United Hospital Services, Inc.

National Labor Relations Board - Board Decisions

Aug 21, 1968

172 N.L.R.B. 1663 (N.L.R.B. 1968)

UNITED HOSPITAL SERVICES, INC.
United Hospital Services , Inc. and Local 3017,
AFL-CIO Laundry & Dry Cleaning International
Union , and Local Union No. 135, International
Brotherhood of Teamsters , Chauffeurs,
Warehousemen and Helpers of America , Joint-
Petitioners . Case 25-RC-3676
August 21, 1968
DECISION AND ORDER
By CHAIRMAN MCCULLOCH AND MEMBERS
FANNING, JENKINS, AND ZAGORIA
Upon a petition duly filed under Section 9(c) of
the National Labor Relations Act, as amended, a
hearing was held before Ralph R. Tremain, Hearing
Officer of the National Labor Relations Board.'
Thereafter, the Joint-Petitioners, herein referred to
as Petitioner or Union, and the Employer, herein
also referred to as UHS, filed briefs with the Board.
The Board has reviewed the Hearing Officer's
rulings made at the hearing and finds that they are
free from prejudicial error. They are hereby af-
firmed.
Upon the entire record in this case, the Board
finds:
The Union seeks to represent all production and
maintenance employees including truckdrivers of
the Employer at its Indianapolis, Indiana, establish-
ment, excluding all office clerical employees,
professional employees, and all guards and super-
visors, as defined by the Act. The Employer, in ef-
fect, urges that the petition should be dismissed on
the grounds that the Board does not have, or in the
alternative should not assert, jurisdiction.
UHS is a nonprofit corporation, providing
laundry services to member hospitals, which must
be either public hospitals or nonprofit, private
hospitals.2 At the time of the hearing there were six
member hospitals.3 UHS was conceived by the Indi-
anapolis Hospital Development Association (IH
' Pursuant to the Board's Rules and Regulations, the Regional Director
issued an order transferring the case to the Board for decision
2 The UHS articles of incorporation provide in part
ARTICLE 11-PURPOSES
Section 1 In General The purposes for which the corporation is
formed are
(a) To establish, maintain and operate hospital laundry facilities for
those public hospitals and nonprofit private hospitals or similar health
facilities organized and operated exclusively for religious, charitable,
scientific or educational purposes which become members of this cor-
poration
Section 2 Non-Profit Purpose The Corporation is organized exclusive-
ly for the foregoing charitable, scientific and educational purposes as a
non-profit corporation, and its activities shall be conducted for the
foregoing purposes in such a manner so that no part of its net earning
1663
DA), a nonprofit organization of several hundred
members (most of whom are board members of
nonprofit hospitals) organized to aid in the
planning and financing of hospital development in
the Indianapolis area. In 1963, IHDA believed it
would be more economical for the area hospitals to
build a central cooperative laundry rather than add
to existing laundry facilities or build new laundries
separately. Prior to the creation of UHS most of the
member hospitals had their own laundry facilities.
UHS began active laundry service in November
1966. The board of directors is elected by member
hospitals, the only voting members. There are three
classes of members (similar to classes of stock):
hospital members, associate hospital members, and
individual members (an individual member is any
person elected a director of the corporation). The
hospital members elect the board of directors at the
annual meeting. At the time of the hearing there
were two representatives of each member hospital
and five or six individual members on the board of
directors.
In order to become a member hospital, a hospital
must execute a membership agreement in which it
warrants that it is either a public or nonprofit
private hospital (or similar health facility). The
agreement provides the hospital will use the UHS
laundry service for substantially all its laundry
requirements for a period of 10 years; charges for
laundry service are to be fixed by the board of
directors of UHS on the basis of UHS costs. The
agreement provides for arbitration in the event of a
dispute over quality of laundry service. If the defi-
ciency is not corrected within 30 days, the hospital
may terminate the agreement. On the other hand
UHS may terminate the agreement if a hospital's
warranties are no longer true, its status changes
from a nonprofit private or public hospital, or it
fails to comply with the articles of incorporation or
bylaws of UHS.
The general manager (Osgood) of UHS is
responsible to and reports directly to the board of
shall inure to the benefit of any member, director, officer or in-
dividual The corporation shall not engage in carrying on propaganda,
,or attempt in any other manner to influence legislation
ARTICLE VII- MEMBERSHIP
Section 2 Hospital Members Any public or non-profit private hospital
(or similar health facility) organized and operated exclusively for reli-
gious, charitable, scientific or educational purposes located within
1751 miles of Indianapolis, and which qualified with respect to quanti-
ty of service may become a Hospital Member of this corporation
The exact number of directors of the corporation as specified in the
By-laws shall never be less than the number of Hospital Mem-
bers at such time, plus three
All of the hospitals involved are exempt from the Board's jurisdiction
(i e , they are not employers as defined in Section 2(2) of the Act)
172 NLRB No. 188
1664 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
directors . He hires, discharges , sets wage rates, and
grants increases ( within guidelines set by the board
of directors ), and sets hours, assigns work , deter-
mines overtime requirements , and purchases sup-
plies.
Charges for laundry service to member hospitals
are strictly on a cost basis , determined periodically
by the board of directors . 4 Charges are made by the
pound and the hospitals are expected to pay on a
bimonthly basis. Although the record is not entirely
clear , it appears that the price per pound is
established by the board of directors upon the
recommendation of the finance committee, which
is composed of the controller of each member
hospital and the UHS treasurer , and General
Manager Osgood.
Although the Employer emphasizes that UHS
was designed solely for hospital laundry and em-
ploys special equipment for this purpose , General
Manager Osgood admitted that the actual laundry
equipment used by UHS is no different from that
utilized by commerical laundries . He did testify,
however, that he knew of no other laundry that em-
ployed a positive-negative airflow system, this
system prevents air from dirty areas from flowing
into clean areas . He also testified that to his
knowledge the stainless steel truck bodies and
laundry carts , along with the special steam cleaning
facilities utilized to keep these clean, were unique.
The hospitals maintain a high degree of control
over UHS with respect to the quality of laundry ser-
viced by means of the quality control committee
( QCC) which is composed of representatives of
each of the member hospitals . The QCC meets
monthly at UHS for the purpose of inspecting the
premises and quality of the laundry ; it then reports
to the board of directors . Osgood testified that the
recommendations of the QCC that he receives from
the board of directors are complied with.5
The record reveals that special procedures are
utilized in the handling of "isolation" and surgical
laundry . UHS has on-the -premises laboratory facili-
ties and employs a lab technician who performs cul-
ture tests regularly on the laundry , laundry carts,
trucks, and various other areas of the plant. How-
ever , Osgood admitted that commercial laundries
that do hopital work have similar tests taken by the
American Institute of Laundries.e
' The Employer notes that the charges to the hospitals in the first year of
UHS existence were on a less-than - cost basis , as the financial statement for
the fiscal year ending September 2, 1967 , shows UHS had a deficit of
$337,428 96
' For example , on the recommendation of the QCC the Employer ex-
pended $3,000 to seal the floors and purchased two 18-pound washing
machines
In fact , some of the member hospitals use commerical laundries for a
The Petitioner , on the other hand , introduced ex-
hibits that reveal the widespread use of commercial
laundries by hospitals in the United States. One of
the exhibits , a survey prepared by the American
Hospital Association reveals that as of August 1,
1965, of 6 ,665 hospitals reporting 2,642 or 39.6
percent had their laundry service provided by out-
side firms , whereas only 2.4 percent of the hospitals
reporting used laundry service provided by
cooperative ventures such as UHS. The Petitioner
contends that UHS is a separate corporation
providing laundry service and is as such not exempt
under Section 2(2) of the Act. The Petitioner con-
tends that UHS merely provides laundry service
similar to that provided by commercial laundries
over which the Board would assert jurisdiction. The
Petitioner concludes that providing laundry service
without more cannot be considered intimately re-
lated to the care and treatment of patients confined
to the statutorily exempt hospitals and that the
Board should , therefore , assert jurisdiction over the
Employer.
The Employer contends there are two grounds on
which the Board could refuse jurisdiction. One is
that UHS , as a nonprofit corporation , is actually an
integral part of the exempt member hospitals and
thus not an employer within the meaning of Section
2(2) of the Act. In the alternative, the Employer
contends that the Board should decline jurisdiction
because UHS operations are intimately related to
the operations of the exempt hospitals and that it
would not effectuate the purposes of the Act to as-
sert jurisdiction.
After a careful consideration of all the relevant
circumstances and noting particularly the facts that
UHS was created by, is wholly controlled by, and
exists only to provide services to exempt hospitals,
we are of the opinion that UHS is an integral part
of the exempt nonprofit and public hospitals it was
established to serve ; as it has no existence indepen-
dently of such hospitals , it shares their .statutory ex-
emption . We therefore find that UHS is not an em-
ployer within the meaning of Section 2(2) of the
Act. Accordingly, we shall dismiss the petition.'
ORDER
It is hereby ordered that the petition filed herein
be, and it hereby is, dismissed.
small percentage of their laundry needs although this was true to a greater
extent when UHS was in the early stages of its operations For example, the
Indiana University Medical Center has standing contracts with commercial
laundries for emergencies and uses commercial laundries regularly for
some uniforms
' In view of our disposition herein , we find it unnecessary to consider the
other ground on which the Employer urged that the petition be dismissed