Plumas Unified School District (PERB 0578E)

STATE 	OF CALIFORNIA
DECISION OF 	THE
PUBLIC 	EMPLOYMENT 	RELATIONS 	BOARD
CALIFORNIA 	SCHOOL 	EMPLOYEES
ASSOCIATION AND 	ITS 	PLUMAS
CHAPTER NO. 	193,
Charging 	Party,
v.
PLUMAS 	UNIFIED 	SCHOOL 	DISTRICT,
Respondent.
Case No. 	S-CE-877
PERB Decision No. 	578
June 26, 1986
Appearances; 	Maureen C. 	Whelan, 	Attorney for 	California School
Employees Association and 	its 	Plumas Chapter No. 	193; 	Kronick,
Moskovitz, 	Tiedemann & Girard by Robert A. 	Rundstrom 	for 	Plumas
Unified 	School 	District.
Before Hesse, 	Chairperson; 	Burt and Craib, 	Members.
DECISION
HESSE, 	Chairperson: 	California School 	Employees
Association and 	its 	Plumas 	Chapter No. 	193 	(CSEA) 	appeal 	the
dismissal 	of 	an unfair practice 	charge 	filed 	against 	the 	Plumas
Unified 	School 	District 	(District). 	A regional 	attorney of 	the
Public 	Employment 	Relations 	Board 	(PERB or Board) 	ruled 	that
CSEA 	failed 	to 	state 	a prima 	facie 	violation 	of 	Educational
Employment Relations Act 	(EERA or Act) 	section 3543.5(a), 	(b)
and (c).11
1EERA 	is 	codified 	at Government 	Code 	section 	3540 	et 	seq.
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PROCEDURAL 	HISTORY
CSEA and 	the 	District have been 	signatories 	to 	a 	series 	of
collective bargaining agreements. 	On August 	27, 	1984, 	they
began 	negotiations 	for a new contract, 	and 	the parties 	reached
impasse on October 	31, 	1984. 	A new contract was 	agreed to on
January 16, 	1985. 	The contract 	language 	concerning benefits
was 	unchanged.
In 	September 	1984, 	the 	District 	informed CSEA that 	it had
elected 	to 	provide 	medical 	insurance 	for 	unit 	employees
partially on a 	"self-funded" 	basis, 	effective October 	1, 	1984.
The 	District would be 	liable 	for 	claims 	up to a certain amount,
with 	the 	carrier paying 	for 	claims beyond 	this 	"stop-loss"
cap. 	The 	partially 	self-funded plan would be 	administered by
Equitable 	Benefit Plan 	(EBP), 	the 	same 	administrator of the
prior 	plan. 	Neither 	the 	charge 	nor 	the 	dismissal 	specified 	the
carrier, 	only the administrator.
Under 	the 	"old plan" 	(the plan ending September 	30, 	1984),
the 	District paid premiums 	of 	$101 	per 	employee per 	month 	to
EBP. 	All 	claims were 	filed with EBP, 	and 	the 	District
reimbursed 	EBP 	for 	the 	first 	$500 	in claims 	per 	year 	per
employee. 	Beyond the 	initial 	$500 claim, 	EBP was 	responsible
for 	all 	claims. 	The 	District paid 	approximately 	$846,000 	in
premiums 	and 	claims 	under 	the old plan 	in 	1983-84. 	The
estimated 	liability 	for 	1984-85 	under 	the 	old plan was 	in
excess of $1,000,000.
N	2

Under 	the 	"new plan," 	the 	District 	would assume
responsibility 	for 	the 	payment 	of 	claims 	up 	to 	$50,000 per 	year
per employee, 	or up to an aggregate amount of 	$619,000. 	Beyond
that amount 	(the 	"stop-loss" 	amount), 	EBP bills 	the appropriate
carrier 	for 	claims 	payment. 	In addition to payment 	of 	claims
up to $619,000, 	the 	District would also pay to EBP 	a 	fee 	of
$127,000 	for 	the 	administration of both parts 	of 	the 	new plan
(the 	self-funded portion 	and 	the portion beyond 	the 	"stop-loss"
amount). 	There would be no change 	in the manner by which
employees 	made 	claims, 	as 	they would 	continue 	to apply to EBP.
The 	new plan was 	expected 	to 	save 	the 	District 	at 	least
$100,000 the 	first year over 1983-84 amounts, 	as 	it 	is
ultimately 	cheaper 	to pay 	employee 	medical 	expenses 	directly
than 	it 	is 	to pay premiums 	for 	like 	coverage.
The 	regional 	attorney dismissed 	the 	charge 	on 	the 	grounds
that 	there 	was 	no change 	in the carrier or 	in the benefits, 	but
rather 	there 	was 	merely a 	shifting of 	the 	financial
responsibility 	for 	claims 	from 	the 	commercial 	carrier 	to 	the
District 	(up\ to the stop-loss amount), 	resulting in the
District 	lowering 	its 	total 	financial burden by $100,000.
Furthermore, 	the 	mere 	shift 	in the 	financial burden produced no
evidence 	or 	allegations 	that 	the 	new plan materially 	affected
the 	claims process. 	Thus, 	the District did not make a
unilateral 	change 	in the 	terms 	of employment.
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DISCUSSION
On 	appeal, 	CSEA argues 	that 	the 	Board 	should 	issue 	an
unfair 	practice 	charge 	based 	on 	the 	District's 	alleged
unilateral 	action 	in adopting a 	self-funded plan, 	thereby
"changing" 	the insurance carrier.2
This 	Board has 	ruled 	in 	the past 	that 	a change 	in health
plan administrators, 	even where benefits 	remain the 	same, 	is 	a
negotiable 	subject. 	(Oakland Unified 	School 	District 	(1980)
PERB Decision No. 	126, 	aff'd 	in Oakland Unified School 	District
v. 	PERB 	(1981) 	120 	Cal.App.3d 	1007.) 	That 	ruling drew on
precedent 	established 	by 	the 	National 	Labor 	Relations 	Board
(NLRB).3 The case before us, 	however, 	does not present the
same 	facts as 	in Oakland. 	Here, 	the 	District has kept the 	same
administrator 	and the 	same benefits. 	Indeed, 	the 	contract
language 	remained 	identical, 	even after 	the 	change 	in 	financial
responsibility, 	so CSEA cannot 	argue 	that 	the 	insurance plan
changed. 	The 	employees will 	continue 	to make 	claims 	and have
benefits 	paid 	exactly as before. 	The 	sole 	difference 	is 	that
the 	District's 	liability 	for 	premiums 	now becomes 	liability 	for
2If
actual changes 	in services 	rendered occur, 	or 	if the
stop-loss 	insurance 	is 	cancelled, 	a new charge 	could be 	filed.
CSEA alleged, 	but only on appeal, 	that 	the District did 	indeed
lose 	its 	stop-loss 	coverage. 	But 	it 	would be 	inappropriate 	for
PERB 	to consider 	allegations 	raised 	on appeal 	for 	the 	first
time, 	when the correct procedure 	is 	to 	file 	a charge or amend a
charge 	already 	filed.
3 See Keystone 	Steel and Wire v. 	NLRB 	(7th Cir. 	1979) 	606
F.2d 	171, 	enforcing Keystone 	Steel and Wire 	(1978) 	237 NLRB 	763.
A
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direct payment of claims, 	up to the 	stop-loss amount. 	This
difference 	alone 	does 	not 	constitute 	a change 	in a 	negotiable
subject.
If 	CSEA had 	alleged 	that 	the 	change 	to a 	self-funded plan
resulted 	in significant differences 	in services, 	or 	in the
employees 	having 	to make 	greater 	contributions 	to 	the 	insurer
(in other words, 	if 	the change had an 	impact on a 	subject
within 	the 	scope of 	representation), 	then the 	duty to bargain
may have 	been 	violated. 	(Palo 	Verde 	Unified 	School 	District
(1983) PERB Decision No. 321.)4
In 	the 	case before 	us, 	nothing 	in CSEA's 	charge 	indicates
that 	the 	employees have been 	affected by 	the 	shift 	in 	financial
payments. 	Indeed, 	the contract 	language 	remains 	the 	same. 	The
claims 	filed by an employee 	continue 	to be 	filed 	in 	the 	same
manner, 	with the same administrator 	(EBP). 	Without more, 	we
are 	unwilling 	to 	say 	that 	a change 	in 	funding 	responsibility
will 	always 	give 	rise 	to a duty to bargain.
4 Compare Bastien-Blessing v. 	NLRB 	(6th Cir. 	1975) 	474
F.2d 49 with 	Connecticut Light and 	Power 	Co. 	v. 	NLRB 	(2nd 	Cir.
1975) 	476 	F.2d 	1079. 	In the 	former, 	a change 	to a self-funded
plan 	resulted 	in 	several 	changes 	to the 	employees. 	In the
latter 	case, 	the 	court 	ruled 	that 	the 	employer was 	free 	to make
changes 	in carrier as 	long as 	no change 	in coverage, 	benefits,
or 	administration 	occurred.
Furthermore, 	we note 	that 	in Palo Verde, 	the Board did not
rule 	that 	a change 	in carriers 	results 	in a per 	se 	violation of
the Act. 	Rather, 	the carrier 	change 	that 	results 	in an 	impact
on 	services 	or benefits will 	give 	rise 	to a violation. 	That 	is
not 	the 	situation here.
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ORDER
The 	Board hereby AFFIRMS 	the 	decision 	of 	the 	regional
attorney 	and 	ORDERS 	the 	unfair 	charge 	in Case 	No. 	S-CE-877
DISMISSED.
Member 	Craib 	joined 	in this 	Decision. 	Member 	Burt's 	dissent
begins 	on page 	7.
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BURT, Member, dissenting:
I dissent. 	In my opinion, 	the District's 	change 	to a
self-funded medical 	insurance 	plan 	constitutes 	a 	unilateral
change 	in a negotiated 	term or 	condition of 	employment.
Although 	there 	is 	no dictionary definition of 	the 	term
"insurance 	carrier," 	the 	entity 	that 	carries 	the 	risk 	of
liability must 	logically be 	the 	carrier. 	Under 	a 	self-funded
plan, 	then, 	the District 	is the carrier.
In 	Palo Verde 	Unified 	School 	District 	(1983) 	PERB Decision
No. 	321, 	we 	indicated 	that coverage 	levels were not 	the only
aspects 	of 	insurance plans 	that 	are 	negotiable; 	the 	identity of
the 	insurer 	may well 	be 	equally 	significant. 	We 	said:
. . . 	A change 	to 	a 	less 	well 	established
carrier, 	or one which 	is less 	reliable or
less 	able 	to perform, 	would 	result 	in a
materially 	lower 	quality 	of 	health benefits
for employees, 	even if the policies were
facially 	identical. 	Under 	any 	such
circumstances, 	a unilateral change of
carrier 	identification would 	in 	and 	of
itself 	materially 	affect health 	care
benefits, 	and thus would violate EERA . 	. 	.
(p. 10).
Clearly, 	a self-funded district 	is 	such a 	"less 	well
established 	carrier." 	I 	find 	the 	employee 	representative's
concern 	over 	the 	District's 	willingness 	and 	ability 	to properly
fund 	its 	medical 	insurance 	program 	to be 	reasonable 	under 	the
circumstances. 	Unlike 	established 	insurance 	companies 	and
health 	maintenance 	organizations 	which 	are 	regulated by 	state
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agencies, 	self-insured public 	entities 	like 	the 	District 	are
not 	regulated by anyone. 	Moreover, 	the 	District 	showed 	itself
unwilling 	in 	the 	negotiations 	that 	did 	take place 	to agree 	to 	a
trust 	or 	other 	arrangement 	to 	insure 	that 	the 	necessary monies
for 	claims 	would be 	regularly 	set 	aside.
Although 	the 	issue has 	arisen only once, 	the 	National 	Labor
Relations 	Board 	(NLRB) 	has 	also 	found a change 	to a 	self-funded
insurance 	plan 	to be 	a negotiable 	subject. 	In Golconda Corp.
(Bastian-Blessing Div.) 	(1971) 	194 NLRB 	95, 	e n f d
Bastian-Blessing v. 	NLRB 	(6th Cir. 	1973) 	474 F.2d 49 	[82 LLRM
2689], 	the NLRB 	found a mid-contract change to self-funding to
be 	unlawful. 	While 	additional 	changes 	in benefits 	were
involved 	in 	that 	case 	(which was 	decided after a hearing),
uncertainty 	over 	the 	funding was 	deemed 	a 	legitimate 	concern.
The 	court's 	decision 	in Connecticut 	Light 	and 	Power 	Co. 	v.
NLRB 	(2d Cir. 	1973) 	476 F.2d 1079 	is 	not 	inconsistent. 	There,
a 	change 	in carriers 	from Aetna 	to Blue 	Shield was 	alleged 	to
be unlawful. 	The NLRB relied on Bastian-Blessing, 	supra, 	and
found 	the 	identity of 	the 	carrier 	to be 	a mandatory subject 	of
bargaining 	and 	that 	the 	employer's 	refusal 	to bargain was,
therefore, 	unlawful. 	On appeal to the court, 	the NLRB's
determination was 	reversed. 	The 	court 	said 	that 	the 	selection
of 	the 	carrier 	was 	not 	a mandatory 	subject 	of bargaining 	under
those 	circumstances 	because 	the 	union had 	merely 	alleged
undefined 	"dissatisfaction" 	with 	the 	carrier 	selected by 	the
employer 	and 	the 	employer had bargained 	in 	good 	faith
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concerning 	coverage 	and administration. 	The 	court
distinguished Bastian-Blessing because, 	in that 	case, 	adverse
affects 	on 	employee 	benefits 	had been 	found 	in 	that 	benefits
were 	omitted, 	enforcement was 	changed 	and 	there was 	a degree 	of
uncertainty 	regarding 	the 	funding. 	The 	court 	explicitly
confined 	its 	decision to the 	facts 	of 	that 	case.
Significantly, 	the 	court disapproved 	the NLRB's 	rule 	that
the 	identity of 	the 	carrier 	is 	a mandatory 	subject 	of
bargaining 	only where 	the 	change 	was 	from 	one 	established
carrier, 	Aetna, 	to another established carrier, 	Blue Shield.
Even then, 	the 	court 	indicated 	that 	a concern over 	funding was
a 	legitimate 	factor 	to 	consider.
In the 	instant 	case, 	the concern over 	the 	District's
ability 	to 	fulfill 	its 	obligations 	under 	a 	self-funded plan 	is
even more 	reasonable 	if, 	in fact, 	the District has no stop-loss
coverage 	applicable 	to this plan. 	Although the District
originally 	stated 	that 	it had 	such coverage, 	the 	CSEA claims
that 	the 	stop-loss 	plan 	the 	District had was 	cancelled 	and
provides 	a 	letter 	that 	arguably 	substantiates 	its 	statement.
The 	District 	denies 	that 	the 	cancellation 	letter 	applies 	to 	the
medical 	insurance 	plan at 	issue but provides 	no 	information 	to
support 	their 	original 	statement 	that 	they do have 	stop-loss
coverage.
Such 	factual 	disputes 	are 	normally 	and 	most 	appropriately
resolved at a hearing on the merits. 	The majority ignores 	this
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dispute, 	however, 	and 	simply assumes 	that 	the 	District's
statement 	is 	correct. 	It 	states 	in the 	facts 	section that 	the
District has 	stop-loss 	coverage; 	it assumes 	the District has
such 	coverage 	when 	it 	discusses 	the 	District's 	liability 	under
the 	new plan. 	The majority states 	that 	the 	sole difference
resulting 	from 	the 	District's 	action 	is 	that 	the 	District's
liability for 	premiums 	now 	becomes 	liability 	for 	direct
payment of claims, 	up to the 	stop-loss 	amount and 	that 	this
difference 	alone does 	not 	constitute 	a 	change 	in a negotiable
subject.
The 	majority 	justifies 	its 	unwillingness 	to consider 	this
factual 	dispute by 	saying 	that 	CSEA raises 	the 	issue 	in 	its
appeal and, 	thus, 	it may not be considered here. 	I disagree.
I 	think 	it 	must be 	accepted 	as 	newly-discovered 	evidence 	that
could 	not 	previously have been obtained by due 	diligence, 	and
which 	is material 	to 	this 	case. 	San Joaquin Delta 	Community
College District 	(1983) 	PERB Decision No. 	261b.
CSEA 	stated 	that 	it 	did 	not 	obtain 	a 	copy of 	the 	letter 	it
submits 	to 	support 	its 	allegation until 	after 	the 	change 	was
dismissed. 	The 	letter 	in question was 	dated March 25, 	1985,
and was 	directed 	not 	to CSEA, 	but 	rather 	to the 	Executive
Director of 	the 	California 	School 	Boards Association. 	The
regional attorney dismissed CSEA's 	allegations 	on April 	16, 	1985.
CSEA apparently did 	not 	learn of 	the 	dismissal 	until 	around
five weeks 	later, 	on or before May 1, 	1985. 	I 	find it quite
reasonable 	to believe 	that 	CSEA did not, 	in 	fact, 	obtain a copy
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of 	a 	letter 	not 	addressed 	to 	it 	until 	several 	weeks 	after 	it
was 	mailed. 	The majority 	states 	no 	facts 	or 	reasons 	on which
to base 	a 	conclusion 	that 	CSEA could have, 	much less 	did,
discover 	the 	letter 	earlier.
In 	addition, 	the 	allegation and 	evidence 	are 	clearly
material 	to 	this 	case. 	If 	the 	District has 	not 	obtained any
stop-loss 	coverage, 	then 	its 	description of the plan to the
CSEA and 	to PERB 	is 	of questionable 	validity, 	its 	risk of
liability under 	the 	new plan 	is 	greatly enhanced, 	and 	its
potential 	savings may be much less. 	Thus, 	the 	language 	in Palo
Verde, 	supra, 	is that much more apt.
For 	the 	above 	reasons, 	I would hold 	that 	a prima 	facie 	case
of 	unlawful 	unilateral 	change has 	been 	stated 	and 	order 	a
complaint 	to 	issue.
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