Source: https://www.gklaw.com/newsupdatespressreleases/Self-Insured-Health-and-Dental-Benefits-1998-03-01-1.htm
Timestamp: 2020-01-22 22:03:26
Document Index: 152883222

Matched Legal Cases: ['§893', '§893', '§893', '§893', '§893', '§893', '§893', '§893']

Godfrey & Kahn S.C.: Self-Insured-Health-and-Dental-Benefits-1998-03-01-1
On January 28, 1998, in Mayville Education Association et al. v. Mayville School District et al., (WERC) Dec. No. 25144-G, the Wisconsin Employment Relations Commission entered an Order which permits the School District of Mayville to remain self-insured. The Order expressly waived the provisions of §893.80, Wisconsin Statutes, as applied not only to the health care benefit plan, but also to the stop/loss insurance policies and benefit liability insurance policy of the District.
This Order completes ten years of litigation in which the teachers' union contested the school district's unilateral change of health and dental care plans from insured plans to self-insured plans. The previous health care benefit plan had been provided through the Wisconsin Education Association Insurance Trust Corporation. When it changed to self-insured status, the Mayville School District duplicated the previous health and dental insurance plans verbatim and expressly provided in the plans to resolve all benefit issues in favor of the "status quo" established under the prior plans.
Immediately thereafter, in January of 1988, the Mayville Education Association filed a prohibited practices complaint with the WERC, alleging that the Employer's unilateral decision to self-insure health and dental benefits violated the duty to bargain provisions of Municipal Employment Relations Act, because of:
- a change in the entity interpreting the benefit provision;
- a loss of state-mandated benefits;
- a risk that incurred claims would not be paid in the event of employer insolvency;
- the risk of loss to the employees of the confidentiality of their claims information during claims processing in a self-insured environment; and
- the decision to self-insure effects bargainable changes in the regulatory scheme governing the plans.
In 1990, an Examiner of the WERC ruled1 in favor of the Mayville School District on all points. On appeal2 to the WERC, the Commission affirmed that the Mayville School District had not unlawfully refused to bargain with respect to the first five issues litigated before the Examiner.
However, on appeal, the teacher's union presented a new issue concerning the application of §893.80, Wisconsin Statutes. That statute limits municipal liability to $50,000 and requires a specified notice of claim procedure as a condition precedent to initiating litigation. The WERC acknowledged that the Association had, for the first time, presented a new issue which had not previously been argued or litigated. On this new sixth point, the WERC determined that the "impact" of §893.80, Wisconsin Statutes, on employees following the District's decision to self-insure, violated the employer's duty to bargain with the union. Although no civil suit was ever brought against the Mayville School District to enforce benefit claims and no defenses were ever asserted by the District to §893.80, Wisconsin Statutes, the WERC ruled that the District's provision of health and dental plans on a self-insured basis, which had previously been provided on an insured basis, violated the duty to bargain provisions of the Wisconsin Municipal Employment Relations Act despite language identical to the predecessor plans. This holding was based on the theory that potential future employee lawsuits alleging that plan benefits had been wrongly denied, would be subject to the requirements and limitations of §893.80, Wisconsin Statutes. The Dodge County Circuit Court and subsequently the Court of Appeals3 both affirmed the WERC's decision.
On remand to the WERC, a hearing was held in January of 1996 to determine whether or not the District had complied with the Order of the WERC to provide the health and dental benefits set forth in the parties collective bargaining agreement through a source for which the requirements and limitations of Sec. 893.80, Stats., are applicable.
In its latest Decision and Order dated January 28, 1998, the WERC, upheld the Mayville School District's decision to self-insure. The WERC noted that it was the intention of the Mayville School District in 1988 to duplicate the benefits previously provided under the predecessor plans. Additionally, the WERC noted that the Mayville School District had, in 1992, waived the requirements of §893.80, Wisconsin Statutes, regarding tort claims and had since also expanded the waiver requirements of §893.80, Wisconsin Statutes, to extend to future claims to the extent that such claims sought access to underlying plan benefits. The WERC, in its Order of January 28, 1998, ordered the school district to include specific language concerning the waiver of the requirements of §893.80 in its health and dental plans to comply with the district's original intent.
The Order's effect allows the Mayville School District to continue self-insuring health care and dental care plans. Self-insuring has allowed the Mayville School District to achieve significant savings despite ten years of litigation.
The Mayville case is fact specific and employers should consult with their legal counsel before embarking on such a unilateral change to self-insuring.