H.E. NO. 84-15

STATE OF NEW JERSEY

BEFORE A HEARING EXAMINER OF THE

PUBLIC EMPLOYMENT RELATIONS COMMISSION

In the Matter of

BOROUGH OF METUCHEN,

Respondent,

-and-	Docket No. CO-83-9-31

N.J. STATE POLICEMEN'S BENEVOLENT

ASSOCIATION - METUCHEN LOCAL #60,

Charging Party.

Appearances:

For the Respondent

Martin A. Spritzer, Esq.

For the Charging Party

Robert Bradley Blackman, Esq.

HEARING EXAMINER'S RECOMMENDED

REPORT AND DECISION

An Unfair Practice Charge was filed by the New Jersey State Policemen's Benevolent Association - Metuchen Local #60 (PBA) with the Public Employment Relations Commission (Commission) alleging that the Borough of Metuchen (Borough) committed certain unfair practices within the meaning of the New Jersey Employer-
Employee Relations Act, as amended, N.J.S.A. 34:13A-1 et seq. (Act). The charge was filed with the Commission on July 14, 1982 and amended July 26, 1982 alleging that the Borough violated §5.4(a)(5) when the Borough unilaterally changed the carrier of health insurance for the PBA.

It appearing that the allegations of the charge, if true, might constitute an unfair practice within the meaning of the Act, the Director of Unfair Practices issued a Complaint and Notice of Hearing on October 19, 1982. Hearings were held on February 24 and March 31, 1983, at which time both parties were given an opportunity to examine and cross-examine witnesses, introduce evidence, argue orally and present briefs. Briefs were submitted by May 25, 1983.

An Unfair Practice Charge having been filed with the Commission, a question concerning an alleged violation of the Act exists and the matter is appropriately before the Commission by its designated Hearing Examiner for determination.

The Borough and the PBA were engaged in collective negotiations for a new contract. The PBA as well as the other employees of the Borough were covered by Blue Cross-Blue Shield Rider J and major medical insurance. As part of its negotiations demands the PBA wanted a better Blue Cross-Blue sSield, the 1420 Plan. The Borough pointed out that the current plan was the best Blue Cross offered. Blue Cross-Blue Shield would not write a 1420 plan for the Borough because the Borough's employment force is too small. The PBA dropped the demand but then sought prescription drug and eyeglass plans.

In response to this demand the Borough negotiator suggested a different health plan with better coverage such as an HMO or the Connecticut General plan.

The negotiations continued and on March 22, 1982 a memorandum of agreement was signed which, among other things, set new wage rates for the 1982-1983 contract. The memorandum was silent as to any change in health benefits.

The PBA witnesses testified that there was a side-bar agreement that before any new health care plan is instituted the PBA would have the right to take such a plan back to the membership for approval. The PBA officers thereafter witnesses presentations by both Connecticut General and Blue Shield. The PBA ultimately rejected the Connecticut General proposal. It wanted to stick with Blue Shield-Major Medical and so notified the Borough. The Borough refused to negotiate in spite of the prior understanding and effective July 1, 1982 the PBA membership lost its Blue Shield and Major Medical coverage and became covered by a Connecticut General Group Medical Expense Insurance Policy. (Blue Cross coverage remained in effect.)

The Borough witnesses' testimony is at odds with that of PBA witnesses. They maintain PBA negotiators were never given the right of rejecting the insurance carrier and they were invited to a presentation by the two carriers only as a matter of courtesy.

The Borough claimed they had no obligation to negotiate over the carrier and since the level of benefits was substantively equivalent between the old and new plans they never had an obligation to negotiate and did not do so.

The two PBA witnesses, Weingart and Sebasty, testified as to the conduct of negotiations. They were equivocal in describing their understanding with Councilman O'Brien as to submitting the change in carrier to the PBA members for approval. Further, the timing of and manner in which the PBA sought the membership's approval for the change in carrier is questionable. A sign-in sheet was posted asking unit members to indicate a preference for Blue Shield or Connecticut General three months after the memorandum of agreement was signed.

Accordingly I find that the PBA failed to prove by a preponderance of evidence that the Borough reneged on an agreement to negotiate.

More importantly, however, there is no dispute that the Borough refused to negotiate either the carrier or the level of benefits.

Robert Wojcik is a representative of New Jersey Blue Cross. He testified as to the benefits that Blue Shield provided under the Borough's old plan. Pursuant to the plan, if a subscriber went to a participating doctor for a covered medical procedure the subscriber would have no financial obligation, no up front money, no balance billing. Aside from that, the employees also had a major medical plan with a $100 deductible, two deductibles per family and 80 percent coverage. The other 20 percent is the responsibility of the family up to $2,000. Blue Shield covered 100% thereafter for "Major Medical covered expenses, prescription drugs, office visits, sick visits to a doctor and things of that nature." There is limited dental coverage for loss of teeth and due to injury.

There are 8,000 participating Blue Shield physicians within the state or about 70% of all surgeons participate.

David Lance of Connecticut General testified that Connecticut General matched the total benefits package of Blue Shield. Connecticut General did not try to match Blue Shield on an item to item basis but came up with a comparable benefits package. Some advantages of the new policy over the old are unlimited benefits for lab and X-ray while Blue Shield has a $125 limitation for X-ray and a $25 limit for lab work.

There is a family security benefit. If an employee died the family would continue to be covered for two years with no premium cost.

Connecticut General has a $50 deductible as opposed to $100. Blue Shield has 80% on the first $2,000; Connecticut General had 90% on the first $1,000. Although the deductible portion is chargeable against the surgeon's fees, under Blue Shield the maximum annual cost to individuals would be $150 with Connecticut General. The Blue Shield maximum would be $500.

There is no coverage for dental work arising out of injury. Lance testified that whether a subscriber would have to pay out for services up front would depend upon the provider of service. There is no formal list of providing doctors. However, the normal turnaround time for reimbursement is ten working days.

In City of Newark, P.E.R.C. No. 82-5, 7 NJPER 429 (¶12105 1981) the Commission, in following precedents in both the NRLB and in public sector agencies in other jurisdictions, particularly Iowa1/ and Wisconsin2/ held that the selection of an insurance carrier is a permissive subject for police and firemen since it is not a term and condition of employment. Therefore, the unilateral selection of a carrier without negotiations does not violate the Act. (Although for police and firemen, such a selection is negotiable and arbitrable on mutual agreement.) Selection of the carrier is not an inherent management prerogative related to a public body's mission in providing services to the public. Rather, the selection of a carrier, at least in the instant proceeding, is an economic decision.3/ Kochel testified that by going to Connecticut General the savings would amount to $12,000.

Selection of a carrier is not a term and condition of employment only to the extent that such selection does not change either the benefits offered under the existing program (for such benefits are terms and conditions of employment) or the administration of the program. The Commission has provided an example of a change in the administration of the program:

...whether employees would have to pay first for services and be reimbursed or whether the carrier would pay the dental or physician directly. City of Newark, supra, at p. 6.

Counsel for the Borough has argued that it was never demonstrated that any employees in fact had to pay for services out of pocket. However the Connecticut General spokesman conceded that there was no provision in the plan for such direct payment and it was conceded by the City Administrator Kochel that employees were required to initially at least pay more money out of pocket under the new plan.4/

Several members of the PBA testified as to their financial experience with both plans. Detective Sergeant Siecinski related how he had two identical operations; one was covered under the new Connecticut General plan. Siecinski had to pay $98. The other operation was under Blue shield and he had to pay $50. Similarly Patrolman Kolbus testified as to his experience under the two plans and how his children had the same problem with their feet and they both required orthotics. His son's orthotics were covered under Blue Shield and Major Medical, but under the Connecticut General policy his daughter's orthotics were not a covered expense.

The Borough and the PBA both testified as to how one plan or the other is more advantageous under certain hypothetical situations.

The Borough's argument here that the plan, although not identical, is substantively equivalent is misplaced. Once there is a change in the benefits under an insurance plan, for better or worse, there is necessarily a change in terms and conditions of employment. The employer has no right to substitute its judgment as to what is an "equivalent plan" for that of the designated majority representative of its employees. The representative is the one who makes the judgment as to whether different benefits are substantially equivalent. If, in the representative's judgment, the plans are not equivalent then there must be good faith negotiations before any change can be made.

This is no different than any other change in terms and conditions of employment.

Moreover, there is clearly a change in the administration of the plans. Under Blue Shield the employee could opt to use a participating doctor. There is no such option under the current Connecticut General Plan.

Accordingly, it is recommended that the Commission find when the Borough of Metuchen changed the carrier of insurance they altered the terms and conditions of employment of unit members. In failing to negotiate in good faith before they changed insurance carriers, the Borough violated §5.4(a)(5) of the Act.

It is hereby recommended that the Commission:

ORDER

The Borough cease and desist from:

1.	Refusing to negotiate with the PBA before changing health insurance carriers when the level of benefits and the administration of the health insurance plan is being changed.

2.	Take the following affirmative action:

A.	Reimburse any PBA member for any financial loss actually incurred due to the change in health insurance from Blue Shield Major Medical to Connecticut General.

B.	Offer to provide funds to those unit members who have to pay out money for doctor's fees until they are reimbursed by the insurance carrier. This is to apply only to those situations where a unit member would have otherwise been able to use a participating doctor under Blue Shield.

C.	Post in all places where notices to employees are customarily posted copies of the attached notice marked as Appendix "A." Copies of such notice on forms to be provided by the Commission, shall be posted immediately upon receipt thereof and, after being signed by the Respondent's authorized representative shall be maintained by it for at least sixty (60) consecutive days. Reasonable steps shall be taken by the Respondent to ensure that such notices are not altered, defaced or covered by other materials.

D.	Notify the Chairman of the Commission within twenty (20) days of receipt what steps the Respondent has taken to comply herewith.

/s/Edmund G. Gerber

Hearing Examiner

DATED:	August 25, 1983

Trenton, New Jersey

WE WILL NOT refuse to negotiate with the PBA before changing health insurance carriers when the level of benefits and the administration of the health insurance plan is being changed.

WE WILL reimburse any PBA member for any financial loss actually incurred due to the change in health insurance from Blue Shield Major Medical to Connecticut General.

WE WILL offer to provide funds to those unit members who have to pay out money for doctor's fees until they are reimbursed by the insurance carrier. This is to apply only to those situations where a unit member would have otherwise been able to use a participating doctor under Blue Shield.