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March 29, 1982

Charles E. SIGETY, d/b/a Florence Nightingale Nursing Home, Plaintiff,
David AXELROD, M.D., Individually and in his capacity as New York State Commissioner of Health; Joanne M. J. Quan, Individually and in her capacity as Deputy Director, Division of Health Care Financing, New York State Department of Health; Raymond Sweeney, Individually and in his capacity as Associate Director, New York State Department of Health; William L. Gormley, Individually and in his capacity as Director Bureau of Residential Health Care Facility Reimbursement New York State Department of Health; and Peter Ottley as President, Local 144, Hotel, Hospital, Nursing Home and Allied Service Employees Union, Defendants

The opinion of the court was delivered by: SWEET

Presently before the court is the motion of plaintiff Charles E. Sigety, d/b/a Florence Nightingale Nursing Home (referred to variously as "Sigety" and "Florence Nightingale") for a preliminary injunction to enjoin the arbitration commenced by defendants Local 144, Hotel, Hospital, Nursing Home and Allies Services Union, SEIU, AFL-CIO ("Local 144") and an oral cross application to enforce the arbitration clause on the grounds that execution of the arbitration clause relating to the 1981-84 agreement was fraudulently induced. Jurisdiction of the court is established by 28 U.S.C. § 1331 and 29 U.S.C. § 185.

This action was originally commenced against Local 144 and in addition David Axelrod, M.D., Commissioner of Health of the State of New York, and other state officials, seeking a declaratory judgment with respect to the rights to Medicaid reimbursement. This phase of the action has been resolved.

On January 22, March 10, 12, 19 and 22, 1982, testimony was presented in open court by the parties. The deposition of Charles Sigety was received on March 25, 1982 in lieu of such testimony because of prior scheduling problems and to accommodate the court's calendar. On the basis of the evidence thus presented, the following findings of fact and conclusions have been reached. As set forth hereafter, upon these findings and conclusions, Sigety's motion will be denied.

 The complicated interrelation between collective bargaining and state reimbursement as well as the nature of the nursing home industry itself have given rise to much litigation, considerable labor unrest, and this pending motion. In this instance, I shall seek to limit these findings and conclusions as narrowly as possible in order to minimize my intrusion into the tangled web of relationships, some resolved and some unresolved.

 Prior to 1980 Sigety was a member of an industry-wide bargaining group, the Greater New York Health Care Facilities Association, Inc. ("Greater New York") which had entered into a three-year collective bargaining agreement with Local 144 in 1978, which expired on March 30, 1981. In January, 1980, Sigety withdrew from Greater New York and sometime thereafter joined the Southern New York Health Care Facilities Association, Inc. ("Southern New York") which also was a bargaining instrumentality for its members. The reasons for this change in membership status is not material to the disposition of this dispute.

 Negotiations for a new contract between Local 144 and the Associations commenced in 1981. Toward the end of the negotiating period, on March 21, 1981, an action was brought by Florence Nightingale and other nursing homes in the Eastern District of New York, Clearview Nursing Home, et al. v. Local 144, 81 Civ. 0854, seeking to stay all arbitration under the 1978 collective bargaining agreement on the grounds that the plaintiffs had withdrawn from Greater New York and were no longer bound. A temporary restraining order staying arbitration was signed by the Honorable Arthur Bramwell on March 30, to expire on April 4, 1981, on which date the motion for a preliminary injunction was to be heard. At least in part involved in this litigation and the negotiations was the effect of the Feerick awards which were certain determinations arrived at by the distinguished arbitrator, John Feerick, Esq.

 Negotiations continued at the Sheraton Center Hotel and by the contract expiration date culminated in the customary clock stopping, in the course of which the negotiators were invited to the state offices where the impact of the proposed collective bargaining agreement upon the state cost reimbursement and its methodology were discussed. Both industry and labor were asked by the state to ameliorate their positions and, in ways not material here, certain accommodations were made by both sides. A collective bargaining agreement was reached between Greater New York and Local 144 sometime on April 3, followed by an agreement between the Union and Southern New York. The agreement included the withdrawal of the Brooklyn action.

 However, Sigety was not a signatory to this agreement and on the morning of April 4, 1981 Local 144 struck Florence Nightingale. By early afternoon Peter Ottley, the President of Local 144, had sufficiently recovered from the rigors of the night before to place a call to Charles Sigety suggesting a meeting to see if the differences between the Union and Florence Nightingale could be resolved. Ottley and the Sigetys had rooms at the Sheraton Center during the negotiations.

 Birge Sigety, Charles' son, Francis Washler, the accountant for Florence Nightingale, and Charles Sigety went to Ottley's room in response to his call. Washler had been asked by Sigety to come to the hotel earlier that day to discuss the effect of the agreement that had been signed by Greater New York and its impact on cost reimbursement. The testimony of the Sigety attendants at this meeting was consistent and credible. Ottley's version was not markedly different, except as to one or two critical details, but was, perhaps understandably, somewhat vaguer. A year later, in the calm of the courtroom I find that the conversation included the following.

 After small talk and a brief recounting of war stories from the night before, Birge Sigety in response to Ottley's inquiry stated that two matters were of principal concern to Florence Nightingale, the first being the cost reimbursement and its methodology and resolution of these issues in light of the Feerick awards, and the second, weekend staffing. The former issue had been in the forefront of the discussions in the days and nights just passed and the weekend staffing problem had been the subject of discussion over some period of time. The prior contract contained a provision relating to weekend staffing but the industry practice was not uniform.

 Ottley stated his conviction that the cost reimbursement issue would be satisfactorily resolved and that he would assist in its resolution. The Brooklyn litigation and its restraint were considered briefly in the context of the cost reimbursement issue, and it was concluded that the action would become moot upon the resolution of the cost reimbursement problems. Three alternatives to solve the weekend staffing issue were discussed, redefinition of the period covered, additional staffing, and increased weekend benefits. Ottley indicated that redefinition was unlikely, the Sigetys indicated that additional staffing was too expensive, and the possibility of some different schedule, perhaps every weekend off, was felt to be most promising. Ottley stated his belief that the problem could be solved and that a discussion with the local business agent would result in an accommodation.

 Birge Sigety requested Ottley to put his position in writing, Ottley asked Charles Sigety whether or not Sigety trusted him, and upon receiving an affirmative reply, put the same question to Birge. According to the Sigety attendants, Ottley was in tears or on the verge of tears in the face of Birge's challenge to his integrity by requesting a writing. Birge withdrew his demand, the Sigetys and Ottley agreed to terminate the strike, and a written memorandum constituting the collective bargaining agreement was signed shortly thereafter. The pickets were then withdrawn and the strike was over.

 The agreement contained a three-year term and incorporated the agreement previously reached the day before between Greater New York and Local 144. Three modifications to the Greater New York agreement were added, one deleted reference to membership in Greater New York, one related to the designation of an impartial chairman, and the third dealt with the possibility of the establishment of a Southern New York welfare fund.

 Birge Sigety unsuccessfully sought to reach an understanding on weekend staffing and later requested that the substance of the April 4 meeting be reduced to writing. This action was initiated against the state defendants and the Union on June 16, 1981. On November 12, 1981 Southern New York, the State of New York and Florence Nightingale reached an agreement relating to cost reimbursement and its methodology in which the parties agreed "that because of new collective bargaining agreements there is a potential for substantial inequities..." In addition, past cost reimbursement claims were resolved, it was agreed, among other things, that the challenges to the determination of the Labor Cost Review Panel and this action would be dismissed as to the state defendants, and a methodology for the resolution of future ...

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