Five unionized nursing centers in Connecticut operated by HealthBridge Management LLC are filing for Chapter 11 bankruptcy, just as several hundred striking employees are set to return to work under a court order.
HealthBridge, which manages nursing centers in five states, has started the process of negotiating debtor-in-possession financing for its five unionized nursing care centers in Connecticut, calling them "the latest victims of unsustainable union labor contracts."
In July, some 600 unionized workers from the five skilled nursing facilities went on strike, after HealthBridge offered a "last, best and final" contract offer following a year of negotiations with the Service Employees International Union District 1199, the New England Health Care Employees Union.
Now, after spending some $12.5 million on temporary workers, security and legal contractors, HealthBridge has filed for Chapter 11 in U.S. bankruptcy court in New Jersey, where the company is based. It has also filed an 1113(e) bankruptcy code motion seeking court authority to permanently modify 2004 collective bargaining agreements if renewed negotiation efforts with the union fail.
"The Centers have a bright future if they can operate under labor agreements that reflect today's financial realities, but the fact is the Centers will not survive unless we have relief from the crushing burden of unsustainable labor costs, especially the spiraling costs of pension and healthcare obligations," Lisa Crutchfield, HealthBridge SVP Labor Relations, said in a media release.
Under the existing collective bargaining agreement with the SEIU at the five centers, HealthBridge says it is losing about $1.3 million a month, with total benefit costs 48 percent higher than the state average for both union and non-union nursing centers.
The company argues that the SEIU's demands have in effect put some Connecticut nursing homes out of business. The union represented 69 percent of Connecticut nursing homes that have closed since 2007, and now represents about 28 percent of nursing centers in the state, according to the HealthBridge.
The debate over union costs at the five centers became so fractious last summer, as negotiations withered, that the company created a website, HealthBridgeFacts.com, warning of the SEIU's "predictable tactics," such as "sabotage and vandalism" and "cozying up to politicians."
Under a court-order injunction HealthBridge has been trying to appeal, the workers who went on strike last summer are going to be reinstated March 3, while the National Labor Relation's board reaches a final decision.
David Pickus, president of the SEIU District 1199, argued in a media release that HealthBridge is "trying to use bankruptcy to avoid its legal obligations to employees under the injunction."
If HealthBridge's financial troubles are severe enough to warrant bankrupcty, Pickus continued, "state receivership would certainly be in the best interests of all of the residents of those five homes, the workers and the taxpayers of Connecticut."