Arbitration Award




In re

Olmstead Township, Ohio


Fraternal Order of Police


117 LA (BNA) 540

FMCS Case No. 00120/00854-6


April 19, 2002




Gregory James Van Pelt, Arbitrator




I. Was the matter timely filed, and properly before the arbitrator? 


II. Whether the prescription drug insurance coverage were equivalent to predecessor plans, as provided in Sections 18 and 18.02 of the collective bargaining agreement. 




The Grievance, dated May 27, 1997 reads, in pertinent part:  


Statement of Grievance: 


On or about May 1, 1997, the employer changed the employee's Hospitalization and Insurance plans. The new plans, not equivalent to the current plan as stated in Article 18 & 18.02. The new plan having increased costs to the employee, particularly to prescriptions. 


Remedy requested: 


A plan equal to the current one (Previous Contract) and reimbursement to the employee for costs of prescriptions over and above the amount under the previous coverage. 


Relevant Contract Provisions (In Pertinent Part) 




8.01 A grievance is a complaint, dispute or other controversy in which it is claimed that either party has failed in an obligation under this Agreement and which involved the meaning, interpretation or application of this Agreement. This grievance and arbitration provision is the sole process for addressing alleged violations of this Agreement. 


8.02 Both parties agree that all grievances should be dealt with promptly and every effort should be made to settle grievances as close to the source as possible. 


8.03 Should the Administration fail to comply with the time limits herein, the Labor Council may appeal immediately to the next step. Should the Labor Council fail to comply with the time limits herein, the grievance shall be considered abandoned. All time limits may be extended by mutual consent. 


8.04 The following procedures shall be utilized when a grievance is initiated by any members of the bargaining unit. 


Step 1 


A grievance must be presented orally or in writing, at the choice of the aggrieved, to the Chief of Police or his designee, within five (5) working days of the occurrence or within five (5) days after it has become known to the employee. The Chief or his designee shall have five (5) days following such presentation to submit an oral response. The employee shall be accompanied by a Labor Council representative, if so requested. 




18.02 The Township shall obtain and maintain in full force and effect, and pay one hundred percent (100%) of the cost thereof, a policy of hospitalization and medical cost insurance for each employee and his family, this policy shall also include dental, vision and a prescription program. The Township shall maintain the current insurance plan or its equivalent. 


Effective January 1, 1998 employees will pay one-half of any increases in premiums above the rates that will go into effect in April 1997, or the rates set forth below, whichever rates are less. The maximum that an employee will be required to contribute is $25.00 per month for single coverage and $50.00 per month for family coverage. 


Background & Facts 


In late 1996 or early 1997, Metropolitan Life Insurance Company (Met Life), at that time the carrier for the health and medical coverage offered by the Township under Section 18.02 of the Agreement, merged with United Health Care (United). As a result of that merger the Employer was informed that its current health care policy would be available only for some six months, after which further coverage would be unavailable through Met Life. 


As a consequence of the curtailment of its existing policy, on May 1st of 1997 the Township implemented a new health care plan, under United Health Care. Among other measures, in March and April of 1997—prior to implementation of the new coverage—the Employer held a number of informational meetings for concerned employees, including members of the FOP. At these meetings, in discussions with union representatives and in personal letters, Olmsted Township administrators promulgated information regarding the new coverage. 


While the United plan afforded primary benefits substantially comparable to those provided under Met Life, a number of its provisions differed from the predecessor coverage. Among these, and at issue here, was an increase in prescription drug coverage from a flat $3.00 per prescription to $15.00 per prescription for generic drugs and $30.00 for brand name pharmaceuticals. 


The Grievant in the present matter, a Dispatcher with the Township since 1977, required medication for a number of conditions, and consequently utilized the prescription drug coverage extensively. When the Met Life plan was supplanted by United coverage in May of 1997, the Grievant obtained prescription coverage under a plan provided by her spouse's employer. She continued under her husband's medical coverage, at $4.00 per prescription, until his retirement in February of 1998. 


At approximately the same period—mid- 1997—negotiations regarding the successor Agreement for the period obtaining at the time of these proceedings 


For a number of years following the grievance filing the Parties engaged in discussions intended to resolve the dispute. A tentative agreement arrived at by the FOP and the Township was not acceptable to the Grievant, and was accordingly rejected. The matter was accordingly presented for arbitration in the instant proceedings. 




Olmsted Township challenges presentation of this matter to the Arbitrator, on the grounds that it was not timely filed. In support of its assertion of lack of procedural arbitrability, the Employer points to language of Step 1 of the Grievance and Arbitration Procedure delineated in Article 8 of the Agreement. Under that provision a grievance must be filed within five (5) working days of the occurrence of the precipitating event, or within five (5) working days after it has become known to the aggrieved. 


The Grievant had or should have had notice of the new plan, including the changes in prescription drug coverage, prior to implementation of the new plan on May 1, 1997. The Township maintains that it made every effort to inform affected employees of provisions of the new United coverage, including holding meetings with bargaining unit representatives. Among additional efforts were letters to individual employees, open meetings in the workplace and other measures to assure information regarding changes in health care benefits, including those in the prescription drug coverage, were provided prior to implementation of the new plan. Nevertheless, says the Employer, the Grievant neither attended meetings nor took advantage of other opportunities to familiarize herself with the new plan. 


Notwithstanding attempts to inform employees of the new health care coverage, the Township maintains that the plan was actually implemented on May 1st of 1997, while the present grievance was not filed until May 27th of that month, well beyond the contractual five day period for timely filing. Accordingly, the Township urges the Arbitrator to determine the matter to lack arbitrability under the Agreement, and to dismiss the matter. 


The Union argues that the Grievant did not obtain a prescription under the new drug program until May 25th, only two days prior to grieving. As she was not affected by the new policy prior to that date, she had no knowledge of the impact, and therefore could not be expected to grieve the charged contractual violation. Alternatively, the FOP maintains that the violation alleged in the present grievance is recurring; each time the Grievant pays more for prescriptions under the present medical coverage is another violation of the contractual requirement for equivalent health care benefits, says the Union. Therefore, it requests that the Arbitrator find the grievance to have been timely filed. 


The Township clearly made great effort to inform its employees, including FOP members and the Grievant here, of the specific prescription drug and other changes in coverage under the United health and medical plan. However, health insurance coverage is a complex and often arcane matter, with implications in specific cases not readily comprehended, even by those with some understanding of the terms and conditions involved. For most lay persons, including the Grievant, constructive knowledge of the personal and individual ramifications of changes in insurance coverage can be fully appreciated only through experience. Moreover, it is arguable that, relying on the contractual equivalency, she believed the prescription drug benefit would be the same under the United plan as it had been under Met Life. Consequently, it is reasonable to conclude that the Grievant lacked knowledge of the effect of the United plan's prescription coverage change until she was required to pay the resulting bill. The occurrence on which the present grievance is based became known to the Grievant on March 25, 1997. Her grievance, dated March 27th, was accordingly timely filed under the provisions of Section 8.04 of the Agreement. The matter is therefore properly before the undersigned Arbitrator for final and binding resolution on the merits. 


Union Position 


The FOP bases the present grievance on Section 18.02 of the 1996-98 Agreement, providing that, “[t]he Township shall maintain the current insurance plan or its equivalent”. When the Employer changed carriers from Met Life to United, says the Union, the plan it selected did not provide equivalent prescription coverage. As a result, the Grievant was forced to incur increased and unwarranted cost for health care in violation of the Township's contractual obligation. Accordingly, the FOP urges the Arbitrator to sustain the grievance and to direct that the Grievant be reimbursed for all prescription drug costs in excess of $3.00 per prescription incurred from May of 1997.


Prescription drug coverage critical to the Grievant under the United plan was not equal to that existing when the 1996-1998 Agreement was ratified, at which time the Met Life plan was “the current insurance plan” according to the FOP. The Grievant concedes that provisions of the United plan were largely “comparable”to those of its predecessor, and that some benefits, including vision, dental care and other ancillary coverage may have exceeded those provided by Met Life. However, says the Union, those benefits were not useful to the Grievant, and were not sufficient to balance the loss in prescription drug benefits. 


Section 18.02 was intended to protect Township employees from inferior health plans during the course of the Agreement, the FOP asserts. In agreeing to its language, the Employer was obligated to provide substantially equal benefits, including prescription drug coverage, even if meeting that obligation resulted in increased expense to the Township. In fact, the Union argues, the Employer could have obtained equal drug coverage at a 5.4% premium increase. Alternatively, the Employer had the option of obtaining coverage from other carriers. Failing to do either, the FOP asserts that the Township violated its contractual obligation to maintain current coverage. 


As a result of the Employer's alleged violation, the Union argues that the Grievant suffered additional prescription drug costs. She mitigated those costs through use of her spouse's $4.00 per prescription drug coverage until his retirement in February of 1998. Subsequent to that time, she contends she was required to pay $15.00 and $30.00. The total amount of her additional prescription drug costs rose to some $1,989.99 incurred between May of 1997 and the hearing date. Accordingly, she seeks to be made whole for all such co-payments incurred in excess of the $3.00 amount provided under the Met Life plan obtaining at the time of 1996-1998 contract ratification. 


Employer's Position 


The Township maintains that it had no choice but to change carriers for the medical insurance afforded its Employees. Met Life no longer provided such coverage after its merger with United Health care. Pointing to the language of Section 18.02, the Employer asserts that it had a contractual right to change carriers, provided such change resulted in coverage “equivalent” to current benefits. Therefore, it asks that the Arbitrator deny this grievance. 


The language of Section 18.02 provides the Township with flexibility in its health and medical insurance providers. So long as the coverage was equivalent to that furnished under Met Life, the Township argues, it had a contractual right to make the change. Equivalent, it says, does not mean identical, a distinction it maintains was acknowledged by Union representatives. 


In fact, according to the Employer, the United Health Care policy was superior to the previous coverage in a number of respects. Most significant among these was that Met Life provided HMO coverage, with no access to physicians outside its limited, local network. United also was an HMO program, but allowed open access to a much larger physician and hospital network, with access to care on a 24 hour basis. In addition, the United policy provided vision and other benefits not included in the coverage under Met Life. 


Testimony on behalf of the Employer indicated that, while it did have an option to continue coverage under Met Life for six additional months, to do so would have resulted in an 8.1% premium increase. At the end of the six-month extension the Township would have been forced to obtain coverage under another carrier. Prescription drug plans industry-wide are raising co-payments, according to the Employer, and coverage identical to that provided under the Met Life plan was simply not available under United. While it concedes that it might have shopped for coverage from another carrier, the Township contends it had a responsibility to its citizens to be aware of health care costs, and accordingly chose to contract with United Health Care. 


Although not identical to the previous policy, the Township argues that the United coverage provides greater benefits to more employees than did its predecessor. Accordingly, it maintains that the plan is equivalent, if not superior to that currently in effect at ratification of the 1996-1998 Agreement. Therefore, it asks the Arbitrator to determine the change in carriers to have been within the contractual right of the Employer, and to deny the present grievance.


Discussion and Opinion 


Understanding that health and medical insurance coverage was and continues to be unstable, the Parties here included in their 1996-1998 Agreement a provision that would allow the Township to change carriers and insurance plans at its discretion. However, to maintain the level of coverage the replacement plan was required to be “equivalent” to that in effect at ratification of the Agreement. The successor Agreement, which became effective on January 1, 1999, contained that provision verbatim. 


The crux of the issue presented in this matter is the meaning of “equivalent” as intended by the Parties in drafting Section 18.02. The Township argues that “equivalent” does not mean “identical”. In fact, it maintains that the benefits available to its employees under the United plan were in some ways superior to the previous Met Life coverage. While the Grievant here did not receive the same prescription drug coverage afforded her under the previous policy, says the Employer, the Grievant and all Township employees enjoyed increased access to physicians, hospitals and other medical services under the new plan. Therefore, the Employer asserts the provided coverage was at least “equivalent” under the terms of Section 1802. The FOP does not disagree that equivalent coverage does not necessarily mean an identical plan, but merely argues that the Grievant here suffered increased prescription drug costs under the new plan. 


There is no ambiguity in the pertinent language of Section 18.02: “The Township shall maintain the current insurance plan or its equivalent.” The plain meaning of the term “equivalent” is not difficult to divine; Webster's Unabridged gives us, “[t]hat which is equal in value, quantity, etc . . . to something else.” To extend Section 18.02 then: “The Township shall maintain the current insurance plan or `that which is equal in value'”. 


The Township contends that the equivalence of the two plans lay in a holistic assessment of their coverage, as applied to and utilized by a majority of its employees. Under the interpretation urged by the Employer, the United Health Care plan would seem at least the equivalent, if not superior, coverage. 


However, we are not presented with a global or class grievance here. The Grievant in this matter irrefutably paid more for prescription drugs essential to her health under the new carrier. It was also unrebutted that advantages ostensibly available under the United plan, such as the vision care or more extensive network, were of insufficient benefit to offset the increased cost of her medication. As applied to the Grievant, then, the two plans were not, “equal in value” as required under Section 18.02. She is accordingly entitled to compensation for this loss, beginning with its first occurrence on May 25, 1997, two days prior to the filing of the present grievance. 


If the plain meaning of the Agreement supports the grievance as to losses during the 1996-1998 contract period, however, it also militates against the Grievant's claim to increased prescription costs occurring after the effective date of the successor Agreement in January of 1999. At that time the “current insurance plan” was that provided by United Health Care, not its predecessor under the previous contract. Therefore, the Grievant was not entitled to $3.00 prescription co-payments after that date. 


Therefore, it must be determined that the change in carriers implemented by the Township violated the Grievant's contractual rights under Section 18.02 and her grievance is accordingly sustained. The Employer is directed to compensate the Grievant for all documented prescription drug costs in excess of those co-payments provided under the Met Life prescription drug plan incurred during the period from May 25, 1997 until January 1, 1999. 




The grievance is sustained. The Employer is directed to compensate the Grievant for all documented prescription drug costs in excess of those co-payments provided for under the Met Life prescription drug plan she incurred during the period from May 25, 1997 until January 1, 1999.