Should a California union dictate how clinics spend money? Employers sue to block ballot measure

California’s billionaires are not the only ones fighting back against the state’s largest health workers union this election season. Now the clinics are too.

The California Primary Care Association, which represents more than 2,300 community health clinics, and Open Door Community Health Centers filed a lawsuit Thursday to stop Service Employees International Union-United Healthcare Workers West from placing an initiative on the November ballot that would dictate how clinics spend money.

The clinic measure is less prominent than the billionaire-backed fight against a wealth tax, but recently came closer to appearing before voters.

The clinic’s lawsuit, which was filed in the U.S. District Court for the Northern District of California, argues that the union’s ballot measure would interfere with federal laws and regulations that place strict spending requirements on nonprofit health clinics that serve low-income patients.

Joey Cachuela, general counsel for the clinic association said in a statement the initiative threatens patient care. “We are filing this preelection challenge and need the courts to act to prevent this drastic measure from ever going to the ballot. Patient lives are at risk,” Cachuela said.

A spokesperson for the healthcare workers union did not immediately respond to a request for comment.

Dr. Elizabeth Sophy, far right, who is a part of Father Joe’s Villages Street Health Team, examines Devlin Chambers at an encampment in downtown San Diego on March 22, 2024. Chambers, 60, said he has a pinched nerve in his back.

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Kristian Carreon

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CalMatters

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Earlier this month, union members turned in more than 1 million signatures to qualify the “Clinic Funding Accountability and Transparency Act” for the ballot. The union collected nearly double the number of signatures required to place the proposal before voters.

Under California’s election rules, proposals that gather enough signatures qualify for the ballot after the Secretary of State’s office verifies their validity.

The union proposal would require federally qualified health centers to spend 90% of revenue on services that fulfill the stated mission to “provide primary and preventive care to low-income and underserved populations.” It would also punish clinics that do not adhere to this spending formula and place the money in a state-operated account that could later be used for worker training and staffing programs.

“It is the intent of this initiative to create a reasonable minimum standard of mission-directed

spending … to ensure clinic patient service delivery and workforce stability is prioritized over management and overhead spending,” the initiative states.

Union leaders and members argue that clinics spend too much money on executive pay and administrative overhead and too little on patients. They also contend that some clinics spend only half of their revenue on direct patient care, an allegation that clinics call misleading.

“We have one message for our clinics: Put patients first. It’s time for an end to wasteful spending. It’s time to make sure clinics are putting their money in patient care and not CEO-pay,” said Brisa Barrera, a medical assistant from Santa Rosa Community Health during an April rally to celebrate delivering the signatures.

The clinic association, however, argues that the initiative would illegally force hundreds of community health centers to close by stripping nearly $2 billion from health systems.

Tory Starr, chief executive of Open Door Community Health Centers, which operates clinics in Humboldt and Del Norte counties, said the measure would be “devastating” to the organization’s rural patients and would result in layoffs, reduced services and closures.

A nearly identical version of the ballot initiative failed to pass in the state Legislature earlier this year.

The initiative is one of three measures the union has submitted to the ballot. Another aims to limit health care executive pay at $450,000, and SEIU-UHW is also backing the “billionaire’s tax” that has drawn ire from both Democrats and Republicans.

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.