Union files lawsuit to halt privatization of a trio of hospitals

The union representing workers at Maui Memorial Medical Center filed a federal lawsuit Thursday to block the state from privatizing three Maui County hospitals.

The U.S. District Court complaint filed by United Public Workers against Gov. David Ige seeks to stop the implementation of House Bill 1075, which allows a private entity to manage and operate Maui Memorial, Kula Hospital and Clinic, and Lanai Community Hospital. The governor signed the bill into law June 10.

The complaint by the UPW, representing 11,000 public employees, contends that the legislation violates a clause in the U.S. Constitution that prevents the government from repealing its contracts.

“Privatization of our state hospitals would have a profound effect on the communities they were originally intended to serve,” said Dayton Nakanelua, UPW state director, in a news release. “We’re already seeing how layoffs at several of our hospitals are not only affecting those who work there but also patients and their families, as well as diminishing our ability to care for an aging population in the future.”

United Public Workers is a party to two collective bargaining agreements with the state effective from July 1, 2013, through June 30, 2017. A spokeswoman for the Hawaii Government Employees Association, the other public workers union that opposed privatization of the Maui facilities, said the organization is reviewing the lawsuit and considering its legal options.

“House Bill 1075 substantially impairs the obligations of these pre-existing collective bargaining agreements by depriving UPW and the affected bargaining unit employees that UPW represents of all the protections and benefits of these contracts during the contract terms,” the complaint said. “Following such a transfer, the state will use public funds to pay for costs of operating these facilities, but the employees working in these facilities will no longer be public employees of the state of Hawaii.”

The Maui hospitals are in the due diligence process with both Kaiser Permanente Hawaii, the state’s largest health maintenance organization, and Hawaii Pacific Health, which operates Kapiolani Medical Center for Women & Children, Pali Momi Medical Center, Straub Clinic & Hospital and Wilcox Memorial Hospital on Kauai.

Wesley Lo, chief executive officer of Maui Memorial, said Thursday he is expecting proposals from both Hawaii Pacific Health and Kaiser on Aug. 24 and was caught by surprise by the lawsuit.

“Although we are not a party to this complaint we are disappointed to see this, especially since the UPW had an opportunity to participate in the very public legislative process,” he said in a statement.

The Wailuku hospital — part of the ailing public hospital system known as Hawaii Health Systems Corp. — started discussions a year ago with Hawaii Pacific Health and Kaiser, which already has a strong presence on the island, but couldn’t move forward without legislation.

Officials of the Maui hospitals earlier this year said they were looking to cut $28 million in services and jobs starting July 1, but recently stated they would hold off on the reductions while moving forward with privatization.

Cindy McMillan, a spokeswoman for the governor, said the Department of the Attorney General is reviewing the complaint.

This is not the first hurdle to privatization Maui Memorial has faced. In 2012 the hospital began talks with Phoenix-based Banner Health on a public-private partnership. The talks ended when the participants failed to win approval for the move from the state Legislature.