The union representing over 200 former employees of a behavioral health hospital Washington plans to buy for nearly $30 million has filed a lawsuit in federal court to block the sale until an arbitrator can determine whether the deal abides by the union’s contract.

SEIU Healthcare 1199NW sued Cascade Behavioral Health on Aug. 24, alleging the company violated its bargaining agreement with employees. That contract includes a section that says if Cascade sells or transfers its operations to a successor that does the same type of work, the sale agreement must call for the new employer to rehire the facility’s union employees based on seniority.

The contract also says that, in this situation, the terms and conditions of the workers’ collective bargaining agreement with Cascade must remain intact when the new employer rehires them.

In the lawsuit, filed in U.S. District Court in Seattle, the union argues that Cascade failed to follow these guidelines and that if the sale proceeds unchecked before the arbitration is resolved, its workers will face harms like lost health coverage and income, difficulties finding new jobs nearby, and the end of their union contract.

The state Department of Social and Health Services took possession of the hospital in August. But according to the lawsuit, the state for now appears to be leasing the facility in Tukwila from Cascade, with the sale expected to close on or before Dec. 31.

Even though the plan is for the hospital to remain a unionized workplace when it reopens under state ownership, the Department of Social and Health Services claims the sale does not meet the conditions that would trigger the re-hiring requirement in the union’s contract.

“DSHS has entered into a contract to purchase the property from the owner, but we are not the successor,” said Tyler Hemstreet, a DSHS spokesperson. “We did not take over their business, nor did we admit any of their former patients after they discharged them or closed its doors.”

The state is not committing to giving former Cascade employees preference or priority in the hiring process. However, Hemstreet said former employees are encouraged to apply to positions at the new hospital, now named Olympic Heritage Behavioral Health.

The union would not provide comment to the Standard, citing pending legal action. Acadia Healthcare, Cascade’s parent company, did not return a request for comment.

High-profile acquisition

State officials, including Gov. Jay Inslee, touted the deal to acquire the hospital as a win for expanding behavioral health care, including for those in jail awaiting competency services. The state expects the facility would allow it to add about 100 beds.

“We have been working diligently to serve rapidly growing numbers of patients needing behavioral health care, but one of our biggest constraints is the amount of time it takes to build and staff new facilities,” Inslee said in a statement about the Cascade acquisition in August. 

“I appreciate the work of the department to act quickly so the state could prepare a competitive bid. We will move as quickly as we can to prepare the hospital to serve patients,” he added.

Inslee’s office said they have not reviewed the lawsuit but support the Department of Social and Health Services’ position.

“There’s no shortage of need or available jobs in our state for workers with these skills and expertise, and we certainly value them,” said Mike Faulk, a spokesperson for Inslee’s office.

DSHS said there is no timeline for when the hospital is supposed to open.

The lawsuit

According to the lawsuit, DSHS officials, including the agency’s director of labor relations, Peggy Pulse, met with union officers in a Zoom meeting on Aug. 11. In the meeting, Pulse told the union that because the state will admit “different clients” than Cascade had, it is not subject to the “successor clause” in the union’s contract.

DSHS said it plans to use the hospital for civil commitment patients — people with criminal charges who were moved to the civil side of the legal system due to serious disabilities, The Seattle Times reported when the sale was first revealed. The lawsuit says Pulse reiterated this during the Aug. 11 meeting.

“Pulse began the meeting by stating that DSHS did not believe that it was successor employer and therefore did not believe that DSHS had any obligation to re-hire the Cascade workforce or otherwise accept the existing working conditions,” the lawsuit adds.

DSHS declined to comment on the Zoom meeting or the lawsuit’s description of it.

The lawsuit also argues that Cascade didn’t follow contract rules requiring the company to give 60-days notice prior to a sale or transfer and to give the union a copy of the sale agreement. SEIU says it learned of the sale through a Seattle Times article and had to obtain a copy of the deal through a public records request with the state.

The union is asking the court to issue a preliminary injunction to pause the sale.

‘Not ambiguous’

Elizabeth Ford, a labor law professor at Seattle University, said Cascade and the state could face an uphill battle proving that the sale of the facility to the state is not subject to the successor clause provisions in the union’s contract because the function of the hospital — to treat behavioral health patients — appears “almost exactly the same.”

For example, she said, if Cascade changed where its patients came from procedurally in the criminal system, “would they suddenly be a different business not subject to the collective bargaining agreement? We wouldn’t think so.”

“To me, the argument doesn’t hold much water,” she added.

While successor clauses tend to be difficult to negotiate into labor contracts, Ford said they’re more common in industries with a lot of turnover, like health care. This type of lawsuit, however, is rare, she said. As for the union’s contract, Ford said it’s “a solid agreement.”

“It’s not ambiguous, to my read anyway,” she said. “It is surprising to see both Cascade and DSHS seem to be ignoring it. It’s weird.”

Below is a copy of the union’s motion for a preliminary injunction, filed on Aug. 24.

SEIU Healthcare 1199NW v. Cascade Behavioral Hospital

— By Grace Deng, Washington State Standard

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