IN COURT OF APPEALS
District No. 197,
Filed April 18, 2006
Dakota County District Court
File No. C3-04-6736
Harley M. Ogata, Debra M. Corhouse, Education Minnesota,
Bryan N. Smith, J. Dennis O’Brien, Littler Mendelson, P.C.,
Considered and decided by Dietzen, Presiding Judge; Wright, Judge; and Worke, Judge.
S Y L L A B U S
1. The term “benefits” in Minn. Stat. § 471.6161, subd. 5, encompasses not only tangible monetary payments, but also includes the choice of a health-care provider. The “aggregate value of benefits” covered by section 471.6161, subdivision 5, is reduced when covered employees incur increased out-of-pocket expenses to retain an existing choice of health-care provider.
2. Minn. Stat. § 471.6161, subd. 5, permits an exclusive representative to waive the statutory restriction on reduction of health-insurance benefits and, therefore, is not an unconstitutional delegation of legislative power under the non-delegation doctrine.
O P I N I O N
Appellant challenges the district court’s final judgment granting summary judgment in favor of respondent on liability and awarding damages to respondent; and its denial of appellant’s motion for amended findings. Appellant argues that (1) it did not violate Minn. Stat. § 471.6161, subd. 5, because it did not reduce the “aggregate value of benefits” provided by the group health-insurance plan; (2) it did not commit an unfair labor practice under the Public Employee Labor Relations Act (PELRA); (3) section 471.6161, subdivision 5, is an unconstitutional delegation of legislative power; (4) the unfair-labor-practice claim was arbitrable under the collective-bargaining agreement; and (5) the proper measure of damages is out-of-pocket losses incurred by respondent’s members. We affirm.
St. Paul Federation of Teachers is the exclusive bargaining representative for public-school
teachers employed by appellant
In May 2003, the parties were negotiating terms for a new 2003-05 CBA. The existing CBA required appellant to provide group health insurance to the teachers. The group health-insurance policy offered by appellant had two health-care coverages to choose from: Medica Elect (Elect) and Medica Choice (Choice). Although the benefit structures for the coverages were the same, Choice cost more because the insured had an almost unlimited provider network. “Providers” are health-care professionals and facilities offering health services, including hospitals, physicians, skilled-nursing facilities, and pharmacies. A “provider network” is a group of providers that agrees to provide services to an insurance carrier’s customers for less than their usual fees. If an insured obtains the services of a non-network provider, that insured will incur greater out-of-pocket costs because the fees for services will not be subject to the discounted rate.
In the spring of 2003, appellant faced a projected 11.3% increase in premium rates for the existing health-care-benefit structure. As a result, appellant requested that its insurance committee explore options to control costs. Following its review, the majority of the insurance committee recommended an option that would limit the amount of the increase to 5%. Under this option, Elect was unchanged and maintained its benefit structure with the same limited provider network, but Choice changed considerably, including an increase in out-of-pocket maximums from $1,000 to $1,200; an increase in office-visit and emergency-care co-pays from $10 to $15; and a decrease in inpatient hospitalization coverage from 100% to 80%. To avoid the increased out-of-pocket expenses, members enrolled in the Choice coverage could switch to Elect coverage with its more limited provider network. Following a public hearing, the school board approved the recommended option; and modified the Choice health-insurance coverage available to teachers covered by the CBA.
Respondent brought suit against appellant, alleging that appellant’s unilateral change of the Choice coverage violated Minn. Stat. § 471.6161, subd. 5, and constituted an unfair labor practice under PELRA. Subsequently, both parties moved for summary judgment. The district court granted partial summary judgment for respondent, denied appellant’s motion, and ordered the matter to proceed to trial on the issue of damages.
At trial, appellant argued that the appropriate measure of damages was the out-of-pocket losses incurred by respondent’s members as a result of the change in the Choice coverage. Respondent argued that damages should be measured by the difference in premiums paid by appellant as a result of the change in Choice. Respondent offered the testimony of John Stiglich, an expert in health-insurance actuarial statistics. Stiglich testified that appellant’s out-of-pocket measure of damages was “not actuarially sound” and that a premium-differential measure was the best measure of damages. Two teachers also testified that they remained with Choice coverage despite increased costs because their spouses, one of whom was receiving cancer treatments and the other of whom was pregnant, would have been forced to change physicians under Elect.
Following trial, the district court awarded respondent “an amount in damages equal to the difference between what [appellant] would have paid in premiums under the group health plan prior to the unlawful change in the plan and the premiums it did pay for the revised plan.” Subsequently, appellant moved for amended findings and conclusions of law and that the district court make additional findings of fact. The district court denied appellant’s motion. This appeal follows.
I. Did the district court err by granting summary judgment in favor of respondent on the claim that appellant violated Minn. Stat. § 471.6161, subd. 5?
II. Did the district court err by granting summary judgment in favor of respondent on the claim that appellant committed an unfair labor practice under PELRA?
III. Is Minn. Stat. § 471.6161, subd. 5, an unconstitutional delegation of legislative power?
IV. Did the district court err by declining to compel the parties to arbitration?
V. Did the district court abuse its discretion in awarding damages to respondent?
summary judgment is granted based on the application of a statute to undisputed
facts, the result is a legal conclusion, which the court reviews de novo. Educ.
Minnesota-Greenway, Local 1330 v. Indep. Sch. Dist. No. 316, 673 N.W.2d 843
(Minn. App. 2004), review denied (
A. Statutory Interpretation of Section 471.6161, subdivision 5
Minn. Stat. § 471.6161, subd. 5, states: “The aggregate value of benefits provided by a group insurance contract for employees covered by a collective bargaining agreement shall not be reduced, unless the public employer and exclusive representative of the employees of an appropriate bargaining unit . . . agree to a reduction in benefits.” The phrase “aggregate value of benefits” is not defined by the statute.
Essentially, appellant makes two arguments. First, appellant argues that the statute does not prohibit it from reducing the value of the benefits of Choice coverage provided that it does not reduce the value of the benefits of Elect. We disagree.
The plain and ordinary meaning of the phrase “aggregate value” is the whole or total amount of the goods or services considered to be a fair equivalent or price for something else. The American Heritage Dictionary 33, 1900 (4th ed. 2000). Appellant suggests that we should simply compare the aggregate value of Choice with Elect, and because the value of Elect has not been “reduced,” conclude that appellant did not violate the statute. But the “benefit” at issue is the health-care insurance coverage available under the CBA, which includes both Medica Choice and Elect. Thus, the proper method for determining whether there has been a reduction in the aggregate value of the benefits is to compare the value of the health-care insurance coverage under both Choice and Elect before appellant changed the coverage with the value of the coverage after the change. Here, it is undisputed that there has been a reduction in the benefits under the Choice coverage. Teachers with Choice coverage now incur greater out-of-pocket expenses for the same health-care coverage. Consequently, it is axiomatic that appellant reduced the aggregate value of the health-care coverage when it reduced the value of the Choice coverage.
Second, appellant argues that the term “benefits” in Minn. Stat. § 471.6161, subd. 5, extends only to benefits that have a tangible monetary value. It suggests that respondent’s members can switch from Choice to Elect without incurring additional out-of-pocket expenses, and therefore, there is no reduction in the value of the benefits. Respondent argues, and the district court agreed, that its members who switch from Choice to Elect would have a smaller network from which to choose providers and that this change constitutes a reduction in the value of the benefits.
Appellant suggests that the definition of “benefit” is “a payment or series of payments to one in need.” But we discern no legislative intent to interpret the term “benefit” as narrowly as appellant does. The common meaning of benefit is: “1a. Something that promotes or enhances well-being; an advantage . . . b. Help; aid. 2. A payment made or an entitlement available in accordance with a wage agreement, an insurance policy, or a public assistance program.” The American Heritage Dictionary, supra 168. Thus, “benefit” is not limited to tangible, monetary benefits, but also includes non-monetary benefits that promote or enhance well-being, or constitute an advantage. Certainly, it is an advantage to respondent’s members to have a larger provider network from which to choose a health-care provider. The physician-patient relationship is a professional relationship built on trust and confidence, particularly in light of the personal and often sensitive nature of health-care issues. Here, it is undisputed that switching health-care coverage from Choice to Elect will result in a more restricted provider network available to respondent’s members; and, for some, the change in coverage may require a change in their physicians. Consequently, we conclude that the term “benefit” in Minn. Stat. § 471.6161, subd. 5, includes the non-monetary benefit of retaining the choice of a provider network available under Choice without incurring additional expense.
nonetheless relies on language in a Minnesota Attorney General’s opinion discussing
the predecessor to Minn. Stat. § 471.6161, subd. 5, to support its position. Op. Att’y Gen. 59a-25 (Dec. 15, 1987). Attorney general’s opinions, however, are not
binding on this court. Billigmeier v.
further argues that its definition of “benefit” is supported by an
B. Terms of Collective-Bargaining Agreement
Appellant further argues that article VIII, section 1, of the CBA reserved to it the right to unilaterally change the Choice coverage without bargaining with respondent, and therefore, there was no violation of Minn. Stat. § 471.6161, subd. 5. Respondent argues that appellant failed to raise this argument below; and, thus, is barred from raising it on appeal.
we will not consider matters not argued and considered by the district
court. Thiele v. Stich, 425 N.W.2d 580, 582 (
Article VIII, section 1 of the parties’ CBA states: “Selection of Carrier: The School Board reserves the right to select the insurance carrier and the policy for any group insurance coverage provided for the teacher.” Appellant argues that by agreeing to the language of the CBA, respondent waived its consent rights under the statute. We disagree. Waiver of respondent’s consent rights under section 471.6161, subdivision 5, must be “clear and unmistakable.” Law Enforcement Labor, 695 N.W.2d at 638. We do not discern an intent by respondent in article VIII, section 1, to waive its consent rights.
Further, the provisions of the CBA are consistent with the statute. Appellant bargained for the right to choose the insurance carrier and the policy it wished to provide to respondent teachers. But reserving the right to select the insurance carrier and the policy does not, ipso facto, confer the right to reduce insurance benefits without the consent required by the statute. Here, respondent has the right to select the insurance carrier and policy so long as there is no reduction in benefits.
C. Conflict Between Minn. Stat. § 471.6161, subds. 4 and 5
Appellant further argues that interpreting the term “benefits” under subdivision 5 to include non-monetary benefits puts that subdivision in direct conflict with subdivision 4 of section 471.6161. Specifically, appellant contends that subdivision 4 allows it to solicit proposals from other insurance carriers every five years and that the district court’s interpretation of subdivision 5 would not allow it to select a different insurance carrier unless it offered the exact coverage as previously provided.
Section 471.6161, subdivision 4, provides that “[g]roup insurance contracts may not exceed five years in length, including all extensions. The political subdivision shall request proposals for coverage at least once every 60 months.” The language of subdivision 4 simply requires a school district to solicit proposals from insurance carriers every five years; and subdivision 5 prohibits a school district from reducing the “aggregate value of benefits” without the consent of respondent.
We see no conflict between subdivisions 4 and 5. Read together, appellant is required to solicit proposals every five years but is prohibited from reducing benefits without the consent of respondent. If appellant receives an insurance proposal that maintains the “aggregate value of benefits,” it has the right under the statute to change the insurance carrier and policy subject to any other limitations set forth in the CBA. Consequently, we conclude that defining “benefits” to include non-monetary benefits, such as a choice of provider does not create a conflict between subdivisions 4 and 5 of section 471.6161.
Appellant argues that the district court erred by granting summary judgment on the unfair-labor-practice charge because respondent waived its right to bargain over health insurance in the CBA. Respondent contends that health insurance is a mandatory subject of bargaining and that it did not waive its right to bargain over that subject.
PELRA, a public employer commits an unfair labor practice when the employer
refuses “to meet and negotiate in good faith” over the terms and conditions of
employment with the exclusive representative of its employees. Minn. Stat. § 179A.13, subd. 2(5) (2004); see also Am. Fed. of State, County, Mun.
Employees, Council #14 v. City of
A unilateral change by an employer
in the terms and conditions of employment is a prima facie violation of the
employees’ collective-bargaining rights.
Greenway,673 N.W.2d at 849. A unilateral
change is not per se an unfair labor practice.
Appellant does not dispute the material facts that it unilaterally changed the Choice coverage and that health insurance is a “fringe benefit” included under “terms and conditions” of employment. In fact, appellant appears to concede these points and relies solely on its argument that respondent waived its statutory right to bargain over group health insurance in the CBA.
have previously concluded that appellant’s reservation-of-rights argument is
without merit because it did not raise the argument before the district court. We also concluded that the language of article
VIII, section 1, of the CBA was not a “clear and unmistakable” waiver as
Third, appellant argues that Minn. Stat. § 471.6161, subdivision 5, unconstitutionally delegates to respondent, a private party, the authority to determine when a state-funded school district can reduce its benefits without providing sufficient guidance as to the proper exercise of that authority and without making respondent accountable to the public for exercising such authority.
When a statute’s
constitutionality is challenged, this court reviews the challenge de novo as a
question of law. In re Blilie, 494 N.W.2d 877, 881 (
The non-delegation doctrine has been
articulated as follows: “[T]he legislature—except where expressly authorized by
the constitution . . . cannot delegate purely legislative power to any other
body, person, board, or commission.” Lee v. Delmont, 228
“Although purely legislative power
cannot be delegated, the legislature may authorize others to do things (insofar
as the doing involves powers which are not exclusively legislative) which it
might properly, but cannot conveniently or advantageously, do itself.” Lee,
on Remington, 257 Minn. 562, 102
N.W.2d 528, and State ex rel. Foster v.
But Minn. Stat. §
471.6161, subd. 5, grants respondent neither the discretion or authority to
create restrictions, nor the authority to determine to whom and when the
restrictions apply. It was the
legislature that created and imposed on employers governed by a CBA the
restriction that the aggregate value of health-insurance benefits cannot be
reduced unless the exclusive representative consents. Respondent’s only discretion is to determine
whether it will execute a waiver of the restriction and permit reduction of
benefits. See Remington, 257
We conclude that Minn. Stat. § 471.6161, subd. 5, does not delegate pure legislative power but merely permits respondent to waive the statutory restriction on reduction of health-insurance benefits. Consequently, the district court did not err by denying appellant’s motion to amend its conclusions of law to declare the statute unconstitutional.
Fourth, appellant argues that the district court erred by not ordering the parties to arbitration. Appellant urges this court to apply the Collyer Wire doctrine, which is the National Labor Relations Board’s policy of declining to exercise its jurisdiction over unfair labor disputes arising from a CBA that are subject to the CBA’s grievance-arbitration procedures. See Collyer Insulated Wire, 192 NLRB 837, 841-42 (1971). Respondent argues that appellant waived its ability to compel arbitration by failing to raise it below. We agree.
did not raise arbitration as an affirmative defense in its answer and failed to
raise the arbitration argument until its posttrial motion for amended
findings. Ordering the parties to
arbitration at this point would impede timely resolution of the controversy. See
moved to supplement the record, to include a district court decision issued in
another matter after this appeal was filed.
The record on appeal is limited to papers filed in the district court,
plus transcripts of the district court proceedings, if available.
Finally, appellant argues that the district court erred by finding that the measure of damages for its PELRA violation was the premium differential paid by appellant as a result of the unilateral change in Choice coverage. Appellant contends that the proper measure of damages is the out-of-pocket losses incurred by respondent’s members.
district court has broad discretion in determining damages and will not be
reversed except for a clear abuse of discretion. Reiling
v. City of
presented expert testimony that appellant’s out-of-pocket measure of damages
was not “actuarially sound” and that the premium differential was the most
appropriate way to measure the damages in these circumstances. And the district court is in the best
position to judge whether there was a basis in the record for damages
awarded. See LaValle v. Aqualand Pool Co., 257 N.W.2d 324, 328 (
D E C I S I O N
We conclude that appellant unilaterally reduced the “aggregate value of benefits” under the group health-insurance plan in violation of Minn. Stat. § 471.6161, subd. 5, and PELRA by implementing a change in the Choice coverage that resulted in greater out-of-pocket costs to retain one’s choice of health-care providers; that Minn. Stat. § 471.6161, subd. 5, is not an unconstitutional delegation of legislative authority; that appellant waived its right to demand arbitration; and that the damage award is supported by the evidence. Therefore, we affirm.
Affirmed; motion denied.
 In some limited and carefully delineated
situations, the legislature has by statute expressly given attorney general’s
opinions the force of law unless and until a court of competent jurisdiction
overrules them. See N. States Power Co. v. Williams, 343 N.W.2d 627, 632 (