Healthcare provider Kaiser Permanente stepped into San Francisco's bitter hotel labor dispute Tuesday by agreeing to provide two months of medical coverage to 3,500 locked-out workers who were at risk of losing their benefits.

The Oakland-based health plan's decision allows the workers, whose employer-sponsored health insurance with Kaiser is due to expire Dec. 1, to stay out on picket lines while their union holds out for its contract demands, said Mike Casey, president of Unite Here Local 2.

Kaiser's move followed a tie vote last week by the board that oversees the hotel workers' healthcare fund on whether to extend the workers' insurance coverage while contract talks continued. The four board trustees who represent the 14 hotels at the center of the dispute voted against the extension, Casey said.

"By withholding healthcare, they thought people would cave in," Casey said. "I think this weakens the weapon of the lockout, which was designed to starve us out."

Rick Malaspina, a spokesman for Kaiser Permanente's Northern California region, said the nonprofit company was not taking sides in the hotel dispute but merely looking out for the well-being of its clients.

In the past, Kaiser has done the same for other union members engaged in work stoppages, including Southern California grocery store workers last year, he said.

Malaspina said that even though there was no quid pro quo to Kaiser's offer, "we expect that eventually we will be repaid."

He would not disclose how much it would cost the company to continue insuring the workers and their families, a group that totals about 8,000 people.

Fourteen downtown San Francisco hotels have been engaged in a contentious dispute with Local 2 members since Sept. 29, when the union called a two-week strike at four of the hotels.

Management of the 10 other hotels responded two days later by locking out union members from their properties and then extended the lockout to all 14 when the union ended its strike Oct. 13.

The two sides have been at odds over pension contributions, the length of the new contract and proposed increases in the amount employees pay for healthcare.

They are scheduled to return to the bargaining table Friday.

An additional 500 Local 2 members who receive healthcare through PacifiCare Health Systems Inc. and San Francisco's Chinese Hospital are still at risk of losing their insurance Dec. 1, but the union is hoping to work out similar deals with those providers, spokeswoman Valerie Lapin said.