Elliott Co. Inc. v. Unemployment Comp. Bd. of Review

• Decision Date: 13 October 2011
• Citation: 29 A.3d 881
• Parties: ELLIOTT COMPANY, INC., Petitionerv.UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, Respondent.
• Court: Pennsylvania Commonwealth Court

29 A.3d 881

ELLIOTT COMPANY, INC., Petitioner

v.UNEMPLOYMENT COMPENSATION BOARD OF REVIEW, Respondent.

Commonwealth Court of Pennsylvania.

Argued June 8, 2011.Decided Oct. 13, 2011.

Jarrod D. Shaw, Pittsburgh, for petitioner.Paul R. Jordan, Assistant Counsel, Harrisburg, for respondent.BEFORE: LEADBETTER, President Judge, and PELLEGRINI, Judge, and COHN JUBELIRER, Judge, and SIMPSON, Judge, and LEAVITT, Judge, and BROBSON, Judge, and BUTLER, Judge.OPINION BY Judge COHN JUBELIRER.

Elliott Company, Inc., (Employer) petitions for review of the Order of the Unemployment Compensation Board of Review (Board), which reversed the Unemployment Compensation Referee's (Referee) determination that Paul J. Detruf (Claimant) is ineligible to receive unemployment compensation (UC) benefits under Section 402(b) of the Unemployment Compensation Law (Law), ¹ 43 P.S. § 802(b), because he voluntarily quit his employment without cause of a necessitous and compelling nature. The Board found Claimant eligible for UC benefits after determining that Employer's change to its retirement health care plan constituted a necessitous and compelling reason for Claimant to quit his employment.

Claimant is a member of the United Steel Workers of America, Local 1145 (Union). Employer and Union ratified a new collective bargaining agreement (CBA) effective March 1, 2008, which included revisions to, among other employee benefits, Employer's former health care plan (pre–2008 plan), modifying some of the costs of the health plan. Employer's health care plan under the 2008 CBA (2008 plan) included a two-year window during which eligible employees, including Claimant, were permitted to retire and continue on the pre–2008 plan during retirement, until they reached age sixty-five, at which point they would become eligible for Medicare. Claimant retired during this window and filed for UC benefits, asserting that had he not retired before February 1, 2010, he would have suffered a substantial change in his health care benefits.

The Indiana UC Service Center (Service Center) denied benefits, stating that “there was insufficient information provided to indicate whether the Claimant had a necessitous and compelling reason for voluntarily leaving the job.” (Notice of Determination at 1.) Claimant timely appealed and the Referee held a hearing at which both Claimant and Employer presented multiple witnesses. The Referee issued a decision affirming the Service Center's denial of UC benefits under Section 402(b) of the Law. The Referee noted that the burden was on Claimant to prove that he had a necessitous and compelling reason to quit his employment that resulted from circumstances that were both real and substantial. The Referee stated that he understood Claimant's dissatisfaction with the deductibles being added in the 2008 plan after years of limited employee costs, but reasoned that Employer provided competent evidence that economic conditions and soaring medical costs led to the negotiated 2008 plan. Additionally, the Referee did not find the negotiated changes between the pre–2008 plan and 2008 plan to be so burdensome or substantial that it established a necessitous and compelling reason to quit. Accordingly, the Referee concluded that Claimant failed to meet his burden of proof and was ineligible for UC benefits under Section 402(b). (Referee's Decision/Order at 2.)

Claimant appealed to the Board. Claimant asserted that the increase in costs he would incur during his retirement under the 2008 plan was substantial and that he had to retire before his eligibility to participate in the pre–2008 plan during retirement expired on February 1, 2010. The Board reversed the Referee, and found the following facts:

1. From January 20, 1969 through January 29, 2010, the claimant was employed by [Employer] as a full-time manufacturing/processing clerk, earning $22.31 per hour.

2. [C]laimant voluntarily retired on January 29, 2010, due to concerns about the retiree health coverage.

3. [E]mployer's original health plan, the [pre–2008 plan], had $5.00 co-pays and no deductible.

4. Under the [pre–2008 plan], prescriptions cost only $5.00, and hospital expenses, whether inpatient or outpatient, were 100% covered.

5. In 2008, the union employees of [Employer] ratified a new contract which included negotiated changes to the employees' medical coverage.

6. All active employees were placed on the newly changed medical coverage, the [2008 plan] as of March 1, 2008.

7. The new medical coverage, the [2008] plan, included larger co-pays and deductibles.

8. The deductibles included ... $10.00, $20.00 or $35.00 for prescriptions, $20.00 co-pay for doctor visits and an out of pocket maximum of $1,000.00 per year for an individual and $2,000.00 per family.

9. The employees had an approximate two-year window from March 1, 2008 through February 1, 2010 to choose to retire with the original health care, the [pre–2008] plan, or retire after February 1, 2010 and have medical coverage under the [2008] plan until age 65.

10. This option was available for employees who were eligible to retire at 58 years of age with 30 years of service or 60 to 65 years of age with 20 years of service.

11. Employees who retired before February 2, 2010 were placed in the [pre–2008] plan from their retirement date until they reached the age of 65 at which time they go on Medicare.

12. Employees who retire after February 1, 2010, remain in the [2008] plan.

13. [C]laimant takes two prescriptions that were costing him $140.00 per month under the [2008] plan, but under the [pre–2008] plan only cost him $10.00 per month.

14. [C]laimant's wife has diabetes and she is taking five different prescription medications.

15. These medications under the [2008] plan cost [C]laimant between $10.00 and $35.00 a piece per month. Under the [pre–2008] plan they only cost [C]laimant $25.00 per month in total.

16. Because of her medical condition, [C]laimant's wife also had to make frequent visits to the doctor.

17. [C]laimant elected to retire rather than lose his vested right [to] health care benefits under the [pre–2008] plan in retirement. (Board Decision, Findings of Fact (FOF) ¶¶ 1–17.) In sum, the two-year window provided an employee with the opportunity to try the 2008 plan while retaining the option to maintain the pre–2008 plan should he or she retire, if otherwise eligible, before February 2, 2010. The 2008 plan had some differences from the pre–2008 plan. (Employer's Ex. E–1, E–2, Summaries of PPO Benefits.) There was no change in the premium amounts to be paid by retirees under either plan; Employer paid 50% of the health insurance premiums for retirees aged 58 to 60 and 100% of the premiums for retirees aged 60 to 65. The 2008 plan included increases in co-payments from $5.00 to $20.00 for in-network doctor visits and from $5.00 for a 60–day supply to $10.00, $20.00 or $35.00 for a 30–day supply of generic, formulary, or non-formulary prescription drugs, respectively. Additionally, the mail order program for maintenance prescription drugs that formerly permitted a 60-day supply of either generic or brand name drugs with a $5 co-payment was changed to a $20 co-payment for generic, $40 co-payment for brand formulary, and $70 co-payment for brand non-formulary for a 90-day supply. There were also new out-of-pocket maximums of $1,000 for an individual or $2,000 for a family. (Employer's Ex. E–1, E–2, Summaries of PPO Benefits.)

Based on these findings, the Board analogized this case to McCarthy v. Unemployment Compensation Board of Review, 829 A.2d 1266 (Pa.Cmwlth.2003), concluding that, like the claimant in McCarthy, Claimant here was faced with a substantial reduction to his retirement health care benefits. (Board Decision at 3.) The Board further noted that Claimant had “a vested right to these benefits by virtue of the most recent CBA” and that “[C]laimant's actions were not based upon mere speculation.” (Board Decision at 3 (emphasis in original).) The Board determined that the substantial change in Claimant's retirement health care benefits gave him a necessitous and compelling reason to leave his employment and, therefore, Claimant was eligible for benefits under Section 402(b) of the Law.

Employer petitioned this Court for review.² Thereafter, the Board filed an Application for Relief in the Form of a Motion for Consolidation of Cases (Application to Consolidate), for the instant case and seven related cases ³ involving Employer, alleging common questions of fact and law. (Board's Motion for Consolidation of Cases at 1–2, Elliott Company v. Unemployment Compensation Board of Review, No. 1787 CD. 2010.) This Court denied the Application to Consolidate by Order dated October 19, 2010, but granted the Board permission to file a lead brief and reproduced record, relevant portions of which could be adopted by reference in the briefs and reproduced records of the remaining cases, of which the instant case is one. Elliott Company, Inc. v. Unemployment Compensation Board of Review, (Nos. 1783–1787, 1914, 1937–1938 CD. 2010, filed October 19, 2010) (denying Application to Consolidate).

On appeal, Employer argues that the Board erred in finding Claimant eligible for UC benefits pursuant to Section 402(b) because: (1) Claimant failed to produce substantial evidence that the change from the pre–2008 plan to the 2008 plan resulted in a substantial change to Claimant's retirement benefits; and (2) Claimant merely took advantage of an enhanced retirement benefit and this case is, therefore, similar to Diehl v. Unemployment Compensation Board of Review, 4 A.3d 816 (Pa.Cmwlth.2010), appeal granted, ––– Pa. ––––, 20 A.3d 1192 (2011), rather than McCarthy.⁴

Section 402(b) provides that a claimant shall be ineligible for benefits for a period “[i]n which his unemployment is due to voluntarily leaving work without cause of a necessitous and compelling nature.” 43 P.S. § 802(b). The claimant who...