Beverly Enterprises, Inc.

Published by the Government Accountability Office on 1997-06-03.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States
General Accounting  Ofaee
Washington, D.C. 20648

Health, Education, and
Hnman Services Divhion

June 3, 1997

The Honorable Lane Evans
Ranking Minority Member
Committee on Veterans’ Affairs
House of Representatives
The Honorable William J. Coyne
The Honorable Mike Doyle
The Honorable Frank R. Mascara
House of Representatives

Subject: Beverlv Enter-m&es. Inc.
In 1996and 1996,we issued reports on the extent to which federal contractors
violate the Occupational Safety and Health Act and the National Labor Relations
Act (NLRA).’ At your request, on May 14, 1997,we summarized the findings
from these reports at a Congressional Town Hall Meeting in Pittsburgh,
Pennsylvania At that meeting, you asked us to respond for the record to a
portion of the statement submitted by the Chairman and Chief Executive Officer
of Beverly Enterprises, Inc. @-Ithe Chairman’s statement, he had disagreed
with the characterization of his company in our 1996report as one of the more
“serious labor law violators” identified in our analysis.) This correspondence
reviews the methodology used in our report and summarizes Beverly
Enterprises’ position and our response. In summary, the available facts support
our identification of Beverly Enterprises, Inc. as a firm that met our criteria as a
more serious labor law violator among all contractors with casesdecided by the
National Labor Relations Board (NLRB) during fiscal years 1993and 1994.

‘See Worker Protection: Federal Contractors and Violations of Labor Law
(GAO/HEHS-96-8,Oct. 24, 1996) and Occunational Safetv and Health Violations
of Safetv and Health Regulations bv Federal Contractors (GAOAXEHS-96-157,
Aug. 23, 1996).
                                            GAOIHEHS-97-14SR   Beverly Enterprises,   Inc.
To assessthe concerns raised by Beverly Enterprises, Inc., two aspects of our
report’s methodology-the tie period covered and the criteria we used-are
tinortant considerations. First, our study methodology focused on violators
over a specific 2-yearsperiod. The caseswe examined were those that had
received a final decision by the Board in fiscal years 1993or 1994. This
approach allowed us to report on easesthat had been resolved-rather than
those still being processed-and that were the most recent for which data were
available. Had we chosen a different time period, we might have identified
different employers as serious labor law violators. For example, of the 15
companies our report identiEed as more serious labor law violators, only 2 had
 cases also decided by the full Board during fiscal years 1990and 1991.2 Thus,
if we had chosen the time period of fiscal years 1990and 1991,most of the 15
 companies we identified would not have been identified as serious labor law
violators because they had no casesresolved in those years. On the other hand,
 other companies not identified as serious labor law violators on the basis of
 1993-94data might have been identied as serious labor law violators on the
 basis of 1990-91data
Second, because violations vary in their severity, we chose to classify an
employer as a serious labor law violator if that employer met at least one of the
following two principal criteria:
- The application of a comprehensive Board-ordered remedy: We considered a
  remedy to be comprehensiveif the company received a broad cease-and-desist
  order,3 a “Gissel bargaining order,lt4or, in the absenceof such broader orders,

2Becausewe studied only cases decided in fiscal years 1993and 1994,we did
not analyze these decisions.
?he Board issues a broad cease-and-desistorder, prohibiting the km from
engagingin a range of unlawful conduct, when the company has demonstrated a
proclivity to violate the act or when its conduct has been widespread or
“A Gissel bargaining order, which derives from the Supreme Court decision
NLRB v. Gissel Packing Co., 395 U.S. 576 (1969), orders an employer to bargain
with a union that has not been certified through an election. The Board
imposes a Gissel bargaining order as an extraordinary remedy when the
company has committed unfair labor practices that have made the conduct of a
fair election unlikely or have undermined the union’s majority and caused an
2                                          GAO/JXEHS-97-146R Beverly Enterprises,   Inc.
    a Board order for an employer to cease and desist from 10 or more types of
    unlawful actions against workers.’

- Employer actions affecting the job status of more than 20 workers: Examples
  of such actions would be the employer’s unlawful firing of worker3Ym--m-H
  in the first place, suspending,or transferring rno~an~~ti~vrdual    workers.
If an employer met either of these criteria, we reviewed prior NLRB casesto
determine whether the employer had a history of labor law violations, that is, at
least one other adverse Board decision since 1980.6

We determined that Beverly Enterprises met two of these criteria: (1) the
application of a comprehensive Board-ordered remedy and (2) a history of
violations under the NLRA. In a Board case issued during fiscal year 1993,7the
company was ordered to reinstate workers and to cease and desist from many
unlawful actions designedto thwart union activity during organizing campaigns
at 23 facilities. The company received an order to cease and desist from 10 or
more types of unlawful actions against workers and a broad cease-and-desist
order in which the Board ordered the company to comply with the terms of its
order at all of its facilities nationwide. Our further examination of Beverly
Enterprises, Inc.‘s labor relations record also detected that the company had a
history of violations under the NLRA.

election to be set aside.
‘These cease-and-desistorders are typically narrow and require only that the
company not engagein that particular unlawful activity. The relatively large
number of unlawful actions suggests,however, that the company is also a more
serious violator.
‘A history of violations refers to a company found to have violated the NLRA in
at least one other case since 1980.
‘Beverlv California Cornoration f/k/a Beverlv Enterprises, 310 N.L.R.B. 222
(1993). The case was a consolidated case concerning allegations that the
respondent committed “scores of unfair labor practices at 35 facilities
throughout the United States.” The Board affirmed an AIJ’s finding that the
respondent committed one or more tmfair labor practices at all but 2 of the 35
facilities involved in this litigation during the 2 years between 1986 and 1988.
The overwhelming majority of the violations occurred in the context of union
organizing activity at 23 facilities.
3                                          GAOAEHS-97-14SR   Beverly Enterprises,   Inc.
Beverly Enterprises disagreeswith both of our determinations about the
company’s   status as a serious labor law violator. Beverly Enterprises contends
that it does not meet our criteria for being a serious labor law violator because
a February 28, 1994,U.S. Court of Appeals decision reversed the previously
cited fiscal year 1993Board ruling,8 This appellate case held that the broad
cease-and-desistorder issued by the Board was improper and also denied
enforcement of three unfair labor practices. The February 1994appellate
decision modified the Board’s original ruling, but it reaffirmed the enforcement
of ail uncontested violations and granted enforcement of 16 of 19 contested
unfair labor practice findings. Beverly’s statement disputes our characterization
of the company as having a history of labor law violations on the basis of its
interpretation of the effect of the 1994Appeals Court decision on the 1993
 Board ruling. In determinin g whether Beverly Enterprises had a history of
violations, however, we idenmed a Board decision made before the 1993case.
Even considering the 1994Appeals Court decision, we believe that Beverly
Enterprises met the criteria to be characterized in our report as a serious labor
law violator because of (1) its fiscal year 1993case in which the NLRB applied a
comprehensive Board-ordered remedy and (2) its history of violations under the
NINA. The 1994 appeals court decision did disahow the broad cease-and-desist
order issued by the Board. We stiIl classified Beverly Enterprises, Inc. as a
 serious labor law violator, however, becauseit had received Board orders to
 cease and desist tTom 10 or more types of unlawful actions against workers,
which were affirmed by the 1994 appellate decision. In our report, we
 supported our determination that Beverly Enterprises had a history of violations
 by citing a 1986case in which the Board ordered the company to bargain with
 the union and restore wages and benefits that had been uniIateralIy changed at a
 nursing home in Waterloo, Iowa.’ On August 16, 1995,before we issued our
 report on October 24, 1996,we contacted the administrator of NLRB’s appeals
 database,who confirmed that as of that date that case had received no appeal

&rorrington Extend-A-Care Emnlovee Assn. v. NLRB, 17 F.3d 680 (2d Cir. 1994).
‘Beverly Entertxises, Inc. d/b/a Parkview Gardens Care Center, 280 N.L.R.B. 47
(1986). The Board afhrmed an ALJ finding that Beverly had committed several
unfair labor practices at Parkview Gardens Care Center. In addition, in its 1993
decision regarding Beverly Enterprises, Inc., the Board noted the company’s
history of violating the NLRA.
4                                          GAO/HEHS-97-14SR   Beverly Enteqmises, Inc.

We hope this information responds fully to your request. We are sending copies
of this letter to Senator Arlen Specter and RepresentativeRon Khnk, who were
present at the Town Hall meeting. In addition, we are sending copies to the
General Counsel and Chairman of the National Labor Relations Board and to
Beverly Enterprises, Inc. We also will make copies available to others on
request. If you or your staff have any questions about this letter, please call
Charlie Jeszeck,Assistant Director, at (202) 512-7036or Jackie Baker Werth at
(202) 512-7070.
Sincerely yours,

Carlotta C. Joyner
Director, Education and
 Employment Issues


5                                        GAOEIEHS-97-14SR   Beverly Enterprises,   Inc.
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