WellPoint Starts Out by Issuing Pink Slips : Insurance: Action by new Blue Cross unit triggers accusations of union busting. Company says move was made for other reasons.
WellPoint Health Networks, in one of its first acts as a for-profit subsidiary of Blue Cross of California, has issued layoff notices to a majority of its 165 workers in Oakland, and in so doing has opened an old wound with its beleaguered union there.
WellPoint, the new Woodland Hills-based public unit of nonprofit Blue Cross, confirmed last week it was laying off 87 people in Oakland this June, most of them claims processors and represented by the Office and Professional Employees Union Local 29.
Tamara Rubyn, a Local 29 representative, accused management of targeting unionized workers for the job cuts and continuing what she claimed has been a plan that began in 1986 when Blue Cross’ current chairman, Leonard Schaeffer, came on board.
“We definitely believe it’s a union-busting move,” Rubyn said of the Oakland layoffs. “And we’re going to fight it all the way.” She conceded, however, that there was little the union could do to save those jobs.
Blue Cross, the state’s largest health insurer, and its WellPoint subsidiary now employ about 3,500 workers, most of them in Woodland Hills and Westlake Village, where none of the workers are unionized. Even while trimming its work force in Oakland, Blue Cross is gearing up for an expansion in Southern California.
Company officials denied the job cuts in Oakland were intended to break the union. Last October, Blue Cross laid off 55 non-union workers in Woodland Hills, said Ronald Williams, WellPoint’s executive vice president. Like that decision, he said, “this one is based on the different mix of business being sold.”
Williams says the cuts are the result of a shift in business from indemnity insurance to managed health-care operations and the result of its continuing consolidation.
The layoff notices were issued in late February, less than a month after Blue Cross spun off most of its operations into WellPoint and raised $517 million selling stock in that subsidiary to the public. WellPoint includes all of Blue Cross’ managed care operations, including CaliforniaCare--a 423,000-member health maintenance organization--and its preferred-provider network with 1.5 million members.
Williams said the job cuts in Oakland mean that work will be shifted mostly to its Sacramento office. Although no new jobs will be added there, Williams said the shift in work will help preserve union jobs in Sacramento. WellPoint has about 140 workers in Sacramento, most of whom are unionized. After the layoff in June, 78 employees will remain in the Oakland office doing the company’s legal and auditing work.
However, from the union’s point of view, this is merely the latest in Blue Cross’ battle to outflank the union. It was in 1986 that Schaeffer moved Blue Cross’ headquarters from Oakland to Woodland Hills, eliminating about 1,800 jobs in Oakland, including the jobs of 900 members of Local 29. Rubyn said the upcoming layoff will leave only about 100 union jobs at all of Blue Cross, most of them at WellPoint’s operations in Sacramento.
James Eggleston, the union’s lawyer, claimed Blue Cross management went back on its pledge to Oakland employees that their jobs would not be affected by the restructuring. “We may seek license revocation and disciplinary action from the Department of Corporations because of this apparent fraud,” he said.
Company officials denied that contention.
Several weeks ago, WellPoint opened a new office in Calabasas, creating 90 jobs, to handle its growing dental, life and pharmacy plans. Also, Blue Cross and WellPoint recently signed a new lease for office space in Newbury Park, next to its big Westlake Village operations, and plan to add 100 to 150 jobs there immediately and as many as 700 over the next several years. All of those posts are non-union.
Terry Keller, 43, who has been a Blue Cross customer service agent in Oakland for 17 years, said she was shocked by the layoff notice.
“I’m still hoping they’ll change their mind,” she said.
But that isn’t likely to happen.
In 1986, a public campaign to keep Blue Cross jobs in Oakland was unsuccessful as Blue Cross drastically pared its work force, from a high of 6,000 to its current level of around 3,500. Blue Cross says those cuts helped it bounce back from near collapse in the mid-1980s to a solidly profitable operation today.
