On February 3, 2017, the Michigan Supreme Court granted Shelby Township’s application for leave to appeal the December 15, 2015 Court of Appeals judgment affirming the MERC decision in the matter of Shelby Township v Command Officers of Michigan, 29 MPER ¶ 38 (2014). Among the issues to be briefed by the parties: (1) whether the calculation and/or allocation of payments for medical benefit plan costs among employees under PA 152 is a mandatory subject of bargaining pursuant to the Public Employee Relations Act, MCL §§ 423.201, et seq. (“PERA”), and (2) whether PA 152, alone or in conjunction with PERA, precludes a public employer’s use of illustrative insurance rates that include retiree health insurance costs.
Keller Thoma was asked to file an amicus brief in favor of leave being granted, and will continue to update on the proceedings. Please feel free to contact a Keller Thoma attorney at (313) 965-7610 with any questions.
Keller Thoma’s prior case alert follows:
On December 15, 2015, the Court of Appeals upheld a MERC decision that a Township violated PERA in connection with the Township’s calculation of Union employees’ insurance premiums using bundled insurance rates. In Shelby Township v Command Officers Association of Michigan, 29 MPER ¶ 38 (2014), the Township switched from a “hard cap” option to a “percentage option” for employee medical plan contributions after the expiration of a collective bargaining agreement. The Union filed a ULP charge, claiming the Township refused to bargain about the calculation method and total amount of employee contributions. The Union also challenged the Township’s use of bundled rates which included the cost of retiree health benefits to calculate employee premiums. The Township asserted that it had not made any decisions regarding the amounts of premium sharing.
MERC ruled that the Township did not violate its duty to bargain by unilaterally choosing the percentage option, but that the Township “had a duty to bargain about the calculation of the Union members’ premium shares.” MERC also held that the Township “improperly relied on” bundled rates which included the insurance costs of retirees to calculate the employees’ premiums.
The Court upheld both rulings, stating: “A public employer does not have a duty to bargain about its choice between the ‘hard cap’ and ‘percentage’ options for employee medical plan contributions. But a public employer must bargain about the amount that specific employee groups will pay toward the employees’ portion of the contribution. … We conclude that MERC did not err by concluding that this was a mandatory subject of bargaining.”
With respect to the bundled insurance rates, the Court held: “[W]e conclude that MERC did not err as a matter of law when it determined that the Township could not use a rate for its employees’ premiums that included benefits for retired employees. The definition of ‘medical benefit plan’ specifically excludes benefits to retired employees. The bundled rate used in this case included retirees’ costs.”