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Nurses Who Faced Fines, Lawsuits for Quitting Are Fighting Back

Feb. 2, 2022, 10:00 AM

A couple of years ago, Novie Dale Carmen paid $20,000 to quit her nursing job. She was less than halfway to fulfilling the three-year commitment she’d made to Health Carousel LLC, the health-care staffing agency that had helped get her from the Philippines to a hospital in Muncy, a town about three hours northwest of Philadelphia. From across the Pacific, the deal had seemed like a good one, but once she was in Pennsylvania, she began to feel differently.

Carmen says she was paid much less than the American nurses around her. She was banned from discussing her working conditions or going out of town without notifying the agency. Health Carousel seemed to keep finding ways not to count her work toward the 6,240 hours on her contract—the first three months of shifts didn’t qualify, the company said, because it considered that time part of her orientation period. Mandatory overtime didn’t count toward her quota, either. And because she couldn’t refuse overtime, her shifts could stretch as long as 16 hours in an understaffed emergency room.

“I was basically trapped,” Carmen says. “Duped.” To pay Health Carousel’s $20,000 quitting fee, she borrowed the money from her boyfriend, who’d been saving for years to buy a house. She’d refused his offer before, out of guilt and pride, but was desperate to get away from Health Carousel without being sued for quitting, as had happened to many of her peers.

Now Carmen is the one suing. She’s filed a proposed class action in Health Carousel’s home state of Ohio, accusing the company of human trafficking. Although “trafficking” evokes images of people brutally beaten or chained in captivity, the legal definition is much broader and includes trying to coerce someone to do something by threatening serious harm or abuse of the legal process. In June a U.S. district judge rejected Health Carousel’s motion to dismiss the case. At the end of last year, Carmen added claims of wage theft and racketeering, and two more plaintiffs.

Like her co-plaintiffs, Carmen says the forms she signed on this side of the Pacific were very different from the ones she’d seen back in the Philippines.
Photographer: Haruka Sakaguchi for Bloomberg Businessweek

Health Carousel, which has denied wrongdoing, declined to answer detailed questions about the case but said in an email that it was “vigorously defending the good work” it does. “We are proud of our work to place internationally trained nurses at understaffed hospital systems in the United States,” the company said in its statement. “We invest to recruit these professionals and sponsor their employment-based visas to fulfill their dreams.” It also said it expects employees who don’t complete their contracts to pay back its approximate upfront expenses, which typically include a visa, licensing, travel, transitional housing, a cellphone, and support staff costs.

In a filing last year, the company said it “denies all allegations that Plaintiff or any of its nurses were indentured servants to Health Carousel.” It also denied the lawsuit’s claims that its contract terms are “draconian”; that it requires employees to notify the company when traveling out of town; that its penalty for quitting early was “manifestly unreasonable and disproportionate”; that it isolates nurses and shields itself from scrutiny via secrecy rules; that it implies nurses will suffer bad immigration consequences if it fires them; and that it is “overly litigious.”

Carmen’s lawsuit has started off humbly, but it could redefine the terms of one of the biggest trends reshaping U.S. health care: the replacement of burnt-out American caregivers with cheaper foreign workers who can’t simply quit. More than 1 in 6 U.S. health-care workers has quit their job since the start of the pandemic, and almost 1 in 3 front-line health-care workers has been thinking about leaving the profession, according to a 2021 survey by the Kaiser Family Foundation and the Washington Post. For the companies that bring people like Carmen to America, the Great Resignation has been a central talking point. Last year a staffing agency released a survey of U.S. nurses who said things like: “Every shift is the worst shift I’ve ever worked.”

More than 500,000 workers in health care and related fields quit in December alone, according to the U.S. Department of Labor, and that number might have been significantly higher if not for the legions of employees contractually restricted from resigning. Americans have gotten used to calling health-care workers essential. If Carmen’s right, a lot of them could also be called captive.

Hundreds of health-care employees have been sued by staffing agencies like Health Carousel for trying to quit or refusing work, according to U.S. state court dockets reviewed by Bloomberg Businessweek. Some sued the workers for trying to change their own visa status, or trying to initiate mediation, or encouraging co-workers to quit, or, as in the case of one worker in New York, having “unexpectedly and surreptitiously left the apartment” rented for him before abandoning work.

Staffing agencies tend to win these fights. In 2015, Arvie Vitente, a Filipino physical therapist in South Carolina, signed a consent judgment—essentially a mutually agreed upon court order—stating that he had caused $93,500 of damages to Health Carousel by failing to work for the period he agreed to and owed that amount plus interest and the agency’s court costs. Health Carousel had argued that a clause in the contract he’d signed, agreeing to indemnify the company against claims “arising out of or resulting from your participation and performance,” obligated him to pay the company’s expenses for suing him, because he’d left them no choice. “Health Carousel had to file a lawsuit against you because of things you have done under the agreement, correct?” the agency’s lawyer asked when deposing Vitente, who’d accused the company of violating wage law, which it denied. Vitente said, “Yes, sir,” then explained that he felt he’d been forced to breach the agreement because of his alleged mistreatment. Health Carousel said in an email that it negotiated a three-year repayment plan for significantly less than $20,000 with Vitente, who didn’t respond to inquiries.

The $30 billion medical-staffing industry hasn’t disclosed how many total workers it brings in subject to such contracts, but Health Carousel alone has said that it offers placements “at the nation’s finest health-care facilities in all 50 states” and that its staff have helped roughly 7.7 million patients—a population as large as Arizona’s. In August the company said it’s experienced a fivefold surge in demand from clients since the start of Covid-19. Workers are brought in from all over the world, but especially from the Philippines.

Determining the point at which the inherent coerciveness of U.S. wage labor veers into illegal trafficking is a tricky task. Inducements to work are built into the American system, from job-based health coverage to the recent bipartisan obliteration of extended unemployment benefits. But talk of labor markets still conjures economics textbook concepts of a dignified playing field where well-informed people can carefully weigh competing offers. Carmen’s allegations reflect a bunch of ways in which U.S. companies can tilt that field.

Many American employers continue to make their job offers contingent on fine-print conditions, such as noncompete clauses and forced arbitration, that can make it almost impossible to jump to a better workplace or hold management accountable when things go wrong. They seek out foreign workers who often, in theory or practice, lack the legal protections of U.S. citizens. They argue that they aren’t liable for any mistreatment of their subcontracted staff by the companies that technically employ those workers. And they charge staff for equipment or training essential to their duties, establishing a cycle of debt that, in conjunction with low wages, tends to build on itself.

Together, these tactics help companies circumvent the sort of employee leverage that’s been on display in the recent months’ record-breaking resignations and widespread strike threats. “We are supposed to live in a world in which you compete for workers by paying them more and treating them better, but these companies have tried to find another way,” says one of Carmen’s lawyers, David Seligman, who directs a legal nonprofit called Towards Justice. “Just because something is everywhere doesn’t mean it’s not labor trafficking.”

A photo with her cousin Nicole Sua-an is one of Carmen’s few keepsakes from home.
Photographer: Haruka Sakaguchi for Bloomberg Businessweek

Seven years ago, Carmen and her sister were asleep in their mom’s room in the Philippines when Health Carousel called at 4 a.m. to offer Carmen a job. When she got off the phone, Carmen’s mom told her how proud she was. Carmen, then 24, was already working as an ER nurse and had, more than once, delivered a baby in an elevator. “I love to work,” she says. “My father has always told me that you can always do something better with yourself.” In the U.S., she thought, she could improve her skills as well as her earning potential.

After Carmen had waited a couple of years to get her paperwork approved, her parents and sister came to Manila in 2018 to see her off at the airport. “We were all smiling,” she recalls.

The morning after her late-night arrival in the U.S., she says, a Health Carousel rep began shepherding her and two other new hires through a whirlwind to-do list: renting cars, opening bank accounts, getting fingerprinted, applying for Social Security cards, and receiving flu vaccines, all before driving a couple of hours in the snow west from Scranton, Pa., to Williamsport. That night, in the business center of a Comfort Inn, Carmen says the company liaison crowded the three arriving nurses around a laptop and told them to each review and sign a document that was almost 200 pages long.

The Health Carousel rep told them it was basically the same contract they’d already signed, just longer because it included health-care info. Carmen signed after skimming through it, skipping some parts because the rep was headed straight back to Scranton to pick up more recruits and because she was exhausted. “It was a frickin’ long day,” she says.

Carmen with her family in the Philippines.
Photographer: Haruka Sakaguchi for Bloomberg Businessweek

In the Philippines, Carmen had signed a contract with Health Carousel that specified that if she didn’t serve out her required hours of service, she would owe the company $20,000. (Even after paying up, she’d also be barred from working at a competing hospital within 50 miles.) The old contract said such a situation would be “settled amicably” by both sides. The new Comfort Inn forms said that the $20,000 would be “due immediately and in full on or before the last day” on the job, that there would be no partial payment options, and that otherwise “Health Carousel will prepare to immediately file a lawsuit for the full damages” and could obtain an enforceable judgment even if Carmen left the country.

After signing the new documents, Carmen spent a few weeks hanging out without regular pay in an apartment she’d rented, despite what she says had been the company’s promises to the U.S. government to start paying her upon arrival. The contract restricted her from finding other paid work in the meantime. Instead, she watched Netflix, explored dating apps (where she met her boyfriend), and tasted U.S. cuisines while trying to spend as little money as possible. Then Health Carousel put her to work at the Muncy branch of the University of Pittsburgh Medical Center, a $23 billion nonprofit with 40 hospitals that is Pennsylvania’s biggest private employer.

Carmen’s $25.50 hourly pay from Health Carousel started seeming less reasonable when she learned that lots of local positions paid more than $35 an hour. She later learned that UPMC paid Health Carousel $52 or more for each hour she worked, including the three months of orientation that the staffing agency said didn’t count toward her 6,240.

And the work could be brutal. Carmen’s ER unit was supposed to have four nurses caring for a dozen people, but often one to two nurses were missing for one reason or another, meaning Carmen might have to provide intensive care to six patients at once. “The low nurse-to-patient ratio was dangerous for both the nurses and their patients,” her lawsuit alleges. (Health Carousel has denied that claim.) Understaffing meant that there might not be an ER technician on the unit to help check vital signs, wheel patients in and out, feed them, or sanitize those with conditions such as lice.

Carmen found herself harried and overloaded with duties. It rankled that co-workers were making much more money doing the same job. “You have so many things to do and so little time, and you don’t have help,” she says. “It took a toll on my body.”

After days of forced overtime, she felt guilty and worried showing up to work exhausted, less alert than her patients deserved her to be. In a statement, UPMC, which isn’t a defendant in Carmen’s lawsuit, said: “Nurse-to-patient staffing at UPMC Muncy has consistently been at safe and acceptable levels.”

Low staffing levels also meant Carmen’s UPMC managers often told her to stick around after the end of her 12-hour regular shift. “You need to stay, because we can’t keep the patients afloat” otherwise, she says a supervisor told her once. “It’s unsafe.” Carmen didn’t have a choice. Even if her conscience allowed her to walk away from a stretched-thin ER, her contract with Health Carousel wouldn’t.

“If it’s something that the hospital needs, we have to do it,” she says. “We’re not allowed to say no.” So shifts that were supposed to last from 7 p.m. to 7 a.m. stretched to as late as 11 a.m. instead. Yet, as in her months doing the same work during orientation, that forced overtime didn’t count toward the 6,240 hours she owed Health Carousel before she could quit. In its motion to dismiss, Health Carousel says the contract Carmen signed makes clear that the quota was “6,240 regular-time work hours,” so it hadn’t concealed that overtime wouldn’t count.

People who’ve worked through the pandemic for UPMC say Covid made the staffing situation there much worse. “They’re not really doing anything besides saying, ‘Thank you for being heroes,’ ” says Anthony Mwape, a patient-care technician at a UPMC hospital who supports efforts to unionize the staff. “We try our best as PCTs and nurses to work together and be everywhere as much as we can be, but, clearly, that’s really impossible. … People are leaving left and right, and I understand. I don’t blame them one bit.”

UPMC says the union trying to organize its staff has been spreading misinformed claims about staffing issues.

Mwape, who’s worked for UPMC since 2018, says sometimes he’s been one of just two techs juggling a couple dozen patients between them. Other times, one of the two techs gets called up to another floor that has none at all, doubling even that workload. “That’s the culture,” he says, and he avoids discussing these issues with patients. “You want them to feel safe.”

Carmen stays in touch with her family in the Philippines primarily via video calls.
Photographer: Haruka Sakaguchi for Bloomberg Businessweek

By early 2019, Carmen’s energy was wearing thin. “I don’t think this is what I signed up for,” she remembers thinking a year in. “I felt depressed, thinking about the contract looming over me.” But she wasn’t allowed to say that. “It’s in our contract that we’re not supposed to talk about our contract,” Carmen says. “For the first few months, I didn’t know who I could trust.”

But as she gathered with fellow Filipino nurses for post-shift breakfasts or birthday parties, stories spilled out. Other Health Carousel nurses kept abruptly leaving and saying they couldn’t divulge why. Employees secretly compared their pay. (The employee handbook says: “Discussing what you or a co-worker earns is considered indiscreet because salary is a personal matter” and “Any issues regarding our relationship are to be confidentially kept between us.”) Carmen and the other nurses started giving “How’s it going?” an honest answer.

In a little notebook she kept at home to record reminders to herself and places she wanted to someday travel, Carmen started writing notes about the pros and cons of staying at her job, weighing the maddening conditions against the costs of leaving. Her boyfriend, Travis Young, a cable IT worker who tagged along to nurse get-togethers despite not speaking any Philippine language, wanted to know what everyone had been talking about. Eventually she told him.

On one of her days off, sitting on the sofa, he caught her staring off into space. “Are you OK?” he asked.

“Yeah,” she replied, struggling to find the right word. “I think I need to look into my life.” She told him she felt depressed. He asked why. She said it was about her contract, and when he asked what was depressing about it, she explained.

“Don’t do something rash,” he warned her. But as the son of a nurse, he knew she was underpaid. When she showed him her contract, it weirded him out. “It doesn’t look right,” he told her, and helped her find lawyers to talk through her options. After meeting with attorneys, “I felt like cold water washed over me,” Carmen says. “I was opened to the truth about everything.”

When she told her mother she was thinking about quitting, her mom discouraged the idea, because she was worried about deportation. Carmen worried about that, too, but she was becoming desperate. She quit Health Carousel in November 2019. In March 2020, she sued.

Carmen’s lawsuit accuses Health Carousel of an illegal scheme to secure “forced labor” through “threats of serious harm,” by threatening litigation, making nurses fear deportation if they’re disobedient, and imposing those five-figure penalties, which the suit claims are calculated to scare employees out of quitting, not to compensate the company’s actual expenditures.

In his June ruling letting Carmen’s case proceed, Judge Douglas Cole wrote that it would be “absurd” to interpret trafficking law as banning all contract terms that could make it harder to quit. (For example, he noted, a $10 million-salary chief executive officer who’s restricted from defecting to a competing company doesn’t seem like much of a human trafficking victim.) On the other hand, Health Carousel’s assertion that a voluntarily signed agreement could never constitute the basis for a trafficking claim “also seems wrong,” Cole wrote.

“An employer cannot create ever-evolving obligations in an effort to trap an employee into providing additional services,” he continued. Figuring out which contracts go too far “can lead to difficult line drawing exercises,” he wrote, and whether Health Carousel crossed the line will be clearer after unearthing more evidence.

In its unsuccessful motion to dismiss Carmen’s earlier complaint, the company wrote that she “concedes that she both freely entered and freely terminated the employment relationship with Health Carousel.”

Anna Prakash, another lawyer representing Carmen, says that’s a narrow definition of freedom. “A bird in a cage is free to fly around in that cage,” she says. “But that doesn’t mean the bird is free.”

Class actions by allegedly indentured nurses are rare. Staffing agencies’ contracts often restrict how disputes can be handled, such as by requiring hirees to waive the right to a jury trial. Foreign nurses tend to lack the connections and cash that help secure legal representation. The companies tend to be the ones suing, not the foreign workers, and in cases where those ex-employees respond by challenging the legality of the contracts, the companies can offer to simply drop the matter, playing on employees’ fears of debt or deportation. But Carmen has started finding comrades. Physical therapist Jerlin Amistoso’s story of signing her bulked-up agreement with Health Carousel sounds a lot like Carmen’s. The day after arriving from her 24-hour-plus trip from the Philippines to Colorado in 2018, she was so exhausted that her head kept drooping as she tried to review the paperwork. Her Health Carousel rep noticed. “She was laughing,” Amistoso says in an interview. “I was already so sleepy, so I just signed it.”

Like Carmen, Amistoso says her experience bore little resemblance to what she thought she’d signed up for. Her “orientation” period working for the home-health-care firm AccentCare Inc. in Denver, which came with a reduced pay rate and didn’t count toward the four years she owed Health Carousel, kept getting extended for months. She got paid less than half as much as co-workers who were employed directly by AccentCare, and unlike them she was assigned to visit patients spread across the region, driving 100 miles most days between houses. When Amistoso raised such issues with a Health Carousel rep, she says the rep accused her of “insubordination,” reminded her “Health Carousel is the reason why you’re here,” and said she wasn’t allowed to tell anyone else about her concerns. “I couldn’t sleep,” Amistoso says. “I was always crying, I lost my appetite, I lost some weight.”

Then AccentCare decided in 2019 to eliminate all of its Health Carousel positions, and Health Carousel told Amistoso, who had a new mortgage to pay and an infant daughter and a husband with a job in Denver, that she could choose between moving to a job on the other side of Colorado or moving to one in another state. When Amistoso resisted, a Health Carousel manager emailed her a breakdown of the $20,000 the company had supposedly spent on her and would expect back if she quit, including $8,149.33 in “back office administrative support fees.”

Amistoso started worrying that any phone call or snail mail or email could be news of Health Carousel suing her or (much less likely) getting her deported. She screened her phone calls and obsessively checked her inbox. Then, in November, she joined Carmen’s lawsuit as the second named plaintiff.

In its motion to dismiss the latest complaint, the company said Amistoso “decided not to work” and so “fails to plausibly allege that Health Carousel compelled her labor.” AccentCare said in a statement that while it’s not a party to the suit and no longer has a contract with Health Carousel, it “takes very seriously any claim against a staffing agency that supports our patients” and “is fully investigating the matter.”

In December, Kersteen Flores, a nurse who’s also from the Philippines, joined the suit as the third named plaintiff. In the latest complaint, she said Health Carousel assigned her to work in units she felt she lacked adequate training for, then fired her after she took a few days off and told her she owed them $30,000, due immediately. When she told the company she only had $10,000 to pay and was wrestling with “mental and physical health concerns,” Health Carousel told her that “having a plan by which you can resolve your debt will help put your mind at ease.” The company’s filings say its termination of Flores contradicts her trafficking claims: “Far from compelling Flores’ labor, Health Carousel ended its relationship with her.”

In the past few years, staffing companies have, on occasion, been put on the defensive. In 2018, for example, private-equity-backed MedPro Healthcare Staffing announced a settlement with Eden Selispara, a nurse from the Philippines who countersued after being sued for breach of contract. Selispara alleged that when she complained to MedPro for not placing her for two months and paying her only a stipend, MedPro threatened to report her to the government for immigration fraud and said if she quit she’d owe them $150,000 within three days, largely to make up for future profit it had expected to reap from her.

MedPro denied wrongdoing, but it pledged in the settlement not to mislead the government about when nurses would get paid or sue them for any more than $40,000 just for quitting early. “We understand and acknowledge that Ms. Selispara’s experience was not a positive one for her, and we apologize for that,” its chief executive officer said at the time, and the company was “always looking for ways to improve the experience for our employees and candidates.” MedPro, which declined to comment for this story, won a no-bid contract with the state of Florida in 2021 to staff Covid vaccine sites.

Seligman (center), who’s representing Carmen, and his colleagues Valerie Collins (left) and Deborah Schaffer from Towards Justice.
Photographer: Benjamin Rasmussen for Bloomberg Businessweek

A victory for Carmen’s class action could set off a reckoning for the industry, inspiring more litigation and legislative reform efforts, says Jonathan Harris, a professor at Loyola Marymount University’s law school. “A win in this case will send a signal to the recruitment industry generally, at least in the health-care sector, that they can’t continue to use these types of contracts without the very serious risk of the contracts being found unenforceable and the recruitment agencies being called human traffickers,” he says.

Advocates say U.S. government officials could already be doing much more to help nurses and similar workers than they have been. New laws or regulations taking a broader view of “employment” would make it easier to prosecute prominent companies for mistreatment of their subcontracted staff. Agencies like the Labor Department’s Wage and Hour Division and the Federal Trade Commission could each take on aspects of these companies’ business models, as could state attorneys general. “The laws that our clients are suing under are laws that federal and state governments can sue under, too,” says Seligman, Carmen’s lawyer, and they wouldn’t be bound by contract clauses that workers signed restricting where or how they can bring a case.

Barring a settlement or a successful motion to dismiss, Carmen’s suit will progress to depositions and a ruling on class certification. In the meantime, she still has her green card and is now working directly for a hospital in Hershey, Pa., where she’s cared for patients throughout the pandemic. That’s been a different sort of harrowing experience, but she says she’s paid more and treated much better now than when she was with Health Carousel. “I wish there was a time machine” to prevent ever signing that contract, she says. “You just have to keep on moving forward.”

The last time Carmen heard directly from Health Carousel, before they started communicating via lawyers, was in her final week working for the company. It emailed her a nondisparagement agreement and asked for her signature. That one, she didn’t sign.

Read next: In the Poorest Part of the Poorest State, Health Care Is Going From Bad to Worse

To contact the author of this story:
Josh Eidelson in San Francisco at jeidelson@bloomberg.net

To contact the editor responsible for this story:
Jeff Muskus at jmuskus@bloomberg.net

Bret Begun

© 2022 Bloomberg L.P. All rights reserved. Used with permission.