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The borough appealed to the state’s highest court after an appeals panel reinstated an arbitrator’s decision that the borough pay East Rutherford PBA Local 275 the money.
However, the Supremes said its argument was “without merit” and affirmed the appeals court ruling.
The justices pointed directly to a provision of the union’s collective bargaining agreement with the borough that any “change in carrier or source of coverage shall result in equal or better coverage,” and that the benefits, terms, and conditions of employment not specifically set forth in the CBA “shall be maintained at the highest standard in effect at the time that the CBA took effect.”
The borough has to bear “all increases in premiums” during the term of the agreement, the justices noted.
They also cited a preservation of rights provision that cannot “annul or modify existing applicable provisions of [s]tate or [f]ederal [l]aws.”
The arbitrator’s award “was not inconsistent with any of the CBA’s provisions, individually or taken as a whole,” the state’s highest court wrote in this morning’s decision. “Therefore, the award was not procured by undue means and the Arbitrator did not exceed her authority.”
It also “does not directly conflict with existing law or public policy,” the justices added.
The borough began voluntarily participating in the State Health Benefits Program in 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,” court papers show.
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, a state appeals court in July 2011 found that 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.
The borough appealed that ruling – leading to today’s Supreme Court decision.
Courts aren’t supposed to “second-guess an arbitrator’s interpretation” of the CBA, regardless of their view of the arbitrator’s position, the justices said.
They can vacate it on statutory grounds, including if it was “procured by corruption, fraud or undue means,” if “the arbitrators exceeded or so imperfectly executed their powers that a mutual, final and definite award upon the subject matter submitted was not made,” or if the arbitrator’s ruling is “contrary to existing law or public policy,” the states’s highest court noted.
That didn’t happen in this case, the Supremes found.
“The arbitration award is sustained because it was not procured by undue means, the Arbitrator did not exceed her authority, the award was not contrary to existing law or public policy, and the award was a reasonably debatable interpretation of the CBA,” the justices wrote.
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