New York City area hospitals and nursing homes win arbitration respecting nurses' health benefits coverage
Clients League of Voluntary Hospitals
On June 20, 2011, Jones Day lawyers achieved an important victory for 41 New York City area hospitals and nursing homes, as Arbitrator George Nicolau issued a binding arbitration award ordering the Trustees of the New York State Nurses Association Benefit Fund (NYSNA Fund) to make wide-ranging changes in the Fund's health benefits program. The NYSNA Fund is a multiemployer, Taft-Hartley trust fund that provides health and welfare benefits to over 14,500 nurse members of the New York State Nurses Association union and their families, and benefits are paid by participating hospitals and nursing homes.
Jones Day represented the NYSNA Fund Employer-appointed Trustees, who had deadlocked with the Union-appointed Trustees over changes to the design of the health benefits program. The parties' competing proposals were submitted to Arbitrator Nicolau, who was given "baseball style" arbitration authority to break the deadlock and approve one of the two competing proposals. Following five days of hearings and testimony from more than 20 witnesses, Arbitrator Nicolau issued a 32-page award adopting the Employer Trustees' position and ordering modification of NYSNA Fund health benefits.
Arbitrator Nicolau's award is generally consistent with recent efforts by both the private sector and state and local governmental entities to trim benefit costs, yet is groundbreaking in that he mandated as a matter of trustee policy that nurses must begin paying for a portion of the cost of coverage through salary deferral contributions. Traditionally, the issue of employee premium contributions to Taft-Hartley plans is left to bargaining parties and is not determined by trustee action. In his ruling, Nicolau noted "that any judgment about the health benefits nurses receive must be made in light of the economic climate and the foreseeable future" for New York City area hospitals, and that "no one had suggested it will be bright." The monthly employee salary deferral contributions will range from 4% to 16% of expected costs for single employee coverage and 5% to 21% of expected costs for family coverage. Nicolau also ordered significant changes to the benefits coverage design, including the establishment of a three-tiered copayment regime for prescription drugs, imposition of a mandatory generic drug program, as well as a "drug step therapy program" to be administered by the NYSNA Fund's pharmacy benefit manager. He also made changes in copayments when nurses visit physician specialists and hospital emergency rooms and when nurses use out-of-network medical providers. The benefit coverage changes will take effect on September 1, 2011, and the employee premium requirements will be effective upon the parties entering into their next collective bargaining agreement. The expected cost savings for participating hospitals and homes will be approximately $90 million in the first three years of the changes.
Jones Day partner Evan Miller (Washington) was lead counsel for the NYSNA Fund Employer Trustees, and he was assisted by associates Kristina Yost (New York) and Miguel Eaton (Washington).