Arbitrator: MESSA Cannot Unilaterally Change Medical Benefit Coverage Year


March 25th, 2019

In a case handled by Thrun Law Firm, an arbitrator recently found that the Bay City Education Associa­tion’s attempt to unilaterally change its medical benefit coverage year from July 1 to January 1 violated the col­lective bargaining agreement. Bay City Education Association MEA/NEA and Bay City Public Schools, AAA 01-18-0001-8403. As many school officials are aware, MESSA changed its plan year from a July 1 to June 30 cycle to a calendar year after freezing rates for an 18-month span from July 1, 2017 to December 31, 2018.

Since the Publicly Funded Health Insurance Contribution Act was enacted in 2011, Bay City Public Schools based its health care cost contributions on the “hard caps” set annually by the Michigan Department of Treasury. The board and the union previously imple­mented a July 1 to June 30 coverage year. Importantly, the district used this coverage year period to calculate its health care contributions and to ensure that its con­tributions were within the annual hard cap amounts.

When MESSA made the March 2017 announcement, the board and association were negoti­ating a successor agreement. After MESSA’s announce­ment, neither the board nor the union changed their table positions or offered any proposals that reflected a change in the coverage year. The parties soon reached a tentative agreement. The board continued to apply July 1 to June 30 as the coverage year to calculate the hard cap and raised the hard cap rates in July 2017.

In January 2018, the union insisted that the board adopt MESSA’s new calendar plan year and increase its hard cap rates as of January 1, 2018. The board asserted that the parties had never negotiated a change in the coverage year and continued to apply the July 1 to June 30 timeframe following established past practice. The union filed a grievance and subsequently advanced the grievance to arbitration.

The arbitrator found that terms of all collective bargaining agreements between the parties operated from July 1 through June 30 for the purposes of calcu­lating the board’s contribution under the hard cap. The union did not present its position on MESSA’s plan year change. The parties also never discussed or agreed on the impact of MESSA’s plan year change, whether the coverage year would change and when, or the effect that the change would have on the board’s contributions as of January 2018.

The arbitrator rejected the union’s argument that the board was bound by the plan year set by MESSA if it contracted for MESSA health insurance. The arbitra­tor found that MESSA could not set aside the previously negotiated July 1 to June 30 coverage year and replace it with January 1 through December 31. Simply put, MESSA did not have the “power to unilaterally change the terms of the Collective Bargaining Agreement of the parties in any way.” Rather, the parties had to negotiate that change.

This decision is an important reminder that districts and unions must negotiate bargaining sub­jects, including health insurance benefits and neither party, nor a third party, may unilaterally change those terms.
Of particular significance in the decision, the board’s bargaining notes made no reference to MESSA’s plan year change. Keeping good notes during negotia­tions is important. Good notes will help school officials identify what topics were discussed when looking back at negotiations that took place months or years earlier.