Thurston-Mason Mental Health, Decision 5609 (PECB, 1996)

STATE OF WASHINGTON
BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION
In the matter of the petition of:
WASHINGTON STATE COUNCIL OF COUNTY AND CITY EMPLOYEES	CASE 12052-U-95-1986
Involving certain employees of :	DECISION 5609 - PECB
COMMUNITY MENTAL HEALTH SERVICES DIVISION OF BEHAVIORAL HEALTH RESOURCES, INC., f/k/a COMMUNITY MENTAL HEALTH CENTER (THURSTON- ) MASON), INC.	ORDER OF DISMISSAL

Seth Hendler, International Representative, Washington State Council of County and City Employees, appeared on behalf of the petitioner.

Washington Employers, Inc., by Matthew W. Lynch, appeared on behalf of the employer.

On September 19, 1995, the Washington State Council of County and City Employees, AFSCME Council 2, AFL-CIO (WSCCCE) filed a petition for investigation of a question concerning representation with the Public Employment Relations Commission under Chapter 41.56 RCW and Chapter 391-25 WAC, seeking certification as exclusive bargaining representative of certain employees of “Community Mental Health Services (Thurston-Mason County)”. Issues framed at a pre-hearing conference held on November 16, 1995, included the identity of the employer and whether the employee which the WSCCCE seeks to represent are employed by a public employer that is subject to the jurisdiction of the Commission. A hearing limited to the jurisdictional question was held at Olympia, Washington, on January 26, 1996, before Hearing Officer Frederick J. Rosenberry. The parties filed post-hearing briefs.

BACKGROUND

The Labor Organization

The WSCCCE is a labor organization which represents various bargaining units of public employees under the Public Employees’ Collective Bargaining Act, Chapter 41.56 RCW. Of particular interest in this proceeding, the WSCCCE represents:

* Certain employees of Thurston County, which is headquartered at Olympia, Washington;¹ and

* Certain employees of Mason County, which is headquartered at Shelton, Washington.²

The Employer

A private, non-profit corporation organized under the laws of the state of Washington since 1966 under the name “Community Mental Health Center (Thurston-Mason) Inc.” changed its name to “Behavioral Health Resources, Inc.” (BHR) in 1994. BHR is a non-profit charitable organization within the meaning of Section 501(c) (3) of the Internal Revenue Code. Its articles of incorporation state that it was organized exclusively:

1. To promote the general public health and welfare; to encourage and develop mental health generally; to further research work as to the cause, prevention, treatment and cure of mental illnesses; to provide treatment for those persons desiring the same from this nonprofit corporation.

2. To operate a clinic to be used in connection with the purposes set forth herein.

3 . To carry on a program of education in the matter of mental health; to instruct in the methods of developing, achieving and maintaining mental health and emotional stability, and to do all things not inconsistent with law, of an educational and advisory nature.

4. To contract its services, the services of its clinic, or of its employees, for the treatment, study or observation of persons with mental problems, or for such services in an advisory or educational capacity, and to receive compensation therefore.

5. To employ psychiatrists, psychologists, social workers, and other professionals, clerical and nonprofessional persons to operate or maintain the clinic (s) and to carryon the work and purposes of this nonprofit corporation.

6. To purchase and otherwise acquire, own and hold real and personal property foi the purpose of attaining the general objectives set forth herein and to bargain, sell, transfer and convey such real and personal property as it shall determine is of no further purpose in attaining the objectives of this nonprofit corporation.

7. To borrow money, and to execute and deliver evidences of indebtedness and created thereby and to secure said obligations by mortgages upon the assets of the nonprofit corporation.....

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¹ The Commission’s docket records indicate that the WSCCCE has been named as a party in 24 of the 53 cases which the Commission has processed since 1976 involving employees of Thurston County.

² The Commission’s docket records indicate that the WSCCCE has been named as a party in 22 of the 86 cases which the Commission has processed since 1976 involving employees of Mason County.

Since 1994, “Community Mental Health Services” has been the name of one of three divisions operating under Steven Norsen, who serves as the executive director and chief administrative officer of BHR.

BHR currently has a board of directors consisting of 16 members. Eight of those members are employed in the public sector, and two of those are elected public officials. Seven of the board members are employed in the private sector, and one of those also serves in an elected public position. One of the board members is retired. No board positions are subject to appointment by a governmental official or entity. As a matter of policy, BHR desires to have representatives of the community serve on its board. When vacancies occur on the BHR board, the remaining board members screen and select applicants to fill the position(s).

The bylaws of BHR provide, in relevant part:

Article II PURPOSE

Section 1. The purpose of this corporation shall be to provide services to individuals, groups and organizations which will promote improved mental health in the community; to hold title to both real and personal property for the furtherance of its projects and to do all things reasonably incidental to these purposes .

Article IV OFFICERS

Section 1. The officers of the Board shall be: a president, a president elect, a vice-president, a secretary, and a treasurer, all of whom shall hold office until a successor has been duly elected.

Article V BOARD OF DIRECTORS

Section 1. The Board of Directors shall consist of a minimum of eighteen members, at least one-sixth of whom shall be residents of Mason County. One-third of the members shall be elected at the December meeting to hold office for three years, beginning January 1. Interim vacancies shall be filled by the Board at any regular meeting.

Article VI COMMITTEES

Section 1. ...

b.         Human Relations Committee shall be composed of one or more Board members appointed by the President and selected volunteers from the community. The Committee shall annually review the corporation’s written Personnel Policies and recommend to the full Board any suggested changes. The Committee shall be responsible for updating job descriptions of key personnel as needed and shall negotiate the contract with the Executive Director for ratification by the full Board. The Committee shall submit names of candidates to fill Board vacancies and an annual slate of officers for the Board of Directors.....

Article VII DUTIES OF THE BOARD AND EXECUTIVE DIRECTOR

Section 1. The Board of Directors shall have the authority to employ and dismiss an Executive Director who shall serve as executive secretary to the Board and as chief administrator of the corporation responsible for both delivery of services and proper financial management, including the approval and execution of all contracts, leases and agreements relevant to the operations of the corporations not specifically reserved for approval by the Board of Directors.

Section 2. Other staff members shall be appointed, disciplined, or dismissed by the Executive Director in accordance with personnel policies adopted by the board.....

Article X DISSOLUTION

Section 1. In the event of dissolution of this corporation, the residual assets shall be donated to a charitable organization whose primary function is the advancement of mental health. The selection of such an organization shall be made by a majority vote of the Board of Directors.

Both the articles of incorporation and the bylaws of BHR were stipulated in evidence by the parties.

Relationship Between BHR and Thurston County

BHR provides services to numerous organizations including school districts, insurance companies, Medicaid, Medicare, Champus, and the Washington State Department of Corrections. The three divisions of BHR provide mental health and chemical dependent services, as follows:

* The Recovery Services Division primarily contracts to provide publicly-funded chemical dependent rehabilitation services to Thurston County. This division is developing contracts with other payers for domestic violence services and a chemical-dependency rehabilitation program for the state prison system.

* The Integrated Health Services Division develops referrals from primary care physicians to provide privately-paid specialized psychiatric counseling and psychological services.

* The Community Mental Health Services Division provides mental health services to groups and individuals. Fees for those services are paid by the individual, medicare, or medicaid. BHR is negotiating with public entities and with private health maintenance organizations to provide services through this division. The division has approximately 120 employees.

BHR and Thurston County are parties to a “municipal services contract” which grew out of a request for bids published by the county’s social services department.³ BHR competed with other organizations to provide contracted services, and was the successful bidder to provide outpatient mental health rehabilitation services. The term of the contract between Thurston County and BHR is for the period from July 1, 1995, to June 30, 1997. It was executed on June 5, 1996, by the Thurston County Board of County Commissioners and Steven Norsen, executive director of BHR. That contract states, in relevant part:

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³ Mason County and Thurston County are parties to an agreement that Thurston County will provide mental health services for Mason County. Because of that contract between the two counties, BHR also provides services in Mason County.

THIS CONTRACT, made and entered into this day by and between the COUNTY OF THURSTON, a municipal corporation, hereinafter referred to as the “THURSTON/MASON REGIONAL SUPPORT NETWORK [Prepaid Health Plan (PHP)], and BEHAVIORAL HEALTH RESOURCES (BHR), hereinafter referred to as the “CONTRACTOR”.

WITNESSETH

WHEREAS, it is the purpose of this agreement to provide age and culturally competent community outpatient mental health rehabilitation services under a Prepaid Health Plan (PPH) managed care system to eligible Medicaid recipients in accordance with the Social Security Act . . . and, to the extent deemed necessary by state and federal government, any other provisions of Title XIX of the Social Security Act and applicable Federal regulations, and applicable state statute and regulation. Services shall be provided in accordance with the Statement of Work, Exhibit A and shall include but not be limited to, the outpatient mental health rehabilitation services detailed in the current Medicaid State Plan, and

WHEREAS, the PHP requires certain services to be performed as hereinafter set forth requiring qualified and specialized skills, together with other supportive capabilities; and

WHEREAS, sufficient PHP resources are not available to provide such services; and

WHEREAS, the CONTRACTOR represents that it is qualified and possesses the necessary capabilities and sufficient skills, including technical and professional skills where required, to perform the services set forth in this CONTRACT.

. . .

II. SERVICES

[T]he contractor shall furnish the necessary personnel and services and otherwise do all things necessary for or incidental to the performance of the work ...

. . .

XV. RELATIONSHIP OF PARTIES

A. The parties intend that an independent contractor relationship between the CONTRACTOR and the PHP shall be created by this contract. The PHP is interested primarily in the results to be achieved. The implementations of services shall lie solely with the CONTRACTOR. No agent, employee, servant or representative of the CONTRACTOR shall be deemed to be an agent, employee, servant, or representative of the PHP for any purpose, and the employees of the CONTRACTOR are not entitled to any of the benefits the PHP provides for PHP employees. The CONTRACTOR shall be solely and entirely responsible for its acts and for the acts of its agents, employees, servants, subcontractors, or otherwise during the performance of this contract.

B. In the performance of the services herein contemplated, the CONTRACTOR is an independent contractor with the authority to control and direct the performance of the details of the work; ...

. . .

XXIII. NONDISCRIMINATION IN EMPLOYMENT

During the performance of this contract, the CONTRACTOR shall comply with the PHP’s Nondiscrimination Plan and the federal and state laws upon which it is based. Requirements of the Nondiscrimination Plan are hereby incorporated by reference, and include but are not limited to:

A. The CONTRACTOR shall not discriminate against any employee or applicant for employment because of race, color, sex, sexual orientation, religion, national origin, creed, marital status, age, Vietnam era, or disabled veteran status, or the presence of any sensory, mental or physical disability. This requirement does not apply, however, to a religious corporation, association, educational institution or society with respect to the employment or individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution or society of its activities.

B. The CONTRACTOR shall take affirmative action to ensure that employees are employed and treated during employment without discrimination because of their race, color, religion, sex, sexual orientation, national origin, creed, marital status, age, Vietnam era or disabled veteran status, or the presence of any sensory, mental or physical disability. Such action shall include but not be limited to the following: Employment, upgrading, demotion, or transfer, recruitment, selection for training, including apprenticeships and volunteers.

[Emphasis by bold supplied.]

BHR primarily uses its Community Mental Health Services Division to provide the contracted services, but subcontracts internally with its Integrated Health Services Division to provide some services.

According to Norsen, the contract between BHR and Thurston County does not address the wages, benefits, personnel policies or other terms of employment affecting the BHR employees who perform the contracted services. Moreover, as stated by Norsen, the terms and conditions of employment offered BHR employees are “none of their [Thurston County] business”. Any grievances that BHR employees may have are submitted either to the executive director or board of BHR for consideration. Thurston County has no role in the hiring, establishment of salaries, processing of grievances or the discharge of BHR employees. BHR is a member of a trade association which conducts periodic salary surveys among its members, and BHR considers that survey when it sets salaries for its employees.

Office-clerical employees of BHR are represented by Office and Professional Employees International Union, Local 23. Norsen testified that, to the best of his recollection, that organization acquired its status as exclusive bargaining representative in 1978, in proceedings before the National Labor Relations Board.

POSITIONS OF THE PARTIES

The WSCCCE asserts that the employees it seeks to represent in the Community Mental Health Services Division of BHR meet the definition of public employees, because they perform mental health services for Thurston County. Notwithstanding the terms of the contract between Thurston County and BHR, the union claims that the Community Mental Health Services Division comes within the scope and definition of a public employer pursuant to Chapter 41.56 RCW because it provides a service for Thurston County and Mason County that is funded by tax revenues. Moreover, the union claims that even if BHR is the employer, Thurston County is a co-employer of the petitioned-for employees, so that they still meet the statutory requirements to come within the scope of coverage of Chapter 41.56 RCW. It is the position of the union that the Public Employment Relations Commission has jurisdiction in the matter.

BHR maintains that it is the sole employer of the employees that the union seeks to represent, and that it is not a public employer within the meaning of RCW 41.56.030. BHR thus contends that the Public Employment Relations Commission lacks compulsory jurisdiction necessary to process the union’s representation petition. Additionally, the employer does not consent to extending jurisdiction to the Commission in the matter (e.g., under Chapter 49.08 RCW) . According to the employer, it has a municipal services contract relationship with Thurston County to provide BHR’s social services product, which it does through its Community Mental Health Services Division, as a result of competitive bidding for the type of services BHR offers. BHR maintains that it retains sole control over all matters related to wages, hours, benefits, and working conditions of its employees, and that Thurston County has no control over employment matters. BHR urges that the representation petition filed in this matter should be dismissed.

DISCUSSION

The Standard to be Applied

The Public Employees’ Collective Bargaining Act, Chapter 41.56 RCW, applies to a broad range of public entities:

This chapter shall apply to any county or municipal corporation, or any political subdivision of the state of Washington, including district courts and superior courts, except as provided otherwise by RCW 54.04.170, 54.04.180, and chapters 41.59, 47.64, and 53.18 RCW. The Washington State Patrol shall be considered a public employer of state patrol officers appointed under RCW 43.43.020. ....

RCW 41.56.020.⁴

The statute defines “public employer” as follows:

[A]ny officer, board, commission, council, or other person or body acting on behalf of any public body governed by this chapter as designated by RCW 41.56.020, or any subdivision of such public body.

RCW 41.56.030(1) [emphasis by bold supplied].

The Supreme Court of the State of Washington has generally provided an expansive interpretation of the scope of the statute, holding that its coverage extends to a wide variety of types of public entities that fall within the general categories mentioned in the statute. Roza Irrigation District v. State, 80 Wn. 2d 633 (1972).

It is well settled that counties in the state of Washington, organized and operated pursuant to Title 36 RCW, fall within the class of “municipal corporations and political subdivisions” that are within the jurisdiction of the Commission under Chapter 41.56 RCW. There is no doubt that Thurston County is a public employer covered by Chapter 41.56 RCW.

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⁴ Chapter 41.59 RCW applies to the “certificated” employees of school districts. Chapter 47.64 RCW applies to the employees of the Washington State Ferries system. Chapter 53.18 RCW applies to employees of port districts. Chapter 54.04 RCW applies to public utility districts.

This case deals with the union’s assertion that Thurston County exerts sufficient control over Community Mental Health Services Division employees of BHR to create an employee/employer relationship with Thurston County sufficient for collective bargaining. The statutory definition of “public employer” is not necessarily limited to those organizations normally thought of as being “public” entities, but also may apply to agents and private entities who perform services for the public entity. There have been occasions where the status of employees who are a part of the contractual arrangement between a private entity and a public entity can become blurred. See, North Mason School District, Decision 2428-A (PECB, 1986) ; Tacoma School District, Decision 3314-A (PECB, 1991).

The Commission has adopted standards to evaluate whether particular employees come within the coverage of Chapter 41.56 RCW, embracing principles similar to the “right of control” test set forth by the National Labor Relations Board (NLRB) in National Transportation Service, 240 NLRB 565 (1979) . The Commission looks to who has the “final say” with regard to most mandatory subjects of bargaining. The Commission gives particular importance to who controls wages and benefits when determining who is the employer. Tacoma School District, supra.

Application of the Standard

It is both common practice and consistent with public policy for public entities to contract with private employers for goods and services. Inherent to such commercial relationships, tax revenue is the primary source of funding for the purchase of goods and services by governmental bodies. Major public works construction projects are a prime example, as road and building contractors are paid substantial amounts of “tax dollars” for their efforts.

The Nature of BHR -

On the record made here, it is clear that BHR is not, itself, a public entity. The employer provided uncontroverted testimony that there is no governmental involvement in the composition of its board of directors. Incorporation under the state law concerning non-profit corporations and status as a charitable organization under Section 501(c) (3) of the Internal Revenue Code do not equate with being a “municipal corporation or political subdivision” of the state of Washington. The fact that some current members of a self-perpetuating board of directors are public employees, or even elected public officials, should not come as a surprise in a community where state government is the largest employer. The overlap of public employees and elected officials into “community” roles on the BHR board does not convert BHR into a public body.

The Contract Between BHR and Thurston County -

Notwithstanding the union’s arguments here, there is no precedent establishing that employees of a private firm providing goods or services to a governmental entity on a contractual basis automatically come under the coverage of Chapter 41.56 RCW, either on a basis that the contracting entity is “acting on behalf” of a public/governmental entity or otherwise. The source of funding has not been used as a basis for determining bargaining units.⁵ The use of tax revenue to pay for such goods or services may be one indicia of employee status, but is certainly not an exclusive or compelling factor in determining whether an individual has rights as a public employee under Chapter 41.56 RCW.

The executive director of BHR testified that BHR has complete control over all terms and conditions of employment of the BHR employees assigned to its Community Mental Health Services Division. In particular, employee grievances are submitted either to the executive director or to the board of directors, wages and benefits are determined by a committee of BHR’s board of directors, and BHR controls all hiring and termination decisions. According to the executive director, Thurston County has no role in the hiring, establishment of salaries, processing of grievances or the discharge of BHR employees. There was no evidence to the contrary.

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⁵ See, for example, Tumwater School District, Decision 1414 (PECB, 1982); Lake Washington School District, Decision 1550 (EDUC, 1982); Kent School District, Decision 2215 (PECB, 1985); Kitsap County, Decision 4314 (PECB, 1993); and Green River Community College, Decision 4491 (CCOL, 1993).

The record supports a conclusion that the relationship between BHR and Thurston County (representing itself and Mason County) is such the that those parties have an arms-length business relationship that is characteristic of typical commercial transactions.

The Nondiscrimination Requirement -

The contract between BHR and Thurston County contains a broad prohibition against discrimination by BHR in its personnel relations with its employees. This stands out among the contract terms as the one instance where the public entity might be viewed as interposing itself into the employment relationships between BHR and the petitioned-for employees. Neither BHR nor the union raised that provision as being relevant to their respective claims and, upon closer examination, it appears to be a routine safeguard against the misuse of public funds.

The extension of Thurston County’s “Non-discrimination Plan and the state and federal laws upon which it is based” to BHR as a contractor appears to be consistent with national policy.⁶ Assurances that invidious discrimination will not be supported by public funds are consistent with state and federal nondiscrimination laws that appear to apply to BHR independent of its relationship with Thurston County. The incorporation of the nondiscrimination clause in the contract does not create an employment relationship between Thurston County and the employees of BHR, inasmuch as the contract does not assign any responsibility to Thurston County and BHR remains responsible for compliance with the nondiscrimination requirements. Moreover, the county’s remedy for noncompliance with the discrimination clause would be to cancel its contract with BHR, rather than to correct errant BHR employees.

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⁶ National policy in this regard was formalized on September 24, 1965, when federal Executive Order 11246 required that contracts between a government agency and a provider of goods or services contain provisions prohibiting employment discrimination by the provider.

Where a proposed bargaining unit does not clearly come within the jurisdiction of the agency, the Commission has held that the burden is properly placed upon the petitioner to prove that a public entity should be viewed as the employer. Tacoma School District, supra. The WSCCCE offered no evidence in support of its position that BHR is a public employer in this case, relying instead on evidence submitted by BHR and limited cross-examination of the executive director of BHR. The WSCCCE has failed to meet the burden of proving facts sufficient to establish that Thurston County is the employer of the petitioned-for employees.

Private Sector Questions Concerning Representation

For many years, Chapter 49.08 RCW has been used as the source of authority for the Commission and its predecessor, the Washington State Department of Labor and Industries, to resolve questions concerning representation involving private employers and their employees.⁷ The Commission proceeds only with the consent of all parties; the ballots cast or authorization cards signed by the employees constitute the “record” on which a certification is based; the certification has the same effect as an agreement for the employer to voluntarily recognize the union. However, WAC 391-25-299 provides, in pertinent part:

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⁷ That statute enacted in 1903 is titled “Arbitration of Disputes”, but applies to “any employer or employee having differences”, without limitation as to the type or source of the dispute.

The Commission lacks authority to proceed in representation disputes under chapter 49.08 RCW absent the agreement of all parties. The executive director shall not proceed in such matters unless an agreement is filed under WAC 391-25-230 or 391-25-250. ...

The union has not stated an interest in having its petition processed under Chapter 49.08 RCW, and the employer has stated that it does not consent to such processing by the Commission. Absent joint concurrence by the parties, that avenue for resolving this question concerning representation is not available.

FINDINGS OF FACT

1.         The Washington State Council of County and City Employees, affiliated with the American Federation of State, County and Municipal Employees, AFL-CIO (WSCCCE), a bargaining representative within the meaning of RCW 41.56.030(3), filed a timely and properly supported petition for investigation of a question concerning representation, seeking certification as exclusive bargaining representative of employees of “Community Mental Health Services Thurston/Mason County”.

2.         Behavior Health Services, Inc. (BHR) is a private, non-profit corporation organized under the laws of the state of Washington and headquartered in Lacey, Washington. BHR was formerly known as “Community Mental Health Center (Thurston-Mason), Inc.”. BHR provides mental health and chemical dependent services through three divisions: “Recovery Services”, “Integrated Health Services”, and “Community Mental Health Services”. BHR is the sole corporation, and one board of directors sets policy for all three divisions. Members of that board screen applicants and fill vacancies on the board. No board members are appointed by a governmental entity or public official.

4.         BHR operates under the day-to-day direction of an executive director, who is appointed by the BHR board of directors and serves as chief administrative officer.

5.         The Community Mental Health Services Division of BHR provides mental health services for Thurston County and Mason County pursuant to a contract between BHR and Thurston County for the period from July 1, 1995, to June 30, 1997. That contract for services was the result of requests for bids from Thurston County to providers of the type of services sought by the county. BHR competed with other organizations to provide services, and successfully bid to provide outpatient mental health rehabilitation services. BHR primarily uses its Community Mental Health Services Division to provide the contracted services, but it also subcontracts internally with its Integrated Health Services Division to provide some medical services.

7.         BHR controls all terms and conditions of employment and other personnel matters of those employees assigned to its Community Mental Health Services Division.

8.         Thurston County does not exercise control over the wages, hours or working conditions of employees assigned to the Community Mental Health Services Division of BHR. There is no evidence that Thurston County would have authority to engage in meaningful collective bargaining regarding the wages, hours and working conditions of employment of employees assigned to the Community Mental Health Services Division of BHR.

9.         The parties have not consented to determination of a question concerning representation pursuant to Chapter 49.08 RCW.

CONCLUSIONS OF LAW

1.         Neither Behavior Health Resources, Inc., nor its Community Mental Health Services Division is a public employer within the meaning of RCW 41.56.030(1).

2.         The petitioner has not provided evidence sufficient to base a conclusion that Thurston County has control over the wages, hours and working conditions of employees assigned to the Community Mental Health Services Division of BHR so as to be deemed to be either their sole employer or a co-employer.

3.         The Public Employment Relations Commission does not have jurisdiction in this matter pursuant to Chapter 41.56 RCW.

4.         The Public Employment Relations Commission does not have jurisdiction in this matter pursuant to Chapter 49.08 RCW.

ORDERED

The petition for investigation of a question concerning representation filed in the above-captioned matter is hereby DISMISSED for lack of jurisdiction.

Entered at Olympia, Washington, on the 19th day of July, 1996.

PUBLIC EMPLOYMENT RELATIONS COMMISSION

[SIGNED]

MARVIN L. SCHURKE, Executive Director

This order will be the final order of the agency unless appealed by filing a petition for review with the Commission pursuant to WAC 391-25-390(2).