What’s Wrong with Rite Aid is What’s Wrong with America



Americans are fighting an uphill battle for health care reform. As the debate rages for President Barack Obama’s sweeping health care reform bill, Americans are gaining quite an education. The public now knows, for example, that health related industries, including insurance companies, do not operate for profit in other industrialized countries, and that accounts for the much higher cost of health care here. It is also clear that the problems lie not just with doctors, hospitals or even insurance companies. It includes related industries such as drug store chains. Fortune 500 company Rite Aid exemplifies everything that is wrong with health care in the United States.

Rite Aid operates nearly 5,000 stores nationwide. It is the third largest drug store chain in the US, behind Walgreen’s and CVS. Alexander Grass opened the predecessor to Rite Aid in Pennsylvania in 1962. After that, Grass wasted no time turning his business into a sprawling chain. Aggressive buyouts and acquisitions of other stores and businesses led Rite Aid to a landmark billion dollars in sales in 1983. Subsequent partnerships with the health chain, General Nutrition Company, and the on-line drug outlet, drugstore.com, made Rite Aid a powerful conglomerate, controlling access to a significant portion of US drugs and health related products.

Long criticized for its aggressive policies, the ugly side of this giant became painfully obvious in 1999. Consumers complained about Rite Aid’s aggressive marketing tactics and practices, such as selling products past their expiration dates. Like many other abusive and highly profitable industries, Rite Aid hired lawyers, paid fines, and continued their crooked practices.

Alexander Grass eventually turned Rite Aid over to his son, Martin. In 2002, Martin Grass forcibly stepped down after  complaints of massive fraud surfaced against him. Grass’s abuses ranged from annoying his neighbors with his noisy executive helicopter to charges of massive fraud by the US Attorney General. In 2004, Rite Aid agreed to pay $7 million to settle allegations that the company submitted false prescription claims to United States government health insurance programs.

Martin Grass was ultimately convicted and sentenced to eight years for obstructing justice and conspiring to defraud Rite Aid and its shareholders. A federal judge ultimately trimmed one year off his sentence, the Wall Street Journal reported in 2005.

Because of these and other scandals Rite Aid suffered some losses. It closed many stores on the West Coast, but proved resilient enough to purchase the Eckerd drug store chain in 2007.

Given this track record, it comes as no surprise that Rite Aid is a legendary opponent to labor organization. Beginning in 2006, workers at the Lancaster (California) warehouse, a large Rite Aid distribution hub, tried to organize under the International Warehouse and Long shore Union. Grievances included working conditions, such as being forced to work in 100 degree heat, loss of benefits and other things.  

The IWLU agreed that Rite Aid workers needed a union, and collected authorization cards from one-third of the Lancaster workers. Then, when the Rite Aid organizers filed the union authorization cards with the National Labor Relations board, all hell broke loose. Rite Aid launched an aggressive anti-union campaign to try to prevent the workers from organizing. Workers were taunted, bullied, threatened and fired. Nonetheless, in a March 2008 election, the workers prevailed; IWLU Local 26 became the legal negotiating body for the Lancaster Rite Aid workers.

The battle is not over, though. Rite Aid refuses to negotiate seriously with the union. Delay after delay leaves the union, and the employees, frustrated. In February, 2009, workers held rallies in four states to encourage Rite Aid retail outlets to support the Employee Free Choice Act and to urge Rite Aid to negotiate and reach a fair union contract with its Lancaster distribution center workers. Hundreds of union members from multiple industries attended the rallies in support of the Rite Aid workers. This and subsequent rallies gained much sympathetic news coverage, but no results. Rite Aid still will not negotiate.

Instead, the company contracted with Oliver Bell and Associates, a well known anti-union organization based in Texas, to oust the union. Bell is training Rite Aid managers and supervisors on how to engineer a decertification election to get rid of the union. 

So what can be done? To take action on behalf of the Rite Aid workers, contact Mary Sammons, the CEO of Rite Aid. Urge her to stop stalling and do what is right by the workers – namely, negotiate with their legally-formed union.

Rite Aid’s anti-labor policies are, however, indicative of much larger issues. What’s wrong with Rite Aid is what’s wrong with American capitalism. It is a rotten system based on cut-throat competition, unfair business practices, greed and lust for profit. It is a prime example of what is wrong when profit enters any part of the picture regarding our nation’s health care. 

Even the far reaching reforms backed by Barack Obama do not go far enough. We should support health care reform, but no one should assume that the battle ends there. We must fight capitalism at every turn where our health is concerned, and that includes drug store chains.