime contends that step increases under

Section 5 of the parties’ expired contract were “inexorably

linked” to the annual increases under Section 3, because

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Section 5 referenced the total increase cap under Section 3.

Pet’r Reply Br. 4. This argument is unconvincing. The step

increase provision in Section 5 did not by its terms provide for

the cessation of the benefit at the expiration of the agreement.

Employees’ anniversary dates continue for as long as they are

with the employer. By contrast, it is clear from the terms of the

annual increase provision under Section 3 that such increases

were due only in the years indicated in the contract.

In the absence of language in the collective bargaining

agreement providing otherwise, anniversary step increases are

part of the status quo and continue post-expiration.

Furthermore, anniversary step increases and annual increases

are “distinct rights that operate independently of each other.”

Wilkes-Barre, 857 F.3d at 377. Thus, language tying annual

increases to the term of the contract has no bearing on whether

the anniversary step increases also expired. Wilkes-Barre

instead instructs us to assess each contractual provision on its

own terms. Where one of two wage increase provisions in a

collective bargaining agreement includes explicit language

making clear that it will not continue as part of the status quo

post-expiration, and the other increase provision in the contract

does not include such explicit language, the second increase

provision remains part of the status quo and is subject to the

unilateral change doctrine. Under this rule, only the Section 3

increases terminated with the contract. Prime’s Section 5

obligations continued as part of the status quo after the

agreement expired.

Nothing in the agreement between Encino and 121RN

limited the duration of the anniversary step increases. Section

3 provided for annual increases to take effect on four specific

dates prior to the expiration of the contract. J.A. 151–52.

Section 5, in turn, provided for step increases to occur on the

anniversary date of an employee’s hiring “beginning July 1,

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2008.” J.A. 152. Unlike Section 3, Section 5 provided no date

certain for the increases to end. In these circumstances, our

decision in Wilkes-Barre is controlling, and Prime’s attempts

to distinguish that decision are unavailing.

It is also noteworthy that Section 5 of the parties’

agreement referred to Section 3 to indicate only that the step

increases would be provided “[i]n addition” to the Section 3

annual increases and that step increases were subject to a

9.25% total annual increase cap. J.A. 152. The clear

implication of these contract terms was that anniversary step

increases would be due (subject to the cap) without regard to

whether an employee received an annual increase. The cap on

the total increase level in a 12-month period merely indicated

the maximum increase that an employee could receive in a

year, not whether step increases would continue after the

expiration of the agreement. As in Wilkes-Barre, the disputed

wage increase provisions in this case were plainly “distinct”

and “operate[d] independently of each other.” 857 F.3d at 377.

On the record at hand, we agree with the Board that Prime

breached its duty to bargain when it unilaterally terminated

employee anniversary step increases after the expiration of the

parties’ agreement.

C. Refusal to Provide Requested Information

Prime also challenges the Board’s determination that

Encino was required to provide 121RN with the information it

requested. Because the Board’s decision was consistent with

established precedent and is supported by substantial evidence,

we have no cause to disturb it.

An employer’s statutory duty to bargain in good faith

“includes a duty to provide relevant information needed by a

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labor union for the proper performance of its duties.” Detroit

Edison Co., 440 U.S. at 303. Refusing to provide relevant

information upon request is a violation of the Act. Country

Ford Trucks, Inc. v. NLRB, 229 F.3d 1184, 1191 (D.C. Cir.

2000). Information related to employee benefits is

presumptively relevant, id., and an employer must produce

presumptively relevant information unless it rebuts the

presumption or asserts a valid countervailing interest, see Oil,

Chem. & Atomic Workers Local Union No. 6-418 v. NLRB, 711

F.2d 348, 359–60 (D.C. Cir. 1983). In order to withhold

presumptively relevant information, an employer must “prove

either lack of relevance or . . . provide adequate reasons why it

cannot, in good faith, supply the information.” Hondo, Inc.,

311 NLRB 424, 425 (1993).

Prime first contends that the information 121RN requested

was “facially irrelevant” to bargaining and, therefore, the

hospital had no duty to produce it. Pet’r Reply Br. 9. According

to Prime, because Encino had made clear that it was not going

to purchase insurance from a competitor regardless of what

cost issues the Union raised, cost of care was not at issue. This

is a specious claim. Prime’s preference to provide health care

itself surely did not nullify the Union’s right to bargain over

the subject. See Katz, 369 U.S. at 743 (“A refusal to negotiate

. . . as to any subject which is within § 8(d) . . . violates

§ 8(a)(5).”). Health care benefits are a mandatory subject of

bargaining. Oak Harbor Freight Lines, Inc. v. NLRB, 855 F.3d

436, 438 (D.C. Cir. 2017). Therefore, the Union had a right to

seek the relevant data. See Oil, Chem. & Atomic Workers, 711

F.2d at 359. Indeed, in this case, Prime put the issue of cost in

play when, during contract negotiations, it raised the possibility

of increasing health care costs for the employees. See J.A. 815–

16. In any event, it appears that Prime abandoned this argument

before the Board. See Prime Healthcare Servs., 364 NLRB No.

128, slip op. at 13, n.25. Therefore, we need not address it for

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lack of jurisdiction. See 29 U.S.C. § 160(e); Alden Leeds, Inc.

v. NLRB, 812 F.3d 159, 166–67 (D.C. Cir. 2016).

Prime also contends that even if the requested information

was presumptively relevant, the presumption of relevance was

rebutted by Encino’s concern that 121RN’s requests for

information were for illegitimate purposes. Encino points out

that 121RN sought the same type of coding information that

UHW had requested. And, as noted above, Encino was

concerned that UHW’s requests were improper in light of

UHW’s relationship with Kaiser. Relying on the Board’s

opinion in Hondo, Inc., 311 NLRB 424, Prime claims that,

given its legitimate competitive concerns, the Union was

obliged to better explain its need for the disputed information.

In Hondo, Inc., the Board held that, where it was obvious

that a union was seeking information for an improper purpose,

the union was required to “do more than provide general

avowals of relevance in order to establish its need for the

information.” Id. at 426. In such a situation, the union was

obligated to “articulate how it would use the information to

fulfill its duties.” Id. Prime contends that, because it raised

legitimate concerns about the Union’s purpose in making the

information requests at issue in this case, the Union was

required to demonstrate more precisely the relevance of the

data that it sought. Prime asserts that the Union’s explanations

were too conclusory to meet the standard enunciated in Hondo,

Inc.

In rejecting Prime’s claims, the Board adopted the ALJ’s

finding that “[t]here was nothing unusual about [121RN]’s

request for information,” and “the mere fact that UHW had

used similar . . . data to issue critical reports about Prime was

insufficient to rebut [the] presumption [that the union acts in

good faith in requesting information] or justify [Prime’s]

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failure to provide the information to 121RN.” Prime

Healthcare Servs., 364 NLRB No. 128, slip op. at 13–14.

Accordingly, the Board concluded that 121RN had no duty to

provide any further explanation to justify the relevance of its

information requests. Id. at 13.

The Board’s conclusion is perfectly consistent with

established precedent, and it is supported by substantial

evidence in the record. The disputed information pertained to

the costs and quality of care at Prime facilities, which were

“obviously relevant given that the employees were required

under the Prime EPO plan to obtain medical treatment at Prime

facilities,” id., and because the health plans were a likely

subject of bargaining. Like 121RN, UHW was in the midst of

negotiations with the hospital about health care issues. The

Board thus reasonably concluded that the mere similarity in the

information requested by the two Unions was insufficient to

rebut the presumption that the information was relevant to

bargaining, or to suggest that it was requested for an improper

purpose. See DaimlerChrysler Corp. v. NLRB, 288 F.3d 434,

443 (D.C. Cir. 2002) (noting that relevant information requests

are presumed to have been made in good faith “until the

company demonstrates otherwise”); Country Ford Trucks, 229

F.3d at 1192 (explaining that “[v]ague allegations of a union’s

bad faith” do not affect the employer’s obligation to turn over

presumptively relevant information). Therefore, Prime had a

statutory duty to comply with 121RN’s requests.

Finally, Prime vaguely suggests that the disputed cost-of-

care information might be privileged, confidential financial

information. Pet’r Br. 49. However, Prime did not expressly

press this argument in response to 121RN’s (as distinguished

from UHW’s) requests for information. Therefore, Prime’s

passing references to “privilege” and “proprietary

information,” id., are insufficient to merit our review. See Am.

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Wildlands v. Kempthorne, 530 F.3d 991, 1001 (D.C. Cir. 2008)

(collecting cases in which this court has refused to consider

arguments only cursorily mentioned in the briefs).

Moreover, if the information was somehow privileged or

confidential, Prime would have been required to provide the

Union with a reasonable accommodation to ensure it received

the information it needed to perform its duties. See, e.g., U.S.

Testing Co., Inc. v. NLRB, 160 F.3d 14, 20–21 (D.C. Cir.

1998); Tritac Corp., 286 NLRB 522, 522 (1987). Therefore,

we reject Prime’s challenge to the Board’s determination

regarding the requested information.

III. CONCLUSION

For the reasons explained above, we hereby deny the

petition for review and grant the Board’s cross-application for

enforcement of its order.

So ordered.