Opinion ID: 27209
Heading Depth: 4
Heading Rank: 2

Heading: The Medical Benefits Plan

Text: The Mississippi Power Company Medical Benefits Plan (the “Medical Benefits Plan”) that was in effect in 1995 when the subject changes were announced had become effective on March 1, 1993. It is a Company-drafted document that was executed unilaterally by the Company but by no representatives of the Unions. The Medical Benefits Plan’s articles cover numerous topics, such as “Benefit Provisions,” “Eligibility for Benefits,” and “Plan Administration.” Among these articles are two that are pertinent to this controversy: Article IX (Reservations of Rights by the Company and Limitations of Rights of Covered Persons), and Article X (Amendment and Termination of the Plan). Section 9.1 of Article IX provides: 9.1 Plan Voluntary on Part of Company. While it is the intention of the Company that the Plan shall be continued indefinitely and that the Company contributions required hereunder shall be made in each year that the Plan remains in effect, the Plan is entirely voluntary on the part of the Company. [Emphasis ours.] Article X provides, in relevant part: 10.1 Amendment of Plan. The Company...shall have the right at any time by instrument of writing, duly executed, to modify, alter or amend, in whole or in part, the Plan.... The Company makes no promise to continue these benefits in the future and rights to future benefits will never vest. In particular, retirement or the fulfillment of the prerequisites for retirement pursuant to the 4 terms of any employee benefit plan maintained by the Company shall not confer upon any Employee, Retired Employee or Dependent any right to continued benefits under the Plan. [Emphasis ours.] 10.2 Termination of Plan. The Company intends that the Plan shall be permanent. However, the Company...has the right to terminate the Plan at any time.... After the termination of the Plan..., the Company and the Covered Employees shall have no further obligations to make additional contributions to the Plan. Thus, the plain and unambiguous language of these sections of the Medical Benefits Plan make clear that the Company has the right to alter, at will and unilaterally, any terms of the Medical Benefits Plan, including the unfettered right to terminate it altogether. 3. The Group Medical Insurance Agreement (“Insurance Side Letter”) The Insurance Side Letter is styled as a two-page offer and acceptance that pre-dated the Medical Benefits Plan and that was signed by the Company on August 15, 1992, the day before the MOA became effective, but that did not become effective itself until it was signed for acceptance by the Unions on December 18, 1992. It is one of several attachments to the MOA. Like the MOA, the Insurance Side Letter is the product of negotiations between the Company and the Unions and is presented as the Company’s “offer [that] shall become an agreement when the Union indicates its acceptance hereof.” Following the portion describing the offer and the Company’s signature, and above the Unions’ acceptance 5 signatures, is the boldface title, “Group Medical Insurance Agreement.” The Insurance Side Letter does not expressly refer by title to the Company’s medical benefits plan that was in place when the Side Letter was executed; it could not refer to the Medical Benefits Plan because it was not yet in existence. Thus the Insurance Side Letter is a generic agreement applicable to any group medical insurance that might be in place from time to time during the term of the MOA. None contest, however, that the Insurance Side Letter was applicable to the Medical Benefits Plan at the time in April 1995 when the prospective changes to that plan were announced. In the Insurance Side Letter, the Company agrees to pay “seventy percent of the cost of group medical insurance coverage” for each participating employee and either one dependent or the employee’s family, or $92.80 for a single employee’s coverage; and the Company further agrees to pay seventy percent of any increase in premium costs “in the event of any increase in premiums for the above insurance.” As consideration for this commitment, the Company extracts an offsetting commitment —— called a “condition” —— from the Unions: [1] the matter of insurance coverage or [2] change in the Company’s contribution toward the premium for insurance coverage of its employees shall not be subject to bargaining or a request for bargaining by the Union until the expiration of the Memorandum of Agreement, except by mutual consent. [Emphasis and 6 enumeration ours.]3 The mutual agreements in the Insurance Side Letter —— the Company’s payment obligation and the Unions’ agreement that neither coverage nor premium payments would be the subject of bargaining —— are specified to run co-extensively with the MOA’s initial term and all annual renewals, unless modified or terminated according to procedures identical to those specified in the MOA, as outlined above. And, just as does the MOA, the Insurance Side Letter stipulates that “[u]ntil the parties have agreed upon such changes the provisions of the agreement shall remain in full force and effect.” 4. Interrelationship of the Documents As noted, the bilateral MOA does not address traditional employee benefits, such as pensions, life insurance, or health insurance. On the opposite end of the contractual spectrum, the 3 The Unions’ agreement regarding bargaining about medical insurance during the original term of the MOA and all extensions extends to only two aspects of such insurance: (1) anything to do with coverage, and (2) the Company’s financial commitment to pay portions of the premiums on any such insurance. As the Company bound itself to pay a specified percentage or dollar amount of all medical insurance premiums as well as a percentage of increases in premiums occurring during the initial term of the MOA and all extensions, the negating of bargaining over any “change in the Company’s contribution” must pretermit only the Unions’ right to seek to bargain for greater premium contributions by the Company during that term. In contrast, the Insurance Side Letter’s negating of bargaining over “the matter of insurance coverage” is unrestricted as to the type and extent of coverage, or, indeed, to coverage vel non; the clause pretermits the Unions’ seeking to bargain about anything to do with coverage during the term of this agreement. 7 Company’s unilateral Medical Benefits Plan is an ERISA welfare benefit plan which provides an employee benefit that, by the plan’s own terms, can be changed from time to time or even terminated altogether by the Company, acting alone. The third document, the Insurance Side Letter, has features of both: Like the MOA, the Insurance Side Letter is a bilateral agreement executed by both the Company and the Unions; like the Medical Benefits Plan, however, it relates only to the Company’s unilaterally granted employee benefit of medical insurance, and then only to (1) premium payments and (2) coverage. In essence, this third document links the first two by specifying a quid pro quo between the parties on elements of the two otherwise-unrelated documents. On the one hand, the Unions obtain the Company’s commitment to maintain a specified level of financial support not otherwise provided for in either the MOA or any medical insurance plan, binding the Company throughout the term of the MOA and all extensions to pay designated percentages or dollar portions of the premiums for medical insurance coverage, as well as designated percentages of any increases in premiums that occur during that period. On the other hand, as consideration for the Company’s assumption of such premium payment obligations, the Unions expressly acknowledge that throughout the term of the MOA and any annual renewals, the Unions cannot seek to bargain about either increasing the Company’s premium payment commitments or any changes in medical insurance coverage, whether Company-instituted or Unions-requested, those being matters that the Company 8 explicitly reserved to itself under that plan. Stated differently, the Company committed to a financial obligation it did not have under the MOA regarding partial payments of medical insurance premiums and emphasized a right that it presumably has always enjoyed under its medical insurance plans to change or terminate coverage4; in consideration for the Unions’ express acknowledgment that they can neither seek to bargain for increased medical insurance premium contributions by the Company nor challenge through bargaining any unilateral changes in coverage of such insurance that the Company might make. This third document thus serves to bridge the gap between the other two documents —— one bilateral and the other unilateral —— regarding medical insurance coverage and the Company’s contributions to the payment of premiums for such insurance. It is within the context of this interrelationship of the three documents that we now consider the Company’s petition and the Board’s cross-petition.