Workers sue after retirement pay eliminated

Three hospital employees are suing Kalispell Regional Medical Center and Northwest Healthcare, its parent company, for what they say is the unfair elimination of a retirement benefit that allowed them to cash in unused long-term sick time.

A lawsuit filed recently in Flathead County District Court by Sheila Chipman, Deborah Wallen and Ellen Hames alleges Northwest Healthcare unilaterally broke its contractual promise to reimburse retiring 25-year employees for sick time accrued over the course of their careers.

The plaintiffs also want their lawsuit to become a class action involving other Northwest Healthcare employees. Northwest Healthcare, the Flathead Valley's largest employer, has a work force of more than 2,000.

Northwest Healthcare executives, however, said they don't believe the hospital's actions merit any lawsuit.

"We believe, like any business, the hospital has the authority to modify, add to or discontinue the employee benefits it offers," Northwest Healthcare spokesman and treasurer Bill Freeman wrote in an e-mail. "The hospital is disappointed that the lawsuit was brought and will obviously have to defend itself against the allegations in the lawsuit."

The Continued Illness Bank benefit, which was adopted decades ago, allows Northwest Healthcare employees to accrue hours that they can then use as paid time off for personal or family illnesses, Freeman said.

In 2002, a severance pay plan was added to the benefit, allowing employees with 25 or more years of employment to cash in accrued but unused hours upon retirement.

In July this year, the severance pay plan was eliminated - but only for those employees who had not yet reached 25 years of service. Employees who already had 25 years were grandfathered in and still will receive a severance payment if they have not used all their hours for personal or family illnesses, Freeman said.

"Most importantly, the CIB benefit was not eliminated," Freeman said. "Our employees still have this important benefit."

Depending on an employee's pay rate and amount of accumulated sick time, retirement payouts could reach $15,000 to $20,000, according to Kalispell attorney Joe Bottomly, who represents the plaintiffs.

"It encourages people to use as little sick leave as possible and encourages employee longevity," Bottomly said. "It can be significant, depending on the person."

The lawsuit alleges that by revoking the severance pay portion of the benefit - which has been paid in the past and appears in the employee handbook - Northwest Healthcare unilaterally broke its contract with employees.

"It's clear that this was part of the employment contract," Bottomly said.

Because paid sick leave is compensation and part of an employee's wage package, revoking the benefit also runs afoul of Montana's wage protection statutes, he added.

The plaintiffs are asking the court to find that employees have a legal right to the benefit and to order Northwest Healthcare to pay damages for violating the Montana Wages and Wage Protection Act.

Freeman said the severance pay was eliminated because the hospital's interpretation of accounting rules made continuing the benefit too expensive.

"The elimination of the severance pay plan was prompted by current interpretation of accounting rules that would require the hospital to increase its severance pay liability to include all employees, not just those who had reached 25 years of service," he said. "This liability increase would have had a significant detrimental impact on the hospital's financial position."

After Northwest Healthcare changed the Continued Illness Bank benefit, the three employees - each of whom has worked 20 years or more for the company - filed suit.

The legal action halted talks between employees and hospital officials, who had promised to bring employee concerns before the Northwest Healthcare board of trustees in October.

"Unfortunately, because we are now involved in litigation, we are unable to continue with our discussions related to employee suggestions, and management and the board of trustees will not take any actions on these suggestions until this legal matter is resolved," Northwest Healthcare President Velinda Stevens wrote in a letter to employees. "We strongly believe this litigation is without merit and intend to present a strong defense against it."

The complaint, which has yet to be answered by Northwest Healthcare, was filed with the potential to become a class action lawsuit. Pending court approval, the three women who brought the suit could be joined by hundreds of other employees, Bottomly said.

Named as defendants in the lawsuit are the hospital and Northwest Healthcare as well as numerous affiliates under the company's umbrella, including the Northwest Healthcare Foundation, The Summit, Brendan House, Applied Health Services, Kalispell Medical Equipment, Healthcenter Northwest, Northwest Orthopedics and Sports Medicine, Big Sky Family Medicine, and Medical Office Management Services.

A certification hearing, which has yet to be scheduled, must be held to determine whether the lawsuit will be heard as a class action, Bottomly said.

During that hearing, a judge must decide whether, based on the number of people potentially involved, the suit would be better handled individually or as a class action and whether each individual case has similar issues of fact.

Reporter Nicholas Ledden can be reached at 758-4441 or by e-mail at nledden@dailyinterlake.com