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April 10, 2013 / Paul Levy

Which side are you (really) on?

Thursday, June 26, 2008, 11:45am

Over the last few months, I have set forth the “playbook” that is used by the SEIU (Service Employees International Union) when it is running a corporate campaign against an employer to try to extract concessions in the union organizing process. Now, I want to present you with a recent example of the tactics that are employed.

CareGroup, which is the holding company comprising BIDMC (and BID~Needham), Mt. Auburn Hospital, and New England Baptist Hospital recently successfully sold about $500 million in bonds. See below. These bonds were issued under the auspices of the MA Health and Educational Facilities Authority (MA HEFA), which is the designated public agency for coordinating the issuance of tax-exempt bonds by schools, hospitals, and other non-profit entities in the state.

The proceeds of the bonds will be used for a number of purposes, including financing a new wing of Mt. Auburn Hospital, a variety of capital improvements at NE Baptist, new patient rooms and an expanded emergency department at BID~Needham. In addition, proceeds were used to refund variable interest auction-rate securities that, because of turmoil in the capital markets, had seen dramatically increased interest rates. Like many other institutions, CareGroup was seeking to replace those bonds with more secure fixed-rate securities.

SEIU appeared at MA HEFA and tried to interfere with the issuance of these bonds. Oh, not by directly saying they should not be issued, but by presenting misleading and inaccurate arguments about our hospital’s finances and accounting procedures and auditing processes procedures in the hope of derailing the approval. Fortunately, the highly professional staff and board at MA HEFA found no merit in SEIU’s arguments.

Then SEIU tried to stop the Governor’s office from signing off on these bonds. The Governor has to sign an affirmation called a TEFRA (Tax Equity and Fiscal Responsibility Act of 1982) certificate, that the bonds are consistent with the public standards of tax-exempt financing. Fortunately, the professional staff in the Executive Branch conducted their own due diligence, and the certificate was signed. (As I recall, in all these years, a Governor has only once turned down a request for financing once it has been approved by MA HEFA.)

I have mentioned below that SEIU tries to arrogate to itself the powers and authority of designated public agencies. It uses the argument that it is a concerned player in the health care arena, specifically noting its interest in “healthcare costs and accessibility,” and therefore has a right or obligation to intervene in these matters.

Let’s be clear. SEIU’s rights and obligations are not the issue, and we should not be distracted on that point. However, its actions belie its words. If SEIU has a real concern about the cost and accessibility of health care, how does that square with its attempts to derail bona fide financial transactions that seek to expand access to health care facilities and stabilize or reduce their costs? And, notably, when its arguments were not persuasive in a public forum in front of a state agency, it attempted to use behind-the-scenes influence in the Governor’s office.

This is not the first time SEIU has intervened in such matters. It has done so elsewhere in the country when it is engaged in corporate campaigns.

SEIU may seek to change the topic, saying this is about changing the process by which unions are certified. That is an issue that will continue to be debated. But the manner of seeking such change matters, and it matters a lot. When the union itself tries to undermine the mission of hospitals, particularly those non-profit hospitals governed by community leaders, it does so at the risk of harming those very purposes it purports to espouse.

There have been many reports about the huge amounts of dollars being spent by the SEIU to influence races for elected offices throughout the US, from local to national elections. (Here’s but one example.) When are reporters going to start asking the question of those candidates receiving support: “Do you agree with the tactics used by the SEIU in conducting corporate campaigns against hospitals?” And, “What promises have been made in return for those donations?”

As a friend of mine recently wrote to his local elected representatives:

“As your constituent, I received the flier from SEIU thanking your help for the union’s organizing PCAs (personal care assistants) in Massachusetts. I know it’s nice as an elected official to get a no-cost endorsement mailed to your constituents.

“But, is the mailing really at no cost to you, in terms of your ongoing political judgments? I read today in the NY Times that SEIU is setting up a $10 million fund to punish elected officials who fail to maintain pro-union positions. Are you now in the position of having to say yes to SEIU every time they come in the door?”

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