Union sues to block privatization of Alaska Psychiatric Institute

JUNEAU — Alaska State Employees Association Local 52 filed suit Monday against the state of Alaska, alleging the Department of Health and Social Services has violated bargaining agreements, state law and the Alaska Constitution as it seeks to privatize operations of the Alaska Psychiatric Institute.

“We want the state of Alaska to do this the right way, and it hasn’t been done the right way,” said Jake Metcalfe, executive director of the union, by phone Monday.

Matt Shuckerow, press secretary to Gov. Mike Dunleavy, said the administration does not comment on ongoing litigation.

The association represents more than 200 employees at the state’s only public psychiatric hospital, according to the complaint filed Monday in Anchorage District Court. The complaint seeks damages and an injunction against the state, blocking it from privatizing the hospital.

The union is also asking for a temporary restraining order, meaning the first hearings in the matter are likely to happen this week.

Metcalfe said the union’s disagreement with the state is over the second part of a two-phase agreement between the Department of Health and Social Services and Wellpath Recovery Solutions, a Tennessee-based firm. In February, the governor’s administration said it would turn over management of API to Wellpath.

Under that agreement, Wellpath is in charge of resolving an ongoing staffing and safety crisis at the hospital that has left its Medicaid and Medicare certification in jeopardy. (The hospital was accredited by an independent review body on Friday.)


After that situation is resolved, Phase 2 of the state’s agreement with Wellpath is scheduled to begin Sept. 1. That arrangement pays Wellpath $40.4 million per year (plus $3.3 million in pass-through costs) for five years to operate the facility.

Shuckerow said by email that the Wellpath agreement was not driven by budgetary considerations but by the emergency state of the hospital.

The Wellpath agreement was a sole-source contract, which has drawn the attention of skeptical lawmakers. In a committee hearing earlier this month, members of the House of Representatives were told by the state’s chief procurement officer that he was not aware that Providence Health Services had also expressed interest in management of the hospital.

The union’s lawsuit incorporates information from that hearing but is predicated upon the idea that the union was shut out of the state’s decision to privatize.

“We’ve spent a good couple of months trying to convince them that they have to follow a certain procedure, and I guess they’ve basically refused to listen to us because they haven’t replied,” Metcalfe said.

According to the union’s contract with the state, any privatization program should be preceded by a financial feasibility study, and the union is to be allowed a chance to offer a counterproposal.

The union alleges that didn’t happen.

Metcalfe said the union filed suit reluctantly but feels legal action is necessary to protect the hospital’s patients and the interests of the union’s members.

“It’s not something we want to do. We really think it’s the last process that we can engage in, and it’s really, really disappointing that they would put their own employees and our most vulnerable people in society through this process,” he said.

James Brooks

James Brooks was a Juneau-based reporter for the ADN from 2018 to May 2022.