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As union lawsuit falters, state readies Tukwila psychiatric hospital for patients

Opening the facility is part of Washington’s strategy for addressing years of problems with providing behavioral health services to people caught up in the criminal justice system.
The state plans to acquire Cascade Behavioral Health Hospital under a nearly $30 million purchase agreement. | COURTESY WASHINGTON STATE GOVERNOR’S OFFICE
October 4, 2023

Washington state is planning to admit patients before the end of the month at a recently acquired psychiatric hospital in Tukwila, in spite of a union lawsuit seeking to stall the facility’s sale.

Washington’s Department of Social and Health Services is aiming to accept about 50 patients before the end of October, agency spokesman Tyler Hemstreet said in an email Friday. The hospital should eventually be able to accommodate about 100 patients. 

Opening the facility is part of the state’s strategy for addressing years of problems with providing behavioral health services to people caught up in the criminal justice system.

“We intend to start accepting patients in the near future,” Hemstreet said last week. “We will bring in more patients in January and into May as other wards come online.”

Meanwhile, the union’s odds of success with its lawsuit dimmed last week. 

SEIU Healthcare 1199NW asked a federal judge to pause the sale until it could settle a contract dispute with Cascade Behavioral Hospital LLC, the owner and previous operator of the hospital who is selling its facility to the state.

But U.S. District Judge Barbara J. Rothstein indicated in a 12-page, Sept. 29 order denying SEIU’s request for a preliminary injunction that the union was unlikely to prevail in its challenge. She gave the union and Cascade two weeks to explain why the case should not be tossed out.

The state isn’t named as a defendant in the case, but Hemstreet said that the Department of Social and Health Services was “pleased with the court’s decision.”

A lawyer and spokespeople for SEIU and a lawyer for Cascade did not respond to requests for comment.

‘Prime opportunity’

Over the summer, state officials touted the purchase as a way to help close a gap in psychiatric hospital beds, including for those in jail awaiting mental competency evaluations to stand trial. 

Washington is under a court-monitored settlement stemming from a 2014 lawsuit, known as the Trueblood case, over delays in services for people in this type of situation.

This case has resulted in hundreds of millions of dollars in fines for the state, including a $100 million penalty a judge imposed in July after finding DSHS failed to provide adequate bed space for those covered by the agreement. 

Cascade, a subsidiary of Acadia Healthcare, publicly announced on June 1 that it would close the Tukwila hospital. By the end of June, it had discharged patients and, by the end of July, laid off all union-represented employees at the hospital and closed its doors.

Seeing a chance to reduce bed shortages at issue in Trueblood, the state in August entered a $29.9 million agreement with Cascade to buy the facility. Since then, the Department of Social and Health Services took possession of it under a lease.

DSHS Secretary Jilma Meneses, around the time the sale was announced, called it “a prime opportunity for us to add immediate capacity” for behavioral health patients. And Gov. Jay Inslee promised the state would “move as quickly as we can” to prepare the hospital for patients.

Unexpected snag

Legal difficulties with the deal arose in late August. SEIU sued Cascade claiming the company broke obligations in the collective bargaining agreement for union workers at the hospital. The union represents about 200 nurses, service workers, and others who worked there.

A key claim focused on a section of the labor contract that said if Cascade sells or transfers its operations to a successor that does the same type of work, the sale agreement must call for the new employer to rehire the facility’s union employees based on seniority.

The contract also says that, in this situation, the terms and conditions of the workers’ collective bargaining agreement with Cascade must remain intact when the new employer rehires them.

SEIU wanted to pause the sale until the union could complete arbitration with Cascade to resolve their disagreements over these and other “successor clause” contract provisions.

The company’s position is that the state’s purchase of the hospital didn’t trigger the contract requirements. Cascade argues it sold an “empty hospital building” rather than transferring or selling its operations. The state, while not a party in the lawsuit, took a similar stance.

Skeptical judge

Last week, Judge Rothstein weighed in heavily against the union’s arguments.  

“It is undisputed that Cascade made and announced the decision to cease operations at its hospital before it was approached by DSHS regarding a sale of the building, and that the facility was closed … before the parties entered into a purchase and sale agreement,” she wrote.

“There was no transfer of Cascade’s ‘operations’ or any part thereof because at the time of the sale, no operations existed,” Rothstein added. 

The judge also rejected claims that the company closed the hospital “in bad faith” before brokering the sale to avoid labor contract obligations. 

Her order notes that the state plans to treat a different group of patients than Cascade and that DSHS didn’t try to acquire assets like computer systems or records.

“The position that purchase of an empty, closed hospital building is a sale of ‘any part’ of Cascade’s ‘operations’ is not, as a matter of law, sufficiently sound,” she wrote.

Readying the site

Against this backdrop, the Department of Social and Health Services is readying the hospital, now called Olympic Heritage Behavioral Health, for patients. The purchase agreement calls for the sale to close by Dec. 31. Hemstreet did not provide a more specific date.

For now, the state is leasing the facility for $150,000 per month, with crews working on upgrades like painting, installing safety equipment, getting computer systems set up, and making security upgrades.

DSHS plans to start accepting patients while the facility is still under lease.

Hemstreet said new employees have gone through orientation and about 150 staff are now employed there. The agency has encouraged former Cascade employees to apply for jobs but says they won’t get any special hiring preference.

The department has also said that collective bargaining agreements at the hospital will mirror contracts it has with workers at other similar facilities. 

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