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By MARA LEE email@example.com
The Hartford Courant
4:10 PM EST, February 25, 2013
Five Connecticut nursing homes which are run by HealthBridge Management have filed for bankruptcy protection.
Those five homes employ workers represented by the Service Employees International Union, and the company's goal in filing for bankruptcy is to modify its union contracts without union consent, which would reduce its labor costs.
The nursing homes that are covered by the case are Newington Health Care Center, West River Health Care Center in Milford, Danbury Health Care Center, Long Ridge of Stamford and Westport Health Care Center. The company's non-union homes, in Milford, Southbury and Cheshire, are not part of the case.
The company says it has enough cash to continue operating the facilities, including paying vendors for goods and services.
HealthBridge was unable to persuade the union to terminate the pension or take on more health insurance cost sharing, and last summer, it unilaterally made the changes to the benefits package. About 600 workers went on strike as a result.
The National Labor Relations Board is prosecuting a case arguing that the company broke the law when it made the changes. The agency, which is responsible for protecting workers' rights, convinced a federal judge to order HealthBridge to take back the strikers at their previous wages and benefits. The workers return to work March 3.
The bankruptcy filing documents say that unless the company terminates the pension and reduces its health insurance costs, the nursing homes will be forced to close. The motion says that would result in about 1,140 employees losing their jobs, and frail and elderly patients moving to other nursing homes.
David Pickus, president of SEIU District 1199 put out a statement that said after HealthBridge's lawyers failed to convince appeals courts to overturn the court order, "the company is now trying to use bankruptcy to avoid its legal obligations to employees."
Under the labor contracts it agreed to, the company says it expects to lose about $1.3 million a month across the five facilities.
"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," spokeswoman Lisa Crutchfield said.
Elizabeth Austin, the head of Pullman & Comley's bankruptcy section, said that a bankruptcy judge will only allow union contracts to be rewritten if you prove "there's no way to meet the obligations of the contract and the business will go dark" unless the contract is modified.
"The standard is very high, it's very difficult to reject union contracts through a bankruptcy," she said.
She said it's difficult to say how long it might take the company to get a ruling on that question. "I have no doubt it will be hotly contested by the union," she said. "I think it will all be scrutinized very carefully by the bankruptcy court."
A Courant review of the company's financial filings with the state that cover the last fiscal year found losses were mounting because of dropping patient counts, strike costs, a higher proportion of Medicaid-covered patients, and labor costs.
The filings also showed that two of HealthBridge's three non-union homes in Connecticut, where there are lower wage and benefits costs, also reported losses for both fiscal year 2011 and 2012.
Crutchfield would not discuss why those facilities are unprofitable.
HealthBridge, in its statement announcing the case, said the union has caused financial losses at many homes that resulted in closure. HealthBridge closed a nursing home in Wethersfield last year that had been covered by SEIU.
"There is no getting around the fact that SEIU, District 1199, labor agreements are the leading reason for nursing home closures in Connecticut. That's bad for patients, employees, physicians and the communities they serve," Crutchfield said.
"If the financial situation is as dire as HealthBridge claims in its press releases, receivership would certainly be in the best interests of all of the residents of those five homes, the workers and the taxpayers of Connecticut, who provide most of the millions of dollars annually for care of the elderly in HealthBridge homes," Pickus responded.
Spectrum Healthcare, which also had an SEIU strike in recent years, filed bankruptcy last year. It is in the process of closing Laurel Hill Health Care in Winsted. It has not yet asked the court to change its union contracts, though it has the possibility of doing so.