Earlier this year, Capitol Watchdog wrote about how SEIU-UHW union President Dave Regan scuttled a deal between six financially struggling California Catholic community hospitals and Prime Healthcare out of spite. Regan used his political clout to stop Attorney General Kamala Harris's approval of the sale despite support from the California Nurses Association and SEIU members at the facilities, as well as from Consumer Watchdog (Capitol Watchdog's sponsor).
Now Daughters of Charity Health System is making layoffs, cutting doctor payments and has a long list of services it plans to close. A new lawsuit filed by Prime over the failed deal, which describes how Harris allegedly "corruptly abused" her office, has the seeds of a political scandal and a Martin Scorsese film. The lawsuit alleges Regan, who is right out of central casting as the bullying union boss, boasted about his power over the Attorney General in terms that could come right out of the movie Goodfellas or Mean Streets.
Spoiler alert: We don't know what's true or not in the lawsuit, but at the very least it's intriguing political theater that will be on California's stage for many months. (Frankly, that's why it's a little baffling that you're reading about it mostly at Capitol Watchdog and not many other places.)
According to the suit, Regan told Prem Reddy, the founder and CEO of Prime Healthcare, that Harris was "his politician" and "would do what [he] told her to." After Reddy asked Regan whether he would really kill a deal for political gain and put thousands of jobs and their pensions in jeopardy, "Regan told Dr. Reddy that he would and that Attorney General Harris would do what she was told and nothing more," the lawsuit stated.
The lawsuit alleges former Attorney General Bill Lockyer, former state Board of Equalization Chairman Conway Collis, who was Daughters of Charity's lobbyist, and others warned Prime that it must submit to SEIU's demands for allowing unionization of all its California hospitals or Harris would either outright deny the transaction or implement "onerous" conditions, which would be denial in effect, the lawsuit says. The latter is what happened, it added.
The most explosive allegations deal with Harris's political contributions:
"On January 13, 2015, Harris announced her 2016 run for the U.S. Senate seat currently held by Senator Barbara Boxer. Harris is dependent on her base support of labor unions, including UHW and SEIU, to fund her Senate candidacy. Prime is informed and believes that UHW promised Harris up to $25 million dollars by way of political contributions through SEIU COPE, the national Political Action Committee for SEIU and UHW, if she denied or imposed conditions on the Prime-DCHS sale which would constitute a de facto denial. Moreover, Prime is informed and believes that UHW advised Harris that if she did not agree to their demands and approved the sale of DCHS Hospitals to Prime, this money would be spent supporting alternative candidates."
It's important to remember that Regan is about as thuggish as they come in the union movement in America. Regan and SEIU-UHW have used threats about its support to get its way before in connection with Prime Healthcare. During the fight over the Daughters transaction, Regan and SEIU warned Democratic legislators they needed to stop taking money from Prime or else. The money quickly stopped.
The lawsuit alleges that Harris "corruptly abused" the authority of her power, under the Non-Profit Hospital Transfer Statute, which gives her complete discretion over the sale of nonprofit hospitals, "by entering into an illegal scheme with the Service Employees 18 International Union - United Healthcare Workers West."
In the lawsuit, Prime says that Harris violated its rights under the Equal Protection Clause of the Fourteenth Amendment, the National Labor Relations Act, and the state's equal protection and due process statutes. It also states that the Nonprofit Hospital Statute is unconstitutional and constitutes an arbitrary, irrational and unreasonable restriction on a buyer's constitutional right to acquire property.
The merits of the case may or may not be decided before Harris has to make some tough decisions about her future relationship to Regan and SEIU-UHW.
SEIU gave $425,000 in independent expenditures in support of Harris for the past two elections and $100,000 in direct contributions to her for the 2010 election.
Fortunately for Scorsese, lawsuits are public record, so he won't have to option the rights if he wants to make the movie.
If the case goes forward, the depositions and testimony will be right in the open, no doubt including discovery about Regan's brass knuckle tactics with campaign cash in the legislature and beyond.
Just think of the Scorsese flick. There are nuns and dying hospitals. Regan easily could play himself, based on internal recordings we've heard of his boasting to union leaders about a $100 million sellout agreement with the state's hospital cartel (think the underboss grocer in Casino whose yapping on a wiretap "sunk the whole world.") Reddy is as colorful as billionaire doctors come and even has a helicopter (think Wolf of Wall Street). Harris no doubt has stories to tell that won't stay in San Francisco.
It's got all the makings, except for a moral to the story. That has yet to come.
It's too early to tell. But sensitivity in the AG's press shop is ultra-high. Reporters that raise questions about the Prime deal's denial report quickly getting the backhand of a flack. (One journalist tweeted "@KamalaHarris's office just called to rake me over coals re today's story on Prime&Daughers'deal.") That may explain why there hasn't been more mainstream media coverage of the lawsuit allegations.
Whether it's just over-protective handlers or not, the lawsuit is a fuse that's been lit. Harris has some heat on her tail. Whether there will be a kaboom remains to be seen.
