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OPINION OF TRUSTEES
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In Re
Complainant: Employees and Pensioners
Respondent: Employers
ROD Case No: 88-658 – February 6, 1995
Trustees: Thomas F. Connors, Michael H. Holland, Marty D. Hudson and
Robert T. Wallace.
The Trustees have reviewed the facts and circumstances of this dispute concerning the provision
of health benefits coverage under the terms of the Employer Benefit Plan.
Background Facts
The Complainants are Employees, Pensioners, and laid-off Employees of the Respondents. The
Respondents consist of four active coal companies and one company that is no longer engaged in
coal mining activities and, consequently, no longer employs miners. The Complainants contend
that the Respondents have failed to provide health benefits coverage at the level prescribed by
the terms of the Employer Benefit Plan established pursuant to the National Bituminous Coal
Wage Agreement (“Wage Agreement”) of 1988.
Information provided to the Funds by the Complainants indicates that the Respondents have
provided health benefits coverage for the Complainants by implementing health insurance
policies under which benefits are paid at 80% of the cost of a service with the beneficiaries
paying 20% of the cost. The Employers have promised to reimburse beneficiaries for the 20%
they are required to pay under the terms of the plans. Benefit plan descriptions were not
included with the case, so it is not clear whether deductibles and other benefits may also be
involved.
Two active coal companies have responded that they are providing all benefits required by their
collective bargaining agreements through a combination of policies through insurance carriers
and direct payment of all other benefits covered under the Employer Benefit Plan by the coal
companies themselves. One company has noted that one of the Employees listed as a
Complainant is no longer employed by that company.
The company that is no longer engaged in coal mining activities states that it has been seeking
health insurance coverage for its eligible retirees, disability pensioners, and laid-off Employees,
but has been unable to find a carrier willing to provide the coverage. The company, along with
one of the other companies, contends that it would be impossible to fully insure health benefits
Opinion of Trustees
ROD Case No. 88-658
Page 2
as required by the Employer Benefit Plan. The company further states that six of the
Complainants listed in the case have been employed by other coal operators subsequent to
having been laid off by the Respondent and that another of the Complainants was laid off more
than four years ago.
On November 10, 1992, a United States District Court issued an extension of a temporary
restraining order (TRO) enjoining the Respondents from failing to provide the Complainants
with health insurance coverage as required by the terms of their collective bargaining
agreements. Under the TRO, the Court accepted the provision of 80/20 health plans by the
Employers as long as they pay any additional medical expenses covered under the Employer
Benefit Plan. The temporary restraining order further states that all parties reserve their
respective positions regarding whether the provision of benefits through 80/20 policies is
permissible according to the collective bargaining agreements between the Employers and the
United Mine Workers of America. The order was to remain in effect until the expiration of the
Wage Agreement or until the further order of the court.
One company contends the temporary restraining order rendered by the court has stayed this
resolution of dispute and asks that the resolution of dispute be dismissed or referred back to the
parties to be resolved by negotiations.
Two of the companies have not responded to requests for statements of their positions in this
dispute.
Dispute
Are the Respondents’ implementations of their 80/20 health coverage plans in violation of the
1988 Wage Agreement?
Positions of the Parties
Position of the Complainants: The Respondents are in violation of the 1988 Wage Agreement by
their use of 80/20 health coverage plans.
Position of the Respondents: Employers that responded contend that they are providing the level
of coverage required under the 1988 Wage Agreement by a combination of the use of insurance
carriers and direct payment of benefits by the companies. In addition, one company maintains
that the temporary restraining order has stayed this dispute, which should be dismissed or
referred back to the parties for resolution by negotiation. Two companies have not responded.
Pertinent Provisions
Article XX Section (c)(3)(i) of the National Bituminous Coal Wage Agreement of 1988 provides
in pertinent part:
Opinion of Trustees
ROD Case No. 88-658
Page 3
(3)(i) Each signatory Employer shall establish and maintain an Employee benefit plan to
provide, implemented through an insurance carrier(s), health and other non-pension
benefits for Its Employees covered by this Agreement as well as pensioners, under the
1974 Pension Plan and Trust, whose last signatory classified employment was with such
Employer. The benefits provided by the Employer to its eligible Participants pursuant to
such plans shall be guaranteed during the term of this Agreement by that Employer at
levels set forth in such plans…. The plans established pursuant to this subsection are
incorporated by reference and made a part of this Agreement, and the terms and
conditions under which the health and other non-pension benefits will be provided under
such plans are as to be set forth in such plans.
Article I (1), (2), and (4) of the Employer Benefit Plan provide:
Article I – Definitions
The following terms shall have the meaning herein set forth:
(1) “Employer” means (Employer’s Name).
(2) “Wage Agreement” means the National Bituminous Coal Wage
Agreement of 1988, as amended from time to time and any successor
agreement.
(4) “Employee” shall mean a person working in a classified job for the
Employer, eligible to receive benefits hereunder.
Article II A. (4) of the Employer Benefit Plan provides:
Article II – Eligibility
The persons eligible to receive the health benefits pursuant to Article III are as follows:
A. Active Employees
(4) A new Employee will be eligible for health benefits from the first day
worked with the Employer.
Article III A. (8) and (9) of the Employer Benefit Plan provide in pertinent part:
Article III – Benefits
A. Health Benefits
(8) Co-Payments
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ROD Case No. 88-658
Page 4
Certain benefits provided in this Plan shall be subject to the co-payments
set forth below and such co-payments shall be the responsibility of the
Beneficiary….
Co-Payments for covered Health Benefits are established as follows:
Benefit Co-Payment
(a) Physician services as an out- Working Group — $7.50 per visit patient as
set forth in section up to a maximum of $150 per 12-
A(2) and physician visits in month period(*
) per family.
connection with the benefits set
forth in section A(3), paragraph Non-working Group — $5 per visit
(c) but only for pre and post- up to a maximum of $100 per 12-
natal visits if the physician month period(*
) per family.
charges separately for such
visits in addition to the charge
for delivery, and paragraphs (g)
through (m), paragraph (n)
except inpatient surgery, paragraph
(o) and section A(7) paragraph (f).
(b) Prescription drugs and insulin, $5 per prescription or refill up
as set forth in section A(4) to $50 maximum per 12-month
and take-home drugs following period(*
) per family.
hospital confinement as set Note: For purposes of this co
forth in section A(1)(a). payment provision, a
prescription or refill shall be deemed to be
each 30 days (or fraction thereof) supply.
________
*
The 12-month periods shall begin on the following dates: March 27, 1988; March
27, 1989; March 27, 1990; March 27, 1991 and March 27, 1992.
(9) Vision Care Program
Actual Charge Up To
(a) Benefits Maximum Amount Frequency Limits
Vision Examination $20 Once every 24 months
Per Lens (Maximum = 2) Once every 24 months
– Single Vision 10
– Bifocal 15
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ROD Case No. 88-658
Page 5
– Trifocal 20
– Lenticular 25
– Contact 15
Frames 14 Once every 24 months
Article III D. (1)(a) of the Employer Benefit Plan provides:
D. General Provisions
(1) Continuation of Coverage
(a) Layoff
If an Employee ceases work because of layoff, continuation of health, life and accidental death and
dismemberment insurance coverage is as follows:
Number of Hours Worked for
the Employer in the 24
Consecutive Calendar Month
Period Immediately Prior to Period of Coverage
the Employee’s Date Continuation from the
Last Worked Date Last Worked
2,000 or more hours Balance of month plus
12 months
500 or more but less than Balance of month plus
2,000 hours 6 months
Less than 500 hours 30 days
Discussion
Article XX Section (c)(3)(i) of the 1988 Wage Agreement requires a signatory Employer to
establish and maintain an Employer Benefit Plan to provide health and other non-pension
benefits for its Employees. The Wage Agreement stipulates that benefits provided by the
Employer pursuant to such Plan shall be guaranteed during the term of the Agreement by that
Employer at levels set forth in such Plan.
Article II. A. of the Employer Benefit Plan provides health benefits coverage for active
Employees working in classified positions for a signatory Employer. Article III. D. (1)(a)
provides continued benefits coverage for laid-off Employees based on the number of hours
worked for the Employer during the 24-month period prior to the date last worked.
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ROD Case No. 88-658
Page 6
The Respondents provide coverage for the Complainants under 80/20 plans implemented
through insurance carriers. Article III. A. of the Employer Benefit Plan specifies the benefits
which are to be provided under the Plan. Article III. A. (8) provides that certain benefits under
the Plan shall be subject to co-payments of $5.00 or $7.50, and such co-payments shall be the
responsibility of the beneficiary. The usual procedure for filing claims as contemplated under
the terms of the Wage Agreement is one in which the beneficiary is expected to authorize the
provider to bill the insurance carrier for services rendered and to pay only the co-payment charge
set forth in Article III. A. (8), until the specified maximum yearly amount is reached. The
procedure for filing claims and the method of payment established by the Respondents in this
case are inconsistent with the claim procedure contemplated under the terms of the Wage
Agreement and the Employer Benefit Plan. Levels of benefits to be provided to Employees,
Pensioners, dependents, survivors and eligible laid-off Employees are established through
collective bargaining and may not be unilaterally changed by an Employer. In addition, in ROD
88-235 (copy enclosed herein) and several others, the Trustees have previously addressed the
issue of whether an Employer can partially implement its plan through an insurance carrier and
offer to pay or reimburse its Employees for out-of-pocket expenses in excess of applicable copayment amounts. In that opinion, the Trustees concluded that such practice is inconsistent with
the express provisions of the Wage Agreement and the Employer Benefit Plan. Accordingly, the
Respondents’ use of non-conforming health coverage plans and its offer to pay certain out-ofpocket expenses are inconsistent with the express provisions of the Wage Agreement and the
Employer Benefit Plan. The Respondents are required to provide health benefits coverage for
the Complainants and their eligible dependents at the level specified in the Employer Benefit
Plan.
One Respondent contends that this case has been stayed by the restraining order issued by the
court. The Trustees are not parties to that case. Thus, the order restraining the Employers from
failing to provide health insurance coverage for the Employees and Pensioners has no effect on
whether the Trustees may decide this Resolution of Dispute.
Opinion of the Trustees
The Respondents’ health coverage plans are inconsistent with the express provisions of the 1988
Wage Agreement and the Employer Benefit Plan. The Respondents are required to provide
health benefits coverage for eligible Complainants and dependents at the level specified in the
Employer Benefit Plan.