West Chester Township Trustees and West Chester
Township Local 3518
the matter of Voluntary Arbitration
West Chester Township Local
The West Chester Township Trustees
AAA Case Number 52 390 00479 06
Date of Hearing
Date of Award
An arbitration hearing was conducted December 11, 2006
at the Headquarters of the West Chester Township Trustees.
The Union proposed that the issue to
be decided by the Arbitrator should be stated as:
the Township violate Article 20 of the collective bargaining
agreement by using the total cost of health care for employees,
rather than the monthly health care premium for the base plan,
in calculating the amount of contribution for health care
insurance coverage to be paid by bargaining unit employees?
If so, what is the remedy?”
The Township phrased the issue a bit
Article 20 requires the covered employees to pay up to ten
percent of the employer’s monthly billed premium or total
monthly cost for health insurance, which includes both an
insured billed premium and an HRA funding for the self-insured
portion of the plan?”
parties were given full opportunity to examine and cross-examine
witnesses, pose arguments and present their respective cases.
Both advocates presented their cases competently and
parties submitted post-hearing briefs, which convincingly
summarized their positions.
All evidence, arguments and views were considered by the
Arbitrator in reaching the decision stated herein.
At the hearing the parties agreed that the matter was
properly before the Arbitrator for determination.
Relevant provisions of the Collective Bargaining Agreement include:
Article 10, Arbitration
Powers of the Arbitrator:
(a) The arbitrator shall not have the power to add to,
subtract from, or modify any of the terms of this Agreement.
Article 20, Welfare
The Employer will provide major medical health insurance
coverage at current levels throughout the term of the Agreement
from a carrier of its choice on the following basis:
At no cost to the Employee for single coverage
under the Employer Plan during the term of this Agreement so long as the
Employee is actively at work, on vacation or on approved sick
leave and so long as the Employer's monthly per Employee
costs do not exceed the following:
and child(ren) $525 (if offered)
Employee and spouse ($575) (if offered)
Provided, further, that if the Employer's monthly cost
for such Base Plan exceeds the above caps, the Employee will pay,
via payroll deduction, up to a maximum of 10% of the
Employer's total monthly health care
premium for such Base Plan.
Any Employee may decline major medical health care
coverage and receive One Thousand dollars ($1,000)
compensation payable on or before the last regular payroll in
December of that year for a full year of such waived coverage or
pro-rated on a monthly basis if less than one (I)
In the event that escalations in major medical insurance
premium costs exceed the ability of the Employees to continue to
make the required premium or co- payments, the Employer and
covered Employees will discuss and, upon mutual agreement,
consider adjustments to deductibles, co-pays, and coverage
levels in an effort to contain costs for both the Employees and
the Employer. Any such agreements will
be reduced to writing,
signed by both parties and maintained as a record of the current
coverage level for purposes of this Agreement.
Insurance coverage disputes are to be resolved
exclusively by the insurance carrier or plan administrator.
During the term of the Agreement the Employer will
continue to provide forty thousand dollars ($40,000) in term
life insurance for each Employee and Accident & Sickness
Coverage at the levels provided on the effective date of this
Agreement, so long as said coverage remains available to the
Employer at a reasonable cost
From time to time, and at its discretion, the Employer
may provide to bargaining unit members, additional supplemental
health and welfare benefits generally afforded to other
Employees of the organization that are not specifically
delineated in this contract document. It is recognized that such
allowances are provided apart from this Agreement, and when
provided will be done so at the sole discretion of the Employer
and for whatever period of rime the Employer deems appropriate.
Prior to any change in insurance camera, the Employer
will meet and confer with the Union regarding any proposed changes.
The Employer, at its option, will self-insure or provide
general liability insurance coverage for Employees acting in good faith,
within the scope of their official duties as assigned by the
Employees who serve on a Hazardous Materials Team on
behalf of the Township shall be given biannual medical examinations at no
cost to the Employee.
There shall be a joint Township inter-departmental Safety
and Health Committee (Risk Management Committee) established
under the sponsorship of the Township Administration. The Fire
Department will have one representative on this committee appointed by the Fire Chief. In
addition, one representative will be appointed by the union to
sit on this committee. The committee member assigned by the
union to this position shall sit on this committee without compensation.
8. The Employer shall provide and make available materials required in the day to day maintenance and upkeep of all fire stations; i.e. cleaning supplies, toilet tissue, paper towels and the like.
The Employer shall provide, repair, and/or replace as
needed for the following equipment for all fire stations:
oven/range, microwave, garbage disposal, coffee maker,
refrigerator/freezer, free standing ice maker, dishwasher, vacuum
cleaner, washer, dryer, lawn mower, and snow blower.
This dispute centers on the share of insurance costs being
charged to bargaining unit members.
Prior collective bargaining agreements have been based
upon the Township (employer) paying insurance costs up to a
certain level. The
bargaining unit member (employee) was then expected to pay
anything above that amount through payroll deductions up to a
An example of this expectation
is provided in the 2000 – 2002 agreement.
In that contract the language stated that insurance would
be provided at no cost to employees “so long as the
Employer’s monthly per Employee cost does not exceed “$200
per single coverage or $500 per family coverage.” 
In the 2003 – 2005 agreement
the employee’s contribution would kick in after $250 for
single coverage or $625 for family coverage. 
In August 2005, the Township
changed its purchased insurance plan from one called “Diamond
“to another plan called “Emerald B.”
Because the “Emerald B” plan did not provide benefits
equal to the previous plan, the Township added a “health
–care reimbursement account” (HRA) which reimbursed
employees for the differences between what was covered by the
previous “Diamond” plan and the new “Emerald” plan. This
HRA was self insured by the Township.
The negotiations that commenced
in October 2005 led to a change in the language of the insurance
proposals included a continuation of the same language but
differed on the proposed increases in the amount of the caps.
The Township then proposed
different language which eventually went to Fact Finding.
It is the interpretation of
this language that leads to the disagreement between the
The language in question is:
“At no cost to the Employee
for single coverage under the Employer Plan during the term of
this Agreement so long as the Employee is actively at work, on vacation
or on approved sick leave and so long as the Employer's
monthly per Employee costs do not exceed the following:
and child(ren) $525 (if offered)
Employee and spouse ($575) (if offered)
Provided, further, that if the
Employer's monthly cost for such Base Plan exceeds the above
via payroll deduction, up to a maximum of 10% of the
Employer's total monthly health care
premium for such Base Plan.”
2006 the Township paid 100% of all health care benefits which
included the billed premiums and HRA costs notwithstanding the
language about maximums or caps in the collective bargaining
Township calculates that these “voluntary” contributions
cost the Township more than $10,000 per year.
At the time the 2006 collective
bargaining agreement was being negotiated the Township was
paying 100% of all health care benefit costs.
After ratification of the new agreement the Township
entered into renewal of the Insurance Carrier contract.
Three options were considered and presented to employees
Option 1 was the United Health
Care “Tanzanite” plan with HRA reimbursement.
Option 2 was the “Tanzanite” plan without HRA
reimbursements which would have led to a decrease in benefits
but would be fully paid by the Township.
Option 3 was for the “Tanzanite” plan with HRA
reimbursement but with mandatory waivers for any spouse or
family member who had other health care coverage.
The Township reports that most
employees preferred Option 1.
In July of 2006 the Township
made an appeal to all bargaining units for a voluntary
contribution of 6%. The
Township believed that a 6% contribution would provide a uniform
amount of contribution for all employees.
All bargaining unit agents rejected this request.
The Township began deducting up
to 10% of the total cost of health care benefits (billed
premiums plus HRA contributions) and the Union filed the
grievance that has led to this arbitration.
The Union Grievance states:
Explain Nature of the Grievance and Facts:
“On or about
Wednesday, August 1, the Union received a letter from Township
Administrator Judy Boyko, that described the Township's interpretation of the CBA
regarding the employee's monthly contribution for health care.
The grievance is being filed based upon, but not limited to, Article 20 - Welfare. The language
in the CBA (Article 20, par 1 a and I b) refers to a "Base
Plan" for health care. The Union maintains that the "Base
Plan" refers to the health care plan purchased by the
Township (United HealthCare "Tanzanite Plan") and
its associated monthly
premiums. Using the "Tanzanite Plan" monthly premiums,
most employees are below the defined health care caps in the CBA and not required to
contribute. The exception is for those under the 'employee /
spouse' plan, the only group over their cap. The Township maintains that the "Base Plan"
includes the monthly premiums plus the cost of the health care
reimbursement account (HRA). The addition of the two costs place most
employees over the CBA health care caps. The exception is for
those under the 'single' plan, the only group under their cap. On
Friday, August 4, all employees, who were over their cap by the
Township's standard, had a health care contribution deducted
from their pay.
the Union's position prevails, and those employees who were not
required to contribute for their health care plan be reimbursed
for the payroll deductions already taken.”
POSITION OF THE UNION
The Union notes that previous collective bargaining agreements
focused on the “Employer’s monthly per Employee cost” in
calculating whether the employees would pay a portion of the
insurance costs. The
Union points out that the language changed in 2006- 2008 as a
result of a Township proposal to say “The Employer’s monthly
per Employee cost for such Base plan.”
The Union asserts that at fact-finding the Township drew
a distinction between the premiums for the health insurance plan
while concentrating on the cost saving aspects of the HRA.
The Union notes that within days after the effective date
of the new collective bargaining agreement the Township proposed
scrapping the contractual language and replacing it with
a flat 6% contribution.
Once Local 3518 rejected the 6% proposal along with all
other bargaining agents, the Township Administrator notified the
president of the Local that the Township would be considering
the total costs when calculating the amount due by bargaining
The Union believes the
employee’s share of insurance should be based on the premium
and not the total costs. The
Union notes that the language was changed in 2006 based upon a
proposal of the Township. It
notes that Elkouri & Elkouri in How Arbitration Works, 6th
Ed., 2003 at page 453, states “when
parties have changed the language of their agreement,
arbitrators presume that they intend a changed meaning.”
The Union argues the contract interpretation axiom that “ambiguous
language will be construed against the party that drafted the
The Union notes that during
bargaining there was never any reference to total costs vs.
Based upon the language of the
current agreement the Union urges the Arbitrator to grant the
POSITION OF THE TOWNSHIP
The Township argues that in
contract interpretation cases the Union bears the burden of
proof to show that the Agreement has been violated.
It contends that the Township has the right under the
collective bargaining agreement to include the total cost of its
healthcare program when applying the caps included in the
Township does not believe the 2006 revisions eroded this right.
The employer believes the
language is clear and unambiguous and notes that when the
language is such the Arbitrator must apply that language
notwithstanding the gravity of the consequences.
believes it has the right to include both billed premium and HRA
costs even though they may not have been fully discussed in
Township cites several arbitration cases that it believes to be
on point including Dublin
Unified School District (121 LA 1178)
and American Standard (119
argues that the definition of “premium” includes total
costs. To support
this argument it cites the testimony of Benefit’s Consultant
David F. Rinderle who testified that in the health care field a
“premium” refers to the total cost of all benefits.
Township argues that the
the Federal requirements of ERISA and COBRA legislation
require both amounts (billed premium and HRA) to be reported as
argues that the new reference to “Base Plan” is undefined
and subject to at least two interpretations.
Neither can be considered as more credible than the
notes that no other bargaining unit has objected to the
inclusion of the HRA in the calculation of total premium cost.
notes the hardship that would be presented if the Union were to
prevail including the possibility of a reduction in benefits.
This is a
challenging case in that the position of each respective side
can clearly been seen and understood.
has worked hard to maintain insurance costs at a level where
health benefits can be provided to employees without
contribution but no longer feels it can afford that option.
increasing costs of health care have forced the Employer to look
for cost saving ways to manage the situation.
Arbitrator clearly understands the dilemma and might, if this
were a fact finding hearing, look for ways to remedy some of
those concerns, this matter is one in which I am engaged to
decide with the language means.
the actions of other bargaining unit representatives are
instructive but I have not been asked to rule upon matters
pending before them.
carefully examined the Dublin case  submitted by the Township.
Arbitrator Riker clearly based his decision on the clear
unambiguous language of “$50,000 total cost” to the Board.
Likewise, a careful review of
the American Standard case 
rendered by Arbitrator Richard Colvin, again shows that the
language was, in the mind of Arbitrator Colvin, very clear in
that it stated: Employees
will pay 10%/12%/15% monthly contribution starting 1/1/03.
He found no ambiguity in the language presented to
I do not
find the language in this case to be nearly as clear.
While the Township argues the clarity and lack of
ambiguity of the language the argument in the Employer’s post
hearing brief partially repudiates its own position.
discussing the definition of “base plan” the Employer
states: “First and
foremost, the new term “Base Plan” is not defined in the
Agreement, and it is susceptible to at least two different
In the mind
of this Arbitrator this is de
facto evidence that an ambiguity exists.
I am in agreement. The
language in Article 20 is unclear and ambiguous.
evidence of ambiguity can be found from a careful reading of
Section 1 of the Welfare Article.
one reads Section 1 a in a vacuum the position of the Township
part that section states:
At no cost
to the Employee for single coverage under the Employer
Plan during the term of this Agreement so long as
the Employee is actively at work, on vacation or on approved
sick leave and so long as the Employer's monthly
per Employee costs (emphasis
added) do not exceed the following:
But when one goes on to examine
Section 1 b the new term of “Base Plan” is introduced.
The Employer would proffer the interpretation that this
“base plan” refers to the possibility that at some time in
the future, the Township might offer a second “richer” plan.
Township Administrator Boyko
testified that the Township had conducted serious discussions
regarding this possibility at the table including offering more
than one insurance option.
This argument does not meet the
test of reason. At
a time when the Employer is doing everything possible to contain
health care costs, it is highly unlikely that the Township would
be considering the addition of a second plan.
If such a plan was being considered then it would
incumbent on the party proposing this new language to have
offered a clear explanation at the bargaining table since the
addition of other plans would most certainly require the
agreement of the Union and a change in collective bargaining
I am not convinced that such a
clear discussion ever took place.
It is much more likely that the discussion of the three
options took place at the employee meetings held soon after the
effective date of the collective bargaining agreement.
Arbitrator John J. Murphy noted the standard commonly
used by arbitrators in considering this issue, in a case in 1984
when he said: “The
intent manifested by the parties to each other during
negotiations by their communications and by their responsive
proposals -- rather than undisclosed understandings and
impressions -- is considered by arbitrators in determining
contract language.” 
cites authority (Central
Realty Co. v. Clutter (1980), 62 Oho St. 2d 411) which
suggests “Ambiguous language will be construed against the
party that drafted the language. “
This Contract Interpretation axiom is known as “contra proferentem.”
While a helpful concept the Supreme Court in the
Westfield Insurance Case,
on Central Realty:
“It is generally the role of the finder of fact to resolve ambiguity,
However, where the written contract is standardized and between
parties of unequal bargaining power, an ambiguity in the writing
will be interpreted strictly against the drafter in favor of the
non-drafting party. [Cent. Realty Co. v. Clutter (1980), 62 Ohio
St2d 411.] 
these negotiations there can be no issue of unequal bargaining
power and while I do hold the Township to a higher level of
responsibility in explaining clearly the impact of language
changes that it proposed, I cannot resolve the ambiguity solely
on this concept.
makes the argument that to grant the grievance might lead to a
discontinuation of the benefit of the HRA.
That would truly be an unfortunate outcome and one that
the Union may want to consider within the context of bargaining,
but it is not a matter that I, as an interpreter of the language
before me, can consider.
argues that the Federal definitions of “premium” under COBRA
and ERISA include total payments (billed premiums plus HRA
costs). That may
very well be the case but this Arbitrator is limited to the
application of the collective bargaining language.
what was intended by “base plan” and to resolve this
ambiguity, I turn to the report of the Fact Finder for it was
his report that was ultimately adopted and became the current
collective bargaining agreement.
Howard Silver, in adopting the language proposed by the
Township, gives examples that clearly show the comparisons he
was relying on in formulating his recommendation.
On page 15 of his report he states:
proposes a single coverage monthly premium cap of $325 (single
coverage at present is $237.50; a monthly premium cap of $525
for an employee and child coverage if offered by the insurance
provider (present cost is $459.07)…”
It is clear
that Fact Finder Silver is basing his report on the actual
premiums charged by the insurer and not on the total cost to the
Law Dictionary (7th Edition) defines “Premium” as
the periodic payment required to keep an insurance policy in
tend to apply the plain meaning of terms.
Certainly there were many different terms of art that
could have been employed by skilled negotiators that would
convey the interpretation offered in this case by the Township.
Benefits consultant Rinderle used the term “premium
equivalent” or the term “total cost” could have been
would clearly have conveyed a different meaning if one had been
In order for
a neutral Arbitrator to ascribe a different meaning to the term
than its commonly accepted one, would require either that the
Township could demonstrated that this was an established
practice or understanding accepted by both parties.
The record is devoid of any such understanding. Because
the Township had simply assumed all the costs in the past
without regarding to the negotiated caps, there can be no
reliance on an understanding based on an established practice.
determining factor in resolving this ambiguity in the mind of
this Arbitrator is based upon the testimony of Administrator
Examination, Union Advocate Arnett asked Ms. Boyko.
“So during the negotiation process and even at
fact-finding you – and I guess “you” being broadly the
Township never indicated to the committee members who were
negotiating that the contribution that employees would be asked
to make would be based on the premium and the cost of the health
Ms. Boyko responded: “I’ve
never stated anything such because I was not aware that there
was a differential.” (T
In the mind
of this Arbitrator clearly the Township cannot ascribe meaning
to words if the Chief Executive Officer had not considered the
issue of total cost vs premium and is not aware that there is a
only one plan in affect under this collective bargaining
agreement so I must conclude that the “base plan” references
the product being offered by the insurance company.
Further, the plain meaning of the word “premium” does
not, in the opinion of this Arbitrator, include the additional
cost of the HRA.
reasons herein stated the Grievance is granted.
The Township shall apply the
caps contained in the collective bargaining agreement only to
the billed premium for insurance.
Those person who have had an amount above the caps
deducted from their check shall receive reimbursement of those
at London, Ohio this 15th day of March, 2007
Eugene Brundige, Arbitrator
 Union exhibit A
 Union exhibit B
 121 LA 1178, Dublin (California) Unified School District & Dublin Teachers Assn. CTA/NEA
 119 LA 577 American Standard, Inc. (Paintsville, Ky) & United Steel Workers
 Township’s Post Hearing Brief, page 15.
 Kahn’s & Company 83 LA 1225.
 Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-Ohioo-5849.