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Lourdes Medical Center of Burlington County v. Board of Review

July 12, 2007

LOURDES MEDICAL CENTER OF BURLINGTON COUNTY, APPELLANT,
v.
BOARD OF REVIEW, RESPONDENT,
AND DIANE PRESTWOOD, SANDRA C. VODA, JEANNE RICHARDSON, BETH A. BENN, LIESA P. MILLINGTON, BARBARA J. MARTIN, PATRICIA A. SOZIO, EDNA E. MORRISSEY, BERNICE AMARH, DEBORAH L. SORRENTINO, KARON R. BRANCH, NANCY ZIRPOLI, CYNTHIA L. BORGSTROM, QUETTELY G. DANASTOR, DONNA TAYLOR RIVERA, VIRGINIA L. BROWN, ANNETTE M. RIDGE, JUANITA BUSSIE, CANDACE L. WEBB, JUANITA PAYNE, CHRISTINE M. GALLAGHER, JANE E. MAHER, MARIA MIRAGLIA, PAULA M. CLARK, PEGGY A. GLASPEY, DOROTHEA D. CURTIS THOMAS, KATHLEEN C. NASTO, REGINA M. JONES, THOMAS W. BRAY, KITTY L. STOUT, DZIGBORDI A. AHIEKPOR, LINDA L. PINE, FLORENCIA A. BAKER, ROVENUS D. LITTLE, MARCI J. LYONS, PATRICIA L. BOZZI, MARYANN K. LAVERTY, NANCY KELLY, PHYLLIS M. SNOW, KATHLEEN M. MORAN, ROBERT A. WALSH, BRENDA MORRISON, MARY MAIETTA, PATRICIA A. RALPH, JOSEPHINE M. FOLZ, JOSEPH R. PARKER, KIMBERLIN J. SANSONI, PATRICIA A. MARTINO, ANNA CLARK, CAROLYN D. STEVENSON, DORIS E. ROBERTS, ANNA V. SIA, AYISHA BRYANT, MARY E. MURRAY, ROSA E. JONES, LOIS J. PRICE, CHRISTINE M. MUELLER, DEBBIE A. STEWART, MARY A. BEAUDET, SHARON M. SHEDAKER, BETH A. SLIMM, SHIRLEY J. MEGARGEE, ELEANOR A. NEUENFELDT, MILDRED E. PERRY, TERESA E. LAVERTY, CAROLYN M. RICHMAN, CAROL A. ANDERSON, SUSAN L. GARBE, SHIRLEY D. RICHARDSON, PURIFICACION C. ST. GEORGE, YSABEL L. GALICK, ANNETTE L. ZELAUSKAS, RUTH BEST, THERESA A. SCHIERS, MARY F. HANSEN, CAROL A. KINKADE, NEDINA C. JORDEN, ELIZABETH HALL, VALARIE L. STANLEY, SANDRA L. IWANICKI, MARGARET J. CLIVER, STEPHANIE J. SAMAR, STEPHANIE L. SMITH, JACQUELINE R. KIRBY, NORA DUNN, BARBARA V. JONES, REGINA HASS, MARIANNE NEWMAN, LINDA L. MAKRIS, PATRICIA A. MELCHIORRE, JOAN R. MCDOWELL, PATRICIA L. MCQUARRIE, LISA A. HALL, SUSAN STARK, SANDRALEE HEINZE, DEBORAH L. GOSS, AND KATHLEEN DENTON, CLAIMANTS-RESPONDENTS.



On appeal from a Final Administrative Order of the Board of Review, Department of Labor.

The opinion of the court was delivered by: Miniman, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Submitted February 5, 2007

Before Judges Lintner, Seltzer and C.L. Miniman.

After between 240 and 280 nurses employed by appellant Lourdes Medical Center of Burlington County (Lourdes) walked off the job on April 19, 2004, ninety-seven of the nurses filed for unemployment benefits on June 6, 2004. Unemployment benefits are designed to "ameliorate the impact of involuntary unemployment." Sweeney v. Bd. of Review, 43 N.J. 535, 539 (1965). Generally, employees who are unemployed as a result of a stoppage of work relating to a labor dispute are disqualified from receiving unemployment benefits. N.J.S.A. 43:21-5(d); N.J.A.C. 12:17-12.2(a)(1). That regulation provides that the stoppage of work must so curtail production that the employer cannot produce "more than 80 percent of [its] normal . . . goods or services." N.J.A.C. 12:17-12.2(a)(2). The Deputy Director, Division of Unemployment Insurance, ruled on June 15, 2004, that the nurses were entitled to benefits and that the labor dispute disqualification of N.J.S.A. 43:21-5(d) did not apply by virtue of N.J.A.C. 12:17-12.2(a)(2).

Lourdes timely appealed and the Appeal Tribunal conducted a hearing on September 22, 2004. At that time the strike was in its fifth month. In one consolidated, written opinion on November 5, 2004, the Tribunal affirmed the Deputy Director's decision. On further appeal to the Department of Labor ("DOL"), Board of Review ("the Board"), the decision of the Appeal Tribunal was affirmed on March 11, 2005, in ninety-seven separate, identical opinions. We granted leave to file one appeal from all ninety-seven decisions. We now reverse and remand these matters to the Board for further proceedings consistent with this opinion.

I.

The evidence offered at the September 22, 2004, hearing established that Lourdes is a nonprofit hospital located in Willingboro, New Jersey. "Its mission is to serve as a comprehensive community hospital and meet the needs of the community, regardless of ability to pay." It was licensed as a 259-bed hospital prior to the April 19, 2004, strike and employed approximately 2000 people. Lourdes' goals prior to the strike were to grow, add more services, and bring in more physicians.

The nurses, members of JNESO Local District Council 1 Labor Union ("JNESO"), had been working without a contract since the end of February 2004. When the strike commenced, JNESO set up picket lines at each of Lourdes' five entrances and maintained them through the date of the hearing before the Appeal Tribunal. Members of the public had to cross the picket lines to use the main entrance to Lourdes and some vendors refused to cross the lines.

John Nespoli, the Chief Administrative Officer of Lourdes, stated that the most significant impact of the strike was the fear it created in the community that Lourdes was going to close its doors. The relationship with the community became quite difficult. Many damaging rumors circulated for months. As a consequence, Lourdes' public relations personnel were required to focus their efforts ten to twelve hours per day on strike-related activities, rather than their usual activities. The cost of management time increased because management had to "hold[] the community together" and assure it that Lourdes would not close its doors. Additionally, the strike had a destabilizing effect on the non-nursing staff of the hospital, which represented about seventy percent of all employees. The relationship with these employees was extremely difficult. This required management to become involved in communications efforts with the remaining staff to try to offset the effect of the strike. Normal management priorities were set aside.

Lourdes believed that it would have experienced substantial growth in the absence of the strike. However, the strike caused Lourdes to lose opportunities to improve new positions and start new programs. For example, new medical groups that Lourdes had been recruiting to come on staff delayed forming a relationship with it. Lourdes lost revenue in the form of a $750,000 grant from the State for obstetric funding, which was temporarily denied, allegedly at the behest of JNESO, specifically because of the strike. The loss of this grant added to the deficit. In spite of the absence of this funding, Lourdes continued to operate an obstetrics clinic. Also, the opening of a one-million-dollar laboratory system was briefly delayed.

Notably, the strike caused a significant increase in labor costs. Initially, Lourdes hired temporary nurses to replace the striking nurses at a daily cost of $56,000, compared to an average of $100,000 per month it spent on agency nurses before the strike. When it appeared that the parties had reached an impasse, Lourdes began searching for permanent replacements. By the time of the hearing, almost 200 temporary nurses had worked at Lourdes. After the strike, approximately two-thirds of Lourdes' nurses were temporary. Lourdes offered work to the striking nurses, and about eighty crossed the picket line and returned to work. Lourdes also hired forty new nurses and was required to hire additional security guards because of the strike. Over time, the cost of temporary agency nurses remained substantial, in the neighborhood of $1 million per month. Pre-strike, the monthly cost of the nursing staff was $1.3 to $1.5 million; after the strike, that figure rose to $2.15 million plus an additional $100,000 per month for housing and travel expenses for the agency nurses.

Lourdes' revenues remained relatively stable during the strike. However, due to the increased labor costs, operational losses increased. In 2003, the year before the strike, losses for hospital operations were $10.5 million, and in the first quarter of 2004, losses were $600,000 per month. Thereafter, monthly losses jumped to between $1.4 and $1.75 million for each month between April and July 2004. Losses for 2004 were projected to grow by $8,000,000 above 2003 losses. According to Lourdes' finance director, the increase in losses was related to the strike. Nespoli observed that if the losses were to continue, Lourdes could not stay open forever.

Technically, Lourdes could have shut down, although it did not wish to do so.*fn1 Nespoli testified that closing Lourdes would be "a complex, lengthy, regulatory, legal process." A certificate of need would be required to close Lourdes and then Lourdes could shut down only if the Department of Health and Senior Services ("DHSS") approved the shut down. Nespoli estimated that the process of closing would take one year to complete. When the strike began, Nespoli was required to appear before the DHSS to present Lourdes' strike plan, including data on how Lourdes was going to be staffed during the strike. That plan was reviewed and approved by the DHSS.

It was undisputed that nonunion personnel or managers never performed the duties of the striking nurses. Lourdes' hours of operation remained the same; no procedures were curtailed in any of Lourdes' departments (some departments even experienced increases in patient levels); and, finally, no one was laid off or discharged because of the strike. Indeed, Lourdes publicly declared that its operations were running smoothly notwithstanding the strike. Additionally, several physicians at Lourdes signed an open letter to the community stating that the level of nursing care at Lourdes was excellent, and that Lourdes was operating at pre-strike levels.

II.

The Appeals Examiner made the following findings of fact on November 5, 2004:

The claimants were all registered nurses and members of the JNESO District Council 1 labor union. They were employed by [Lourdes] at the Willingboro, NJ location through 04/19/2004 when they went on strike at 7 am. The striking 240 union members manned picket lines twenty-four hours per day, seven days per week for the duration of the strike. There was a dispute over the contract that had expired at the end of February, 2004. No new contract has been ratified. [Lourdes] is a 259-bed hospital that contains an emergency room and provides a large variety of medical services to the public. They employ approximately 2000 employees in a variety of health-related occupations. To remain open during the strike, the employer hired additional agency nurses to replace the striking registered nurses at a cost of $1,000,000 per month. During the strike, they hired approximately 40 new nurses, and more than 80 striking union nurses have returned to work.

During the strike, the hospital was able to operate at normal occupancy levels and the census of patients did not decrease because of the strike. The hospital did not reduce the medical procedures or services provided to the public during the strike. They continued to release information to the public indicating that they were ...


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