Statement of David R. Banks, Chairman
and Chief Executive Officer, Beverly Enterprises, Inc.
On behalf of Beverly Enterprises, I am pleased to share with you my perspective on the principal issues that will be addressed at this meeting: (a) whether companies with a history of violating labor and safety laws should continue to receive federal contracts and (b) whether such companies can provide the highest quality health care services.
On the issue of companies continuing to do business with the federal government despite a history of violations, I'd like to express one overall concern and then deal with the subject specifically as it relates to Beverly Enterprises.
In deliberating the merits of any proposal that would bar alleged violators from federal contracts, I certainly hope you would adhere to the basic legal principle upon which our nation's judicial system is founded -- the presumption of innocence until guilt is proven. No restriction, no action of any type should be based on unproven allegations. This is especially critical in an area such as labor-management relations, where so many important issues are hotly contested and finally resolved only in the fair and impartial setting of the federal court system.
The legitimate regulatory processes that have been established to ensure compliance with federal labor and safety laws, unfortunately, can be abused by irresponsible unions to further their own agenda. The National Labor Relations Board (NLRB), for example, frequently issues complaints based upon allegations. Complaints are then investigated, recommendations are made and local administrative decisions rendered. As you would expect, it's not unusual for controversial decisions to be appealed within the NLRB and then, finally, to the federal courts.
Justice is ultimately served. However, some unions take advantage of the time required for the regulatory and judicial processes to run their courses. They conduct relentless and misleading publicity campaigns, so that unproven charges and alleged violations eventually take on the aura of "fact."
The reality of the situation is that allegations frequently are page one news -- especially when they are accompanied by mass demonstrations and other public relations activities designed to heighten media interest. A federal court decision that dismisses the allegations and vindicates a company gets buried in the fine print -- especially since the decision typically comes years after the complaint.
I urge you to let the judicial system serve as the basis for determining whether companies, in fact, have a "history of violating the law" -- and make no decisions on the basis of how well some unions are able to use the system and the news media.
Let me now address Beverly's situation. It is a prime example of certain unions taking unfair advantage of the time required for the judicial process to work. Through carefully orchestrated and well-financed publicity campaigns, they have succeeded in portraying unfounded allegations as "guilty" verdicts.
The facts, however, tell a far different story. The NLRB has rendered a decision on only one set of alleged labor law violations by Beverly, and the federal court overturned the NLRB's basic ruling.
The case involved a series of union charges of labor law violations that occurred from 1986 to 1988 at 38 of Beverly's then - 1,000 facilities. The NLRB had not followed its normal case-handling procedure during this period and withheld individual action on these complaints. Instead, it had aggregated them into a single consolidated complaint. This unusual approach apparently was used to justify the NLRB's contention that a national cease-and-desist order was an appropriate remedy against Beverly.
However, the U.S. Court of Appeals overturned the NLRB order. The Court found that:
"Non-hallmark (minor) violations at 3% of a company's facilities does not show an anti-union animus amounting to a proclivity to violate the Act. Nor was there a showing that the unfair labor practices stemmed from a corporate-wide labor policy."
In reviewing the NLRB's actions on various specific complaints, the Court also noted,
"The proof in many cases, while sufficient to support the decision, was ambiguous, and contrary decisions would have been sustainable."
The unions also have alleged that Beverly committed still other labor law violations between 1988 and 1993. The NLRB again has aggregated these charges into two other consolidated complaints. These alleged violations have not yet been acted upon by the NLRB, even though many of the cases have been pending for nearly 10 years. Still more time will pass before these allegations receive a hearing in the federal court. In the meantime, the unions use the allegations to support their label of Beverly as a "corporate outlaw."
Under the circumstances, I think it would be grossly unfair to identify Beverly as a company that has a history of labor law violations. Those who would have you believe otherwise, of course, will cite a report of the U.S. General Accounting Office (GAO) as evidence of Beverly's disregard of labor law. Please take a closer look at that report and what the GAO actually did.
The GAO was asked to identify government contractors that allegedly had violated provisions of the National Labor Relations Act. The GAO reviewed NLRB records and found that there were 80 such firms for fiscal year 1993. Beverly was one of six nursing home companies included in the report, based on the consolidated complaint I just discussed -- the alleged violations between 1986 and 1988.
It's important to point out that the GAO was not instructed to review the merits of these allegations or to validate the NLRB's findings.
The GAO report relied heavily on the NLRB's decision to issue a national cease-and-desist order against Beverly. In fact, the GAO used this order as the principal reason for classifying Beverly as one of 15 government contractors who were "more serious labor law violators." However, the report failed to include the fact that the U.S. Court of Appeals already had overturned the NLRB's cease-and-desist order. That order was the principal reason why Beverly had appealed the NLRB's decision, and the 1994 Court ruling represented a significant exoneration of Beverly.
The GAO report, although technically accurate in its factual recitation of NLRB actions, fails to tell the complete story because it excludes the final resolution in federal court. The report also is unfair for categorizing Beverly as a "more serious labor law violator" because the GAO already knew the NLRB's order had been overturned.
I'd now like to address quality of care. It is an issue at this meeting only because certain unions have tried to portray isolated incidents as representative of the care we provide to our residents. Ironically, by using "quality care" as their rallying cry, the unions are dishonoring the very people they claim to represent -- the caregivers at Beverly who we know are doing an excellent job.
Providing quality care is our most important responsibility. It is the essence of what we do at Beverly, and the facts clearly demonstrate that we do it well. We certainly are not perfect, but we do provide quality care that consistently exceeds the average for the nursing home industry, in Pennsylvania and nationally.
Consider the findings of the following national studies:
The Health Care Financing Administration (HCFA) studied compliance with federal and state healthcare regulations among nursing home companies from 1992 to 1996. This study found that Beverly exceeded the industry's average compliance rate for each of those five years. Beverly's compliance rate ranged from 94.7% to 96.4%.
Another independent study, conducted by the American Health Care Association (AHCA) in December 1996, found that Beverly facilities outperformed the industry in every quality category. This study, which analyzed compliance with federal and state healthcare requirements from 1993 through 1996, demonstrated that Beverly facilities had a compliance rate that was higher than the industry average for each of those years, and also higher than the average of chain-owned facilities.
Beverly conducts a "Friends and Family" survey of nearly 79,000 residents/patients and their families. We found that 94% of respondents were either "very satisfied" or "satisfied" with the quality of nursing care provided in Beverly facilities and that 92% would recommend the facility to a friend. This survey was conducted by Beverly in April 1996, and the results were independently verified by an independent market research company.
The same high quality of care is being provided to our residents in Pennsylvania:
An independent study conducted by the AHCA in December 1996 showed that Beverly's Pennsylvania facilities outperformed the industry. The study, which analyzed compliance with federal and state healthcare requirements from 1993 through 1996, demonstrated that Beverly Pennsylvania facilities averaged fewer citations than the nursing home industry.
Based on 1996 Online Survey Certification and Reporting (OSCAR) data from HCFA, Beverly Pennsylvania facilities had no substandard quality of care issues. The industry average of facilities with substandard quality of care issues was 3.97%.
Beverly's 1996 "Friends and Family" survey of nearly 5,900 Pennsylvania residents/patients and their families found that 94% of respondents were either "very satisfied" or "satisfied" with the quality of nursing care provided in Beverly Pennsylvania facilities and that 94% would recommend the Beverly facility to a friend.
Through May 12 of this year, the Pennsylvania Department of Health has conducted 12 licensure surveys in Beverly facilities. Four of our facilities were found to be deficiency-free, and the other eight received good surveys with no substandard quality citations.
Let me personalize those statistics by also telling you that more than 550 of our associates in Pennsylvania have had family members in a Beverly facility. I'm proud of that endorsement, and I'm proud of the care that we provide.
At this point, an obvious question arises. If Beverly is not a chronic labor violator and if the care Beverly provides is significantly better than the industry average, then why has Beverly been placed at the center of these controversies? With so much smoke, is there a fire somewhere?
The truth is that the smoke is being produced by some irresponsible unions. They've been trying to harass and intimidate Beverly as a key part of their top-down effort to organize the nursing home industry. In short, we are a target because we are the industry leader.
I generally have no quarrels with unions or with their right to organize employees, ours included. In fact, we routinely negotiate contracts with several major unions who represent employees at about 100 of our facilities. And if associates at any of our facilities want to consider the question of union representation, we only ask two things. First, we want to be sure our associates hear from both labor and management so they can make decisions about this important issue on the basis of factual information. Second, our associates should be entitled to make their decisions in a secret ballot election conducted under the auspices of the NLRB.
The Service Employees International Union and the United Food and Commercial Workers Union don't want to play by these well-established rules, however. They don't want secret ballot elections. So they've adopted a particularly malicious organizing tactic called a "corporate campaign."
In this corporate campaign, these unions have been trying to blackmail Beverly into permitting them to organize our associates without any discussion of opposing points of view -- and without secret ballot elections. We simply won't do that. That's what this labor-law-violation and poor-care smoke screen is all about.
This same issue is also behind the labor conflicts here in Pennsylvania. We've been trying for more than a year to negotiate contracts at the 20 facilities represented by SEIU locals. They have refused to negotiate and do not respond to our requests for meetings. We put specific wage offers on the table three weeks ago. The unions refuse to respond.
While the SEIU locals have been stone-walling us in Pennsylvania, Beverly has successfully negotiated 30 contracts in 11 states with several major unions -- including the UFCW, the Teamsters, the Steelworkers, even other locals of the SEIU. The problem in Pennsylvania is that certain unions are sacrificing the very people they claim to represent in order to achieve their national organizing objectives.
I don't believe this is fair to our associates in Pennsylvania or in any other state. But this is what happens when unions wage a corporate campaign. As one of their leaders has said, "If we can't organize them, the best thing to do is to erode their business as much as possible." The unions' abuse of power in these corporate campaigns -- and abuse of the people they claim to represent -- is the root cause of this entire controversy.
Thank you for this opportunity to set the record straight on Beverly.