Former employees of the now-closed Westlake Hospital sued the parent company Wednesday, alleging violations of U.S. labor laws and fraud for creating shell companies to conceal its identity from state regulators.
The lawsuit, which seeks class-action status, contends Pipeline Heath Systems failed to give more than 500 employees 60 days notice of their termination as required by the Federal Worker Adjustment and Retraining Notification Act.
The Melrose Park hospital closed in August and filed bankruptcy.
In April, employees were told their jobs would be eliminated. However, the hospital didn’t close within the 60 days because of legal action by the village of Melrose Park.
Federal law requires employers to notify its staff with an updated notice if mass layoffs are extended 14 days past the planned closure.
The lawsuit claims employees assumed their jobs were secure since Westlake had a court injunction forcing it to stay open. Then 549 employees were “blindsided” on Aug. 19 when a bankruptcy trustee notified them their jobs were terminated without warning.
Pipeline Health was not immediately available for comment.
The lawsuit was filed against Pipeline Heath Systems because the entity known as Pipeline-Westlake Hospital is still in bankruptcy.
“Pipeline Health created the Pipeline-Westlake entity for the sole purpose of acquiring — and then immediately closing — Westlake Hospital pursuant to a strategy developed by Pipeline Health for the benefit of its investors,” the lawsuit reads.
Tenet Healthcare sold Westlake last year as part of a packaged deal to Pipeline Health and TWG Partners, a firm founded by Eric Whitaker, a close friend of former President Barack Obama and a former director of the Illinois Department of Public Health. The sale also included Weiss Memorial Hospital, 4646 N. Marine Drive, and West Suburban Medical Center in Oak Park.
The $70 million deal was finalized in January. Within a month of acquiring the three hospitals, Pipeline announced plans to close Westlake despite promising state regulators it would keep Westlake operational for at least two years.
“Pipeline Health underestimated the strength and resiliency of the Westlake Hospital caregivers and staff,” said attorney Ari Scharg, of Edelson PC, who is representing the former employees. “This lawsuit shows that they will continue to aggressively fight for their own rights and for rights of other hospital workers in Illinois who we think are similarly at risk by the for-profit hospital industry.”
Manny Ramos is a corps member of Report for America, a not-for-profit journalism program that aims to bolster Sun-Times coverage of Chicago’s South Side and West Side.