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East Rutherford PBA Local 275 appealed after a state administrative law judge nullified an arbitrator’s ruling that the borough repay the money.
The judges homed in on a few provisions of the CBA, including one that said the contract “shall not annul or modify existing applicable provisions of State or Federal Laws.”
They also cited another that states all CBA benefits “shall be maintained not less than the highest standards in effect at the time of the commencement of the collective bargaining negotiations between the parties leading to the execution of this Agreement.”
The CBA also specifies that “all existing benefits, rights, duties, obligations and conditions of employment applicable to any Employee pursuant to any rules, regulations, instruction, directive, memorandum, practice, statute or otherwise shall not be limited, restricted, impaired, removed or abolished,” the appeals judges noted.
What’s more, the CBA specifically states that “[a]ny change in carrier or source of coverage shall result in equal or better coverage…. All increases in premiums during the term of this Agreement shall be borne entirely by the Borough pursuant to present practice,” they wrote in their decision.
The borough has voluntarily participated in the State Health Benefits Program since December 2001, offering medical insurance coverage to those PBA members and their families who chose to enroll in its NJ Plus or HMO plans.
From 2002 to the end of 2006, PBA members made a five-dollar co-payment in connection with each office visit to a physician.
However, the state program doubled co-pays on doctor visits that the East Rutherford PBA members had been following for five years, and the borough followed suit, effective Jan. 1, 2007.
The union filed a grievance that was rejected by East Rutherford officials, so the PBA demanded arbitration.
The borough responded by asking the New Jersey Public Employment Relations Commission (PERC) for a scope of negotiations determination, seeking a restraint of binding arbitration of the grievance. PERC refused the request.
“To restrain arbitration, we would have to first conclude that the PBA is not entitled to pursue its claim that the Borough was obligated to maintain a contractual level of benefits,” PERC wrote. “Such a holding would be a departure from well-established case law. Purchasing insurance from the SHBP does not insulate an employer from enforcement of an agreement over a level of health benefits.”
An employer “must reconcile its contractual obligations with its choice of health insurance benefits,” the commission added.
The collective bargaining agreement lasted from Jan. 1, 2005 until Dec. 31, 2009.
On Dec. 29, 2009, two days before it expired, the arbitrator ruled that the borough unilaterally doubled the co-pay as a result of the state co-pay increase – despite the “not less than the highest standards” provision in the agreement, as well as the one that said the terms “shall not be limited, restricted, impaired, removed or abolished.”
She directed the borough to reimburse the employees “for co-payments in excess of five dollars for the period commencing on January 1, 2007 and continuing thereafter until the expiration of the CBA,” the appeals court noted.
The borough petitioned a state administrative law judge, who granted a request to vacate the arbitrator’s ruling because it was “contrary to existing law and the public policy of New Jersey.”
The arbitrator’s June 1, 2010 decision “exceeded [her] authority,” he ruled.
However, the appellate panel said the CBA “does not compromise public policy by undermining the SHBC’s determination” to uniformly increase co-payments for doctor visits.
The judges pointed to the “preservation of rights” provisions of Article 7 of the CBA that the arbitrator focused on – which, they said, was clearly within her authority to do.
As the contract spells out, benefits that existed when the CBA was signed could not be “limited, restricted, impaired, removed or abolished,” the appeals court concluded.
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