The Santa Cruz Valley Regional Hospital promised employees extended health insurance and pay when it announced mass layoffs in June, but those promises disintegrated when the now-closed hospital fired everybody in July.
Roughly 300 health-care providers and other employees, about 200 full-time, were working for Green Valley’s only hospital when it shut down June 30. The company’s former CEO, Stephen Harris, said during a previous interview that workers would receive pay and health insurance through Aug. 20. Employees say they were also told they’d receive compensation for up to 80 hours of unused vacation pay.
This formal 60-day notice was given under the protection of the WARN Act, which is administered by the U.S. Department of Labor and stands for Worker Adjustment and Retraining Notification Act.
But on July 21, employees received a termination letter in which they were told, “you will no longer be entitled to any further compensation, monies, or other benefits from SCVRH, including coverage under any benefits plans or programs sponsored by SCVRH, except as described hereinbelow.”
The letter then details that the final paycheck, deposited on or before July 29, would include full pay.
Several employees said that is not what happened, however. Instead, only partial pay was included and any paid-time-off employees used to round out their hours was removed from the paycheck. They also still had insurance withdrawals made, even though their insurance is no longer effective.
“I have former co-workers who don’t have money for groceries, or have to decide between their rent and food right now and it is absolutely heartbreaking,” said registered nurse Stephanie Garrett of her colleagues.
“I was supposed to get paid for 80 hours and I only was paid for 24 hours, and I was supposed to be paid 44 hours of unused vacation time and they have decided not to pay that either.”
“Don’t know where to start”
Employees may be able to file a claim alleging WARN Act violations in federal court, said attorney Roscoe J. Mutz, a partner with Tucson’s Farhang and Medcoff.
While Mutz is not representing the Green Valley employees, he is familiar with WARN Act guidelines. During an interview Thursday, he said it appears a “strong argument could be made for back pay and benefits.”
Arizona law does not generally mandate accrued time off be compensated during a layoff, but if the employees were promised that as part of the WARN agreement or an existing company policy, Mutz said that also could be covered.
For now, the wait is challenging as many try to figure out what’s next, and how to get by without the money and benefits they were counting on. Garrett said some have applied for unemployment but their claims are being dismissed because they are still listed as active employees.
Rochelle Bryant, an ultrasound technician, decided Southern Arizona would be a good place to settle when she moved here from California eight months ago for a new job. She was about to put her house in California up for sale when the layoffs occurred.
“We don’t know where to start, we don’t know what to do,” she said of herself and former colleagues. “Some people are saying, ‘Forget it. We’re not even going to get paid because now they are talking about filing for bankruptcy.’ ”
Long-beleaguered hospital
The hospital, initially called Green Valley Hospital, was built in 2015 for about $77 million. The owners filed for bankruptcy in 2017, and the hospital was renamed after being purchased for $26 million by California-based Lateral Investment Management.
The relaunch of the Santa Cruz Valley Regional Hospital was fraught with challenges and change.
A doctors group called Global Hospitalist Solutions sued the hospital in 2019, claiming it was owed more than $1.9 million. The suit was settled later in the year with terms kept confidential.
In 2021, a Rochester, New York, company call Broadstone Net Lease, Inc. bought the hospital for $60 million with Lateral Investment remaining the operator. Harris, who declined interview requests for this story but answered a few questions by email, said the Broadstone sale money was used to “pay off the real estate mortgage and to fund the hospital’s losses.”
Further details on the company’s growth and losses were not available at the time of publication. Lateral Investment’s Richard de Silva, and Jeremiah Foster of Resolute Commercial Services — who has been hired as the chief restructuring officer — did not respond to interview requests.
Since the start of the pandemic, the hospital has been flooded with public funds including $5.9 million in federal paycheck protection program money, $5.4 million from the state’s COVID-19 Crisis Contingency and Safety Net Fund, and $6.4 million in advanced Medicare payments.
In a previous interview, Harris said the Medicare money was needed to stay open during the pandemic, but then became an unmanageable debt to pay back at $400,000 per month. Payments were going to drop to $50,000 per month in September, he said.
For a while, it appeared Tucson’s TMC HealthCare was going to buy the facility but that plan fell through in June for reasons that have not been made public.
Investigation needed
Hosanna Hembree has worked in nursing 27 years and started at the hospital when it opened in 2015. After layoffs, Hembree said they were told they could work four or five hours a day to get the hospital ready to close, but then clock a full day.
Instead, she said their last check only included pay for the hours they worked.
She attributes the closure entirely to mismanagement.
“The COVID money the hospital received that should have gone back to equipment and funding and staff,” she said, “but we did not see any of that money.”
Michael Culver worked in maintenance at the hospital for a few months, and was out of town when the layoffs occurred. He called in, he said, and was relieved to hear he still had a job. That didn’t last even a full day.
“I was promised to be there until October, to keep everything running, but apparently that changed,” he said. “They just told me, ‘We can’t pay you any more.’ ”
Culver said he relocated here for the job, and had planned to work at the hospital until he retired.
“Honestly,” he said, “there needs to be a government investigation of the whole thing.”
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