Bastian-Blessing, Div. of Golconda Corp. v. NLRB

• Decision Date: 21 February 1973
• Docket Number: No. 72-1456.,72-1456.
• Parties: BASTIAN-BLESSING, DIVISION OF GOLCONDA CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Sixth Circuit

474 F.2d 49 (1973)

BASTIAN-BLESSING, DIVISION OF GOLCONDA CORPORATION, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 72-1456.

United States Court of Appeals, Sixth Circuit.

February 21, 1973.

Paul F. Gleeson, Chicago, Ill., Arthur B. Smith, Jr., Van H. Viot, Chicago, Ill., on brief; Vedder, Price, Kaufman & Kammholz, Chicago, Ill., of counsel, for petitioner-appellant.

Allison W. Brown, Jr., N.L.R.B., Marcel Mallet-Prevost, Asst. General Counsel, Steven C. Kahn, Atty., N.L.R.B., Washington, D. C., Jerome H. Brooks, Director, Region 7, N.L.R.B., Detroit, Mich., on brief, for respondent-appellee.

Before EDWARDS and CELEBREZZE, Circuit Judges, and HASTIE,^* Senior Circuit Judge.

EDWARDS, Circuit Judge.

Bastian-Blessing petitions to set aside and the Board seeks enforcement of an order of the National Labor Relations Board finding the employer guilty of 8(a)(5) and 8(a)(1) violations of the National Labor Relations Act, 29 U.S.C. § 158(a)(5) and (1) (1970), by unilaterally terminating an employee health insurance plan which had previously been in force through insurance with Aetna Life Insurance Company.

The employer, purporting to maintain the same benefits, undertook self-insurance. Subsequent to the termination of the Aetna coverage, it informed the union¹ as to what it had done and discussed the reasons for the change, but declined to go back to the Aetna insurance contract when requested to do so.

The Board found that the Aetna termination materially affected mandatory subjects of bargaining in relation to health insurance in that two material changes were made in benefits under the company self-insurance program and in that, in addition, the enforceability, administration and funding of the plan were affected. The Board's order required Bastian-Blessing to restore the status quo by reinstating the contract with Aetna.

The Board Decision and Order of December 16, 1971, is reported at 194 N.L. R.B. 95 (1971), and its Supplemental Decision of March 30, 1972, is reported at 195 N.L.R.B. 167 (1972).

The material facts of this case do not appear to this court to be in dispute. Petitioner does dispute the inferences which the Trial Examiner and the Board drew from those facts, along with the legal conclusions drawn therefrom. Specifically, Bastian-Blessing claims that after termination of the Aetna insurance contract, it engaged in good faith negotiations with the union concerning its health insurance program, which served to satisfy the bargaining obligation under the Act. It also claims that the Board was without authority to order it to reinstate the insurance contract between it and Aetna Life, since it claims that the identity of the insurance carrier is not a mandatory subject for bargaining.

Petitioner, Bastian-Blessing, is a division of a conglomerate, Golconda Corporation, which merged with Astro Controls, Inc., the previous parent corporation of Bastian-Blessing, while this controversy was going on. Local 893 of the Brotherhood of Carpenters has been bargaining agent since 1953 only for 165 employees of the Bastian-Blessing Division. Aetna Life Insurance Company had been the Bastian-Blessing group insurance carrier since World War II. It issued a group insurance policy containing the benefits negotiated between Local 893 and Bastian-Blessing in 1959. This policy was continued in effect, with some changes resulting from collective bargaining, up until August 1, 1970, when the company canceled the contract unilaterally, without prior notice to the union.

The group health insurance plan was a contributory plan. Each employee paid $1.00 per week toward its cost and the employee contributions represented approximately 40% of the premium cost, with the employer paying the rest.

The Trial Examiner found a relationship between increasing benefit costs and the sudden termination of the Aetna contract:

In the fiscal year ending April 20, 1967 (as reported on Form D-2 to the Department of Labor), the total premiums paid Aetna (for over 1,500 employees) amounted to $395,318. Aetna paid out benefits, and put in reserves, a total of $312,696, and refunded over $56,000 to the Company. By fiscal 1969, with somewhat fewer employees, the total premiums had increased almost $100,000, to $493,372, and the total benefit charges had increased over $229,000 (73 percent) to $541,852. Instead of a cash rebate as in 1967, there was a deficit in 1969 of $92,883. (The 1969 Form D-2 shows that Aetna retained $30,053 for expenses, as compared to fiscal 1968 expenses of $28,765 — an increase of less than $1,500. In fiscal 1967, which included a period of time when the Company\'s own employees were processing claims for Aetna, the Aetna expenses were $15,559. The amount of commissions decreased from $3,756 in 1967 to $2,625 in 1969, whereas taxes increased from $6,776 to $11,725.)

Despite the increased costs, the Union negotiated further health benefits in its new 3-year collective-bargaining agreement, effective from December 1, 1969, through November 30, 1972. Nothing was said in the negotiations about canceling the Aetna policy or changing carriers. * * * Thus, I find that although the reference to the old Aetna employee booklet was deleted, the Company and the Union still bargained for a continuation of the Aetna plan. (Following these 1969 negotiations, the Company contracted with Aetna to amend Group Policy GC-40,636 to provide the increased benefits.)

The Trial Examiner and the Board found also that when Bastian-Blessing instituted its self-insurance plan as described in its "Company Insurance Certificate," it omitted entirely two significant employee benefits: a conversion privilege without evidence of insurability, and the certainty of coverage of new-born babies under the $20,000 major medical benefit.

The Board further found that Bastain-Blessing's cancellation of the Aetna contract deprived its employees of enforceability of the prior master contract and of Aetna's administration of that contract:

In the negotiations for the current 1969-1972 collective-bargaining agreement, as previously found, the Company and the Union bargained for a continuation of the Aetna plan, with various increased benefits which the Company thereupon contracted with Aetna to provide. Under this union-negotiated plan, not only was the payment of the employees\' health benefits ensured in writing by the 56-page Aetna Group Policy GC-40,636 (the master contract), but also the interpretation and application of the group policy was placed in the hands of the well-known group insurance carrier, Aetna.

The Company\'s unilateral and irrevocable August 1 cancellation of the Aetna group policy, and the January 7 issuance of its "Company Insurance Certificate," deprived the employees of both the protection of the enforceable master contract, and (as discussed later) Aetna\'s interpretation and application of it.

The January 7 "Certificate" did not contain all the pertinent provisions governing the payment of benefits. It was a modified copy of the most recent Aetna "Group Insurance Certificate" (employee booklet), and was thus only a "summary of the essential features" of the previous Aetna insurance coverage. It failed to set out such provisions in the Aetna master contract as (a) what employees are eligible (permitting coverage of full-time employees working temporarily on a part-time basis), (b) eligibility after 3 months of continuous service, (c) requirement of written request, etc., for coverage of dependents, (d) effective date for dependent\'s coverage if application is made within 31 days, and if made thereafter, (e) the specific amount of nonoccupational disability weekly benefit ($52, as set out in bargaining agreement), (f) method of computing "average weekly earnings" for determining 70 percent limitation on weekly benefit, (g) exclusions and limitations applied in the event a family member is disabled when the maximum benefit is increased, (h) no benefits if prohibited in jurisdiction of residence, and (i) employer shall not "discriminate unfairly between individuals in similar situations" in administration of the provisions.

In many places where the January 7 Certificate is copied from the Aetna employee booklet, the Company has substituted the words, "the Plan," for the words, "the group policy." For example, on the cover page of the Certificate, the sentence from the Aetna employee booklet containing the words, "certain terms of the Group Policy," was changed to read, "The kinds of coverage and certain terms of the Plan applicable thereto are described on this and the following pages of this Certificate." (Emphasis supplied.) In other places in the Certificate, there still remain repeated references to "the group policy." Thus former references in the Aetna "employee booklet" sic to "the group policy" now appear in the January 7 Certificate in such phrases as: "subject to the terms of the Plan," "payable under the Plan," "subject to the terms of the group policy," "if included in the Plan," "benefits provided under the Plan," "coverage under the Plan," "subject to the limits provided in the Plan," "Employee's insurance under the group policy," and "coverage under the group policy." These references in the Certificate to "the Plan" and "the group policy" are evidently made (as were the references in the Aetna employee booklet) to the detailed provisions in the now-canceled Aetna Group Policy GC-40,636....