State Employment Relations Board. v. State

Citations: 96 Ohio App. 3d 535; 645 N.E.2d 759; 1994 Ohio App. LEXIS 3540Docket: No. 94APE01-117

Court: Ohio Court of Appeals; August 11, 1994; Ohio; State Appellate Court

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In 1986, the Ohio Office of Collective Bargaining (OCB) and the Ohio Health Care Employees Union District 1199 established a three-year labor contract that included provisions for an employee health care plan, specifically outlined in Article 15. The article stipulated the employer's maximum contributions for health insurance, detailing specific premium rates for single and family coverages for fiscal years 1988 and 1989, varying by age. Two health care plans were offered: a traditional plan with comprehensive coverage for a higher premium and an optional plan with limited coverage, both administered by a Blue Cross company, with the state acting as a self-insurer.

By 1987, the health care fund faced financial difficulties due to an influx of healthier employees opting for the cheaper optional plan and the impact of two "rate holidays" where premiums were not collected. In response, Ed Seidler, OCB director, informed all unions about the funding crisis, leading to a joint committee formation to address the issue. A written agreement was reached in 1987, which included implementing employee premiums for the optional plan, penalties for non-compliance on preadmission certification, and penalties for providers who did not adhere to the agreement. Additionally, a task force was established to explore further cost-control methods, and the state contracted Touche-Ross to study the health care plan's financial health. The study, completed in March 1988, provided various recommendations, after which OCB announced a 16% rate increase in April 1988 without further discussion.

On April 27, 1988, the union filed an unfair labor practice complaint against OCB, alleging bad faith bargaining and misrepresentation. SERB initially found probable cause but the hearing officer ultimately determined there was no unfair labor practice, citing a lack of evidence of fraud regarding the financial soundness of the plan and concluding that OCB was not required to negotiate premium increases due to the contract's terms. The union's appeal to SERB resulted in a finding that the 1987 and 1988 health care premium increases were subject to collective bargaining, as the contract language was ambiguous regarding OCB's authority to unilaterally impose increases. The court of common pleas upheld that OCB could pass the entire premium increase to employees without further negotiation. The union then appealed, leading to a reversal by the appellate court, which remanded the case back to the common pleas court. The trial court again reversed SERB's decision, prompting the union to appeal with three assignments of error related to the trial court's failure to adhere to the appellate court's prior opinion, disregard for SERB's findings, and vacating SERB’s decision. R.C. 4117.13(D) permits appeals from SERB decisions to the court of common pleas, which has the exclusive authority to modify or set aside these orders based on substantial evidence. Relevant case law establishes that the standard of review for SERB decisions emphasizes deference to SERB's factual findings and interpretations of R.C. Chapter 4117.

Disputes involving conflicting evidence are within the jurisdiction of the State Employment Relations Board (SERB), designated by the General Assembly to foster effective labor-management relations between public employees and employers. Courts are not required to intervene in every factual disagreement as long as SERB’s decisions are supported by substantial evidence. The court of common pleas is tasked with reviewing whether SERB's order meets the legal standard outlined in R.C. 4117.13(D), and it is not bound by the common pleas court's conclusions.

If the common pleas court fails to afford appropriate deference to SERB’s factual determinations, appellate courts have the authority to reverse the lower court’s decision and reinstate SERB’s order. SERB found that while the OCB could argue it had no obligation to negotiate in 1987 based on contract language, it voluntarily reopened negotiations that year and was thus obligated to continue in 1988. SERB’s focus was on the expected actions in 1988 rather than actual events.

The trial court was remanded to determine if substantial evidence supports SERB’s conclusion that OCB committed an unfair labor practice by unilaterally raising health insurance premiums, in violation of R.C. 4117.08(A). The court must also interpret a subsequent oral agreement and assess whether bargaining occurred before Touche-Ross was involved, along with determining if OCB violated its duty to bargain afterward. Evidence supports SERB's finding that the 1987 agreement resulted from negotiations, and OCB was required to bargain in 1988, especially since the agreement included modifications beyond mere information dissemination and addressed ongoing healthcare fund issues. The state's financial contributions and recognition of the need for future cost containment were acknowledged by all parties.

Unilateral changes made by the Ohio Civil Service Commission (OCB) in April 1988 involved not only an increase in employee contribution rates but also required the state to contribute $7.5 million to the health care fund contingent on union acceptance of specific cost containment measures. These measures included expanded second opinion and generic drug lists, along with penalties for employees failing to notify the plan during emergencies. The trial court misinterpreted the nature of a task force agreement and a contract for a study, viewing them as mere preliminary agreements instead of recognizing the substantive changes to health care coverage that necessitated collective bargaining under R.C. 4117.18.

The State Employment Relations Board (SERB) found sufficient evidence of an unfair labor practice by OCB, countering the trial court's reliance on Connecticut Light & Power Co., which held that there is no obligation to negotiate mid-term contract changes. In that case, the employer's unilateral shift premium increase proposal was deemed not subject to negotiation, but SERB argued that a unilateral imposition of contract changes, particularly detrimental ones, is not permissible. The appellate court upheld SERB's findings, reversed the trial court's judgment, and remanded the case with instructions to affirm SERB's decision.

The unions involved in the contract negotiations in 1987 and 1988, although not parties to the appeal, had submitted separate acceptance letters due to a looming open enrollment deadline. The unions accused the state of refusing to negotiate in good faith, citing material misrepresentation and concealment of relevant information during the bargaining process. The appellate court acknowledged the need for clearer instructions on remand regarding any subsequent oral agreements but ultimately directed the trial court to assess the substantial evidence supporting SERB's requirement for negotiation over the 1988-1989 health care premium increase.