Amicus Curiae Brief — American Hospital Assn. v. NLRB

I Supreme Cour, U.S,

FILED

| NOV 21 1999

—_ JOSEPH F. SPAN

No. 90-97 | CLERK a

In The

Supreme Court of the United States

October Term, 1990

+

AMERICAN HOSPITAL ASSOCIATION,

Petitioner,

VS.

NATIONAL LABOR RELATIONS BOARD, ET AL.,

Respondents.

+

On Writ Of Certiorari To The United

States Court Of Appeals For The

Seventh Circuit

==

BRIEF OF THE MISSOURI HOSPITAL

ASSOCIATION AS AMICUS CURIAE IN

SUPPORT OF PETITIONER

+

GERALD M. SILL E. J. HOLLAND, Jr.*

Senior Vice President/ Peccy F. ScHMItt

General Counsel SPENCER Fane Britt &

Missouri Hospital BROWNE

Association Suite 1400

4713 Highway 50 West 1000 Walnut Street

Jefferson City, Missouri Kansas City, Missouri

65102 64106

(314) 893-3700 (816) 474-8100

*Counsel of Record

November 23, 1990

COCKLE LAW BRIEF PRINTING CO., (800) 225-4964

OR CALL COLLECT (402) 342-2831

ay

————

il

|

7

i

———

i

TABLE OF CONTENTS

Page

Bee GE RIE oc cc ciccccccedewteccevcccccce iii

Statement of Interest of the Amicus Curiae ......... 1

Summary of the Argument ..................0+00+- 3

PTI 6.6 66's crt credneseecescvecccccccccucccecs 6

I. SECTION 9(b) OF THE LABOR ACT AND THE

DIVERSE AND RAPIDLY CHANGING HEALTH

CARE INDUSTRY REQUIRE INDIVIDUALIZED

BARGAINING UNIT DETERMINATIONS ...... 6

A. The Hospita) Industry In Missouri, As Else-

where, Is Diverse And Rapidly Changing.. 9

1. The Variations In Acute-Care Hospitals

In Missouri Are Substantial............ 9

2. The Variations In Acute-Care Hospitals

In Missouri Are Relevant To The Deter-

mination of Bargaining Units .......... 11

B. The Board’s Rule Is Arbitrary And Capri-

cious In That It Ignores The Diversity Of

Acute-Care Hospitals ..............--+005- 14

1. The Board’s Decision To Treat All Acute-

Care Hospitals Alike Is Arbitrary, Capri-

cious And Not Based on Substantial Evi-

EE ee Be een as bad dekceeuees es ¢ 14

2. The Board’s Rationale For Excluding Nurs-

ing Homes Applies With Equal or Greater

Force To Acute-Care Hospitals........... 18

ii

TABLE OF CONTENTS - Continued

Page

3. The Board’s Rationale For Excluding Psy-

chiatric and Rehabilitation Hospitals

Applies To Acute-Care Hospitals With

Psychiatric and Rehabilitation Units ... 20

II. THE RULE VIOLATES THE CONGRESSIONAL

ADMONITION AGAINST THE PROLIFERA-

TION OF BARGAINING UNITS IN THE

HEALTH CARE INDUSTRY ..................- 21

A. The Number Of Units Mandated By The

Rule Far Exceeds The Number Of Units

Sought And Approved In Missouri Hospital

i ee UU 23

B. The Number Of Units Mandated By The Rule

Far Exceeds The Number Of Units Deemed

Appropriate By The Board In A Missouri

Industry That Is Not Subject To A Congres-

sional Admonition Against Proliferation Of

Bargaining Ualts ......sccccccccssessscnses 24

Comchuslo® ...cccccccvccseccececessseene ene 27

iii

TABLE OF AUTHORITIES

Page

Cases

American Hospital Ass'n v. N.L.R.B., 899 F.2d 651

cc cackeseceseeestssevccocccces 17

American Hospital Ass'n v. N.L.R.B., 718 F.Supp.

iD ccccocaccnseeeueeesesoosccoeces 22

Baltimore Gas & Electric Co., 206 NLRB 199 (1973) .... 13

The Bendix Corp., 227 NLRB 1534 (1977)............. 25

New England Telephone Co., 280 NLRB 162 (1986) .... 13

Sears, Roebuck and Co., 191 NLRB 398 (1971)......... 13

Wright Memorial Hosp., 255 NLRB 1319 (1981) ....23, 24

Sratutes, Ruves & REGULATIONS

Nee en cevecececcsces 3, 6

Final Rule, 54 Fed. Reg. 16336 (1989) ................ 7

Notice of Proposed Rulemaking, 52 Fed. Reg.

i ecindiedecdvbvecccecececoess 14, 15, 16

Notice of Proposed Rulemaking, 53 Fed. Reg.

UTR citeeccescieeteccccccocccces passim

LecisLative History

H.R. Rep. No. 93-1051, 93d Cong., 2d Sess. (1974) .... 22

S. Rep. No. 93-766, 93d Cong., 2d Sess. (1974) ...... 22

STATEMENT OF INTEREST OF THE MISSOURI

HOSPITAL ASSOCIATION AS AMICUS CURIAE

This brief is submitted on behalf of the Missouri

Hospital Association (“MHA”) in support of petitioner,

the American Hospital Association (“AHA”). The Mis-

souri Hospital Association was an active participant in

the National Labor Relations Board (“Board”) hearings

concerning the promulgation of the rule governing collec-

tive bargaining units in the health care industry. The

MHA offered testimony through two of its leading health

care executives and submitted written comments to the

Board. The MHA also participated as an amicus curiae

before the court of appeals for the Seventh Circuit and

before this Court in support of the AHA’s petition.

The MHA has 140 acute-care hospital members, rep-

resenting ninety-eight percent of the acute-care hospitals

in the state of Missouri.' The membership of the MHA

ranges from large tertiary-care referral centers in major

metropolitan areas to very small primary-care hospitals

in rural areas. The diversity of the MHA membership and

the general diversity of the health care industry in Mis-

souri are of particular relevance to the issues presented to

1 All statistical information concerning MHA member hos-

pitals cited herein appears in Missouri Hospital Profiles 1989, a

publication of the Missouri Department of Health, State Center

for Health Statistics. The acute-care hospital figures exclude

federal and state facilities, but include thirty-nine hospitals

owned or operated by local governmental entities. This case is

of interest to such governmental hospitals because the Mis-

souri state agency having jurisdiction to establish bargaining

units for them normally follows procedures adopted by the

Board.

this Court by the AHA. The majority of the MHA’s mem-

ber hospitals are health care industry employers subject

to the rule promulgated by the Board. As such they and

the patients they serve have a significant and direct inter-

est in the outcome of this case.

The MHA agrees with the AHA’s legal position that

the rule promulgated by the Board violates both the

mandate of Section 9(b) of the National Labor Relations

Act (the “Labor Act”) that bargaining unit determinations

be made “in each case,” and the Congressional admoni-

tion against undue proliferation of bargaining units in the

health care industry, contained in the legislative history

of the 1974 Health Care Amendments to the Labor Act.

The MHA relies upon the arguments made by the AHA in

support of those positions. The MHA, as amicus, will not

restate those arguments but will focus on Missouri's

experience and demonstrate 1) the necessity of individu-

alized bargaining unit determinations in light of the div-

erse and rapidly changing health care industry and 2) the

proliferation of bargaining units in acute-care hospitals

that necessarily will follow adoption of the rule.

The Board has concluded that acute-care hospitals

display no differences relevant to bargaining unit deter-

minations. The MHA finds this conclusion to be incredi-

ble and irrational in light of the wide range of hospital

Organizations and their relationships with their

employees. In this regard, Missouri is a microcosm of the

country, with major metropolitan hospitals at one end of

the spectrum and small rural hospitals at the other. The

MHA, as the representative of the vast majority of Mis-

souri hospitals, believes it has information relevant to

this court’s consideration of the writ of certiorari to the

United States Court of Appeals for the Seventh Circuit.

>

SUMMARY OF THE ARGUMENT

I. The National Labor Relations Act requires that the

Board determine “in each case” the appropriate unit for

the purposes of collective bargaining. 29 U.S.C. § 159(b).

The Board, however, has chosen to shirk its statutory

responsibility by promulgating an irrebuttable rule that

mandates eight units for all acute-care hospitals. The

Board’s dismissal as “merely minor differences” all varia-

tions among acute-care hospitals is arbitrary, capricious,

and violates Section 9(b) of the Act.

A. The variations among acute-care hospitals in Mis-

souri, as elsewhere, are substantial and are relevant to the

determination of appropriate bargaining units. Factors

such as size, services provided, number and classifica-

tions of employees, and administrative structure affect

the manner in which employees relate to one another.

These factors affect the appropriate bargaining units for

those employees. Acute-care hospitals in Missouri range

in size from eighteen licensed beds to 1,208 licensed beds,

from twenty-eight full-time employees to 5,262 full-time

employees. Services provided by acute-care hospitals

range from basic inpatient and outpatient services to

multi-location outpatient facilities and home health agen-

cies. The bargaining unit rule forbids consideration of all

such relevant information.

B. The rule first proposed by the Board subdivided

health care institutions into 1) large acute-care hospitals

4

(those with more than 100 beds), 2) small acute-care

hospitals (those with 100 or fewer beds), and 3) nursing

homes. The Board based its decision to deem four units

appropriate in small hospitals and six units appropriate

in large hospitals on the fact that there is less division of

labor and specialization and more functional integration

of employees in small hospitals than in large hospitals. In

response to criticism from the hospital industry that the

100-bed distinction was inadequate recognition of the

diversity of acute-care hospitals, and criticism from union

representatives that bed size did not correlate well with

staff size, the Board completely abandoned its attempt to

recognize any differences among acute-care hospitals and

proposed that eight units be deemed appropriate in all

acute-care hospitals. The Board’s response was arbitrary,

capricious, and ignored both the Board’s own experience

and the evidence placed before it in the rulemaking pro-

ceedings.

_ The Board’s rationale for excluding nursing homes,

psychiatric and rehabilitation facilities from rulemaking

applies with equal or greater force to excluding acute-

care hospitals. The Board abandoned its initial attempt to

include nursing homes in the rule, based on the incorrect

conclusion that “[t]o a larger extent than acute care hospi-

tals, nursing homes vary both in size and type of service

rendered.” 53 Fed. Reg. at 33927. Hospitals in Missouri

vary more in size and provide a far wider range of

services than nursing homes. Fifty-one MHA member

acute-care hospitals have separate skilled nursing units in

addition to acute-care beds. Psychiatric and rehabilitation

hospitals are excluded from the Board’s rule, but psychi-

atric and rehabilitation units within acute-care hospitals

are not. The factors relied upon by the Board to exclude

psychiatric hospitals are relevant to the determination of

the appropriateness of a bargaining unit regardless of

whether the psychiatric facility is independent or affili-

ated with an acute-care hospital.

II. The House and Senate Committee reports accom-

panying the 1974 amendments to the Act contained an

admonition to the Board to prevent the proliferation of

bargaining units in the health care industry. The rule

promulgated by the Board ignores this admonition and

requires the automatic fragmentation of acute-care hospi-

tal employees into eight separate units.

A. The eight-unit rule is a significant increase over the

number of units deemed appropriate by the parties and

by the Board in hospital elections in Missouri. In a 1986

election at a ninety-two bed acute-care hospital the union

sought two units, one of professional employees and one

of nonprofessional employees. In a 1980 election at a

seventy-eight bed acute-care hospital the union sought

and the Board allowed two units, one of all ambulance

department employees and the other of all other hospital

employees. To mandate eight units at facilities such as

these is undue proliferation of bargaining units.

B. In a Missouri industry that is not subject to a Con-

gressional admonition the Board has refused to allow

skilled maintenance employees to be separated from the

production and maintenance bargaining unit representing

all employees. An aerospace contractor with 7,300

employees in 116 different job classifications ranging

from janitors and food service employees to highly

skilled technical employees has one bargaining unit. A

rule mandating eight units — including a skilled mainte-

nance unit similar to the one rejected at the aerospace

contractor - for acute-care hospitals, regardless of the

particularized facts at hand, is undue proliferation of

bargaining units in the health care industry.

—+

ARGUMENT

I. SECTION 9(b) OF THE LABOR ACT AND THE

DIVERSE AND RAPIDLY CHANGING HEALTH

CARE INDUSTRY REQUIRE INDIVIDUALIZED

BARGAINING UNIT DETERMINATIONS.

Section 9(b) of the Labor Act provides, in part, that:

The Board shall decide in each case whether, in

order to assure to employees the fullest freedom

in exercising the rights guaranteed by this sub-

chapter, the unit appropriate for the purposes of

collective bargaining shall be the employer unit,

craft unit, plant unit, or subdivision thereof. . . .

29 U.S.C. § 159(b) (emphasis added). The mandate of this

language is clear: the Board must determine the appro-

priateness of bargaining units on an individual basis,

considering the particular facts in each case. The Board,

by promulgating an essentially irrebuttable rule for deter-

mining bargaining units in acute-care hospitals, has

shirked its statutory responsibility to conduct this factual

review and make individual decisions in each case.

The Board’s Final Rule provides that:

Except in extraordinary circumstances and in

circumstances in which there are existing non-

conforming units, the following shall be appro-

priate units, and the only appropriate units, for

7

petitions filed pursuant to section 9(c)(1)(A)(i)

> 9(C)(1)(B) of the National Labor Relations

eee t

(1) All registered nurses.

(2) All physicians.

(3) All professionals except for registered

nurses and physicians.

(4) All technical employees.

(5) All skilled maintenance employees.

(6) All business office clerical employees.

(7) All guards.

(8) All nonprofessional employees except

for technical employees, skilled maintenance

employees, business office clerical employees,

and guards.

Final Rule, 54 Fed. Reg. 16347-16348 (1989). The only

specific example of an “extraordinary circumstance”

given by the Board is “a unit of five or fewer employees.”

Id. at 16348. In the Supplementary Information accom-

panying the Final Rule the Board reaffirmed the narrow

scope of the “extraordinary circumstances exception” as

previously set forth in its Second Notice of Proposed

Rulemaking (“NPR II”). Id. at 16345. In NPR II the Board,

in addressing variations between acute-care hospitals,

stated that:

The Board has considered fully and at length all

evidence presented and arguments submitted at

the rulemaking hearings and during the com-

ment period. None of the referred-to variations

between acute care hospitals, some of which are

enumerated below, are matters which would

qualify for litigation under the special circum-

stances exception; rather, they are merely minor

differences, inherent in the industry due to the

multiformity of individual constituent institu-

tions.

NPR IIL, 53 Fed. Reg. 33900, 33932.2 This sweeping dis-

missal of any further consideration of the diversity of

acute-care hospitals as “merely minor differences” is a

flagrant violation of the “in each case” requirement of

Section 9(b) and flies in the face of any realistic analysis

of the health care industry. The court of appeals decision

upholding the validity of the bargaining unit rule also

improperly dismissed the importance of the differences

among acute-care hospitals.

2 The Board provided the following enumeration of

“minor differences” in acute-care hospitals:

Among the variations in acute care hospitals illustrated

at the hearings and considered by the Board are argu-

ments relating to: (1) Diversity of the industry, such as

the sizes of various institutions, the variety of services

offered by individual institutions, including the range of

outpatient services provided, and differing staffing pat-

terns among facilities (as, for example, a particular facil-

ity employing a larger or smaller number of RNs than

generally employed by similarly situated hospitals); (2)

increased functional integration of, and a higher degree

of work contacts between, employees as a result of the

advent of the multi-competent worker, increased use of

“team” care, and cross-training of employees; (3) the

impact of nationwide hospital “chains”; (4) recent

changes within traditional employee groupings and pro-

fessions, e.g., the increase in specialization among RNs;

(5) the effects of various governmental and private cost-

containment measures; and (6) single institutions occu-

pying more than one contiguous building.

NPR II, 53 Fed. Reg. at 33932.

9

A. The Hospital Industry In Missouri, As Else-

where, Is Diverse And Rapidly Changing.

The variations in the hospital industry in Missouri, as

elsewhere, hardly can be considered “merely minor dif-

ferences” as the Board concluded. The MHA submits that

such variations are substantial and are relevant to the

determination of bargaining units. The Board’s rule is

arbitrary and capricious in that it ignores any and all

differences among acute-care hospitals. In support of its

position, the MHA offers the following information con-

cerning the diversity of the hospital industry in Missouri

and the relevance of that diversity to the determination of

appropriate bargaining units.

1. The Variations In Acute-Care Hospitals In

Missouri Are Substantial.

There are 142 acute-care hospitals in Missouri, 140 of

which are members of the MHA. Of the member hospi-

tals, seventy-two are rural and sixty-seven are urban.®

The largest member hospital has 1,208 licensed beds and

the smallest has eighteen licensed beds. The member

hospital with the largest staff employs the equivalent of

5,262 full-time employees; the smallest employs twenty-

eight. The number of full-time registered nurses

employed by member hospitals ranges from 1,201 to

three.

3 The terms “rural” and furban” as used for purposes of

MHA statistics are as defined in the Medicare Regulations at 42

C.F.R. § 412.62(f).

10

Forty-five member hospitals have “swing beds,” i.e.,

beds which, pursuant to federal Medicare and Medicaid

statutes and Missouri regulations, may be designated

from time to time either as skilled nursing care beds or

acute-care beds, at the discretion of the institution. Fifty-

one member hospitals have Medicare-certified distinct

part skilled nursing units which are nursing home type

units operated within the hospitals’ facilities.

The services provided by the MHA member hospi-

tals, and their related organizations, also vary widely.

Some member hospitals provide basic inpatient and out-

patient general care services while others operate, often

through subsidiary corporations, activities such as home

health agencies, inpatient and outpatient psychiatric

units, multi-location outpatient clinics, outpatient surgi-

cal facilities and rehabilitation facilities.

In addition to its diversity, the hospital industry in

Missouri, as elsewhere, is rapidly changing. With increas-

ing frequency, health care providers are consolidating

facilities and services to maximize efficiency and

resources. These consolidations are taking place through

mergers, acquisitions, and joint ventures. Entire health

care systems are merging and reorganizing their

employees and delivery systems. At the same time health

care providers in urban areas are expanding their facili-

ties through the development of satellite locations to

serve patients outside the area normally served by their

primary hospitals. These changes in structure and ser-

vices result in changes in the number, mix and organiza-

tion of employees. An irrebuttable rule that sets

bargaining units in conc.ete is inappropriate for the rap-

idly changing health care industry.

11

2. The Variations In Acute-Care Hospitals In

Missouri Are Relevant To The Determina-

tion Of Bargaining Units.

Each type of hospital described above and, indeed,

each hospital, has a different employee mix and a differ-

ent administrative structure. They have different ratios of

one type of employee to another and of all employees to

patients as well as different levels of integration among

various employee groups. It should not require evidence

or hearings to conclude that the employees of a twenty-

bed hospital in rural Missouri are organized in a different

fashion than the employees of a 1200-bed hospital in

metropolitan St. Louis, Missouri. The patient acuity levels

are substantially higher at the latter institution than at the

former. Generally speaking, the higher the acuity level of

the particular institution, the more skills that must be

brought to bear upon each patient’s needs at the same

time. Thus, the higher the acuity, the greater the func-

tional integration of the many categories of employees

needed to care for a single patient. On the other hand, the

large urban institution, with thousands of employees, is

more likely to be able to hire fairly narrow specialists and

concentrate their responsibilities within their primary

area of expertise while the small rural hospital, with far

fewer employees, must ask each employee to wear more

hats and fill more roles.

An example of the high level of integration of the

various classifications of health care employees is found

in one acute-care hospital in Kansas City, with only 240

staffed beds, where registered nurses work in fifteen

departments and occupations outside the nursing depart-

ment, where they serve as traditional staff nurses or

12

operating room nurses.‘ These registered nurses work in

utilization review, risk management, quality assessment,

social services, education, a preferred provider organiza-

tion, medical records, admitting, administration, outpa-

tient clinics, radiation therapy, central services, DRG

coordination and review employee health, infection con-

trol and the wellness clinic. At that institution, approx-

imately ten percent of the nurses are in non-patient-care

areas and only seventy percent are in traditional acute

patient-care settings.© Nonetheless, the Board would

require all of these registered nurses from many different

departments, who have virtually nothing in common

with each other except their state licensure but a great

deal in common with other employees with whom they

work on a daily basis, to be lumped into a single bargain-

ing unit separate from all other employees. Such a result

confounds reason and arbitrarily ignores the fact that “in

each case” and particularly in this case a different result is

required.

When the Board makes a determination concerning

the appropriate bargaining units at a given employer it

considers how that institution functions. The Board treats

a retail store with an attached warehouse differently than

a retail store and a warehouse which are not attached to

4 See, Testimony of Dan H. Anderson, Supplemental

Appendix of Plaintiff-Appellee submitted to the court of

appeals for the Seventh Circuit at 482.

5 See, November 6, 1987 letter to counsel for American

Federation of Labor and Congress of Industrial Organizations,

also submitted to the Board as part of the administrative

record.

13

each other. Sears, Roebuck and Co., 191 NLRB 398 (1971).

Thus, the bargaining unit configuration depends upon

the business structure adopted by the employer. An anal-

ogy to the acute-care hospital setting would require con-

sideration of factors such as whether the hospital also

operates an outpatient department or skilled nursing

facility and whether the employees interact or inter-

change. The bargaining unit rule promulgated by the

Board forbids the consideration of all such relevant infor-

mation.

Even absent express congressional admonition

against unit proliferation, the Board has found in the

public utility cases that the public’s “immediate and

direct interest in the uninterrupted maintenance of the

essential services” required “a systemwide unit . . . in the

public utility industry. ...” Baltimore Gas & Electric Co.,

206 NLRB 199, 201 (1973), cited and followed in New

England Telephone Co., 280 NLRB 162, 164 (1986). The

Board has been reluctant “to fragmentize a utility’s oper-

ations” and has done so “only when there was compel-

ling evidence” that the narrower unit “conformed to a

well-defined administrative segment of the utility com-

pany’s organization and could be established with>ut

undue disturbance to the company’s ability to perform its

necessary functions.” Baltimore Gas, 206 NLRB at 201.

These strong policy considerations apply with at least

equal force to the health care industry, especially in the

face of strong congressional intent which the Board so

cavalierly ignored here. The Board’s proposed rule

ignores the well-defined administrative structures of

health care providers and irrationally proposes eight

units, each of which cuts across those structures.

14

More importantly, the rule will not even allow consider-

ation of those factors.

B. The Board’s Rule Is Arbitrary And Capricious

In That It Ignores The Diversity Of Acute-Care

Hospitals.

The Board’s refusal to recognize the significance and

relevance of the differences among acute-care hospitals is

arbitrary and capricious. The Board’s decision not to

distinguish among acute-care hospitals is particularly

illogical and inconsistent in light of the Board’s reasons 1)

for initially distinguishing between acute-care hospitals

on the basis of size, 2) for exempting nursing homes from

the impact of the bargaining unit rule, and 3) for exclud-

ing psychiatric and rehabilitation hospitals from the rule.

1. The Board’s Decision To Treat All Acute-

Care Hospitals Alike Is Arbitrary, Capri-

cious And Not Based On Substantial Evi-

dence.

On July 2, 1987 the Board issued its first Notice of

Proposed Rulemaking and Notice of Hearing concerning

collective bargaining units in the health care industry

(“NPR I”; 52 Fed. Reg. 25142 et seq.). The original pro-

posed rule applied differently to three categories of

health care institutions: 1) large acute-care hospitals, 2)

small acute-care hospitals, and 3) nursing homes. Large

acute-care hospitals were defined as those with more

than 100 patient beds. Small acute-care hospitals were

defined as those with 100 or fewer patient beds. NPR I, 52

Fed. Reg. at 25149.

15

The Board proposed that six collective bargaining

units be deemed appropriate in large acute-care hospitals:

1) registered nurses; 2) physicians; 3) other professional

employees; 4) technical employees; 5) service, mainte-

nance, and clerical employees; and 6) guards. NPR I, 52

Fed. Reg. at 25146-48. The Board proposed that four

collective bargaining units be deemed appropriate in

small acute-care hospitals and nursitig homes: 1) all pro-

fessional employees; 2) technical employees; 3) service,

maintenance, and clerical employees; and 4) guards. NPR

I, 52 Fed. Reg. at 25148. In explaining its decision to

differentiate between large and small acute-care hospi-

tals, the Board stated that:

[W]e think that in smaller facilities there will be

found less division of labor and specialization,

and more functional integration of employees’

services, than normally is the case in large hos-

pitals. °

NPR I, 52 Fed. Reg. at 25148.

In its Second Notice of Proposed Rulemaking the

Board abandoned the distinction between large and small

acute-care hospitals. The Board stated that its decision to

drop the 100-bed distinction was based on “the evidence

provided by the parties regarding the lack of correlation

between bed number and hospital staff, the multiplicity

of definitions for the term ‘bed’ in health care, the lack of

consensus on the number of beds dividing large and

small hospitals, and the parties’ general opposition to use

of a distinction based on the number of beds.” NPR II, 53

Fed. Reg. at 33927.

16

While it is true that the hospital industry in general,

and the MHA in particular, criticized the 100-bed distinc-

tion, these criticisms were not based on either evidence or

belief that all acute-care hospitals are alike. Quite to the

contrary, the hospital industry criticized the 100-bed dis-

tinction because it did not describe or define accurately

the differences among acute-care hospitals that are rele-

vant to the determination of appropriate bargaining

units. The MHA, both in oral testimony at the administra-

tive hearings and in written comments submitted to the

Board, criticized the 100-bed distinction as unreasonable

because, among other reasons, (1) a 100-bed hospital is

not a “large” hospital, and 2) the rule did not provide a

definition of “bed.” The MHA suggested that, if a rule

was to be adopted, the bed standard should be based on

occupied or staffed beds rather than licensed beds

because many hospitals are licensed for more beds than

are utilized. The MHA also suggested that small hospitals

be defined as those with fewer than 400 staffed beds.

The Board’s initial proposed rule recognized that

there are differences among acute-care hospitals that are

relevant to the determination of appropriate bargaining

units. The Board observed that, based on its experience,

“liJn smaller facilities, it is likely that employees will

have more contacts with one another, may to some extent

perform one another’s work, and generally may share

interests more than groupings in larger hospitals.” NPR I,

52 Fed. Reg. 15246. Instead of refining its rule in response

to the criticism and evidence of the inadequacies of the

proposed 100-bed distinction, however, the Board simply

ignored all of its prior experience and relevant testimony,

and abandoned its attempt to distinguish among acute-

17

c2ie hospitals. This decision by the Board is arbitrary and

capricious and is not based on substantial evidence.

The court of appeals for the Seventh Circuit recog-

nized as “an important criticism” the hospital industry’s

position “that the Board’s rule is arbitrary because it

lumps together hospitals of different sizes and missions

in different locations.” American Hospital Ass‘n v. N.L.R.B.,

899 F.2d 651, 659 (7th Cir. 1990). The court of appeals,

however, rejected this “important criticism” on the

grounds that the hospital industry had failed to propose

“an alternative that recognized the diversity of the indus-

try but preserved the virtues of a rule.” Id. This rejection

is based on the erroneous assumption that the hospital

industry was under an affirmative duty to provide the

Board with a rational and nonarbitrary rule.

The court of appeals stated that the hospital industry

“joined the unions in opposing a proposed distinction

between hospitals having more than one hundred beds

and hospitals having fewer.” Id. This statement mis-

characterizes the hospital industry’s response to the pro-

posed 100-bed distinction. The court of appeals implies

that the hospital industry and the union representatives

were in agreement in opposing the 100-bed distinction

when, in fact, the hospitals and the unions opposed the

distinction for very different reasons. The hospital indus-

try argued and provided substantial evidence that the

100-bed distinction was inadequate recognition of the

diversity of acute-care hospitals in that it did not take

into account the number of beds actually utilized or the

nature of services being provided by the hospital. The

unions, on the other hand, argued that there is not an

adequate correlation between number of beds and

18

number of staff to justify distinguishing between hospi-

tals. 53 Fed. Reg. at 33927. The Board noted that when the

parties suggested alternative bed-number distinctions

some unions suggested small hospitals be defined as

those with fewer than fifty licensed beds, the AHA sug-

gested a 400-bed distinction, and other employers sug-

gested from 250-beds to 500-beds as the line between

small and large hospitals. 53 Fed. Reg. at 33927. To char-

acterize these diverse viewpoints as agreement is mis-

leading and not supported by the evidence before the

Board or the court of appeals.

The Board correctly attempted to construct an analyt-

ical framework, based upon size, to distinguish among

hospitals. It preliminarily failed to draw the line at the

appropriate place and in the appropriate manner. Then,

instead of reconciling the diverse suggestions and draw-

ing a conclusion based on the evidence before it, the

Board, faced with a difficult decision, simply discarded

its own accurate analysis that size differentials do affect

appropriateness of bargaining units. The court of appeals

compounded the error by failing to understand the differ-

ence between the unions’ and the industry’s opposition to

the 100-bed standard. The irrational result ignores the

actual differences among hospitals and sanctions an arbi-

trary and capricious rule not based on substantial evi-

dence.

2. The Board’s Rationale For Excluding Nurs-

ing Homes Applies With Equal or Greater

Force To Acute-Care Hospitals.

As described above, NPR I designated appropriate

bargaining units for nursing homes. In the Second Notice

19

of Proposed Rulemaking, however, the Board concluded

that there are “significant differences between the various

types of nursing homes which affect staffing patterns and

duties” and decided to exclude nursing homes from the

rule. NPR II, 53 Fed. Reg. at 33928. As evidence in sup-

port of this conclusion the Board noted that “[t]o a larger

extent than acute care hospitals, nursing homes vary both

in size and type of service rendered.” Id. at 33927. This

assertion simply is incorrect.

In support of its assertion the Board cited evidence

that nursing home facilities range in size from ten to 500

patients. Id. As stated above, acute-care hospitals in Mis-

souri vary to an even greater degre2, from eighteen to

1,208 licensed beds. The Board also cited evidence con-

cerning the differing levels of care among the three basic

types of nursing home facilities: skilled nursing, inter-

mediate care and residential care. Id. There are hospitals

in Missouri, however, where the level of care varies to an

even greater degree within one institution. As stated

above, fifty-one of Missouri’s 139 acute-care hospitals

have nursing home type units. One hospital in Kansas

City provides care ranging from acute intensive and

emergency care to long term residential care, with several

levels and types of care between the extremes.

If the Board’s findings with respect to the nursing

home industry are correct, its irrebuttable rule for the

substantially more diverse and more rapidly changing

hospital industry must be incorrect. The Board’s rationale

for excluding nursing homes from the coverage of the

rule requires precisely the same finding when applied to

acute-care hospitals. The result of the Board’s rationale is

20

a rule that is arbitrary, capricious, and not based on

substantial evidence.

3. The Board’s Rationale For Excluding Psychi-

atric and Rehabilitation Hospitals Applies

With Equal Force to Acute-Care Hospitals

With Psychiatric and Rehabilitation Units.

The Board’s reasoning concerning the applicability of

the rule to facilities providing care to psychiatric and

rehabilitation patients also is arbitrary and inconsistent.

The rule does not apply to facilities that are primarily

psychiatric or rehabilitation hospitals, but does apply to

psychiatric or rehabilitation units within facilities that fit

within the rule’s definition of an acute-care hospital.

Under this scheme, the employees working on one of the

floors of a 100-bed psychiatric unit at a large metro-

politan hospital would be subject to the rule’s mandatory

bargaining unit determinations but the employees work-

ing at a 100 bed psychiatric hospital would not.® There is

absolutely no rational basis on which to make such a

distinction.

The reasons offered by the Board in support of its

decision to exclude psychiatric hospitals from the rule

apply with equal force to psychiatric units within acute-

care hospitals. Among the reasons offered by the Board

were “that unlike other acute care hospitals, psychiatric

hospitals do not provide care for the physically ill,” that

—

6 Both situations are found among MHA’s members. In

addition, forty-five acute-care hospital members have beds

licensed for psychiatric services. Twenty-nine acute-care hospi-

tal members have beds licensed for rehabilitation services.

Z1

“many professionals participate hands-on with patients,”

that “RNs’ work is closely integrated with the work of

clinical psychologists, counselors, social workers, and

various types of therapists in a treatment plan as desig-

nated by doctors and program coordinators” and “that

there are more paraprofessionals (mental health

workers).” NPR II, 53 Fed. Reg. at 33930. These factors

exist regardless of whether the psychiatric facility is inde-

pendent or affiliated with an acute-care hospital.

Missouri truly is a microcosm of the health care

industry. The members of the MHA do not fit some

artificial hospital profile which fills the Board’s need to

categorize hospitals and their employees in neat

pigeonholes and thereby avoid its statutory obligation to

make individual findings in each case. They are real

hospitals serving real people in the rural areas, small

towns, suburbs and urban centers of an incredibly div-

erse state. They, their employees and their organizational

structures reflect that diversity and it is arbitrary and

capricious for the Board to ignore reality in favor of some

artificial norm which exists only in the mind of the Board.

Il. THE RULE VIOLATES THE CONGRESSIONAL

ADMONITION AGAINST THE PROLIFERATION

OF BARGAINING UNITS IN THE HEALTH CARE

INDUSTRY.

In 1974, when Congress amended the Labor Act to

include not-for-profit hospitals, it included in its Commit-

tee reports the following admonition:

Due consideration should be given by the

Board to preventing proliferation of bargaining

22

vnits in the health care industry. In this connec-

Jon, the Committee notes with approval the

recent Board decisions in Four Seasons Nursing

Center, 208 NLRB No. 50, 85 LRRM 1093 (1974),

and Woodland Park Hospital, 205 NLRB No. 144,

84 LRRM 1075 (1973), as well as the trend

toward broader units enunciated in Extendicare

of West Virginia, 203 NLRB No. 170, 83 LRRM

1242 (1973).

By our reference to Extendicare, we do not neces-

sarily approve all of the holdings of that deci-

sion.

S. Rep. No. 93-766, 93d Cong., 2d Sess. 5 (1974); H.R. Rep.

No. 93-1051, 93d Cong., 2d Sess. 6-7 (1974).

As the District Court in this case recognized “(t]he

stakes are higher when the Board makes bargaining unit

determinations in the health care field, fragmentation of

the workforce is more likely and of greater concern when

patient care is at issue.” American Hospital Ass’n v.

N.L.R.B., 718 F.Supp. 704, 713 (N.D. Ill. 1989). The District

Court concluded that, in promulgating a rule which “des-

ignates an absolute number of appropriate units and

mandates a particular division of the workforce,” the

Board was not responsive to the express concerns of

Congress. 4. at 76. The District Court based its conclu-

sion, in pert, on the fact that the rule requires the “auto-

matic fragynentation of the workforce into eight units,

without regards to the nature and extent of the health

services rendered or the dynamics of a particular health

care institution.” Id. at 714 (emphasis in original). The

MHA believes that the District Court’s conclusion also is

supported by the history of organizational activity that

has occurred in Missouri, both in the health care industry

and elsewhere.

23

A. The Number Of Units Mandated By The Rule

Far Exceeds The Number Of Units Sought And

Approved In Missouri Hospital Elections.

Labor organizations in this state have not hesitated to

seek to represent acute-care hospital units broader than

those that will be mandated by the rule. For example, in a

1986 election at Spelman Memorial Hospital (Case No.

17-RC-9796), a ninety-two bed hospital, the International

Brotherhood of Teamsters sought two units, one of pro-

fessional employees and one of nonprofessional

‘ employees. In an earlier election at the same institution in

1980, Local 96 of the Service Employees International

Union (Case No. 17-RC-8917) sought the same two units.

In another Missouri case, the Board conducted an

election in two units sought by Local 50 of the Service

Employees International Union, one of all ambulance

department employees and the other of all other

employees at Wright Memorial Hospital, a seventy-eight

bed hospital in Trenton, Missouri. In that case the finding

of a separate unit of ambulance drivers and emergency

medical technicians was a result of a unique organiza-

tional structure that made such a unit appropriate. Wright

Memorial Hosp., 255 NLRB 1319 (1981).

In its review of the Wright Memorial Hospital elec-

tion the Board concluded, contrary to what might nor-

mally be found at larger or tertiary-care institutions, that

all registered nurses in the hospital actually functioned as

Section 2(11) supervisors and, therefore, were not

employees for purposes of organization under the Labor

Act. After taking extensive testimony in that case, the

Board itself demonstrated why irrebuttable presumptions

24

and rules are not appropriate in this industry. The Board

found that each unit of the hospital operated with one RN

per shift and that the RNs “possess and exercise super-

visory authority which requires the use of independent

judgment and goes beyond the mere exercising of profes-

sional judgment.” Id. at 1319-1320. If the Board had cho-

sen to assume that registered nurses are registered nurses

and hospitals are hospitals, it never would have taken

cognizance of the organizational structure of the emer-

gency services and the responsibilities of the registered

nurses at Wright Memorial Hospital.

The disparity between the units deemed appropriate

by the parties in Spelman Memorial Hospital and the

Board in Wright Memorial Hospital and the units that

will be deemed appropriate for these same hospitals

under the Board’s rule is staggering. The difference

between three units and eight units constitutes undue

proliferation. The rule which mandates eight units for

hospitals like Spelman Memorial Hospital and Wright

Memorial Hospital violates the Congressional admonition

against undue proliferation in the health care industry.

B. The Number Of Units Mandated By The Rule

Far Exceeds The Number Of Units Deemed

Appropriate By The Board In A Missouri Indus-

try That Is Not Subject To A Congressional

Admonition Against Proliferation Of Bargain-

ing Units.

The MHA believes that the organizational activity in

other industries within the state also is relevant to the

issue of what constitutes “undue proliferation.” In that

regard, the MHA offers information concerning Allied

25

Signal Corp. (formerly Bendix Corp.), a large aerospace

contractor in Kansas City, Missouri.

In the mid-seventies Bendix was the subject of

detailed testimony in a case before the Board. At that

time Bendix employed approximately 2,200 hourly

workers; in 1989 it employed 7,300. The difference in

wages, hours and working conditions from top to bottom

in hospitals is not greater than the differences between

the top and bottom employees in the 116 different job

classifications in the production and maintenance unit at

Bendix. A similar analysis applies to the skill levels of

hospital and aerospace employees. There are tremendous

differences between the lowest level service employees

and the highest level professional and technical

employees in both industries. Both hospitals and aero-

space contractors employ janitors and food service

employees at one extreme and incredibly highly skilled

technical employees at the other. When faced with these

facts with respect to Bendix, the Board refused to permit

a separate skilled maintenance unit, very similar to that

which, by definition, would be appropriate under the

acute-care hospital rule. The Bendix Corp., 227 NLRB 1534

(1977).

Thus, at an aerospace contractor, an organization

substantially larger and more diverse than the vast major-

ity of hospitals in Missouri, all the employees in over one

hundred job classifications are in a single production and

maintenance unit, represented by one union. If this single

bargaining unit structure is appropriate in an industry

that has not been singled out as the object of a Congres-

sional admonition against undue proliferation of bargain-

ing units, any rule mandating eight bargaining units for

26

acute-care hospitals must be found to create undue prolif-

eration.

When Congress issued its admonition against bar-

gaining unit proliferation in the health care industry it

did so after careful thought and with full knowledge of

what havoc unit proliferation has caused in the construc-

tion industry. It ordered the Board to give special consid-

eration to the effect of such a situation on hospitals. It

cannot have intended that the Board give any less consid-

eration to hospitals than it has to the aerospace industry

and it cannot have intended that the Board be permitted

to do by rule what the courts of appeal have not allowed

it to do by adjudication.

27

CONCLUSION

For the foregoing reasons, and those stated in the

brief of petitioner, the MHA respectfully requests that

this Court reverse the court of appeals for the Seventh

Circuit, find that the bargaining unit rule is invalid, and

permanently enjoin the Board from applying the rule to

bargaining unit determinations in acute-care hospitals.

Respectfully submitted,

E. J. HOLLAND, Jr.*

Pecey F. Scumitt

Spencer Fane Britt & BROowNE

Suite 1400

1000 Walnut Street

Kansas City, Missouri 64106

(816) 474-8100

GERALD M. SILL

Senior Vice President/General

Counsel

Missouri Hospital Association

4713 Highway 50 West

Jefferson City, Missouri 65102

(314) 893-3700

* Counsel of Record

November 23, 1990