In Oakland Physicians Medical Center, LLC, 362 NLRB No. 129 (July 22, 2015), the National Labor Relations Board both rejected the employer’s request for deferral to arbitration and found that the employer violated the National Labor Relations Act by making unilateral changes to employee health care coverage, including the premiums paid by the employees, during the term of the collective bargaining agreement (“CBA”).

Article 16.4 of the CBA gave the employer the right to select and change insurance carriers and administrators, as long as similar health coverage was maintained. Article 16.1 of the CBA gave the employer the right to amend the plan design of health insurance benefits with prior notice to the Union, but required employee premiums as listed in a schedule to remain the same.

During the term of the CBA, the health insurance provider terminated its contract with the employer, requiring the employer to obtain new health insurance coverage. The employer obtained new insurance without prior notice to the Union. Employee premiums increased under the new health insurance plan, and the Union refused to agree to the proposed health care changes. Although the employer paid 100% of the employee premiums in the first month of the new health insurance plan, it began deducting the new increased premium amounts thereafter.

The Union filed grievances claiming that the employer’s conduct violated the CBA’s health care provision and filed an unfair labor practice charge challenging the unilateral change mid-contract.  The employer requested deferral to arbitration.

The Board majority, through Chairman Pearce and Member McFerran, rejected the employer’s deferral request. The majority found that the case presented no issue of contract interpretation because of the unambiguous language in the health care provision preventing the employer from increasing employee premiums and requiring prior notice to the Union for any permissible changes.

By altering premium co-shares, and otherwise “amend[ing] the plan design of health insurance benefits,” without notice to the Union, the Respondent engaged in conduct expressly prohibited by the collective-bargaining agreement. These clear violations of the express terms of the parties’ agreement make deferral inappropriate. Further, as the Union refused to give its consent to these changes, it is clear that the Respondent’s conduct constituted an unlawful mid-term contract modification.

In dissent, Member Johnson found that the case should be deferred to arbitration. He relied on Article 16.4 as the operative provision because the employer changed providers and did not simply amend the plan design. Unlike Article 16.1, Article 16.4 did not expressly require prior notice to the Union or prevent the employer from changing employee premiums. It simply required the employer to maintain “similar coverage.”

This contractual provision, even though it directly pertains to the operative facts, is not entirely clear and unambiguous on its face; the term “similar coverage” can reasonably be interpreted as open to at least two plausible interpretations. On the one hand, it is reasonable to construe “similar coverage” to include the level of health benefits. . . . Conversely, the [employer’s] assertion that similar coverage refers to the types of benefits provided under the health plans is equally plausible . . . . Because the term “similar coverage” is susceptible to different reasonable interpretations, an arbitrator is needed to determine what the parties intended by the term . . . .