Opinion ID: 2570481
Heading Depth: 1
Heading Rank: 5

Heading: NEA-T's Contentions

Text: NEA-T contends that the insureds are entitled to 100% of the surplus. Initially, it based its claims on the PA. NEA-T argued that the contract with BCBS resulted from the District's obligations to provide health insurance to professional employees under Article 41 of the PA. When the District raised the PA's mandatory grievance procedure as an affirmative defense, NEA-T shifted its focus. In an amended petition, NEA-T relied on the Rider, District policy, and the cafeteria plan. However, in its factual statements in the amended petition, NEA-T continued to rely on the PA. NET argued the District: (1) established the cafeteria plan, and (2) contracted with BCBS, both as a result of its obligations under Article 41 of the PA. Because it did not follow the grievance procedure in the PA, the trial court dismissed NEA-T's claims. NET continues to argue that entitlement to the surplus is based not on the PA, but on District policy, the cafeteria plan, and the Rider. According to NEA-T, the Rider represents a refund by BCBS of overpaid premiums. The overpayment occurs when the premiums collected for a plan year exceed total claims, expenses, and reserves for that year. NEA-T reasons any BCBS divisible surplus must be distributed to the insureds. NEA-T initially claimed it was entitled to the surplus because insureds were the Contract Holder. NEA-T now contends that even if the District is the Contract Holder, the BCBS Rider mandates application of the surplus to the insureds. NEA-T also argues that according to a 1994 policy of the District (# 4500), any divisible surplus was to be returned to the insureds. Policy # 4500 is not controlling and is addressed later in the opinion. NEA-T argues: (1) The contributions to the insurance premiums are employee contributions, (2) the PA requires the district to provide all employees with a single-low option health plan and the difference in cash between a low-option health plan and $166.68, (3) the insurance plan is part of an employee's total compensation, and (4) the District's contributions are paid out of employee salaries. NEA-T reasons the District has made no contributions to the group insurance plans and, therefore, the entire surplus should be remitted to the insureds. NEA-T agrees with the trial court that entitlement to the divisible surplus refund depends upon whether the premium paid to BCBS was funded by employee compensation or the District. However, NEA-T argues that the trial court erred in determining that resolution of the dispute required interpretation of the PA. NEA-T contends that entitlement to the divisible surplus depends only upon interpretation of the cafeteria plan and Rider. Specifically, NEA-T maintains on appeal that the Rider creates the obligation to refund the divisible surplus, not the PA.