Lourdes Medical v. Board of Review
| Decision Date | 27 January 2009 |
| Docket Number | A-70/71 September Term 2007 |
| Citation | 963 A.2d 289,197 N.J. 339 |
| Parties | LOURDES MEDICAL CENTER OF BURLINGTON COUNTY, Respondent-Respondent and Cross-Appellant, v. BOARD OF REVIEW, Respondent-Appellant and Cross-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 Zirpioli, 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 and Cross-Respondents. |
| Court | New Jersey Supreme Court |
Todd A. Wigder, Deputy Attorney General, argued the cause for appellant and cross-respondent (Anne Milgram, Attorney General of New Jersey, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Mr. Scheindlin and Ellen A. Reichart, Deputy Attorney General, on the briefs).
Thomas A. Linthorst, Princeton, argued the cause for respondent and cross-appellant (Morgan, Lewis & Bockius, attorneys).
Raymond G. Heineman, Jr., argued the cause for respondents and cross-respondents (Kroll Heineman Giblin, attorneys).
Robert M. Pettigrew argued the cause for amicus curiae New Jersey Hospital Association (Jackson Lewis, attorneys; Richard W. Schey and David G. Islinger, Morristown, of counsel).
In this appeal, we must determine whether nurses, while on strike against Lourdes Medical Center of Burlington County (Lourdes), were entitled to unemployment benefits. N.J.S.A. 43:21-5 provides that striking workers are entitled to unemployment benefits, except when the strike causes a "stoppage of work" at their place of employment. The question is what constitutes a "stoppage of work" for purposes of N.J.S.A. 43:21-5(d).
Despite the considerable financial difficulties produced by the strike, Lourdes continued to function at full service. It found replacement nurses, maintained its patient and employee census, and did not curtail its hospital procedures. On that basis, the Board of Review (Board) concluded that Lourdes did not suffer a "stoppage of work" within the intendment of the statute and granted unemployment benefits to the striking nurses. The Appellate Division reversed because the Board did not consider, in determining whether a work stoppage occurred, "the financial expense to which the hospital was put to maintain normal levels of service to the community." Lourdes Med. Ctr. v. Bd. of Review, 394 N.J.Super. 446, 467, 927 A.2d 164 (App.Div.2007).
We now hold that the Appellate Division erred in not deferring to the findings of the Board. We also conclude that loss of revenue attributable to the strike, which does not result in a substantial curtailment of work at the hospital, is not the equivalent of a "stoppage of work." Accordingly, we reverse the Appellate Division and reinstate the Board's decision to grant the striking nurses unemployment benefits.
Lourdes Medical Center is a 259-bed, nonprofit hospital located in Willingboro, New Jersey, employing 2000 people and providing a wide range of medical services to the public. On April 19, 2004, approximately 240 registered nurses, who had been working without a contract for almost two months, went on strike over work scheduling and economic issues.
While the labor dispute was ongoing, ninety-seven of the striking nurses filed for unemployment benefits for the period they were out of work. On June 15, 2004, a Deputy Director of the New Jersey Division of Unemployment Insurance found the striking nurses eligible for benefits. Lourdes appealed, claiming that the nurses should have been denied benefits because they were "participating in a labor dispute."
At a hearing conducted by an appeals examiner (also known as the Appeal Tribunal), evidence was presented that the nurses, who were members of a union,1 manned picket lines at the hospital's five entrances during the strike.2 In response to the strike, the hospital at first hired replacement nurses, which increased by about $1 million per month the total cost for nursing staff. Later, Lourdes hired new nurses on a permanent basis. Management costs generally increased during the strike. For example, the hospital had to hire additional security guards and its public relations personnel were diverted from handling usual matters to focus full-time energies on strike-related activities. Additionally, the receipt of a $750,000 obstetrics department grant and the opening of a new laboratory were temporarily delayed. Before the strike, operational losses for the hospital were $600,000 per month, and afterward losses rose to between $1.4 and $1.75 million per month. In 2004, the hospital's losses were projected to exceed those of 2003 by $8 million.
Despite the strike, the hospital remained in full operation. The hospital's patient census remained stable, its hours of operation did not change, it did not curtail medical procedures in any department, and it found no need to discharge staff. Indeed, in a series of published letters issued during the strike, Lourdes repeatedly assured the community that there was no decline in the quality of services offered by the hospital. Several weeks into the strike, Lourdes reported that doctors serving on the Medical Executive Committee viewed "nursing care at the hospital [as] `excellent' and patient care `[as having] never been better.'" In the fifth week of the strike, Lourdes was "pleased to report that hospital operations continue to run smoothly." In a letter to registered nurses, approximately nine weeks after the inception of the labor dispute, Lourdes insisted that the "hospital has been able to maintain operations and continue to provide quality care to the community." Despite the sunny face it portrayed in those letters, Lourdes claimed at the Appeal Tribunal hearing that the strike required a public relations offensive to counteract rumors that it might close.
At the hearing, Lourdes emphasized that because a hospital is highly regulated by the state, it could not simply close its doors due to mounting financial losses without first engaging in a lengthy and complex legal process to obtain the issuance of a certificate of need from the Commissioner of Health and Senior Services. Lourdes argued that it should not be forced to "subsidize" a strike that was placing it in "severe financial distress."
To determine whether the hospital suffered a "stoppage of work" under N.J.S.A. 43:21-5(d) and N.J.A.C. 12:17-12.2(a)(2), the appeals examiner looked to the governing statute and regulation. N.J.S.A. 43:21-5(d) provides that an individual is disqualified from receiving unemployment benefits if her "unemployment is due to a stoppage of work which exists because of a labor dispute at the factory, establishment or other premises" where she was employed. N.J.A.C. 12:17-12.2(a)(2) defines "`[s]toppage of work' [as] a substantial curtailment of work which is due to a labor dispute." That regulation also provides that "[a]n employer is considered to have a substantial curtailment of work if not more than 80 percent of the normal production of goods or services is met."3 Ibid.
With those legal principles in mind, the appeals examiner noted that, during the strike, the hospital "operate[d] at normal occupancy levels" without a decrease in the census of patients, "did not reduce the medical procedures or services provided to the public," and "maintain[ed] all of the same quality services to the public." The appeals examiner took into account that Lourdes incurred a cost of $1 million per month to replace the striking registered nurses with agency nurses and "hired approximately 40 new nurses." One-third of the striking nurses had returned to work by the date of the hearing.
Despite the "great cost" to the hospital caused by the strike, the appeals examiner concluded that there was not a "stoppage of work" as defined by N.J.A.C. 12:17-12.2(a)(2) or N.J.S.A. 43:21-5(d). The examiner rejected Lourdes' argument that the regulation "should not apply to a hospital's production." Therefore, the examiner held that the striking nurses were entitled to unemployment benefits.
The Board of Review affirmed the decision of the appeals examiner.
The Appellate Division reversed the Board of Review and remanded to the Board for consideration of "whether the financial expense to which the hospital was put to maintain normal levels of service to the...
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