Correctional Medical Systems, Inc.

National Labor Relations Board - Board Decisions

Aug 31, 1990

299 N.L.R.B. 654 (N.L.R.B. 1990)

654 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Correctional Medical Systems, Inc. and Illinois
Nurses Association and Illinois State Labor
Relations Board, Petitioner. Case A0-278
August 31, 1990
ADVISORY OPINION
BY CHAIRMAN STEPHENS AND MEMBERS
CRACRAFT, DEVANEY, AND OVIATT
Pursuant to Section 102 98(b) of the Board's
Rules and Regulations, on June 25, 1990, the Illi-
nois State Labor Relations Board (ISLRB) filed a
petition for an advisory opinion as to whether the
Board would assert jurisdiction over Correctional
Medical Systems, Inc (the Company) In pertinent
part, the petition alleges that an unfair labor prac-
tice proceeding involving the Company (Case No
S-CA-100) is currently pending before the
ISLRB, 1 that the rights and/or obligations of the
parties to that proceeding turn on whether the
Board would assert jurisdiction over the Company,
and that this jurisdictional issue can be most expe-
ditiously resolved through the Board's advisory
opinion procedures The Company, the Union, and
the American Federation of State, County, and
Municipal Employees, Council 31, AFL-CIO, as
amicus cunae, 2 submitted statements responding to
the ISLRB's petition
Section 102 98(b) of the Board's Rules and Regu-
lations provides that any State or territorial agency
or court may petition the Board for an advisory
opinion on whether it would decline to assert juris-
diction over parties then before the agency or
court either (1) on the basis of its current stand-
ards, or (2) because the employing enterprise is not
within the jurisdiction of the National Labor Rela-
tions Act Here, the petition was filed by the
ISLRB and specifically requests an opinion on
whether the Company is within the jurisdiction of
the NLRA 3 Further, as fully discussed below, the
ISLRB has already conducted a hearing and set
forth relevant factual findings concerning the juns-
dictional issue, and these factual findings have been
upheld by the Illinois Appellate Court 4 Accord-
' The petition indicates that the unfair labor practice charge (alleging a
refusal to bargain) was actually filed by the Umon against the State of
Illinois, Departments of Central Management Services and Corrections
(DOC), and that the Company subsequently intervened Aside from noti-
fying the Board that it "concurs in the Petition for Advisory Opinion,"
DOC has not participated in the Instant proceeding
2 No party objects to AFSCME Council 31's participation as amicus
cunae in this proceeding and such participation is granted
3 It is undisputed that the Company satisfies the Board's current com-
merce standards for asserting jurisdiction
4 Although the Union insists that we review afresh the hearing record
if we decide to entertain the petition, we find that this would serve no
useful purpose Both the ISLRB and the Illinois Appellate Court have
reviewed the record in the state proceeding, and both have reached es-
sentially the same factual findings For us to now review the record de
mgly, we find that the petition was properly filed
and that the jurisdictional issue raised may proper-
ly be addressed through the Board's advisory opin-
ion procedures 5
I THE RELEVANT FACTS
The ISLRB's decision issued in July 1988, on ex-
ceptions to the hearing officer's recommended
opinion and order 6 As noted by the Illinois Appel-
late Court on appea1, 7 the factual findmgs of the
hearing officer and the ISLRB were for the most
part similar, except that the hearing officer's find-
ings were more comprehensive The court summa-
rized the relevant facts as follows
It is undisputed that [the Union] is the exclu-
sive bargaining representative for nurses em-
ployed by the State, including nurses em-
ployed by the State to work at its correctional
centers In 1985, DOC entered into a non-bid
contract with [the Company], a private corpo-
ration licensed to do business in Illinois and
based in St Louis, Missouri [The Company],
described in the contract as an independent
contractor, has contracts to provide health
services to correctional facilities in 16 states,
including contracts with nine Illinois correc-
tional facilities Between April 1985 and June
1986, [the Company] was compensated on a
cost-plus plan and provided all health care
staff at [the Shawnee Correctional Center, a
state facility in Vienna, Illinois], except for the
health Care Unit Administrator, who was a
DOC employee (Since July 1987, this position
has been staffed by a [company] employee )
Included among [company] staff are doctors,
nurses, a dentist, psychiatrist and psychologist,
a pharmacist, technicians, and clerical staff
Since July 1986, the contracts have provided
that [the Company] is to be compensated on
the basis of the number of inmates at Shawnee
Quarterly performance level adjustments may
be made, as determined by DOC and [the
Company] and approved by the Warden, if
there are any deficiencies in the agreed-upon
novo and Issue Independent or contrary factual findings in this proceed-
ing would simply muddy the waters—a result which both armcus and the
Union itself strenuously argue we should avoid For the purposes of this
advisory opinion proceeding, therefore, we adopt the factual findings in
the state proceeding as our own
5 The parties have not advised us, nor are we aware, of any unfair
labor practice or representation proceedings involving the parties cur-
rently pending before the Board or its Regional Office
6 State of Illinois, Departments of Central Management Services and Cor-
rections, 4 PER! pars 2034 (IL SLRB 1988)
Illinois Nurses Assn v Illinois State Labor Relations Board, 196
Ill App 3d 576, 554 NE 2d 404 (Ill App Ct 1990)
299 NLRB No 95
CORRECTIONAL MEDICAL SYSTEMS

655
staffing level All health equipment costing
over $100 is owned by the State
[The Company's] staff is required to repre-
sent DOC with local groups [The Company]
solicits, interviews, and hires the nurses DOC
has the nght to approve the "initial and con-
tinued employment" of nurses and sets the
minimum qualifications for them, e g, Illinois
license, one-year experience, CPR certification
with correctional nursing experience preferred
The contract also states certain details that the
interviewer should focus on when questionmg
job applicants Prior to starting work, each
person hired by [the Company] must pass a
DOC background check (for security pur-
poses) The final hiring selection is subject to
DOC's approval (The [ISLRB] found that
DOC did not exercise this right but rather lim-
ited its involvement to overseeing security and
professional licensing matters )
The contract also gives DOC complete dis-
cretion to remove a nurse from Shawnee, al-
though only [the Company] can terminate a
staff member If [the Company] does not
remove the nurse from Shawnee at DOC's re-
quest, DOC can lock her out In one case, [the
Company] termmated a nurse after DOC con-
ducted an investigation which resulted in the
assistant warden requestmg her termination
Nurses' personnel files must be kept at Shaw-
nee, [the Company] keeps duplicate files in its
St Louis office
DOC sets the minimum staffing and schedul-
ing requirements, and specifies how many
hours a week a nurse may work, approves all
hours that have been worked, and the length
of the meal period DOC provides the meals
on site (for security reasons) Requests for all
absences and overtime must be processed ac-
cording to DOC requirements and procedures
DOC requires that all nurses must be evaluat-
ed annually in accordance with applicable
state rules Although, in fact, [the Company]
conducts the evaluations, DOC must verify
them DOC must approve all hours worked
which must be kept on DOC timekeeping
forms DOC requires all nurses to wear white
uniforms and its identification badges which
identify them as contractual employees New
nurses must attend 40 hours of orientation
given [sic] by DOC at the State of Illinois
Training Academy in Spnngfield Further,
each year DOC requires all nurses to complete
40 hours of in-service training
The contract states that nurses must comply
with Administrative Regulations and Admims-
trative Directives, as well as policies and pro-
cedures of DOC and Shawnee The directives
for the health care unit were written by DOC
Medical Director and approved by the Direc-
tor of Corrections From these directives, each
institution develops its own Institutional Direc-
tives, at Shawnee, these were mostly written
by a DOC employee and approved by the
warden Pursuant to these directives, the con-
tract provides for a Health Care Services
Review Committee which is made up of both
DOC and [company] administrators Its func-
tion is to review inmate complaints, infirmary
care, mental health responses, health records,
etc Meeting minutes are given to the warden
The Shawnee nurse's manual "is the how-to
guide for organizing, planning and administer-
ing" health care, and incorporates applicable
directives in addition to other details as to
how the work is to be performed The manual
was written by a [Company] employee, but
after DOC's approval, became the property of
DOC
Nurses are hired as [Company] employees
[The Company] determines their pay rate and
issues the checks from St Louis It provides
all benefits, e g health insurance, retirement
plan Vacation time, sick leave, etc are estab-
lished by [the Company] Only [the Company]
can transfer, promote, discipline, and terminate
a nurse [The Company] pays unemployment
and workers' compensation insurance premi-
ums and all required employee taxes Howev-
er, the contract provides that [the Company]
has a right to "seek representation and indem-
nification from the Attorney General's Office"
554 N E 2d at 406-407 On June 1, 1990, the Illi-
nois Supreme Court denied leave to appeal the de-
cision of the appellate court, 8 and thus the forego-
ing factual findings are appropriately considered
final
II THE POSITIONS OF THE PARTIES
Based on its factual findings, the ISLRB con-
cluded that it lacked jurisdiction over the Shawnee
matter Applying a "degree of control" test, the
ISLRB found that the Company rather than the
State was the employer of the nurses at Shawnee,
and that the Company was not the State's "agent"
within the meaning of the Illinois Public Labor Re-
lations Act Both the ISLRB and the Company
take essentially the same position here, arguing that
8 132 Ill 2d 545, 555 NE 2d 376 (III S Ct 1990) On July 19, 1990, the
Ilhnon Supreme Court further denied leave to file a motion for reconsid-
eration of the order denying leave to appeal
656 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
the State lacks sufficient control over the Shawnee
nurses' primary terms and conditions of employ-
ment to preclude meaningful bargaining by the
Company, and that the Board and not the ISLRB
therefore has junsdiction under the standards set
forth m Res-Care, Inc , 280 NLRB 670 (1986), and
Long Stretch Youth Home, 280 NLRB 678 (1986)
The Union and animus, on the other hand, take
the position that the Board should decline to even
entertain the ISLRB's petition for advisory opin-
ion Notmg that the Illmms Appellate Court ulti-
mately reversed the ISLRB's conclusions and held
that the Company was the State's agent as a matter
of law (because it was performing statutorily and
constitutionally mandated government duties, and
because the State, while permittmg the Company
to control the nurses, retained the right and/or
duty to control), the Union and amicus argue that
the Board should defer to the court's ruling and
dismiss the petition Alternatively, the Union
argues that the Board should find that the Compa-
ny is exempt from NLRA jurisdiction
III ANALYSIS AND CONCLUSIONS
Although the Board has traditionally given care-
ful consideration to state law declarations and in-
terpretations, in the final analysis it is Federal
rather than state law which governs whether an
employer is within the Board's jurisdiction 9 Fur-
ther, while the Board has in certain circumstances
declined to issue an advisory opinion in deference
to state proceedmgs, 1 ° this is not such a circum-
stance Accordmgly, contrary to the urgings of the
Union and amicus, we decline to defer to the Illi-
nois Appellate Court's rulmg 11
As for the substantive issue presented, we fmd,
m agreement with the ISLRB and the Company,
that we would assert jurisdiction over the Compa-
ny The Company is clearly not an exempt "politi-
cal subdivision" under Section 2(2) of the Act
That exemption has historically been mterpreted to
include only those entities that are either (1) cre-
ated by the State, so as to constitute departments
or administrative arms of the Government, or (2)
administered by individuals who are responsible to
public officials or to the general electorate 12 As
See New York Institute for the Blind, 254 NLRB 664, 665 and 667
(1981) (citing NLRB v Natural Gas Utilities District of Hawkins County,
402 US 600 (1971))
10 See SHA Realty, 299 NLRB No 41 (July 31, 1990), and Box Tree
Restaurant, 235 NLRB 926 (1978), and cases cited there (dechnmg to
Issue an advisory opinion where the State had conducted a representation
election within the previous year and thus It was clear the the Board
Itself would not, at that tune, entertain a representation petition among
the same employees)
"As indicated earlier, however, we will defer to the court's underly-
ing factual findings for the purposes of this proceeding
1 ° See Hawkins County, supra
indicated by the court, the Company here is a pn-
vate corporation doing business in several different
States, and m fact is described as an independent
contractor in its contract with DOC
Nor is the Company exempt from jurisdiction
under the principles of Res-Care and Long Stretch
Youth Home, supra In those cases, both of which
issued the same day, the Board reaffirmed the hold-
ing of National Transportation Service, 240 NLRB
565 (1979), and rejected the so-called "mtimate
connection" test under which jurisdiction was
withheld if the private employer performed func-
tions that were intimately related to allegedly tradi-
tional government functions of the exempt entity
The Board held that the proper focus was rather
on the extent of control retained by the employer
over essential terms and conditions of employment
and on the degree of control exercised by the
exempt entity over the employer's labor relations
policies, in short, on whether the employer re-
tained "sufficient control over the employment
conditions of its employees to engage m meaningful
collective bargaining" Res-Care, 280 NLRB at 674,
Long Stretch Youth Home, 280 NLRB at 681-682
Applying this test, the Board in Res-Care declmed
jurisdiction because the exempt entity m that case
approved the mitial wages, wage ranges, and bene-
fits contained in the employer's proposed operating
budget, and also retained the discretion, pursuant
to the contractual cost-plus-fixed-fee compensation
system, to approve or disapprove any subsequent
changes in those terms In contrast, the Board in
Long Stretch Youth Home asserted jurisdiction be-
cause, although the per-resident compensation
system m that case effectively imposed a ceiling on
the employer's total operating budget, there were
no specific limits on employee compensation, i e,
the employer was free to pay either more or less
than what the exempt entity suggested m its cost
guidelines
Based on the facts as found in the state proceed-
ing, we find the mstant case more like Long Stretch
Youth Home than Res-Care Thus, although the
Company used to be compensated on a cost-plus
basis, it is now compensated on a per-inmate basis
by DOC Moreover, as stated by the court, the
Company determines the nurses' pay rate and pro-
vides all benefits, mcludmg health insurance 13 As
1° The ISLRB's complete findings concerning employee compensation
were as follows
The record reveals that the Company has sole and complete control
over the wages and fnnge benefits received by the nursing staff
Salary ranges are set by the Company for each job classification
based on surveys that It alone conducts Annual Increases are also
determined by the Company based on job performance evaluations
performed by Company employees The State has no authority to
Continued
CORRECTIONAL MEDICAL SYSTEMS 657
in Long Stretch Youth Home, therefore, it is clear
that the Company retains extensive if not exclusive
control over employee compensation 14
As outlined by the court, DOC does exercise a
significant degree of control over certain personnel
policies such as hiring selection, staffing, schedul-
recommend or review wage rates set by the Company Paychecks
are issued by the Company and it pays all unemployment and work-
ers' compensation insurance, withholds Income taxes and pays the
employer's portion of social security secunty tax The Company pro-
vides the staff with medical, dental and life Insurance, a retirement
plan, vacations and funeral and sick leave The State has no input in
establishing these benefits
The hearing officer's findings were essentially the same as the
ISLRB's
The nurses are paid pursuant to the Company's pay schedule, and
their pay checks are on Company checks Issued out of St Louis
The nurses receive the same benefit package that the Company pro-
vides its employees (health and dental plan, life Insurance, and retire-
ment plan), and their right to receive paid holidays and vacations,
sick leave, and leaves of absence are governed by the Company's
rules In addition, the Company is responsible for paying unem-
ployment and workers' compensation insurance for the nurses and
withholds their state and federal taxes and remits the monies to the
appropriate federal and state agencies and pays the employer's por-
tion for their social security tax
14 It is this fact which primarily distinguishes this case from Correction-
al Medical Systems, 289 NLRB 810 (1988), a case in which the Board de-
clined to assert jurisdiction over the Company with respect to its oper-
ations at an Iowa correctional facility In that case, the contract between
the Company and the Iowa State Penitentiary incorporated a civil rights
consent decree which effectively limited the Company's discretion over
wages and benefits, thus making that case more like Res-Care
mg, and umforms However, we find that this oper-
ational control would not preclude meaningful bar-
gaining As indicated by the court, the control is
exercised largely for security reasons, and although
DOC could go so far as to remove a nurse from
Shawnee, only the Company could actually termi-
nate the nurse's employment The Board has assert-
ed Junsdiction under similar circumstances in sev-
eral previous cases following Res-Care and Long
Stretch Youth Home,' 5 and we accordingly would
do likewise here
In sum, we find that the Company is an employ-
er within the meaning of Section 2(2) of the Act,
that the Company retains sufficient control over
the Shawnee nurses' terms and conditions of em-
ployment to engage in meaningful collective bar-
gaining, and that it would therefore effectuate the
purposes and policies of the Act to assert Junsdic-
tion over the Company
Accordingly, the parties are advised that, based
on the facts as found in the state proceedmg, the
Board would assert Jurisdiction over the Company
' 5 See Koba Associates 289 NLRB 390 (1988), Old Dominion Security,
289 NLRB 81 (1988), Dynaelectron Corp. 286 NLRB 302 (1987), and
Rustman Bus Co, 282 NLRB 152 (1986)