BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
CLINTONVILLE SCHOOL DISTRICT
(Contingent Insurance Premium Grievance)
Mr. David A. Campshure, Executive Director,
Bayland and United Northeast Educators, on behalf
of the Clintonville Education Association.
Davis & Kuelthau, S.C., by Attorney Robert W. Burns, on
behalf of the Clintonville School
At all times pertinent hereto, the Clintonville Education Association (herein the
the Clintonville School District (herein the District) were parties to a collective bargaining
covering the period July 1, 1999 to June 30, 2001, and providing for binding arbitration of
disputes between the parties. On June 11, 2002, the Union filed a request with the
Employment Relations Commission (WERC) to initiate grievance arbitration over the
cancellation of a contingent premium clause in its health insurance policy and requested that
Commission provide a panel of WERC staff members from which to select an arbitrator.
selected the undersigned to hear the dispute and a hearing was conducted on October 17,
proceedings were transcribed and the transcript was filed on November 1, 2002. The parties
briefs on December 23, 2002. The District filed a reply brief on January 21, 2003, and the
a reply on January 24, 2003, whereupon the record was closed.
The parties stipulated to the framing of the issues, as follows:
Is the grievance moot?
If not, did the District violate the parties' agreement when it terminated the health
insurance contingent premium arrangement with WPS?
If so, what is the appropriate remedy?
1.1 Collective Bargaining
The Board recognizes the
Association as the exclusive bargaining representative on
wages, hours and conditions of employment for all contracted teaching employees.
This includes classroom teachers, librarians, school psychologist, school nurse,
guidance counselors and social workers, but excludes the following:
Administrators, supervisors, principals, assistant principals, local vocational
education coordinator, guidance director, business manager, and other
Noninstructional personnel such as paraprofessionals and aides
clerical, maintenance, and operating employees.
. . .
ARTICLE II MANAGEMENT
The Association recognizes the
Board of Education, on its own behalf, and on behalf
of the electors of the District, hereby retains and reserves unto itself, authority, duties
responsibilities conferred upon and
vested in it by the laws and the Constitution of the
State of Wisconsin, and of the United States, including, but without limiting the
generality of the foregoing, the right:
A. To the
executive management and administrative control of the school system
and its properties and facilities, and the activities of its employees within the
total school program.
. . .
2.2 Limitation of Rights
The exercise of the foregoing powers, rights, authority,
duties and responsibilities by
the Board, the adoption of policies, rules, regulations, and practices in furtherance
thereof, and the use of judgment and discretion in connection therewith shall be
limited only by the specific and express terms of this Agreement, and then only to the
extent such specific and express terms hereof are in conformance with the
Constitution and laws of the State of Wisconsin, and the Constitution and laws of the
. . .
ARTICLE VIII INSURANCE
8.1 Hospitalization Major
Medical Insurance and Dental Insurance
A. A joint
insurance committee composed of two (2) Board members, two (2)
teachers, and an administrator selected by the four, shall evaluate and select
the carrier of the insurance and set the limits of coverage. The limits of
coverage shall not be less than those provided by WPS/HMP Medical
Insurance group number 30690.1 and WEA Trust Dental Insurance group
B. The coverage
shall include a coordination of benefits clause.
C. There shall be
an open season for enrollment as provided by the carrier.
D. The Board will pay
100% of the
single monthly premium for individual health
coverage and 92% of the monthly premium for family health coverage.
WPS/HMP Value Care Review Health Insurance Program shall be
implemented on December 1, 1994.
WPS/HMP Value Care Review Health Insurance Program shall
contain a $100 per individual, $200 per family, front-end deductible.
E. The Board
will pay 100% of the monthly premium for individual dental
coverage and 88% of the monthly premium for family dental coverage.
contributions will be prorated as in the teacher's contract in cases
where employment is considered less than full-time but equal to or more than
G. Teachers shall
enroll in either the individual or family coverage in order to be
eligible for premium benefits.
H. If the parties
agree to change insurance carriers during the term of the
contract, all monies saved will be applied to the salary schedule.
ARTICLE XXII TERM OF AGREEMENT
22.1 Agreement Application
This Agreement shall supersede any
rules, regulations or practices of the Board,
which shall be contrary to or inconsistent with its terms.
. . .
Article VIII, Section 8.1, Paragraph A of the parties' collective bargaining agreement
a joint insurance committee to evaluate and select the District's health insurance carrier and
limits of coverage. It also provides that the baseline for the limits of health insurance
be those provided in WPS/HMP Medical Insurance Group No. 30690.1. Under the
terms of this
clause, and pursuant to the action of the committee, the District has, for a number of years,
WPS as its health insurance carrier.
In 1997, Jenny Goldschmidt, the District's Business Manager, discovered that the
contained a contingent premium arrangement. Under the terms of this provision, if
District would pay somewhat higher health insurance premiums in return for which, if the
claims experience proved lower than anticipated, and thus the premiums paid were greater
deemed necessary, WPS would rebate the difference to the District. Goldschmidt advised the
Board of the existence of this provision and was instructed to activate it, which she did,
consulting the Union or the joint insurance committee. As a result, and due to a low claims
experience that year, in February 1998 WPS reimbursed the District approximately
which was, in turn, paid out to the employees and retirees participating in the District's
insurance plan, again without consultation with, or objection by, the Union or the joint
The District continued the contingent premium arrangement in 1998, resulting in another
more than $100,000.00 in 1999, which was again returned to the employees. Thereafter, the
continued the contingent premium arrangement from year to year, but no further rebates
During the 2000-01 school year Goldschmidt reviewed the District's claims
escalating premiums and determined that the contingent premium arrangement would not
a premium rebate and was no longer fiscally advantageous. Also during that year, the joint
committee, of which Goldschmidt was a member, met to determine whether to continue with
same insurance carrier. The Union representatives voted to switch to the WEA Trust
and the School Board representatives voted to stay with WPS. Goldschmidt also voted to
WPS, but without the contingent premium arrangement, but the Union members objected to
the status of the arrangement in the vote, so the final vote was to remain with WPS without
addressing the issue of the contingent premium arrangement. Thereafter, Goldschmidt, at the
of the School Board and without consulting the committee or the Union, cancelled the
premium arrangement for the 2001-02 school year. The effect of the cancellation was to
District's premium increase for that year from 22.63% to 18.63%. This, in turn, generated
of approximately $30,000.00, which was incorporated into the salary schedule.
The Union grieved the District's action, alleging violations of several contractual
and maintaining that, before taking such action, the District was obligated to
negotiate the matter with the Union and obtain the consent of the committee. As
the Union sought to reinstitute the contingent premium arrangement. The grievance was
proceeded through the steps of the contractual grievance procedure to arbitration. Additional
will be referenced, as necessary, in the discussion section of this award.
POSITIONS OF THE PARTIES
The Union asserts that the grievance is not moot, an issue the District raised for the
at the hearing. The primary issue to be addressed is whether the District violated the
unilaterally canceling the contingent premium agreement and that is not a moot point, even
there would not have been a refund for 2001-02. It is still possible that refunds could be
future years. As to remedy, if the arrangement can be reinstituted, it should be, and if not, a
calculation of what the potential refund would be should be made and the District should
the members accordingly. Also, cancellation of the arrangement affected health insurance
which, in turn, impacted the members' wages. As wages are a mandatory subject of
District was required to negotiate the change with the Association because it affected wages.
The District violated the agreement by ignoring the vote of the joint insurance
The committee exists to select the District's insurance carrier and set limits of coverage. In
the committee voted on switching carriers. Two Association members voted to switch to
Board members voted to retain WPS with the contingency and the Business Manager voted to
WPS without the contingency. The Association members stated the Association's desire to
the contingency, so that issue was removed from the vote. The District's subsequent action,
therefore, did not have the committee's approval.
Apart from obtaining the committee's approval, however, the District had an
obligation to negotiate the change with the Association. Sec. 111.70(1)(nc), Wisconsin
Qualified Economic Offer law, requires school district professional employees to bargaining
and benefits, including health insurance premiums, as a total package. According to the
Memorandum of Agreement Costing in the current contract, the parties agreed to a
economic package for 1999-00 and 2000-01, with the salary schedule to be adjusted after
changes in the health and dental insurance rates and other expenses. Because health
premiums affect the total economic package, any changes must be negotiated, regardless of
the changes will result in more wages being added to the package. In this case, reducing the
premiums in 2001-02 resulted in a correspondingly higher increase in 2002-03 than if the
had been left in place, resulting in a wage freeze that year. Thus, the gains achieved in
at the expense of salary increases in 2003-03. The District is required to negotiate such
decide them unilaterally. The grievance should be sustained and the contingency ordered to
The District argues that, under the contract, the joint insurance committee does not
authority to remove or retain the contingent premium arrangement. The committee's role is
to evaluating and selecting the District's insurance carrier and setting the limits of coverage.
is nothing in the contract language indicating that the committee had any additional similar
authority over similar issues, thus restricting its role to the specific tasks identified in the
The Management Rights clause, however, is a broad delegation of authority, indicating the
the parties to delegate authority as narrowly or broadly as they saw fit.
The terms evaluate, select and set limits are very specific and their dictionary
not encompass the meaning sought by the Union here, to cover decision-making regarding
contingent premium arrangement. Clearly, therefore, the parties intended, and created, a
with a limited function. In no way does the contingent premium clause involve evaluation or
of the carrier or setting the limits of coverage, as established by the testimony. The decision
activate or remove that policy provision goes beyond the committee's function and the
no obligation to consult the committee or refer this matter to it.
The matter is also moot and not arbitrable. The arbitrator's authority is
circumscribed by the
contract and is limited to an alleged violation, misinterpretation, or misapplication of the
The arbitrator cannot, therefore, go outside the contract to expand the authority of the
committee beyond what the contract provides. To the extent, therefore, that the Union seeks
expand the committee's scope beyond the clear limit of Section 8.1, the arbitrator is without
to grant the relief requested. Coverage issues and administration of the insurance contract
the purview of the District and the mere mention of the insurance plan in the contract does
such issues within the arbitrator's authority. The arbitrator cannot, therefore, uphold the
The Union believes that the District had a duty to bargain over the cancellation of the
contingency agreement, because the savings generated by the action impacted the wage
Nevertheless, the Union cannot identify any contractual provision that has been violated,
misinterpreted, or misapplied by the District. The Union cannot point to any violation of
contractual provision cited in the grievance. Further, no evidence suggests that cancellation
provision was not a sound financial decision. The Union appears to argue that cancellation
provision was a mandatory subject of bargaining, but the management rights clause confers
to make financial decisions on the District, unless otherwise restricted by the contract, which
action was not. There was no violation of the contract in the District's action. Further, any
bargain issue is moot because the District's action did not harm the Union. In fact, the
benefited from the reduced
premiums in that their wages were correspondingly increased. The Union argued that
was short-sighted because of potential premium rebates in the future, but these are
the decision was, ultimately, discretionary with the District. Further, this cause duty
is appropriately brought as a prohibited practice, not as a grievance arbitration. Also, any
bargain argument is waived where, as here, no demand for bargaining was made after the
received notice of the District's action. Finally, the Union did not seek to bargain the issue
District activated the provision in the past. That acquiescence establishes a binding past
which forecloses the Union from seeking to bargain it now. The grievance should be
The Union in Reply
The District incorrectly states that it unilaterally activated the contingent premium
arrangement in 1997. Under the provisions of the QEO law, it was required to return
savings to the employees as wages. The Union did not object because it agreed with the
Thus, the District cannot argue from the Union's lack of objection when its action was
law and the Union agreed with the outcome.
It should also be noted that when the committee voted on whether to change carriers,
one voter of the five was in favor of canceling the contingency Jenny Goldschmidt,
Manager. Later, Goldschmidt, alone, cancelled the arrangement.
The grievance is also within the arbitrator's authority. The Union identified several
contractual provisions it believes were violated and the arbitrator can rule on those
a violation is determined, the arbitrator can also order reinstatement of the provision. Despite
District's assertion of broad management rights, those rights are limited by specific
restrictions. In this case, both Article VIII, Section A and the Memorandum of
regarding costing restrict management's authority to unilaterally terminate the contingency.
It is also debatable whether there has been no harm to the CEA members, as the
contends. Eliminating the contingency reduced premiums slightly, but then led to a greater
increase the next year, resulting in a reduced pay grid under an imposed QEO. Had the
been retained, there might have been a smaller premium increase in 2002-03, leaving some
be added to the pay grid that year.
Contrary to the District's argument, the Union did seek to negotiate the issue, as
the grievance, which specifically calls on the District to negotiate the issue. Thus, the Union
District on notice at the outset of the process that removal of the contingency was an issue
parties had to negotiate.
Finally, the District maintains that the proper posture for the case is as a prohibited
complaint, rather than a grievance arbitration. The WERC, however, has a long tradition of
matters to arbitration when the are within the scope of the collective bargaining agreement.
the grievance cites several violations of the contract and, therefore, the case is properly
The District in Reply
The matter is moot and the District has not waived its arguments with respect to
It is generally recognized that the right to contest issues such as arbitrability and mootness
raised at the hearing. Furthermore, the only rational resolution, other than dismissal, would
order the members to return the money distributed after the cancellation of the contingency.
union seeks calculation of whether a reimbursement is due and then order of the same, but
does not support such an argument. There would have been no reimbursement from the
and the money that was reimbursed from the cancellation was paid out. The Association, in
is entitled to no remedy beyond what has already been paid. If the Union wanted to bargain
as it contends, it should have refused the refund, demanded to bargain and then filed a
practice if the District refused.
The District, did not, as the Union suggests ignore the will of the joint insurance
The testimony reveals that the committee decided to stay with WPS, and that was all. It did
consider the issue of the contingent premium arrangement. It fulfilled its role under the
language, but did not go beyond it because the contingency was outside its purview. Thus,
District did not act contrary to the will of the committee when it cancelled the contingency.
the record does not establish that the Union members on the committee raised any clear
canceling the contingency, although, even if they had it would have been advisory only. The
was a financial administrative matter, reserved to the District, which benefited all groups.
no contract violation and the grievance should be dismissed.
At the outset, the question arises whether the grievance is moot. The District
argues that this
is so mainly because the remedy sought by the Union is not feasible. That is, the revocation
contingency arrangement resulted in insurance premium savings, which were distributed to
bargaining unit members. Conversely, had the arrangement been left in place, as the Union
no savings would have been generated due to premium increases. Thus, a finding for the
not result in a reimbursement to the members, but might
require a reimbursement from them to the District of monies they received as a result
termination of the contingency. The District also raises issues of arbitrability by maintaining
grievance seeks to have the arbitrator confer new authority on the joint insurance committee,
he cannot do under the language of the contract, and seeks an order requiring the District to
the issue of whether to cancel the contingency, which is more properly the subject of a
practice complaint than a grievance arbitration.
I find that the grievance is arbitrable and is not moot. It is arbitrable because
the Union has
made allegations of violations of specific contractual provisions by the District. It is within
of the arbitrator to determine whether, in fact, such violations have occurred and, if so, to
appropriate remedy. It is not moot because the arbitrator is not limited in fashioning a
remedy to just
the requests or recommendations of the parties. It may be that, if the grievance is upheld,
reimbursement to the Union membership would not be appropriate and that a retroactive
might require distributed monies to be returned to the District. That is not to say, however,
arbitrator is bound to do either and he may fashion a feasible remedy separate from those
the arguments of the parties. The fact that a specific remedy may not be practical under the
circumstances, therefore, does not render the entire matter moot.
The Union bases its arguments on the propositions that the District had a
obligation to defer to the joint insurance committee on whether to continue the contingent
arrangement, or, failing that, to bargain with the Union over the issue. The first argument
Article VIII, dealing with health insurance. The joint insurance committee created by Article
Section A. is specifically tasked to "evaluate and select the carrier of the insurance and set
of coverage." In interpreting these terms, absent evidence that the parties have interpreted
otherwise, they should be given their ordinary and popular meaning. The word "evaluate"
the carrier of insurance and, in this context, connotes assessing a particular carrier, either
predetermined standard or other plans. "Select," which also refers to the insurance carrier,
means that the committee is to decide which among available insurance carriers the District
utilize. "Set the limits of coverage" authorizes the committee to determine, within prescribed
the specific health benefits to be covered by the plan and the extent thereof. There is no
the parties have expanded the definitions of these terms beyond the meanings I have listed.
function of the committee is, therefore, narrowly defined and, absent evidence to the
limited to its terms.
The contingent premium arrangement is a provision contained within the WPS
insurance plan. The arrangement presumably has been available since the joint committee
selected WPS as the District's health insurance carrier. There is no evidence that the
contingency played a part in the decision to contract with WPS, or that either of the
parties was even
initially aware of its existence. The testimony indicates that the provision was only
the fact by the District's business manager, who activated it without consultation with, or
by, either the committee or the Union. Suffice it to say, then, that on this record it does not
that the contingency played any part in evaluating or selecting WPS as the District's health
carrier. Even if it did, however, this does not automatically authorize the committee to
whether the clause should be activated. The existence of the contingency does not in any way
the limits of coverage of the policy. Its purpose is entirely concerned with the level of
the availability of a rebate should premiums outweigh claims. Assuming, therefore, that the
was part of the committee's consideration in opting for the WPS plan, once the plan was
committee's work ended. The decision whether to activate the contingency arrangement then
others, because it was outside the committee's mandate.
When the joint committee met in 2001 to discuss changing carriers there
appear to have been
two different plans considered, the existing WPS plan, which the District representatives
a plan offered by the WEA Trust, preferred by the Union. At that time, Goldschmidt raised
of canceling the contingency, but the Union members demurred on the basis that the only
before the committee was the choice of carrier, not whether to continue the contingency
Thus, the committee voted to keep the WPS plan, but did not address the issue of the
arrangement. Clearly, therefore, Goldschmidt's subsequent action did not contravene the
the committee. Furthermore, the fact that the committee did not want to discuss the
combined with the fact that it had never considered it before, permits the inference that the
members did not feel it was an issue properly before them. I find, therefore, nothing in the
language or the practice of the parties that indicates that acting on the contingent premium
arrangement was part of the committee's intended or actual responsibilities. Consequently, I
find a violation on Article VIII of the contract.
The Union's second argument stems from an alleged failure on the District's
part in its duty
to bargain with the Union over the question of whether to cancel the contingency. This
extends from the fact that under the Qualified Economic Offer Law,
Sec. 111.70(1)(nc), Wis. Stats.,
the parties are restricted to total package bargaining on economic issues and had, under the
agreement, agreed to a 3.8% total package for 1999-00 and 2000-01. In the Union's view,
required the District to not only return a portion of any insurance savings to the membership,
to negotiate with the Union over any matter which would affect the premium rate and, by
the wage schedule. By unilaterally canceling the contingent fee arrangement without Union
the District failed to do this.
I am not persuaded by the Union's arguments for a variety of reasons. First,
as both parties
have pointed out, the Arbitrator's function is to interpret and enforce the collective
agreement. The QEO is a matter of state law, not contract, as is the District's duty to
Therefore, if the District has violated the law with respect to implementation of the QEO or
bargaining over wages, hours and conditions of employment, the Union's recourse is to
the District bargain the issue. If the District fails to do so, the Union may then file a
practice complaint, which is the proper forum for alleged statutory violations. The Union has
and I am aware of, the Commission's practice of deferring to arbitration matters that
arise under contract as well as statute. In this case, however, the contract sections cited by
Union, in my opinion, do not cover the subject matter raised herein. The Memorandum of
Understanding regarding Costing merely states that the parties have agreed to a 3.8%
package in each
year and that the salary schedule shall be established after the insurance rates have been
This does not compel the District to bargain over a policy provision that may alter insurance
only to use the actual rates when setting the salary schedule. The Union concedes that the
applied the savings from canceling the provision to the schedule and, therefore, it fulfilled its
obligation. The provisions of Article XXII cited by the Union likewise do not affect
ability to manage the insurance program in this instance, they merely forbid the District from
inconsistently with the contract, which, in my view, it did not do. This is not, therefore, a
for deferral to arbitration.
Were it so, however, I would still have difficulties with the Union's position.
reflects that on two previous occasions the District unilaterally acted to activate and continue
contingency agreement without Union input. In each case the Union made no objection.
states that it did not do so because it agreed with the decision and the outcome, which was a
significant premium rebate in each year. It, therefore, had no reason to object. I see two
with this proposition. First, at the time the contingency was activated, it was unknown
would be a rebate. Thus, the Union's statement that it did not object to the distributions
agreed with the them misses the point because at the time the decision to activate the
made it was unknown whether there would be a distribution, or how much. Second, whether
the Union agreed with the distribution, it might have objected to the principle of the District
the decision, whatever its merits, unilaterally. That is the issue with which I have the
difficulty. Since I have determined that there is no contract language that governs on this
point, I look
to the practice of the parties. Here it appears that in the past the District has made decisions
regarding the contingent premium arrangement without Union input and the Union has not
to the practice, leading me to conclude that the District was within its management rights to
For the foregoing reasons, and based upon the record as a whole, I hereby
enter the following
The grievance was not moot, however, the District did not violate the parties'
when it terminated the health insurance contingent premium arrangement with WPS. The
is, therefore, denied.
Dated at Fond du Lac, Wisconsin, this 9th day of July, 2003.
John R. Emery, Arbitrator