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Monday, June 24, 2024 | Back issues
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Union Ends Truce With Calif. Hospital Boss

SACRAMENTO (CN) - The president of the California Hospital Association sabotaged a nonprofit's Medi-Cal ballot measure to protect the exorbitant salaries of hospital executives, the SEIU labor union claims in court.

The Service Employees International Union-United Healthcare Workers West (SEIU-UHW) claims California Hospital Association President Duane Dauner sold his veto power as co-chair of a nonprofit to a teachers' union that opposed the nonprofit's healthcare measure.

Dauner met secretly with leaders of a competing initiative and went against the values of the nonprofit he leads, plaintiff Caring for Californians, by agreeing to veto any proposed ballot initiative to increase taxes on California's wealthiest people to fund Medi-Cal, according to the Nov. 24 complaint in Superior Court.

In exchange for Dauner's vetoes, the union claims, the California Teachers Association and others agreed to crush three ballot measures that would have capped hospital executives' salaries and the prices of medical services at hospitals.

"In effect, Dauner sold out Caring for Californians and the dream of a fully funded Medi-Cal program for higher hospital executive pay and profits," the complaint states.

By vetoing and stalling the ballot measure, Dauner allowed the teachers union to file a competing measure with the California Attorney General and receive preferential placement on the November 2016 ballot, the plaintiffs claim.

In addition to delaying the filing of the Medi-Cal initiative, Dauner and the California Hospital Association agreed to finance the opposing measure, "The School Funding and Stability Act of 2016," to steer tax money to education, not Medi-Cal, the union says.

Then after the competing initiative was filed, Dauner and the nonprofit's board unanimously approved a $9 million loan to support the "Invest in California's Children Act," the Medi-Cal expansion measure.

"Although defendant Dauner approved this action, he had no intention of approving any expenditure that would enable the committee's operation because of his secret deal with the ABC Coalition to undermine the CFC's [Caring for Californians] initiative," the complaint states.

The complaint defines the ABC Coalition as "a coalition of employers and labor organizations with political interests that do not align with CFC."

In 2014, the SEIU-UHW agreed with the hospital association to end its push for ballot initiatives that would limit hospital executive salaries, in exchange for hospitals making it easier for employees to join unions.

Four days before filing this lawsuit, the union said the truce with the hospital association was over. It revived its push for an initiative that would cap Dauner and other hospital executives' pay at $450,000. It's the third time since 2011 that the SEIU-UHW has proposed regulating hospital salaries and healthcare costs.

Dauner slammed the SEIU-UHW in a statement, saying the union violated its agreement with the hospital association and is interfering with state hospitals' ability to hire qualified candidates.

"Artificially imposing a cap on compensation will result in a loss of qualified executives and undermine the ability of hospitals to meet the challenges ahead," Dauner said.

Named as defendants are Dauner and Caring for Californians directors Gregory Adams, Mark Laret and James Holmes. Caring for Californians is a nominal defendant.

The union seeks an injunction removing Dauner from office, and damages for breach of fiduciary duty, fraud and conversion. It is represented by Bruce Harland, with Weinberg, Roger & Rosenfeld in Alameda.

Harland could not be reached for comment after business hours Monday.

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