Trinidad Union Elementary School District/Peninsula Union School District (PERB 0629E)

STATE 	OF 	CALIFORNIA
DECISION OF 	THE
PUBLIC 	EMPLOYMENT 	RELATIONS 	BOARD
TRINIDAD 	TEACHERS 	ASSOCIATION,
CTA/NEA,
Charging 	Party,
V .	v.
TRINIDAD 	UNION 	ELEMENTARY
SCHOOL 	DISTRICT,
Respondent.
)
) 	Case No. 	SF-CE-1052
PERB Decision No. 	629
July 8, 	1987
PENINSULA TEACHERS, 	NHTA/CTA/NEA,
Charging 	Party,
v.
PENINSULA 	UNION 	SCHOOL 	DISTRICT,
Respondent.
Case No. 	SF-CE-1076
Appearances; 	Ramon E. 	Romero, 	California 	Teachers Association,
for 	the 	Trinidad Teachers Association, 	CTA/NEA, 	and 	for the
Peninsula Teachers, 	NHTA/CTA/NEA; 	Littler, 	Mendelson, 	Fastiff &
Tichy by 	Charlotte Addington 	and Larry 	P. 	Schapiro 	for 	the
Trinidad 	Union 	Elementary School 	District; 	Harland 	& 	Gromala 	by
Richard A. 	Smith 	for 	the 	Peninsula 	Union 	School 	District.
Before Hesse, 	Chairperson; 	Porter and Shank, 	Members.
DECISION
SHANK, 	Member: 	These 	cases 	are before 	the 	Public
Employment 	Relations 	Board 	(PERB or Board) 	on exceptions 	filed
by 	the 	Trinidad 	Union 	Elementary 	School 	District 	and 	the
Peninsula 	Union 	School 	District 	(Districts) 	to 	the decisions 	of
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the 	administrative 	law 	judge 	(ALJ) 	who 	found 	that 	the
Districts' 	unilateral 	decisions 	to 	join 	the 	North Coast 	Schools
Medical 	Insurance 	Group, 	a 	multi-employer 	self-funded 	insurance
group, 	for dental 	coverage 	violated 	section 	3543.5(c) 	and,
concurrently, 	sections 3543.5(a) 	and 	(b), 	of the Educational
,
Employment 	Relations 	Act 	(EERA 	or 	Act).1 Although 	separate
decisions 	were 	rendered 	involving 	each 	District, 	they are
considered 	together 	in 	this 	decision 	because 	of 	the 	identity 	of
the 	issues 	and 	facts 	in 	both 	cases. 	We 	affirm both 	decisions
in part 	and 	reverse 	them 	in part.
PROCEDURAL 	HISTORY
On 	September 	16, 	1985, 	the 	Trinidad Teachers Association,
CTA/NEA, 	filed 	a 	charge 	alleging unfair 	practices 	by the
Trinidad 	Union 	Elementary 	School 	District, 	and 	on 	October 	30,
1EERA 	is 	codified 	at 	Government 	Code 	section 	3540 	et
seq. 	Unless 	otherwise 	indicated, 	all 	statutory 	references
herein 	are 	to 	the 	Government 	Code.
Section 	3543.5 provides, 	in pertinent part, 	as 	follows:
It 	shall 	be 	unlawful 	for 	a public 	school
employer 	to:
(a) 	Impose 	or threaten 	to 	impose 	reprisals
on 	employees, 	to discriminate 	or 	threaten 	to
discriminate 	against 	employees, 	or otherwise
to 	interfere with, 	restrain, 	or coerce
employees 	because 	of 	their 	exercise 	of
rights 	guaranteed 	by 	this 	chapter.
(b) 	Deny 	to employee 	organizations 	rights
guaranteed 	to 	them by 	this 	chapter.
N	
2

1985, 	the 	Peninsula 	Teachers, 	NHTA/CTA/NEA filed a charge
alleging 	unfair practices 	by 	the 	Peninsula 	Union 	School
District. 	Both 	associations 	alleged 	that 	the 	respective
Districts 	joined 	the 	North 	Coast 	Schools 	Medical 	Insurance
Group 	to 	provide 	dental 	insurance 	benefits 	without 	first
negotiating 	the 	decision 	to 	join 	and 	its 	effects. 	A third 	and
separate 	complaint 	of 	a 	similar 	alleged 	unfair 	practice
involving 	Southern 	Humboldt 	Joint 	Unified 	School 	District 	was
consolidated 	for hearing with 	the 	Districts' 	cases.2 Hearing
was 	held March 	24 	to March 27, 	1986, 	and concluded on April 	28
and 	29, 	1986. 	Separate decisions 	were 	issued 	in 	each of 	the
cases, 	but only the 	Districts have 	filed exceptions 	with 	the
Board.
FACTUAL 	SUMMARY
In 	1979 	three 	school 	districts 	in 	Humboldt 	County organized
the 	North 	Coast 	Schools Medical 	Insurance 	Group 	(NCSMIG) 	joint
powers 	agreement 	(JPA) 	to provide medical 	insurance benefits
for 	their 	employees. 	In 	October 	1984 	the 	medical 	JPA expanded
its 	membership to 	26 districts 	in 	Humboldt 	County. 	The medical
(c) 	Refuse 	or 	fail 	to meet 	and 	negotiate 	in
good 	faith 	with 	an 	exclusive 	representative.
2The 	ALJ's 	proposed 	decision 	in 	Southern 	Humboldt
Teachers Association, 	CTA/NEA v. 	Southern Humboldt 	Joint
Unified School 	District, 	Case No. 	SF-CE-1069, 	which dismissed
the 	unfair practice 	charge, 	was 	not 	appealed by the 	Southern
Humboldt 	Teachers Association, 	and 	is 	now final. 	See 	PERB
Decision No. HO-U-307 	(1986).
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JPA currently covers 	approximately 	2,059 	lives. 	Because 	of 	the
successful 	six-year history of 	the 	medical 	JPA, 	the NCSMIG
board 	of 	trustees 	decided 	to 	investigate 	the 	possibility of
dental 	coverage 	through 	the JPA. 	In April 	1985, 	the JPA board
appointed 	a 	subcommittee 	to conduct 	initial 	investigations 	and
report 	its 	recommendations 	to 	the 	full 	board. 	The 	subcommittee
included Barney Finlay, 	JPA board president, 	Fran 	Taplan, 	the
certificated 	representative 	to 	the 	board's 	Advisory 	Committee,
and 	Jan Smittle, 	staff assistant 	to the 	NCSMIG JPA.
The 	subcommittee 	specifically 	considered 	two proposals, 	one
from 	California 	Dental 	Service/Delta 	Dental 	Plan 	(CDS) 	and 	the
other 	from 	Robert 	Shirrell 	Associates. 	The proposal 	from
Shirrell 	Associates 	projected 	lower 	rates 	than 	those 	projected
under the CDS plan, 	but 	the carrier, 	the administrator, 	and 	to
some degree 	the benefits, 	would have changed. 	On the other
hand, 	the 	CDS proposal 	incorporated 	the 	existing 	insurance
contracts 	between 	the 	individual 	districts 	and 	CDS, 	which meant
that 	there would be 	no changes 	in benefits or coverage. 	In
addition, 	because 	CDS proposed 	to administer the plan, 	there
would be 	no change 	in 	either 	the plan's 	administrator, 	the
method of 	submitting 	claims, 	or 	in 	the 	dentists who provided
the services.
Pursuant 	to the 	subcommittee's 	investigations, 	CDS'
marketing 	representative, 	Nancie Mazer, 	made 	several
presentations 	to 	the 	JPA board 	concerning 	the 	CDS proposal.
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Although Ms. 	Mazer 	did 	not 	disclose 	specific 	information
regarding 	the districts' 	claims experience, 	she 	informed 	the
board 	that 	the 	CDS 	actuarial 	department 	reported 	that 	the
dental 	claims 	experience 	of 	the 	districts 	in 	the 	NCSMIG was
very satisfactory and, 	in 	fact, 	was better 	than 	that
experienced by 	the 	entire 	statewide 	CDS 	school 	pool. 	On 	the
basis 	of 	the 	CDS data, 	Mazer predicted 	that 	the 	NCSMIG would do
well 	as 	a 	self-insured entity. 	In 	fact, 	Mazer predicted 	that
the 	dental 	JPA would 	save 	at 	least 	10 percent 	over 	the
statewide pool.
Relying 	primarily 	upon 	the 	continuity of benefits, 	coverage
and 	administration provided under 	the 	CDS proposal, 	the
subcommittee 	recommended, 	and 	the 	JPA board 	ultimately 	adopted,
the 	CDS 	proposal. 	Accordingly, 	in 	June Barney Finlay sent 	to
the 	NCSMIG member 	districts 	a 	letter 	informing 	them 	about 	the
dental 	JPA 	and 	offering 	the 	districts 	an 	opportunity 	to 	enter
the 	program. 	Finlay 	explained 	that 	the 	JPA board 	selected 	the
CDS 	program because 	there 	would be 	no changes 	in benefits,
rates, 	servicing dentists, 	carrier or plan administrator.
Those 	districts 	who 	joined 	the 	dental 	JPA continued 	the
coverage 	and 	benefits 	which 	they had 	individually 	negotiated
with 	CDS. 	CDS 	provided 	the 	JPA with 	data 	about 	its 	various
programs, 	and 	identified 	the districts 	enrolled 	in 	each
program. 	The 	districts 	individually 	negotiated 	contracts 	with
CDS 	based 	on 	the 	variations 	of 	several 	master plans 	CDS had 	to
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offer. 	Premium 	rates 	varied 	from 	district 	to district,
dependent 	upon 	the 	selected benefits. 	The 	average 	premium 	of
the 	NCSMIG districts 	was $41.77 per 	employee per month. 	The
JPA decided 	to 	assess 	district members 	at 	their 	existing
premium 	rates 	for 	at 	least 	the 	first 	year, 	even 	though 	CDS
predicted 	that 	because 	of 	the 	savings 	effected 	through 	the 	JPA,
a 	lesser 	amount 	($31.00) 	would 	cover 	all 	claims 	and 	the
requisite 	administration 	fee 	to CDS. 	According to Finlay, 	the
board 	preferred 	to 	take 	a 	conservative 	approach 	to 	funding 	the
dental 	JPA until 	such 	time 	as 	they 	could 	evaluate 	the 	JPA's
claims 	experience.
With 	respect 	to 	the 	benefits 	enjoyed 	by 	the 	individual
employee, 	the dental 	JPA has made 	no changes whatsoever. 	Each
covered 	employee 	continues 	to go to the 	same dentist, 	is
entitled 	to 	receive 	the 	same 	level 	of 	services 	and, 	as before,
submits 	all 	dental bills 	to CDS, 	which administers 	all 	claims.
CDS 	continues 	to monitor all 	billings 	to ensure 	that 	they
conform 	with billing 	rates 	established by 	CDS, 	then pays 	the
dentists 	for their 	services. 	Each month, 	CDS 	submits 	a bill 	to
the 	JPA 	for 	reimbursement 	for 	all 	claims 	paid by 	CDS 	on behalf
of 	the 	JPA, 	including an 	administrative 	fee 	of 	9.2 	percent 	on
paid 	claims.
CDS 	requires 	self-insured programs 	such 	as 	the 	JPA 	to
establish 	a 	deposit 	with 	CDS to prefund the 	coverage, 	as 	a
guarantee 	that 	CDS 	will 	not be 	required 	to pay claims 	from 	its
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V
own 	resources 	in 	the 	program's 	first months. 	CDS 	offered 	the
JPA 	three 	prefunding 	alternatives 	under 	which 	the 	amount 	of 	the
deposit 	varied 	according 	to the 	transferability of 	funds. 	The
JPA opted 	to prefund 	in 	the 	amount 	of $75,000, 	which amount 	is
still 	on 	deposit 	with 	CDS 	and 	an 	existing 	asset 	of 	the 	JPA.
The 	JPA obtained 	the 	$75,000 by 	collecting 	double premiums 	from
the 	member districts 	the 	first 	month 	of 	the program. 	The 	JPA
will 	not 	collect 	a premium 	in the 	last month of 	the year; 	the
districts 	will 	make 	only 	12 	premium payments 	during 	the 	year.
The JPA/CDS 	agreement provides 	a 	150 percent 	stop 	loss 	at
no 	cost 	to the 	JPA. 	Insurance 	expert 	and JPA consultant,
Robert 	Shirrell, 	explained 	the 	stop-loss 	provisions 	and 	their
ultimate 	effect 	on 	the 	JPA. 	There 	are 	presently 	1,250
employees 	covered 	under 	the 	dental 	JPA. 	During 	a 	contract
year, 	the JPA will 	collect premiums 	in 	the amount of 	$626,000,
which 	represents 	$41.77 	(the 	average premium amount), 	times 	12
months, 	times 	1,250 covered 	lives. 	CDS will pay all 	dental
claims 	in excess of $761,000, 	or $50.77 	(the 	stop-loss
provision), 	times 	12 months, 	times 1,250. 	The difference
between 	$761,000 	(when CDS becomes 	liable) 	and 	$626,000 	(the
amount the JPA will 	collect) 	is 	$135,000, 	or the maximum amount
for 	which 	the 	JPA could 	be 	liable 	over 	and 	above 	the premiums
the 	JPA collects. 	Shirrell 	testified 	that 	CDS 	could 	afford 	to
offer 	a 	150 percent 	stop 	loss 	at 	no cost 	to the JPA because,
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based on 	its 	claims 	experience 	in 	Humboldt 	County, 	CDS knew the
3	stop 	loss 	would 	never 	be 	implemented. 3
Shirrell 	also 	reviewed 	and 	analyzed 	both 	the 	JPA's
financial 	statements 	and 	its 	claims 	history 	through March
1986. 	Based on 	calculations 	standard 	to the 	industry, 	he
projected 	that 	the 	average 	cost 	per 	family per 	month 	would 	be
$28.19, 	and 	that 	the total 	of the claims 	costs 	and the
administrative 	fees 	would be 	$30.78 per 	family per month.
Shirrell 	testified 	that 	the 	amount 	of 	the 	JPA's 	reserves
($103,000 as of January 31, 	1986) 	was more 	than sufficient 	to
cover 	any 	contingencies 	which 	might 	occur 	in 	the 	first 	year.
More 	precisely, 	Shirrell 	testified 	that 	the 	JPA's 	reserves 	were
almost 	double 	what 	the 	JPA would 	need, 	and predicted 	a 	surplus
of 	$9.00 per member per month 	at 	the 	end 	of 	the 	current 	year.
Shirrell 	agreed 	that 	it 	was 	prudent 	of 	the JPA to overfund 	the
first 	year 	to handle 	unforeseen 	contingencies, 	and 	noted 	that
the 	surplus 	can be 	used 	to 	stabilize 	rates 	for 	the 	second year
and 	to avoid 	increases 	to the 	member districts. 	Such an 	action
would be 	in 	keeping with 	the purpose 	of 	the 	dental 	JPA, 	which
is 	to effect 	cost 	reductions 	for 	the 	member districts.
3According 	to Shirrell, 	dental 	costs 	are 	very
predictable, 	particularly after 	several 	years 	of 	coverage,
because 	of 	the 	nature 	of 	the 	treatment 	and 	the 	ceilings 	imposed
in the 	insurance 	contracts. 	Thus, 	CDS knows precisely what 	the
risks 	are 	for 	the 	dental 	JPA, 	and 	accurately projected 	that 	the
cost 	of 	claims 	per 	family per month 	would be 	about 	$31.00.
8

DISCUSSION
Our 	analysis 	of 	this Board's 	precedent 	relating to a
unilateral 	change 	in providers 	of health 	care benefits 	must
begin 	with 	Oakland 	Unified School 	Dist, 	v. 	Public 	Employment
Relations Bd. 	(1981) 	120 Cal.App.3d 1007. 	In Oakland, 	the
Court 	of 	Appeal 	considered 	a 	PERB 	decision 	in which 	an 	unfair
labor 	practice 	was 	found 	where 	a 	school 	district 	unilaterally
terminated 	Blue 	Cross 	and 	substituted Western 	Administration
Company 	as 	the 	district's 	medical 	claims 	processor. 	The 	court
in 	Oakland 	found 	that 	the 	district's 	unilateral 	action had
deprived 	the 	covered 	employees 	of 	two 	actual 	benefits 	which
they had 	received 	under 	the 	prior 	administration.
Specifically, 	the 	Blue 	Cross plan 	included 	an agreement by 	the
district 	to 	continue 	medical 	coverage 	for 	terminated 	employees
pending 	their 	coverage 	by 	some 	other health 	plan 	carrier 	and
the 	use 	of 	Blue 	Cross 	identification 	cards 	which 	allowed 	for
simplified 	billing 	procedures. 	Neither benefit 	was 	provided 	by
the 	new carrier.
The significant 	language 	in Oakland reads, 	at page 	1012, 	as
follows:
The 	question 	is whether the 	change 	in
administrators 	had a 	"material 	and
significant 	effect 	or 	impact 	upon 	the 	terms
and 	conditions 	of 	employment."
This 	statement 	was 	taken 	from doctrine 	set 	out 	in
Westinghouse v. 	NLRB 	(4th Cir. 	1967) 	387 Fed.2d 542, 	at 548,
which 	states:
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. 	. 	. 	[S]ince practically every managerial
decision has some 	impact on wages, 	hours, 	or
other conditions 	of employment, 	the
determination 	of 	which 	decisions 	are
mandatory bargaining 	subjects 	must 	depend
upon 	whether a 	given 	subject has 	a
significant 	or 	material 	relationship 	to
wages, 	hours, 	or other conditions of
employment.
In 	1983, 	this 	Board 	decided 	Palo Verde 	Unified 	School
District, 	PERB Decision No. 	321. 	There, 	the district
unilaterally 	changed 	insurance 	companies 	(from 	Blue 	Cross 	to
Blue 	Shield), 	which actually afforded a higher level 	of
benefits 	to employees. 	In 	finding a 	violation of 	EERA, 	this
Board 	in 	Palo 	Verde 	reiterated 	the 	proposition 	for which
Oakland Unified School 	District, 	supra, 	stands: 	Where a 	change
in 	administrators has a 	material 	or 	significant 	effect 	upon 	the
terms 	and conditions 	of 	employment, 	it 	must be 	negotiated.
Although 	the 	District's 	change 	to Blue 	Shield 	actually
increased 	the 	level 	of benefits, 	this did 	not 	insulate 	it 	from
committing 	an 	unfair practice 	under our 	statute. 	This was 	so,
reasoned 	the Board, 	because 	management's 	unilateral 	action 	to
increase 	benefits 	would 	exert 	as 	material 	and 	significant 	a
change 	on a 	matter within 	scope 	as 	would 	a 	decrease 	in 	the
level 	of benefits. 	Thus, 	the 	test articulated 	in Oakland was
met, 	and management 	was 	required 	to bargain. 	After 	finding 	a
violation of 	EERA because of the change 	in benefits, 	this Board
in Palo Verde 	secondarily theorized, 	at page 	10:
A change 	to a 	less 	well 	established 	carrier,
or one 	which 	is 	less 	reliable 	or 	less 	able
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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 	identity would 	in 	and 	of 	itself
materially 	affect health 	care benefits, 	and
thus 	would 	violate 	EERA. 	[Emphasis 	added.]
However, 	in Palo Verde, 	there was no 	finding 	that 	the new
carrier 	would 	provide 	a 	materially 	lower 	quality of 	health 	care
benefits. 	The Board's decision was 	thus grounded upon a 	change
in the benefits.4 44
This 	Board has 	ruled 	in 	the past 	that 	a
change 	in health plan administrators, 	even
where benefits 	remain the same, 	is a
negotiable 	subject. 	[Citations 	omitted.]
That 	ruling 	drew on precedent 	established 	by
the National 	Labor 	Relations Board 	(NLRB).
The case before us, 	however, 	does not
present 	the 	same 	facts 	as 	in 	Oakland. 	Here,
4A mere 	change 	in 	the 	identity of 	the 	carrier 	is 	not 	a
per 	se 	violation. 	Instead, 	there must be a material 	or
significant 	change 	in 	the 	level 	or quality of 	the benefits.
11

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 	direct payment 	of
claims, 	up to the stop-loss amount. 	This
difference 	alone does 	not 	constitute 	a
change 	in a 	negotiable subject.
Perhaps 	the 	true essence of 	Plumas, 	however, 	was contained 	in
footnote 	no. 	4, 	at page 	5, 	which reads as 	follows:
Compare 	Bastien-Blessing 	v. 	NLRB 	(6th Cir.
1975) 	474 F.2d 49 	with 	Connecticu	- 	t 	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.
Thus, 	it 	is 	the position of 	the Board 	that a change to a
self-funded plan does 	not, 	without more, 	result 	in a per 	se
violation 	of 	EERA.
The 	instant 	case 	is 	almost 	identical 	to the 	facts 	in
Plumas, 	supra. 	Here, 	neither the level 	of benefits nor the
quality of 	services 	to 	covered 	employees 	was 	changed 	in 	any
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way. 	The 	Districts 	assumed 	financial 	responsibility 	for 	all
claims 	which 	reach 	the 	amount 	covered by 	the 	stop-loss 	plan
agreed to by CDS, 	at 	no cost to the 	Districts. 	The one 	factual
difference 	is 	that, 	in the 	instant 	case, 	the 	self-funded plan
consists 	of 	a 	joint powers 	entity composed of a 	group of
districts 	formed 	for 	the 	purpose 	of 	providing dental 	benefits.
For 	the 	reasons 	which 	follow, 	we 	find 	this 	distinction
inconsequential.
In 	the 	view of 	the ALJ, 	the 	JPA creates 	an 	increased 	"risk"
to the 	Districts' 	ability to provide dental 	coverage 	in 	the
future, 	thus 	requiring negotiations over 	the 	change. 	We 	find
no 	evidence 	in 	the 	record 	to 	support 	such 	a 	conclusion. 	Plumas
was 	issued 	after 	the 	hearing 	in 	the 	instant 	case 	was 	conducted,
but 	before 	the ALJ 	issued his 	proposed 	decision. 	Plumas 	laid
to 	rest 	any contention 	that 	the 	mere 	change 	to a 	self-funded
program 	is 	a per 	se 	violation of EERA. 	Similarly, 	a change to
a 	less 	well-established 	carrier, 	without 	also 	showing 	an actual
difference 	in benefits or 	services, 	or 	significant
unreliability, 	does 	not 	constitute 	a 	violation.
The Board has 	considered 	the 	factors 	upon which 	the ALJ
relied 	in 	reaching his 	conclusion 	that 	the JPA 	is 	less
reliable, 	less 	well-established and 	constitutes 	a 	greater 	risk
to providing 	future 	dental 	benefits 	to covered 	employees.
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1. 	The 	Districts Have 	Not 	Relinquished 	Control.
The 	ALJ 	found 	that 	the 	"NCSMIG 	agreement 	and 	bylaws
demonstrate 	that 	the 	Districts 	[have] 	delegated 	full 	authority
over 	dental 	insurance 	for a 	definite period of 	time 	to an
entity other 	than 	the 	employer." 	This has 	not 	occurred. 	The
Districts 	have 	not 	changed 	their 	relationship 	to 	their
employees 	in any way. 	Regardless 	of what 	the 	JPA decides 	to do
with 	respect 	to dental 	benefits, 	the 	Districts 	are bound by the
terms of 	their 	respective 	collective bargaining 	agreements, 	and
the 	benefits 	negotiated 	therein 	cannot 	be 	unilaterally 	changed
by them. 	If 	actions 	of 	the 	JPA are 	not 	satisfactory to 	the
Districts, 	they may withdraw 	in 	the manner prescribed 	in 	the
JPA bylaws. 	However, 	they 	remain 	obligated 	under 	the
collective 	bargaining agreements 	in 	effect 	and 	must 	find
adequate providers 	to 	supply 	the benefits 	as 	contracted.
Before 	the 	Districts 	joined the JPA, 	it 	was 	CDS which decided
the 	cost 	of 	rates 	and 	the 	type 	of 	services provided 	and 	not 	the
Districts. 	The 	Districts, 	because of their small 	size, 	were
only 	able 	to 	negotiate 	with 	those 	companies 	which 	supplied 	the
benefits. 	The 	JPA's 	ability to negotiate 	is 	certainly better
than 	that 	of 	the 	individual 	Districts, 	were 	they each 	to
undertake 	self-funded 	programs.
In 	sum, 	the 	evidence 	in the 	record 	supports 	the 	conclusion
that 	the 	Districts 	have 	improved 	the 	ability to 	supply benefits
at 	a 	reduced 	cost 	to themselves. 	It 	is 	not 	enough 	to theorize
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whether 	the 	JPA 	arrangement 	could potentially 	cause 	problems
for 	its 	members, 	or whether the JPA resulted 	in a 	less
well-established 	or 	less 	reliable 	carrier.5	5
2. 	The JPA Does 	Not 	Result 	In Less 	Reliability
Or 	Greater 	Risk.
There 	was 	no 	evidence 	produced by 	the 	Charging 	Parties 	that
the 	JPA was 	not 	reliable. 	The preponderance 	of 	the 	evidence
was 	to the contrary. 	The JPA, 	as a 	self-funded entity, 	had
been 	operating 	since 	1979 	to 	supply medical 	benefits 	and
services. 	The only 	evidence produced 	on 	the 	subject 	indicated
that 	the 	cost 	of 	dental 	services 	was 	more predictable 	and
accurate 	than 	that 	for medical 	services, 	which 	is 	a 	very
volatile 	area.
The 	risk here 	was 	limited by 	the 	stop-loss plan as 	it 	was
in 	Plumas. 	Moreover, 	financial 	resources 	of the JPA were more
than 	adequate 	to cover 	the 	worst 	contingencies.
3. 	The Lack of 	State Regulation.
Lack of 	state 	regulation was 	of 	concern 	to the ALJ. 	By
concluding 	that 	the 	Knox-Keene Act 	(Health 	& Saf. 	Code,
sec. 	1340 et 	seq.) 	probably does 	not 	apply to the 	regulation of
joint power 	agencies 	supplying health 	services, 	the ALJ
reasoned 	that 	the 	JPA was 	less 	reliable 	than CDS. 	We do not
5There 	must 	be 	some 	cogent 	evidence 	that 	changes have
happened or 	will 	happen, 	which have 	significantly changed or
will 	significantly 	change 	employee 	benefits.
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find, 	however, 	that the 	lack of 	regulation 	is of consequence 	in
this 	case. 	If 	the Legislature has 	not 	seen 	fit 	to regulate
such 	agencies, 	it 	is 	not 	within the province of 	this Board to
do so.
4. 	The 	Experience 	of 	the 	JPA Board 	of 	Directors.
A 	final 	concern of 	the ALJ was 	the 	lack of 	experience 	in
the 	field 	of health 	insurance of 	some 	members 	of 	the board 	of
the 	JPA. 	There 	is 	no evidence of 	any sort 	in the 	record
indicating 	that 	the 	lack of experience, 	if 	true, 	had any 	impact
on 	the 	capacity of 	the JPA to provide 	dental 	coverage. 	Indeed,
the ALJ's 	findings 	were 	to the 	contrary. 	The proposed decision
reads as 	follows:
Still, 	at the hearing, 	this 	fear of enhanced
risk 	did 	not 	appear 	justified based 	on 	the
NCSMIG's 	first 	several 	months 	of 	dental
operations, 	in which costs were 	running
about 	even 	with 	initial 	estimates.
We 	find persuasive 	the 	fact 	that 	the 	JPA has been 	operating
in 	the 	medical 	field 	since 	1979 without 	any difficulties 	under
the 	same 	board, 	which 	is 	responsible 	for both the medical 	and
dental 	programs. 	All 	evidence 	indicates 	that 	the 	medical 	field
is 	far 	more 	volatile 	than 	the dental 	field.
We 	therefore 	reject 	those portions 	of 	the 	decisions 	of 	the
ALJ which held 	that 	the 	Districts' 	unilateral 	actions 	in
joining 	the 	JPA 	constituted 	unilateral 	changes 	requiring
negotiations 	with 	the 	exclusive 	representatives 	under 	section
3543.5(c).
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With 	respect 	to Charging 	Parties' 	contention 	that 	they were
deprived 	of 	services 	extended 	voluntarily by 	CDS 	(which
provided 	a 	method 	of 	reviewing 	claims 	disputes 	and 	a 	procedure
for 	reviewing proposed 	rate 	increases), 	we 	affirm the ALJ's
determination 	that 	Charging 	Parties 	failed 	to demonstrate 	any
type 	of 	enforceable benefit 	or 	entitlement 	of which 	they were
dispossessed.
ORDER
The 	unfair 	practice charges 	in 	Case 	Nos. 	SF-CE-1052 	and
SF-CE-1056 	are 	hereby 	DISMISSED.
Chairperson 	Hesse 	and Member 	Porter 	joined 	in 	this 	Decision.
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