Should Los Angeles clamp down on how much hospital executives are paid?
That decision could be put to Los Angeles city voters, under a ballot measure supported by a union representing healthcare workers.
But whether that happens may hinge on another question: How much does the president of the United States make?
The California Hospital Assn. has gone to court to stop a ballot measure that would limit the annual compensation for executives at privately owned hospitals and other Los Angeles health facilities, arguing that the proposed measure rests on a statement that is “factually and provably untrue.”
The L.A. ballot measure, backed by SEIU-United Healthcare Workers West, would set the annual limit for healthcare executives at “the total compensation for the President of the United States,” which it lists as “currently $450,000.” That dollar limit for healthcare executives would include their salaries, bonuses and a range of other benefits and payments, including severance.
The hospital association argued that the president is entitled to other payments and benefits, including travel expenses, discretionary funds and residence in the White House, that bring his annual compensation well over $450,000. As a result, it argued in its lawsuit, the L.A. petition contained “calculated untruths” that misled voters who were asked to sign it.
“California law is clear that voters cannot be lied to or misled when presented an initiative petition to sign,” said Jan Emerson-Shea, vice president of external affairs for the California Hospital Assn., calling the petition “clearly false.”
The hospital association is calling for the courts to block the initiative from being adopted or appearing on the ballot.
Backers of the initiative are fighting the legal challenge, as is the city itself. The lawsuit is “nothing more than a thinly-veiled pre-election attack on the substance of the initiative itself — an action that is strongly disfavored by the courts,” attorneys representing its proponents wrote.
A federal code titled “Compensation of the President” states that the president is paid $400,000 annually and has a $50,000 expense allowance.
But the hospital association cited calculations by a consultant who concluded that the total amount, using the same definition of “covered compensation” that the initiative sets forward for L.A. healthcare executives, exceeds $1.2 million.
That amount includes hundreds of thousands of dollars in annual payment for former presidents after their terms, since the L.A. measure says that compensation for health executives includes “post-employment arrangements,” the consultant wrote. It also relies on a calculation for how much expense accounts and housing that are exempt from taxes would need to be scaled up if they were taxable, as would be the case for hospital executives getting similar benefits in Los Angeles, the consultant said in a legal declaration.
Backers of the ballot measure derided that as a “tortured explanation” and called such arguments “wholly irrelevant red herrings” in a court filing, saying that the definition of compensation in the ballot measure applied to the health care executives, not to the U.S. president.
They also argued that the petition clearly stated that healthcare executives would have their compensation limited to an amount currently set at $450,000.
If the hospital association wants to argue that the U.S. president is actually compensated with more than $450,000 annually, “that is an argument best made to the voters in their efforts to oppose the initiative; it is not a proper basis on which to attempt to shortcut the initiative process,” their attorneys wrote.
Backers of the ballot measure have already turned in their petition and signatures to the Los Angeles city clerk’s office, which checks whether proposed measures have enough valid signatures to be placed on the ballot. If the measure meets that requirement, city council members could also choose to adopt a measure outright instead of sending it to voters.
SEIU-UHW spokesperson Renee Saldaña argued that as it stands, pay for hospital executives is “excessive, unnecessary and inconsistent with what should be hospital systems’ mission of providing quality and affordable medical care for everyone” and that “paying these executives millions is really indicating the wrong priorities.”
Saldaña pointed out that hospital groups have pushed to prevent $25-an-hour wage measures for a range of employees at private hospitals from being adopted outright by cities in Los Angeles County, instead arguing they should go to the ballot. An L.A. wage measure championed by SEIU-UHW has been put on hold after hospital groups successfully pushed for a referendum.
If the hospital association believes that such wage measures should instead be decided by voters, “it’s an appropriate time that voters also weigh in on the salaries of the highest paid individuals,” Saldaña said.
The proposed measure would cap executive compensation for a range of top officials, including CEOs, chief financial officers, executive vice presidents and administrators, at privately owned hospitals and their affiliated clinics, skilled nursing facilities and residential facilities for the elderly located in the city of Los Angeles.
Emerson-Shea called the proposal an “abuse of the initiative system” by the union. “This measure will hurt the ability of hospitals to recruit qualified leaders, at a time when hospitals are facing real challenges, with no benefits to consumers or workers,” she said in a statement.
A court hearing is scheduled for Tuesday.