BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
LABOR ASSOCIATION OF WISCONSIN,
VILLAGE OF BUTLER (POLICE
Mr. Kevin Naylor, Labor Consultant, Labor
Association of Wisconsin,
Inc., 2835 North Mayfair Road, Suite 24, Wauwatosa, Wisconsin
53222, appearing on behalf of the Association.
Mr. Larry Plaster, Village Administrator, Village of Butler,
West Hampton Avenue, Butler, Wisconsin 53007, appearing on behalf
of the Village.
The Village of Butler, hereafter Village or Employer, and
Labor Association of Wisconsin, Inc., hereafter the Association,
are parties to a collective bargaining agreement which provides for
final and binding arbitration. The Association, with the
concurrence of the Village, requested the Wisconsin Employment
Relations Commission to appoint a member of its staff to hear and
decide the instant grievance. Coleen A. Burns was so designated on
August 2, 2000. The hearing was held in Butler, Wisconsin on
September 28, 2000. The record was closed on December 10, 2000,
upon receipt of post-hearing written arguments.
The parties stipulated to the following statement of the
Did the Village of Butler violate the terms and conditions of
the collective bargaining agreement by unilaterally instituting
important benefit plan changes without the Association's knowledge
If so, what is the appropriate remedy?
Article 1 Management
Section 1.01: Except as otherwise specifically
herein, the management of the Village of Butler and the direction
of the work force, including but not limited to, the right to hire,
the right to promote, suspend, discipline and discharge for just
cause, the right to decide job qualifications for hiring, the right
to lay off for lack of work or funds, the right to abolish and/or
create positions, the right to introduce new or improved
operational methods, training and evaluation techniques, equipment
or facilities, the right to make reasonable rules and regulations
governing day to day operations, conduct and safety, and the right
to determine schedules of work, shall be vested in management.
Management, in exercising these functions, will not discriminate
against any employee because of his/her representation by any
Union, if so represented.
. . .
Article 2 Recognition
Section 2.01: The municipal employer
Association of Wisconsin, Inc. as the exclusive bargaining
representative of all employees of the Police Department, except
the Chief of Police, Lieutenant, Police clerical and meter persons,
who have chosen the Union to represent them for the purpose of
negotiating in relation to wages, hours, and conditions of
. . .
Article 3 Existing Practices
Section 3.01: In the interpretation of this
nothing shall be construed as an existing practice unless it meets
each of the following tests: It must be:
[a] Long continued
[b] Certain and uniform
[c] Consistently followed
[d] Generally known by the
[e] Must not be
in opposition to the terms and
conditions of this contract.
. . .
Article 17 Insurance
17.01: The Village will maintain the present State
Group Life Insurance program covering all department personnel
eligible therefor. The premium cost will be paid by the Village.
17:02: The Village shall maintain the existing health
insurance coverage or its equivalent for all employees and their
dependents, commencing on the first day of the month following a
thirty (30) day waiting period, with the premium costs to be paid
by the Village.
a] Coverage will
be provided by an HMO type insurance plan
comparable to the Prime Care Plus Plan or insurance of an
equivalent nature. The full cost of the premiums shall be paid by
b] The Village agrees to reimburse each employee and, if
covered, members of the employee's family, for emergency room
visits which require a co-payment by the employee. Receipts for
such visit must be turned over to the Village for reimbursement.
c] The Village shall supplement the health insurance plan in
the are (sic) of vision as follows: Contact lenses up to On (sic)
Hundred Dollars ($100.00) per paid each twelve (12) months with new
or changed prescription. Use of this benefit exhausts lens and
frame benefits for twelve (12) months. Lenses, including single
vision, bifocal, trifocal, lenticular and rose tints 1 and 2 are
covered in full every twelve (12) month (sic) with new or changed
prescription. There is also an annual Seventy Dollar ($70.00)
retail frame allowance. Any additional costs will be paid by the
. . .
The Village and the Association executed their January 1, 1999
December 31, 2001 collective bargaining agreement on April 28,
1999. On or about March 17, 2000, members of the Association
received a notice entitled Important Benefit Plan Changes with
their paychecks. The relevant portion of the attached notice
states as follows:
IMPORTANT BENEFIT PLAN CHANGES
Please notify your affected employees of these changes
All groups will be renewed into a new
pharmacy rider (with no
change in copays other than those listed below) that will allow for
prescriptions written by any primary or specialty physician not
just those who participate in our network to be filled at the
applicable copayment at a network pharmacy. This will eliminate
the need for the member to file claim forms to have a prescription
paid. Members will be able to choose nearly 50,000 network
pharmacies located across the country, including both independent
and chain pharmacies. To take advantage of this enhancement,
members must always present their ID card when having a
prescription filled. The implementation of this rider will also
eliminate the ancillary charge the difference between the generic
and brand name that the member would pay if they requested the
brand name. Both of these changes mean that the member will never
pay more than the highest copayment for covered drugs.
SPECIFIC BENEFIT PLAN CHANGES:
High Option Select Plus Value or Choice
Plus: The out-of-network (Tier 3) deductible and out-of-pocket maximum will change
to $250/750, $1500/3000 (previously $200/600, $1500/3000) and the
prescription drug copays will change to $7/12/25.
. . .
Previously, the prescription drug co-pay had been $5-$10-$25.
On or about March 17, 2000, the Association filed a
alleging that the Village had violated the terms and conditions of
the collective bargaining agreement by unilaterally instituting
important benefit plan changes without the Association's knowledge
or consent. By letter dated April 7, 2000, Village Administrator
Larry Plaster denied the grievance as follows:
The Village of Butler has not violated the terms and conditions
of the Collective Bargaining Agreement between Local N. 312 and the
Village of Butler.
With respect to Section 17.02 of the
agreement, the Village of
Butler has not changed the existing health insurance coverage. We
continue to offer the same Prime Care Plan (now United Health Care)
that was offered when the agreement
was signed in 1999, namely the High Option Select Plus Value
Plan. In fact, it is the same Prime Care plan we enrolled in when
we started with Prime Care in 1995.
Subsequently, the grievance was submitted to grievance
POSITIONS OF THE PARTIES
The Village does not have the right to pass important benefit
changes instituted by the insurance carrier onto the Association's
membership. Rather, it is the obligation of the Village to obtain
an insurance contract that confers the benefits negotiated by the
parties and provided for in the parties' collective bargaining
The Village mistakenly assumes that its contractual obligation
regarding health insurance care is limited to maintaining a
specific plan. Section 17.02, in fact, imposes upon the Village
the duty to maintain "existing health insurance coverage or its
equivalent." Thus, the Village has a contractual duty to maintain
a specific level of benefits, rather than a specific provider or
To the Village's argument that the level of health insurance
coverage has not been significantly reduced, the Association
responds that a twenty-five percent increase in out-of-network
deductibles, coupled with up to a forty percent increase in drug
co-payments, is a significant reduction in benefits. Moreover,
although the Village's argument would be of relevance if the
collective bargaining agreement required the Village to maintain
"substantially equivalent" coverage, the contractual requirement is
to maintain "equivalent" coverage.
The parties bargained the quality of the health insurance
plan, as well as the Village's obligation to pay 100% of the health
insurance plan premiums. While such arguments may be appropriate
for the bargaining table, they are not justification for the
Village to provide less than the contractually mandated health
The Village is not a helpless bystander. Upon receiving the
renewal notice indicating that the health insurance carrier was
changing plan benefits, the Village could have complied with its
contractual obligation by absorbing the increased costs, rather
than passing on the increased costs to the Association's bargaining
unit members. Alternatively, the Village could have contracted
with another carrier to provide the contractually required health
The Village suggests that there is a past practice of
unilaterally changing the level of health insurance benefits.
Section 3.01 identifies five (5) tests that must be met before a
past practice may be established. Application of these tests to
the established facts requires the conclusion that any allegation
of a past practice is without foundation.
The Arbitrator should sustain the grievance. As remedy, the
Arbitrator should order the Village to cease and desist from
violating the collective bargaining agreement and to reimburse the
Association's bargaining unit members for any expenses incurred as
a result of the unilaterally imposed increase in out-of-network
deductibles and drug co-payments.
Effective January 1, 1996, the Village enrolled in a Prime
Care health plan entitled Prime Care Plus. Although there have
been changes in the name of the health plan and the plan provider,
the same health plan has been renewed annually.
Section 17.02 states that health insurance "will be provided
by an HMO type insurance plan comparable to the Prime Care Plus
Plan or insurance of an equivalent nature." The Village not only
provides an HMO type insurance plan comparable to the Prime Care
Plus Plan, but for a name change, the Village provides the exact
The health insurance company has the sole responsibility to
determine the content of the health insurance plans offered by the
company. Indeed, over time, the Village's insurance company has
instituted a number of plan changes and the Butler Police
Professional Association was notified of these changes. For
example, when the Village initially enrolled in January of 1996,
there was a $5 prescription co-payment. In 1998, this co-payment
was changed to a 3 tier system and the co-payments were $5-$10-$25.
None of the changes were a result of any action, request or
decision of the Village. Rather, all of the changes were imposed
unilaterally by the health insurance provider. The Village's group
policy has, and continues to, expressly state that no one other
than an officer of the health insurance company has authority to
change or amend the policy and that no changes can be made without
a signature from an executive officer of the HMO.
In arguing that there have been significant reductions in
benefits, the Association ignores those benefits that have been
unilaterally increased by the insurance provider. The Village
cannot guarantee that, at any point in time, a specific physician
will be in or out of network. Members of the bargaining unit,
however, decide whether or not they choose to use an in network
Construing Section 17.02 as a whole, it is apparent that the
Village is not required to maintain identical health insurance.
Rather, the Village is only required to provide insurance
comparable to the Prime Care Plus Plan. It is significant that,
although the agreement specifically addresses the issue of payments
of premiums and reimbursements for emergency room visits, the
agreement is silent as to the issue of prescription drug co-payments and co-payments for out
of network providers.
The Village continues to provide an HMO type health insurance
plan comparable to the Prime Care Plus plan, as required by the
parties' collective bargaining agreement. The plan provided by the
Village is UnitedHealthCare's best health insurance plan (most
coverage, least co-payments). The Village has acted in good faith;
has not made any unilateral changes to the health insurance plan;
and has met its obligations under the terms of the collective
bargaining agreement. The grievance should be denied.
Section 17.02 of the parties' collective bargaining agreement
governs the provision of health insurance benefits. The first
sentence of Section 17.02, which is the primary clause, requires
the Village to maintain the "existing health insurance coverage or
its equivalent for all employees and their dependents."
With respect to insurance issues, the word "coverage" is
commonly and ordinarily understood to mean "inclusion in an
insurance policy or protective plan" or "the extent of protection
afforded by an insurance policy." See The American Heritage
College Dictionary (Third Edition, 2000). Thus, the most
reasonable interpretation of the first sentence of Section 17.02 is
that the Village is required to maintain certain health insurance
benefits, rather than a specific policy or a named insurance
Section 17.02(a) states as follows:
a] Coverage will be provided by an HMO type insurance
comparable to the Prime Care Plus Plan or insurance of an equivalent
The language of Section 17.02(a) is not a model of clarity.
However, given the fact that Paragraph (a) is a subordinate clause,
the most reasonable construction of this language is that
"coverage" refers back to the "coverage" required by the first
sentence of Section 17.02. Thus, it is the first sentence of
Section 17.02, and not Paragraph (a), that identifies the required
health insurance "coverage." Paragraph (a) identifies the vehicle
by which this "coverage" is to be provided, i.e., an HMO
insurance plan comparable to the Prime Care Plus Plan.
Notwithstanding the Village's assertion to the contrary, it is
not significant that Section 17.02 addresses the payment of
premiums and reimbursements for emergency room visits, but is
silent with respect to the issue of prescription drug co-pays or
deductibles for out-of-network providers. The failure to address
prescription drug co-pays or out-of-network deductibles would only
be significant if the contract contained an exhaustive list of the
benefits included in the "existing health insurance coverage."
In summary, Section 17.02, construed as a whole, requires the
Village to maintain the "existing health insurance coverage, or its
equivalent." The parties' 1999-01 collective bargaining agreement
was executed on April 28, 1999. At that time, the out-of-network
deductible was $200 per individual and $600 per family and the
prescription drug co-pay was $5-$10-$25. Inasmuch as these are the
out-of-network deductibles and prescription drug co-pays that
existed at the time that the parties entered into the collective
bargaining agreement, these deductibles and co-pays are part of the
"existing health insurance coverage", as that term is used in
As the Village argues, UnitedHealthCare unilaterally
determined that the 2000 health insurance plan, unlike the 1999
health insurance plan, would have an out-of-network deductible of
$250 per individual and $750 per family and a prescription drug co-pay of $7-$12-$25.
UnitedHealthCare also unilaterally determined
that it had the sole responsibility to determine the content of the
health insurance plans offered by UnitedHealthCare. Inasmuch as
the Association contracts with the Village, and not the insurance
carrier, the obligation to provide the contracted health insurance
coverage rests upon the Village and not the insurance carrier.
Thus, the fact that UnitedHealthCare did not, or would not, provide
the health insurance coverage required under the parties'
collective bargaining agreement does not relieve the Village of its
obligation to provide the required health insurance coverage.
Changes that occurred prior to the time that the parties
entered into their 1999-01 collective bargaining agreement are part
of the "existing health insurance coverage." Thus, the argument
that the Village has provided "equivalent" coverage because the
increases in the out-of-network deductible and the prescription
drug co-pay have been offset by prior years' benefit increases is
It is not evident that the increase in the out-of-network
deductibles and the prescription drug co-pays were accompanied by
any improvement in benefits. It is true that, in August of 2000,
UnitedHealthCare announced that it was entering into a multi-year
contract with Merck-Medco. This announcement, however, expressly
recognizes that the "benefit program remains unchanged." Assuming
arguendo, that the use of the word "equivalent" permits some
balancing of health insurance coverage gains and losses, the record
fails to demonstrate that the loss in health coverage resulting
from the increase in the out-of-network deductibles and the
prescription drug co-pays have been offset by any gain in health
The Physician and Provider Directory specifically states that
"All published information is subject to change without notice."
It is not evident that such a disclosure is new to the 2000 health
insurance plan. Thus, for the purposes of this grievance, it is
immaterial that the Village cannot guarantee that, at any point in
time, a specific physician will be in or out of the network.
As the Association recognizes, the Village is not
contractually obligated to have the required health insurance
coverage provided by UnitedHealthCare. Thus, upon learning that
UnitedHealthCare would not provide the health insurance coverage
required by the collective
bargaining agreement, the Village had the contractual right to
purchase the required coverage from another carrier, in accordance
with the provisions of Section 17.02(a). It is not evident that
the Village made such an attempt.
Section 17.02 does not require the Village to notify the
Association of health insurance changes. The Village, however, has
the right to notify the Association that the health insurance
carrier is modifying the existing health insurance coverage and to
request that the Association reopen negotiations on health
insurance. Although the Association is not contractually obligated
to reopen negotiations, such a request by the Village may have
produced a mutually agreeable resolution of the issue.
As the Village argues, in prior contract years, the Village
received notice that its health insurance carrier was amending the
health insurance plan during the term of a collective bargaining
agreement. Contrary to the argument of the Village, the record
does not demonstrate that the Association was aware on any of these
amendments, other than the amendment that occurred in January of
As stated above, the Association was aware of the health
insurance amendment that occurred in 1999. The testimony of Dave
Wentland, the acting President of the Association, demonstrates
that the 1999 amendment was not a unilateral amendment because the
Association's membership knowingly accepted this amendment.
The failure of the Association to grieve unilateral amendments
of the health insurance that occurred in prior contract years does
not waive the Association's right to grieve unilateral amendments
that occur during the current contract term. Additionally, where
the Association did not have knowledge of a unilateral amendment in
the health insurance plan, the failure to grieve the amendment is
not evidence that the Association agrees that the collective
bargaining agreement permits such unilateral amendments.
As the Association argues, the out-of-network deductibles
increased by twenty-five percent and the prescription drug co-pays
increased by twenty to forty percent. Contrary to the argument of
the Village, such increases are significant.
In conclusion, when the Village entered into the 1999-01
collective bargaining agreement, it obligated itself to provide
"the existing health insurance coverage or its equivalent." When
the Village provided health insurance coverage with an out-of-network deductible of $250
per individual and $750 per family and
prescription drug co-pay of $7-$12-$25, the Village failed to
provide "the existing health insurance coverage, or its equivalent.
By failing to maintain the out-of-network deductible of $200
per individual and $600 per family and the prescription drug co-pay
of $5-$10-$25, the Village has violated the parties' collective
bargaining agreement. The appropriate remedy for this contract
violation is to order the Village to reimburse all employees
covered by the Village of Butler Professional Police Association
collective bargaining agreement for all expenditures incurred as a
result of the unilateral increase in the existing out-of-network
deductibles and prescription drug co-pays.
Based upon the foregoing, and the record as a whole, the
undersigned issues the following
1. The Village of Butler violated the terms and conditions of
the collective bargaining agreement by unilaterally instituting
important benefit plan changes without the Association's consent.
2. In remedy of this violation, the Village is to reimburse
all bargaining unit employees for all expenditures incurred as a
(a) the unilateral requirement that these employees pay an
out-of-network deductible of more than $200 per individual and $600
per family and
(b) the unilateral requirement that these employees pay a
prescription drug co-pay of more than $5-$10-$25.
Dated at Madison, Wisconsin this 20th day of April, 2001.
Coleen A. Burns, Arbitrator