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Sunday, April 5, 2020

Pipeline Health: Melrose Park hospital workers properly told facility was closing, WARN suit should be tossed

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By Dan Churney | Dec 3, 2019

Westlake Hospital | Youtube screenshot

The parent company of Westlake Hospital in Melrose Park is arguing hospital workers had plenty of advance notice the facility was closing, contrary to a suit by the workers that alleges employees were "blindsided" when the owners abruptly shut down, allegedly violating federal labor law.

“The Complaint attempts to give the impression that Defendant somehow hid its intent to close the Hospital, and that the ultimate termination in August 2019 was a sudden, unexpected event,” Pipeline Health Systems said regarding the suit it faces.

In September in Chicago federal court, a trio of former employees of Westlake Hospital filed a putative class action against Pipeline, which is based in El Segundo, Calif. 

Ari Scharg | Edelson P.C.

The suit alleged the company didn’t give 60-days notice, as required by the U.S. Worker Adjustment and Retraining Notification Act (WARN), to 549 Westlake employees, when the hospital closed in August after the hospital declared bankruptcy. The workers also claimed Pipeline breached the Illinois Wage Payment and Collection Act by not paying them accrued time off and vacation days. They want Pipeline to pay back wages and benefits, as well as fees for their attorneys.

The workers said Pipeline gave notice April 9, which warned that the hospital was closing between June 9 and June 23. However, on May 7, Melrose Park officials and Cook County State’s Attorney Kim Foxx had a judge block the closing, contending the hospital was needed for the community’s well-being. Pipeline countered the state authorized the closing, because the facility was not “economically feasible” to run.

While litigation proceeded, the hospital filed for bankruptcy Aug. 6. The bankruptcy trustee told employees Aug. 19 they were terminated, effective Aug. 16. Employees then sued, saying the April notice did not apply, because the closing date given in that notice was no longer accurate. Under such circumstances, plaintiffs said a new notice was required. 

Plaintiffs said they were employed by Pipeline-Westlake Hospital, but alleged Pipeline Health Systems, the parent company, controlled hospital operations.

Pipeline has a motion on the table to dismiss the case, arguing the bankruptcy trustee, not Pipeline, shuttered the hospital. 

“Defendant was enjoined by the State Court from taking any steps to close the Hospital, which would include sending a supplemental WARN Act notice and terminating employees. The Court should dismiss the Complaint with prejudice on this basis alone,” Pipeline argued.

Pipeline added its “hands were tied by the state court injunction,” preventing it from issuing any additional notices, if such notices were even warranted.

Pipeline also maintained that nonetheless, the April notice, as well as the “supplemental” notice issued in August, satisfied WARN. Pipeline explained the Code of Federal Regulations provides that when the closing date goes beyond the original 60 days as set out in a notice, an additional notice suffices, if given within the next 60 days. The second 60-day period expired Aug. 22 and additional notice of terminations was given Aug. 19, Pipeline said.

Further, Pipeline argued it was not an employer within the meaning of WARN, because the hospital was not operating as a going concern at the time of the terminations, but was being liquidated as part of the bankruptcy.

Pipeline has also asked U.S. District Judge Sharon Johnson Coleman, who is presiding over the suit, to stay discovery until the motion to dismiss is resolved, because discovery will be “highly burdensome and tremendously costly.” Plaintiffs disagreed, claiming Pipeline is already engaged in "substantial" litigation "related to the core facts of this case" and information sought through discovery should be at Pipeline's "fingertips."

There has been other legal action in connection with efforts to wind down the hospital.

Melrose Park has asked a Cook County judge to hold Pipeline in contempt for filing bankruptcy. Pipeline, in turn, has sued Melrose Park, alleging the village broke the law when it filed the contempt request, saying such a request should be blocked by the bankruptcy proceedings.

Pipeline has been represented in the employees’ action by Riley, Safer, Holmes & Cancila, of Chicago, and in bankruptcy by Morris James LLP, of Wilmington, Del.

Attorney Ari Scharg, and others with the firm of Edelson P.C., of Chicago, has filed all of the legal actions against Pipeline over the Westlake closure, including the actions brought by the village of Melrose Park and the ex-hospital workers' WARN action.

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Organizations in this Story

Edelson, PCVillage of Melrose ParkU.S. District Court for the Northern District of IllinoisRiley Safer Holmes & CancilaWestlake Community HospitalPipeline Health Systems