By Christopher Casillas
A PERC hearing examiner recently levied a significant financial penalty against Kitsap Transit for unilaterally dropping one of two health insurance plans offered to members of two different bargaining units of drivers for the agency represented by the Amalgamated Transit Union (“ATU”), Local 1384. The case, Kitsap Transit, Decision 11098-A (PECB, 2012) arose back in late 2010 when Kitsap Transit notified ATU, with just a few weeks warning, that it was no longer going to offer one of two insurance plans historically available to the members—the Premera PPO Plan—and that all the members would have to move over to the Group Health Plan. The loss in the plan was a significant reduction in benefits for the group as a whole, as around 50% of the membership was signed up under the PPO plan, which many members strongly preferred over the HMO product offered through Group Health.
The employer’s stated position was that in the fall of 2010, Premera, which had been the historical carrier for the PPO plan at Kitsap Transit, notified the agency that they were refusing to submit a bid for coverage in 2011, and with this “last-minute notice” they were unable to secure an alternative carrier to offer a comparable benefit. The actual facts in this case turned out to be quite a bit more complex, but ATU and its legal counsel discovered, upon reviewing an extensive amount of documentation, that in fact, through a series of deliberate and willful missteps by Kitsap Transit, in a somewhat vein attempt to save money, the employer created a set of unnecessary conditions that caused Premera to refuse to rebid on the PPO Plan. These steps included incentivizing employees across the agency to move over to the cheaper Group Health Plan and agreeing with some of its other unions to move them to a different health insurance plan altogether, leaving a smaller and potentially higher risk pool for Premera. These moves, initiated by the employer, affected Premera’s underwriting criteria and caused them to refuse to offer their PPO plan for the remaining members represented by ATU.
In the unfair labor practice proceeding, Kitsap Transit’s principal defense was to argue there was a business necessity justifying what was admittedly a unilateral change in that, they argued, through no fault of their own they simply had no PPO Plan to offer to ATU members beginning in the 2011 plan year. The Examiner wholeheartedly rejected this defense. She concluded:
The employer’s actions cannot be excused due to business necessity because the employer played a significant role in making itself ineligible for PPO coverage. The employer took these actions because it thought the Premera PPO plan had become too expensive and the employer was looking to save money. In this situation the employer’s desire to achieve economic savings does not take precedence over the employer’s obligation to negotiate over changes in mandatory subjects of bargaining and maintain the status quo of terms and conditions of employment for its represented employees.
On a separate allegation, the Examiner also found Kitsap Transit committed a ULP by unilaterally offering an incentive to ATU’s members to move to the Group Health Plan.
Although the incentive was arguably a benefit to those who took it, it was unilaterally made available to the members without first negotiating with ATU and advanced over its explicit objection.
To remedy the unfair labor practices committed by Kitsap Transit, the Examiner ordered the agency to make whole all the members of ATU who lost the Premera plan beginning in 2011, by paying them the premium savings that the employer achieved through the elimination of the Premera plan. The damages are to be calculated by taking the difference in premiums between Premera and Group Health for each of the employees who had coverage under Premera at the time of its elimination at the beginning of 2011, until the employer restores a comparable benefit or negotiates and agrees upon some alternative plan arrangement with ATU. Kitsap Transit had estimated that they had saved about a half-million dollars, agency wide, in eliminating the Premera plan, so the damages in this case for ATU’s members will likely be extensive.
This is a strongly worded decision which, likely, was the product of the employer’s frivolous assertion of the business necessity defense. This defense has always been more limited than some employers would like to think, but the Examiner here drew a clear line that it cannot be used when the employer creates the conditions that result in the emergency change. ATU also likely prevailed here because of the extensive information request they made immediately upon learning of the employer’s plans to drop the Premera PPO option, which is an important reminder for all union representatives. Through the information that was provided in response to that request, ATU and its legal counsel were able to discover that it was Kitsap Transit that caused Premera not to rebid the plan that had historically been offered to many of ATU’s members.
