From: R Communications [mailto:R.Communications@kp.

org]
Sent: Tuesday, December 12, 2017 12:33 PM
Subject: Important Information About Protecting Our Labor Management Partnership

A Message From
Chuck Columbus, Senior Vice President and Chief Human Resources Officer

As you may know, the leadership of the United Healthcare Workers West (SEIU-UHW)
has been in a dispute with the Coalition of Kaiser Permanente Unions and its member
unions over control of the Coalition. That is an internal Coalition issue that does not
involve the management of Kaiser Permanente. However, for months now, SEIU-
UHW’s leadership has insisted in private meetings that Kaiser Permanente
management negotiate with SEIU-UHW as the sole representative of the Coalition in
upcoming National Bargaining. In these meetings, SEIU-UHW’s leadership has
threatened that if we refused their demands, they would put an initiative on the
California ballot that would adversely affect Kaiser Permanente.

Management interference in the Coalition’s organization would be wrong, and it would

violate the spirit of the Partnership. Therefore, we said no to SEIU-UHW leadership’s
demand. Then, on November 16, SEIU-UHW filed its threatened initiative for the
November 2018 California ballot. If enacted, the initiative would directly undermine
Kaiser Permanente’s structure and model of care, to the great harm of our organization
and all of us – employees, physicians, and members.

In sponsoring this destructive initiative, SEIU-UHW leadership has violated both the
spirit and the actual terms of the agreements that set up our valued Labor Management
Partnership. Accordingly, we today have informed the leadership of SEIU-UHW that we
are withdrawing certain privileges of Partnership from SEIU-UHW due to the union’s
outrageous conduct. Among the privileges we have withdrawn is participation of SEIU-
UHW in 2018 National Bargaining.

What The UHW Initiative Would Do

If enacted, the SEIU-UHW ballot initiative would prohibit Kaiser Permanente from
raising rates unless its capital reserves are reduced to a fraction of what they are today.
It is bad public policy to arbitrarily limit reserves that health plans maintain to assure that
they can fulfill their coverage obligations to their members. However, the initiative is
particularly harmful for Kaiser Permanente because, by treating us the same as health
plans who provide only insurance coverage and pay claims to separate providers, it
does not account for the fact that our integrated system does not just offer coverage, we
also deliver the care to our members. In California that means we own hospitals and
medical offices and technology. We also have huge investments to support our many
thousands of employees and physicians, and many other things. All of this requires
capital to maintain, and it all counts toward our capital reserves. Through this ballot
initiative, SEIU-UHW effectively seeks to eliminate much of our capital reserves, even
though they make up the financial structure that supports our entire system. If enacted,
this initiative would harm our ability to meet our long and short term financial obligations,
and ultimately, it would threaten our basic financial integrity.

Over the past few years, SEIU-UHW leadership has used the initiative process to force
concessions from various employers. All these efforts have failed. If SEIU-UHW goes
ahead with spending the millions of dollars it will take to get this initiative on the ballot,
we are confident that once California voters understand the impact on Kaiser
Permanente, they will join us and defeat this measure in November.

Kaiser Permanente’s Measured Response To SEIU-UHW’s Misconduct And Our

Unwavering Commitment To The LMP

When a partner takes action that would harm our integrated model of care and is flatly
contrary to our core principles of Partnership, we must act. Today, we are taking an
appropriate and measured first step by withdrawing from SEIU-UHW certain privileges
of partnership, including participating in National Bargaining in 2018. We also reserve
our right to seek additional relief under our agreements.

Our intention is to narrowly focus our response on SEIU-UHW itself, and not other
Coalition unions, our employees, physicians, or members. Withdrawing these privileges
of Partnership from SEIU-UHW is not designed to affect employees represented by
SEIU-UHW negatively. We will continue to abide by our collective bargaining
agreements for all bargaining units represented by SEIU-UHW. And we call upon SEIU-
UHW to honor our core principles of Partnership.

We are unwavering in our commitment to the Labor Management Partnership. We

strongly believe that a healthy and strong labor management partnership will help us
achieve our mission for the long term.

This is a broadly distributed message. Please do not reply to all.

Please share this message with co-workers who may not have email access.