BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
DEPERE POLICE BENEVOLENT
CITY OF DEPERE and CHIEF DEREK
Parins Law Firm, S.C., by Attorney Thomas J. Parins, 422
Doty Street, Green Bay, WI 54305,
appearing on behalf of the Union.
Attorney Judith Schmidt-Lehman, 335 South Broadway Street,
DePere, WI 54115, appearing on
behalf of the City of DePere and Captain Janz.
The DePere Police Benevolent Association, hereinafter referred to as the Union or
Association, and the City of DePere, hereinafter referred to as the City or Employer, are
a collective bargaining agreement (CBA) which provides for final and binding arbitration of
disputes, which agreement was in full force and effect at all times mentioned herein. The
initially filed a Prohibited Practices complaint (Case 73; No. 61116; MP-3817) against
relative to the issues herein. At hearing, the parties agreed to defer the case to binding
agreed to allow the undersigned to sit as the Arbitrator. The City's motion to amend the
reflect the name of the new Chief of Police was granted. The undersigned held a hearing
matter in DePere, Wisconsin, on February 18, 2003, at which time the parties were given
opportunity to present evidence and arguments. The hearing was transcribed. The parties
filed post-hearing briefs by May 1, 2003, and reply briefs by June 25, 2003, marking the
close of the record.
Based upon the evidence and the arguments of the parties, I issue the following decision and
The parties were not able to stipulate to a statement of the issue.
The Union states the issue as follows:
Is the City required to pay under its health insurance plan
benefits at the second tier of
coverage in an amount equal to 80% for all covered charges, and if so what is the
for the City's failure to do so?
The City states the issue thus:
Whether the medical insurance plan implemented April [sic],
2002, is "equivalent" to that
provided on June 1, 1979, as required by the Collective Bargaining Agreement between the
The Arbitrator accepts the City's statement of the issue.
Hospitalization, Dental, and Long-Term Disability
The City shall provide hospitalization and
medical insurance coverage equivalent to that provided
on June 1, 1979, or as otherwise mandated by the laws of the State of Wisconsin.
. . .
The City provides health insurance benefits to the employees in the DePere Police
Association pursuant to the Collective Bargaining Agreement. The pertinent language
hospitalization and medical insurance coverage be "equivalent" to that which was provided on
Prior to April 1, 2002, the City's health insurance plan provided for, among other
tiers of coverage. The first tier provided for the plan to pay 100% of the covered expenses
up to the,
first $2,000, 80% of covered expenses of the next $3,000 and 100% of the
balance of covered expenses up to a maximum of $245,000. These percentages and
limits were the
same as those existing on June 1, 1979. On April 1, 2002, the second tier coverage was
60% of $2,000, and the lifetime maximum limit was raised from $250,000 to $1,000,000.
same time "usual and customary" charges for participants using PPO providers were
The Union filed a prohibited practice complaint alleging that the City had instituted
changes in the policy unilaterally without bargaining them. At the hearing, the parties
defer to arbitration.
THE PARTIES' POSITIONS
The word "equivalent," as defined by Black's Law Dictionary, means "equal in
amount, effect or significance" and, therefore, the City should have provided benefits at the
tier of coverage at 80%, not 60%. In other words, "equivalent" means "equal."
The Union points to the City's letter to the Association of February 3, 1999, as
the City's understanding that coverage provided must maintain the levels as they existed in
(The letter refers to 1989 but this is a typographical error.) This letter also refers to the
understanding that it could "take away" benefits which had been added through the years
exceeded those in force in 1979 but could not reduce benefits below the 1979 levels. While
benefits are not at issue in this arbitration, the Union notes that it has historically objected to
City's unilateral implementation of additional benefits as well. The existence of additional
coverage or benefits does not support the City's argument that it has the right to unilaterally
the 80% benefit level in the second tier. Such an argument would change the meaning of
from "equal" to "more or less equal." Also, such a finding by the undersigned would
amount to an
amendment to the terms of the CBA and would then allow the City to provide coverage
"comparable" rather than "equivalent." The City's argument that the additional benefits
reduction in the payout in the second tier and thus the value of the plan is the same must be
because it belies the understanding set forth in the February 3, 1999 letter. There, the City
position that it reserved the right to unilaterally take away additional benefits
but specifically admitted
that it could not take away existing benefits. In effect, the "statement of
interpretation" by the City
in 1999 was that its obligation was to provide "equal or better" coverage.
The Union reminds the Arbitrator that the adoption of the City's arguments would
the Arbitrator having to "write into the contract a right of the City to unilaterally implement
in the health insurance plan by way of making trades of specific benefits at its whim, leaving
Association to some kind of burden of proof to show that it was not a fair trade." Such a
would render the contractual references to the 1979 policy superfluous.
The Union argues that it has not waived its right to bargain regarding coverage and
levels simply because it accepted additions to benefit levels over the years. Attorney Thomas
Parins' letter dated February 15, 1999, to the City Administrator makes it clear that the
not acquiesce to benefit level changes and has maintained the position that such changes must
subject of collective bargaining. At the same time, it accepted the additions in benefits and
the City that it considered them to be incorporated into the CBA.
The Union established a prima facie case through the testimony of its
president, Dahl, who testified that the
reduction in the benefit level at tier two was, indeed, a reduction in benefits.
The Union says that the appropriate remedy is to reimburse Association members the
difference between what they would have received at the 80% level and what they actually
at the reduced 60% level. In the future, the City should pay at the 80% level in tier two.
The City's initial brief renewed its motion to dismiss which it had made following
case at hearing. The City argues that the Union failed to present any evidence that it, the
violated the terms of the agreement between the parties.
The City maintains that the case turns on whether the health plan implemented in
April of 2002 is
"equivalent" to the plan in force in 1979. It says that the history between the parties shows
that the City has made
unilateral changes in the plan without bargaining them and this history may be viewed as an
indication that the word
"equivalent" allows such unilateral changes.
Black's Law Dictionary (7th Ed. 1999), defines the
term equivalent as follows:
1. equal in value, force, amount, effect or significance. 2.
Corresponding in effect or function; nearly equal; virtually
The American Heritage College Dictionary (3rd Ed.
1997), defines it as:
1a. equal, as in value, force or meaning; b. having similar or
2. Being essentially equal, all
It says that the plan implemented in 2002 is "almost identical, all things considered"
in place in 1979. It points out that the Union does not take issue with the fact that the
change from $25 per 90-day per person per illness to $100/300 max or the fact that the
benefit of $250 per covered person was instituted or that the lifetime maximum was increased
$250,000 to $1,000,000.
All services covered in 1979 are still covered and provider freedom of choice is the
only complaint of the Association is that the change in the second tier of coverage may result
additional $200 expense to the covered person. It poses the question "Does the mere
payment of an additional $200, when coupled with out-of-pocket savings associated with
from usual and customary charges mean the coverage provided is not "equivalent"?" The
that this potential must be viewed in conjunction with the unlimited savings a person could
not paying usual and customary fee overages. If one couples that potential savings with the
dollar wellness benefit of $250 per covered person, the $200 loss potential is "wiped out."
While one minor component of the entire plan has been altered, coverage in terms of
remains identical. Out of pocket expenses are "equal in value" and, hence, the coverage
in 2002 is "equivalent" to that in force in 1979.
In its reply brief, the City takes issue with the Union's assertion that changes in
since 1979 which amounted to increases and which had been accepted by the Union had
of the Collective Bargaining Agreement."
The letter attached to the Union's brief and identified as "Brief Exhibit A" does not
a precedent between the parties that benefits would remain unchanged. On the contrary, it
that the City's interpretation of the contract was that modifications could be, and were, made
the benefit levels being maintained.
The Association fails to recognize that the 1979 tier two was 80% of $3,000 as
opposed to 80% of $2,000 and
that the unilateral implementation and subsequent unilateral withdrawal of the WPPN PPO in
1998 and 1999 did not
reduce benefit levels. The City acknowledges that if it had done so, it would have been
"Usual and customary" charge savings of the Association in the amount of $3,569
compared with tier two
charges for the same group in the amount of $1,822 shows that the modifications to tier two
resulted in a net savings
for the Association members. The plan is "not only equivalent, but is superior to the health
insurance provided as of
June 1, 1979." The City should not be faulted for realizing cost savings for everyone,
including the Association, while
at the same time maintaining and improving upon coverage previously in place.
The City suggests a remedy in the event the undersigned finds the plan to not be
to the 1979 plan. The City should refund the $1,822 paid by Association members in the
of coverage and the Association members who benefited from the removal of
usual and customary fees for which they would have been responsible prior to the
reimburse the City in the amount of $3,569. The net result being that the Association returns
to the City.
Both parties agree, as do I, that the answer to this dispute lies in an analysis of the
meaning of the word
"equivalent" as it is used in the Collective Bargaining Agreement. Unfortunately, that word
is not defined in the
agreement. Both sides have made compelling arguments for their respective positions. On
the one hand, the Union
maintains that "equivalent" means "equal" and the City, on the other, says it means "almost
identical, all things
considered." In the absence of evidence of a mutual understanding to the contrary, words
will be given their usual and
ordinary meaning as defined by a reliable dictionary. Both sides agree on a definition found
in Black's Law Dictionary
(7th Ed. 1999), which defines the word as meaning equal in value, force,
amount, effect or significance and
corresponding in effect or function; nearly equal; virtually identical. The undersigned
accepts this definition of the
word equivalent. The CBA requires equivalency of "coverage." Like Arbitrator Nielsen in
his Beaver Dam Schools,
Case 19, No. 45546, MA-6639 (Nielsen, 5/91) award, I find that "coverage" is a more
restrictive term in its scope
than "plan" or "benefits." In short, the new coverages must be "equal in
value" and "virtually identical." I find that
they are not.
The City's argument that the overall "package" is equal to or better than the 1979
is rejected because it is based upon a comparison of items in the plan other than "coverage."
usual and customary fee determinations are not coverages since they do not afford protection
a specific risk and the increase of the lifetime maximum from $250,000 to $1,000,000 is an
acknowledgement of the effect of inflation since 1979. While the record does not contain
actuarial evidence in this regard, I suspect that this increase does not add value to the plan
places the insureds in the same relative position they were in in 1979 with the $250,000
The second tier of coverage is "coverage" in the sense that it affords protection from
out of pocket expenses in an amount exceeding 20% of $3,000, or $600. The new plan tier
coverage protects the insured from incurring out of pocket expenses exceeding 40% of
$800. The question then becomes whether the additional exposure to the insured of $200 is
insignificant enough for one to conclude that it is "equal in value" or "virtually identical."
undersigned finds that this change in coverage is not "equal in value" and is not "virtually
In the past, the City has made some changes to the plan which have resulted in some
betterment to the overall
package. The City argues that these changes evidence the fact that "equivalent" does not
mean "equal" and,
consequently, it has the authority to unilaterally implement changes. It also says that because
the Union failed to object
to prior changes which
enhanced the package, it has waived its right to object here. The undersigned is not
persuaded by either of these
arguments. First, the Union's argument is that changes in the plan must be bargained for if
the coverages differ from
those in effect in 1979. If the City voluntarily adds a benefit or
increases coverage in some way, the Union is free to
accept the change as though it had been bargained. The new or changed plan then modifies
the 1979 plan and becomes
the new standard. In this case, however, coverage was decreased. Upon
review of the evidence, the exhibits, the past
practice of the parties, and the arguments of the parties, I am satisfied that the party's
definition of "equivalent"
coverage is really "equal or better" coverage. It is certainly not "equal or less" coverage.
The dismissal of this
grievance would allow the City to slowly and methodically chip away at the coverages
afforded by the plan, just a little
at a time, until, theoretically, there would be nothing left.
This is not to suggest that the undersigned believes the City would do such a thing
nor do I
believe there is any union animus in this matter. Indeed, the City's motivation would, under
of the contract, be irrelevant. That said though, I do believe that the City has made a good
to improve upon the insurance plan while, at the same time, hold the fiscal line in the face of
drastically rising health insurance costs.
In light of the above, it is my
1. The medical insurance plan implemented in April, 2002, is not "equivalent" to that
provided on June 1, 1979,
as required by the Collective Bargaining Agreement between the parties.
2. The plan's second tier shall be modified to the pre-existing coverage levels of 80%
3. To the extent that any members were not reimbursed at the 80% level, they shall
made whole by the City.
Dated at Wausau, Wisconsin, this 27th day of August, 2003.
Steve Morrison, Arbitrator