City of Pittsburgh v. Fraternal Order

• Decision Date: 22 November 2006
• Citation: 911 A.2d 651
• Parties: CITY OF PITTSBURGH v. FRATERNAL ORDER OF POLICE, Fort Pitt Lodge No. 1, Appellant. City of Pittsburgh v. Fraternal Order of Police, Fort Pitt Lodge No. 1, Appellant.
• Court: Pennsylvania Commonwealth Court

Page 651

911 A.2d 651

CITY OF PITTSBURGH v.FRATERNAL ORDER OF POLICE, Fort Pitt Lodge No. 1, Appellant.

City of Pittsburgh v.Fraternal Order of Police, Fort Pitt Lodge No. 1, Appellant.

Commonwealth Court of Pennsylvania.

Argued October 16, 2006.

Decided November 22, 2006.

Eric C. Stoltenberg, Pittsburgh, for appellant.

Hugh F. McGough, Pittsburgh, for appellee.

BEFORE: PELLEGRINI, Judge, and SIMPSON, Judge, and KELLEY, Senior Judge.

OPINION BY Judge PELLEGRINI.

This appeal was previously before us in City of Pittsburgh v. Fraternal Order of Police, Fort Pitt Lodge No. 1,850 A.2d 846(Pa.Cmwlth.2004)(FOP I ), where we held, among other things, that an arbitration panel's award reducing post-retirement medical benefits for police officers was not improper.The Pennsylvania Supreme Court has remanded the matter to us to address whether our decision conflicts with its decision in Appeal of Upper Providence Township,514 Pa. 501, 526 A.2d 315(1987)(Upper Providence 2).

In FOP 1, the City of Pittsburgh (City) and the Fraternal Order of Police, Fort Pitt LodgeNo. 1(FOP), were parties to a Collective Bargaining Agreement (CBA) which set forth the terms and conditions of employment for City police officers, including their medical benefits upon retirement.Unable to reach an agreement as to the terms for a successor CBA, which would take effect January 1, 2003, the FOP demanded interest arbitration, and an arbitration panel was convened to resolve disputed issues specifically related to medical benefits for a retiring officer and his or her spouse.

Prior to this dispute, an interest arbitration award in 1996 determined the medical benefits available to retired officers and became part of the CBAs effective for the years delineated in those awards.The January 31, 1996 interest award, effective from January 1, 1996, through December 1, 1997, stated that the City would provide any officers who retired after January 1, 1982, 1984 and 1996 with Blue Cross/Blue Shield/Major Medical insurance coverage and would contribute towards the coverage an amount equal to that charged by Blue Cross/Blue Shield.¹

Before the hearing, the City proposed that its contribution toward premium costs for retiree medical insurance be capped at the date of retirement with the retiree paying any increases.After hearings, the arbitration panel issued an award dated February 14, 2003, effective from January 1, 2003, through December 31, 2004, granting the City's proposal.Specifically, the arbitration panel stated, in pertinent part, the following in Section 14, Paragraph 4 of the award:

4.For those retiring after January 1, 2004, the City shall contribute toward the cost of husband and wife coverage (Section 14 B II 9) for each employee so electing, an amount equal to the amount charged for such insurance by the carrier providing such coverage on the date of his/her retirement.

The FOP appealed to the trial court requesting it to vacate the arbitration panel's award capping the City's contribution toward the cost of future retiree medical insurance to an amount equal to the amount paid by the City for such coverage on the date of the officer's retirement.It argued that the current retirees and those officers actively employed prior to the date of the award had a contractual right to have the City pay any premium increases for such coverage after retirement.The trial court denied the request, finding that the cap was valid because it was "placed by the Board on the City's contribution to the cost of health care coverage for officers retiring after January 1, 2004 carried forward and renewed a mutually agreed to contractual right in place since January 1, 1996.The cap is valid because it affects only affected officers retiring after a date certain in the future."(Trial court's December 10, 2003 opinionat 7.)

On appeal to this Court, the FOP argued that the arbitration award violated Article I, Section 10 of the United States ConstitutionandArticle 1, Section 17 of the Pennsylvania Constitution because Section 14, Paragraph 4 of the award capping the City's contribution towards officers' post-retirement medical benefits for those active-duty police officers who retired after the effective date of the award was part of the City's contractual obligation and could not be diminished by an award.Denying the FOP's appeal, we held that:

[w]hile public retirement benefits, if awarded at the time of retirement, are a form of deferred compensation, constitute contractual benefits and are rights protected by the United States Constitution, seeAssociation of Pennsylvania State College and University Faculties v. State System of Higher Education,505 Pa. 369, 479 A.2d 962(1984), that does not mean that the Board was without authority to change future retirees' benefits that were awarded in previous contracts.As we pointed out in City of Wilkes-Barre v. City of Wilkes-Barre Police Benevolent Association,814 A.2d 285(Pa.Cmwlth.2002)"[t]here is no ... limitation on consensual modification of existing retirement benefits, nor is there authority limiting arbitrators' ability to modify retirement benefits as part of a statutory dispute resolution process."814 A.2d at 288.All that those cited constitutional provisions foreclose is unilateral change in contractual benefits, not changes that are entered by mutual agreement in a contract or by an Act 111 panel.If we were to adopt the FOP's position, it would mean that collective bargaining contracts and Act 111 boards could only award increased benefits and could never reduce any benefits.

(Fraternal Order of Policeat 9-10.)

The FOP filed a petition for allowance of appeal with our Supreme Court, which was granted.By ordered dated November 30, 2005, the Court remanded the matter to us to determine, "Whether the Commonwealth Court's decision permitting the reduction of post-retirement healthcare benefits for active officers conflicts with the Supreme Court decision in Appeal of Upper Providence Township,514 Pa. 501, 526 A.2d 315(1987)."(Emphasis added.)This is all that the Court has directed us to review and the only issue now before this Court.

While dealing with many other issues, Upper Providence 2 addressed 53 Pa.C.S. § 2962(3)² which provided that home rule municipalities were not "authorized to diminish the rights or privileges of any former municipal employee entitled to benefits or any present municipal employee in his pension."The question implicit in the Supreme Court's remand is whether this provision, as interpreted by Upper Providence 2, precludes an arbitration panel from reducing post-retirement medical benefits in the future for officers who have not yet retired.

In Upper Providence 2, Upper Providence Township (Township) and the FOP of Delaware County were unsuccessful in reaching a collective bargaining agreement for the year 1984³ on the issue of hospital and medical benefits that were being provided to retired bargaining unit members.The original 1976-1977 collective bargaining agreement provided that the full hospital and medical benefits in effect at the time of retirement were to continue annually after retirement until death.The impasse on that issue was because the Township believed that providing medical benefits to police officers after retirement was illegal and wanted the benefit removed as a matter of law.The matter was submitted to arbitration with only that "one issue in dispute, the legality of the hospital and medical benefits that were currently being provided to retired bargaining unit members."Upper Providence 2,514 Pa. at 504, 526 A.2d at 316.(Emphasis added.)Agreeing with the Township's position, "a majority of this panel has concluded that this benefit is illegal and has refused to continue this benefit beyond 1983."Id. at 505, 526 A.2d at 317(quoting from the dissenting arbitrator's opinion).

The FOP appealed the award of the arbitration panel denying benefits for 1984 to the trial court which held that the arbitrators erred in revoking the benefits because "such benefits 'are legal and irrevocable, once given.'"Id. at 506, 526 A.2d at 317.The Township appealed to this Court, and we affirmed, agreeing that the arbitration panel committed an error of law in holding that medical benefits could not be provided to retirees.Pertinent to what is before us, we stated:

The parties have briefed and argued the question of whether the common pleas court properly declared by dictum that [53 Pa.C.S. § 2962(c)(3)] providing that "no municipality shall ... be given the power [by its charter] to diminish the rights or privileges of any former municipal employe" forbade Upper Providence Township from terminating these benefits which had been conferred by earlier collective bargaining agreements and arbitration award.This question isnot germanebecause the township was not here seeking to diminish benefits of former employees; it was seeking through bargaining to obtain a contract in which the benefits might be eliminated in future as unlawful.(Emphasis added.)

SeeAppeal of Upper Providence, 93 Pa.Cmwith. 272, 502 A.2d 263, 267(Pa. Cmwlth.1985)(Upper Providence 1).

Our Supreme Court granted the Township's petition for allowance of appeal.After finding that we had erred in holding that we were permitted to reverse an arbitration award due to an error of law, Justice Larsen, writing for the Court, went on to review the award to determine whether the award conformed with the Home Rule Charter and Optional Plans Law (Law).⁴He held that an arbitration award may be in excess of the arbitrator's exercise of powers if it requires the public employer to perform an act that it is prohibited by law from performing.He did so based on his finding that because a home rule municipality could not do anything contrary to 53 Pa.C.S. § 2962(c)(3), which provides that, "No municipality shall be given the power to diminish the rights or...