All posts by Joesph Sandulli

Cities and Towns Cheating on Health Insurance Contributions to Self Funded Plans

When cities and towns use self-funded health insurance plans, they have been able to cheat on their required contributions.  We have already found a number of cases where municipalities have failed to make their required contributions, thereby forcing employees to pay a greater share then they had agreed to.

This cheating is possible because of the way premiums are established for self-funded plans.  In such plans the premiums are set by estimating a number which will cover the projected cost of claims and expenses.  The premium payments must also maintain a cushion in the fund sufficient to cover regular variation in claims plus enough to cover claims which will come in after the end of a plan period.  We have found that when there is such a cushion in the fund, employers can be tempted to skip their payments and allow claims to be paid from the cushion and from employee contributions.

To prevent this cheating, union representatives acting under their collective bargaining agreement or working through a Public Employee Committee, where the PEC has a health insurance agreement, must carefully monitor the financial records of the insurance plan.  They should insist on monthly records to be presented quarterly for review.  The records must include the following:

  1. The monthly claims paid.
  2. The monthly expenses of the plan including the fee paid to the plan administrator and the fees for consultants, actuaries, and accountants.
  3. The monthly revenue, showing both the revenue from employee contributions and from employer contributions and income from any other source, like interest on funds.
  4. The monthly fund balance.

Looking at this data the unions should be able to confirm that the total contribution rate is appropriate to cover the claims and expenses of the plan and that the employer is paying its agreed upon share.  Finally, there should be an annual audit report on the plan confirming that the monthly data has been correct.


Policing and Emergency Medical Services

Policing and Emergency Medical Services

The nature of policing is evolving again as departments are getting more involved in providing emergency medical services.  Traditionally the police service has focused on responding to criminal acts, investigating them, and arresting the perpetrators.  That concept changed somewhat with the advent of community policing which asked officers to involve themselves with the community in ways that might prevent crime or assist in investigating it.  The dramatic change is that now departments are asking police officers to make their first priority the delivery of emergency services, ahead of and even to the exclusion of investigation of crime.  Such a change will require a significant change in the skills and the mindset of the patrol officer.

The change in policing arises first from the introduction of three new technologies. First on the scene was the AED (Automated External Defibrillator).  This is the device which delivers an electrical charge to the heart of a person suffering from cardiac arrest. Its use requires a determination that the subject is suffering from cardiac arrest.  The second new technology is the nasal Narcan.  This device allows the officer to spray a chemical into the nose of a person suffering from an overdose of heroin or other opioid and to instantly revive him.  This requires the officer to make a determination that the subject is suffering from an overdose.  Finally, there is the epi-pen which is used to inject epinephrine into the muscle of a person suffering from an allergic reaction.  Use of this device also requires the medical determination that the person is indeed suffering an allergic reaction.   Some departments are now requiring officers to carry some of these devices in their cruisers for use in the appropriate circumstances.

However, the truly dramatic change in policing comes from the recently enacted statute, Massachusetts General Law Chapter 94, Section 34A which immunizes from prosecution both an addict suffering the overdose and the person who calls for medical assistance[1].  When a police officer is called to the scene of an overdose, the purpose of the response is no longer the investigation of a crime; the purpose is now to furnish medical care.  The assumption by police of this new, different, and complex responsibility adds value to their service to the community and is worthy of additional compensation.  While there are not yet many examples of police unions which have bargained benefits for medical services, our firm has negotiated the following provisions for our clients:

Weymouth Police             3% Medical Technology premium

Gloucester Police   1% Narcan; $725 Defibrillator premiums

Braintree  Police              $600 Defibrillator (expires in July 2014)

Brookline  Police            $400 Defibrillator premium

Peabody Police                  $500 Defibrillator premium

[1] Section 34A. (a) A person who, in good faith, seeks medical assistance for someone experiencing a drug-related overdose shall not be charged or prosecuted for possession of a controlled substance under sections 34 or 35 if the evidence for the charge of possession of a controlled substance was gained as a result of the seeking of medical assistance.

(b) A person who experiences a drug-related overdose and is in need of medical assistance and, in good faith, seeks such medical assistance, or is the subject of such a good faith request for medical assistance, shall not be charged or prosecuted for possession of a controlled substance under said sections 34 or 35 if the evidence for the charge of possession of a controlled substance was gained as a result of the overdose and the need for medical assistance.


Quinn Bill Eligibility of Rehired or Transferred Police Officers

Once a police officer qualifies for Quinn Bill benefits, the benefits cannot be terminated if the officer is rehired or transferred after the Quinn Bill cut-off date of July 1, 2009.

Under the recent Quinn Bill amendments police officers hired after July 1, 2009 are no longer eligible to participate in the Quinn Bill benefits.  Municipal employers have contended that officers eligible for the Quinn Bill who are rehired or transferred after that date lose their Quinn Bill eligibility.  This issue has arisen in the following ways for officers hired before July 1, 2009 who qualified for Quinn Bill: 1) The officer resigns from the police service, but is then rehired by the same municipality after July 1, 2009; 2) The officer transfers to another department after July 1, 2009; 3) The officer is laid off and is recalled into another department after July 1, 2009.

The Massachusetts Department of Higher Education, which administers the Quinn Bill, has now definitively answered that all of these rehired and transferred police officers remain eligible for Quinn Bill Benefits.   In a recent communication with our office the Department has stated that it is their policy “that an approved PCIPP (Police Career Incentive Payment Policy) eligibility status is never revoked.  Thus, if an approved PCIPP officer leaves employment and returns at a later date, or transfers from one department to another, the officer retains his or her PCIPP eligibility.”    

Reconsidering a Ticket: An Exercise of Discretion or a Criminal Act?

A New York grand jury has charged ten New York City police officers with crimes for “fixing” traffic tickets. The charges resulted from a wiretap for unrelated matters during which investigators overheard discussions of fixing tickets. The crimes charged were the alteration or destruction of the public records and official misconduct.

Massachusetts has similar laws which might be applied to ticket fixing. M.G.L. c. 66, s. 15 establishes criminal penalties for destroying public records. Likewise M.G.L. c. 268A, s. 26 (the employee ethics law) imposes criminal penalties for use of your position to gain benefit for yourself or others and for acting or failing to act based on kinship or influence. M.G.L. c. 268A, s. 23 (b) (2) & (3). The Boston Globe is already investigating ticket fixing in Massachusetts and their reporters have called local police officers to ask for comment.

A police officer in Massachusetts still has discretion whether or not to issue a traffic ticket. Newton Police Association v. Police Chief of Newton, 63 Mass. App. Ct. 697 (2005):

If a police officer observes…a civil motor vehicle infraction, the officer may issue a written warning or may cite the violator for a civil motor vehicle infraction…

M.G.L.c. 90C, s. 3(A)(1). Once the officer issues a ticket, however, there is no guidance about what circumstances justify revoking it. While we would argue that the officer retains broad discretion to reconsider and revoke the ticket, we would urge special caution in this environment. If you reconsider and decide to revoke a ticket, you should consider documenting an appropriate reason for your action and/or getting documented approval from a superior officer. If you are a supervisor or court officer, you should likewise document an appropriate reason for any decision not to prosecute a violation.

Bargaining Changes in Health Insurance Contributions.

Ever since Governor Romney proposed legislation in 2003 setting municipal employers’ health insurance premium contributions at 75% and employee contributions at 25%, cities and towns have been attempting to bargain for the reduction to 75% of any higher employer contributions. While the reduction of employer contributions is generally undesirable, the employer’s anxiety about the cost of insurance can be turned to the employees’ advantage. Employers have been induced to pay substantially more in wage increases than they have gained in premium contribution reductions. This strategy is available to unions only when employers propose a reduction in their health insurance contributions; the union cannot expect such exceptional wage increase unless the employer first seeks a reduction of health insurance contributions.

Some recent contract settlements negotiated by this office demonstrate the possibilities. In the case of the Essex Police (MassCOP Local 270) Attorney Ken Grace negotiated a 6.5% wage premium to offset a proposed reduction of the employer’s health insurance contribution from 90% to 75%. The parties assumed that their general wage increases would have been 3%, 3%, and 3% without the change in insurance contributions. In that case the contract wage increases and the insurance reductions were as follows:

General Wage Increase Town’s Insurance %
July 1, 2004 3.0% 90%
July 1, 2005 9.5% 75%
July 1, 2006 3.0% 75%

Assuming that an employee has an HMO family plan costing a typical $12,000 per year, the 15% increase in employee contributions costs 15% x $12,000 = $1,800 per year. However, the 6.5% wage increase on a typical police salary of $50,000 per year generates 6.5% x $50,000 = $3,250 per year. Not only does this wage increase far supersede the increased employee cost of the insurance contribution increase, but unlike insurance contributions, it increases the overtime rate and it increases the employee’s pension benefit. For employees on the individual insurance plan, the gain would be even greater.

One concern about agreeing to any reduction in the employer contribution in health insurance is that any compensation for the change will be swallowed up by the substantial annual increases in the premium. Assuming that premium rates will increase at an average of 10% per year, the additional cost arising from the change in rates from 90% to 75% will not overtake the $3,250 wage premium for seven years. That is, the $1,800 increased at 10% per year will not rise over $3,250 until the seventh year. During the first six years following the change, the employee is getting far ahead of the game. By the time the seventh year comes around, there may be some entirely new approaches to health care.

Another approach to bargaining a reduction in the employer’s contribution to health insurance has been to make the reduction gradual, but again with substantial wage premiums. Attorney Amy Davidson of this office bargained the following package for the Dedham Firefighters (Local 1735, I.A.F.F.):

General Wage Increase Town Insurance %
July 1, 2004 2.0% 90%
July 1, 2005 6.92% 87%
July 1, 2006 3.0% 84%
July 1, 2007 4.0% 80%

Here the union obtained a 3.92% premium in 2005 and an additional 1% in 2007 (assuming a 3% increase would have been appropriate with no change in insurance) in exchange for the gradual reduction of the town’s insurance contribution from 90% to 80%. At the end of the contract the 10% increase in employee insurance contributions will cost about $1,200 per year while the compounded 4.96% wage increase generates $2,480 per year.

One final reason to consider this approach to bargaining is that some recent interest arbitration cases from the Joint Labor Management Committee have ordered the reduction of employer contributions. Rather than letting an arbitrator determine what compensation, if any, is appropriate as a trade for such a reduction, it may be desirable to bargain the appropriate trade.

Joseph G. Sandulli

PERAC – Superlongevity Programs Regulated

At a PERAC meeting on January 25, 2006, there was a change of direction. Instead of adopting proposed legislation as they had voted at the last meeting, they decided to adopt a regulation, a copy of which is attached. This change was based in part upon the belief of some union legislative agents that they could no longer guarantee a favorable outcome (or even reasonably control the outcome) if this issue were put into the hands of the legislature.

The regulation was submitted to the clerk of the legislature on January 31. The regulation will become the law if the legislature approves it or if the legislature does not reject it within 45 days from that submission (that would be March 17, 2006, St. Patrick’s Day). All the legislative agents expect that the legislature will allow the regulation to become effective.

This new regulation grants more extensive grandfather rights than the regulation that was originally proposed. It allows anyone to opt in to a superlongevity plan at any time during a contract that was in effect on January 25, 2006. Such a participant in the plan could then receive his superlongevity benefit for three years, even if that three years took him under a new contract, and he would be able to count the benefit in his retirement. For example, under a contract effective from July 1, 2005 through June 30, 2008, an employee could opt to begin receiving superlongevity as late as June 29, 2008. He would be able to receive superlongevity for 3 years until June 29, 2011 (assuming that the 2008-2011 contract continued to provide superlongevity) and then retire on June 30, 2011 and have his superlongevity counted in his retirement.

If a contract expired on June 30, 2005 (or before) and is continuing beyond January 25, 2006 pursuant to an evergreen clause, an employee who wants superlongevity will have to opt into the plan before that contract is replaced with a new agreement.

When the current contract is going to be replaced, we will need to modify our superlongevity plans to accommodate this regulation. I would recommend that we provide a continuation of superlongevity benefits for those who have already opted into the superlongevity plan, and then provide an alternative benefit all other employees. For an alternative benefit, I would suggest either a large longevity step at 29 or 30 years of service, or a “senior employee benefit” (a new wage step for one or more of the most senior employees in the department).

In advising members or in taking any action with respect to new contract provisions, remember that the regulation is not yet final. Although everyone expects it to become law, anything could happen up at the state house.