Prime Healthcare ordered to pay $6.5 million in back wages

Dr. Prem Reddy, the founder of Prime Healthcare Services, is seen in 2014.
(Irfan Khan / Los Angeles Times)

In a ruling last week, the National Labor Relations Board ordered Prime Healthcare Services, the owner of several Southern California hospitals, to pay back wages to laboratory technicians, clerks and pharmacists, among other employees.

The chain owes $6.5 million to 500 workers at Encino Hospital Medical Center and Garden Grove Hospital and Medical Center, according to the union representing them, the SEIU-United Healthcare Workers West.

Prime Healthcare had appealed a 2014 ruling by a regional NLRB judge requiring that the company pay employees annual raises they were promised in an expired 2011 contract.


The national labor board affirmed the judge’s decision, noting that the language in the old contract provided for continued raises for employee’s yearly work anniversaries, even if the contract was not renewed.

Union officials have been sparring with Prime Healthcare for more than five years over lapsed contracts and the provision of benefits to employees.

In February, a regional NLRB judge ordered Prime Healthcare to recognize a 2014 contract agreement that covers 1,100 employees. Prime has appealed that ruling.

“This is a marker for the workers. It’s a blow against the company, but the pursuit is still about getting the company to recognize the contract vote,” said Sean Wherley, a spokesman for the SEIU-UHW.

In a statement, Prime Healthcare spokeswoman Elizabeth Nikels said the company plans to appeal the decision to the D.C. Circuit Court of Appeals. “We value the work of all our staff and nurses and their commitment to providing exceptional patient care,” Nikels said.

Prime Healthcare has had a rough year. In May, the Department of Justice joined a lawsuit against the company, which it accused of committing Medicare fraud at 14 California hospitals.


Lawyers for the federal government charged that the hospitals admitted visitors to the emergency room as inpatients, earning the company “millions of dollars in inflated reimbursements.”

The suit also alleged that Prem Reddy, the India-born founder of the company, would demand that emergency room doctors be fired if they didn’t admit Medicare patients.

In a statement, Prime acknowledged that there is a “lack of clarity between what federal regulators and physicians believe is necessary to adequately document medical necessity for hospital admissions.”

But the company said that it has been successfully audited for its Medicare billing practices, and that it is “confident it will prevail and ultimately be exonerated.”

In June, the U.S. Supreme Court declined to hear a Prime Healthcare lawsuit against the SEIU-UHW, which claimed the group was extorting the company in an effort to unionize workers at its hospitals.

The suit was dismissed by federal Judge Gonzalo P. Curiel in April 2015.


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