IN THE MATTER OF COUNTY OF ESSEX AND ESSEX COUNTY PBA LOCAL 382 (PUBLIC EMPLOYMENT RELATIONS COMMISSION) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3458-19
IN THE MATTER OF
COUNTY OF ESSEX,
Petitioner-Appellant,
and
ESSEX COUNTY PBA
LOCAL 382,
Respondent-Respondent,
FOP LODGE 106, PBA LOCAL 183
and PBA LOCAL 183A,
Intervenors-Respondents.
Argued March 24, 2021 – Decided April 20, 2021
Before Judges Fuentes and Rose.
On appeal from the New Jersey Public Employment
Relations Commission, PERC No. 2020-40.
Angelo J. Genova argued the cause for appellant
(Genova Burns, LLC, attorneys; Angelo J. Genova and
Joseph M. Hannon, of counsel and on the briefs;
Leonard S. Spinelli, on the briefs).
Frank C. Kanther, Deputy General Counsel, argued the
cause for respondent New Jersey Public Employment
Relations Commission (Christine Lucarelli, General
Counsel, attorney; Frank C. Kanther, on the statement
in lieu of brief).
Albert J. Seibert argued the cause for respondent Essex
County PBA Local 382 (Law Offices of Steven A.
Verano, PC, attorneys; Joseph P. Slawinski, of counsel
and on the joint brief).
C. Elston & Associates, LLC, attorneys for intervenors-
respondents FOP Lodge 106 (Catherine M. Elston, of
counsel and on the joint brief).
Law Offices of Nicholas J. Palma, Esq., PC, attorneys
for intervenors-respondents PBA Local 183 and PBA
Local 183A (Valerie Palma DeLuisi, of counsel and on
the joint brief).
PER CURIAM
The County of Essex appeals from a February 20, 2020 final agency
decision of the Public Employment Relations Commission (PERC) that denied,
in part, the County's petition to restrain arbitration of a grievance filed by the
Essex County PBA Local 382 (PBA 382). We affirm.
PBA 382 represents the County's correction officers below the rank of
sergeant. The County and PBA 382 were parties to a collective negotiations
agreement (CNA) that was in effect from January 1, 2014 through December 31,
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2017.1 The CNA contained a grievance procedure that culminated in binding
arbitration. The CNA also addressed the officers' health insurance benefits.
Sections 1 and 5 of Article 21 provided, in pertinent part:
1. The existing Hospitalization, Medical Surgical and
Major Medical Insurance benefits shall be paid for by
the County except as set forth below. The County
reserves the right to select the insurance carrier who
shall provide such benefits, as long as the benefits are
not less than those now provided by the County.
....
5. The County may change insurance carriers or be
self-insured, so long as it does not reduce existing
benefits.
The County renews its health insurance provider contract annually. For
the 2016 calendar year, Aetna provided health benefits to the County's twenty -
six bargaining units. During 2016, the County anticipated a rise in Aetna's costs
for the following calendar year and, as such, "began soliciting quotes from other
carriers including the State Health Benefits Program" (SHBP). The County
engaged in "Labor Roundtable" discussions with the bargaining unit's
representatives in an effort to meet the SHBP's "uniformity" requirement "that
all active and retired employees of a public entity be enrolled in the SHBP."
1
The parties have not provided the CNA on appeal, but the pertinent provisions
are quoted in PERC's February 20, 2020 written decision.
A-3458-19
3
Ultimately, PBA 382 and three other bargaining units disapproved the
change in providers from Aetna to SHBP. 2 The remaining twenty-two
bargaining units agreed to enrollment. In September 2016, the resolution to
enter the SHBP for the 2017 calendar year was approved, effective January 1,
2017.
In January 2017, PBA 382 filed a grievance and demand for arbitration
with PERC. PBA 382 asserted the County violated the CNA by unilaterally
changing health insurance carriers, resulting in a reduction in the level of its
members' health benefits. The grievance also requested stipends for its members
who waived the County's health coverage. Thereafter, the County filed a scope-
of-negotiations petition, seeking to restrain arbitration of the grievance. 3
On February 20, 2020, PERC issued a comprehensive written decision on
the scope petition, denying in part, and granting in part, the County's application.
Citing our Supreme Court's decision in Ridgefield Park Education Ass'n v.
2
PBA Local 183, on behalf of the County's Sheriff's officers; PBA Local 183A,
on behalf of the County's Sheriff's superior officers; and FOP Lodge 106, on
behalf of the County's superior correction officers, also opposed the change in
providers. We granted the motions to intervene as of right filed by those
bargaining units (collectively, intervenors). See R. 4:33-1. PBA 382 and the
intervenors filed a joint responding brief on this appeal.
3
The parties have not provided the grievance or PBA's demand for arbitration
on appeal.
A-3458-19
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Ridgefield Park Board of Education, 78 N.J. 144, 154 (1978), PERC aptly
recognized its "narrow" jurisdiction. As PERC noted, the agency does "not
consider the contractual merits of the grievance or any contractual defenses the
employer may have." PERC then squarely addressed the issues raised in view
of the applicable legal principles.
PERC initially determined that portion of the grievance pertaining to
stipends was preempted by statute and therefore not arbitrable. The County does
not appeal from that determination. Relevant here, however, PERC denied the
County's scope petition "to the extent the grievance challenge[d] any other
alleged reductions in the level of . . . PBA [382]'s health benefits caused by the
County's unilateral change to the SHBP." Canvassing the governing law, PERC
elaborated:
The level of health benefits is generally negotiable
absent a preemptive statute or regulation and a
grievance contesting a change in a negotiated level of
benefits is generally negotiable. (Citations omitted).
Therefore, an employer's selection or change of
insurance carrier becomes mandatorily negotiable if the
change would affect the level of benefits or
administration of the plan. (Citations omitted).
An arbitrator may determine whether the parties
made an agreement over the level of health benefits and
whether the employer violated that agreement, even if
the changed benefits were a result of legislative or
regulatory changes to the SHBP. (Citations omitted).
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An arbitrator cannot order the County to continue a
level of benefits through the SHBP that the [State
Health Benefit's Commission] (SHBC) has not
authorized. (Citations omitted). However, no statute
or regulation requires that a local employer participate
in the SHBP. Local employers can withdraw from the
SHBP at any time consistent with their obligations
under existing collective negotiations agreements.
(Citations omitted).
Against that legal backdrop, PERC correctly recognized the parti es in the
present matter "agreed on a level of health benefits" and it was within the
County's discretion to contract with a health insurance provider "so long as the
chosen provider offered plans consistent with the negotiated level of benefits."
PERC observed: "The County was not mandated to join the SHBP, but
voluntarily chose to change health insurance carriers and consequently
potentially violate the CNA's health benefits provisions." Moreover, the County
acknowledged "it unilaterally changed carriers for some negotiations units,"
including PBA 382, which did not agree to that change.
Notably, PERC found "if the arbitrator determines that the transition to
the SHBP also resulted in changes to the level of health benefits that the County
agreed to in its CNA with . . . PBA [382], the County cannot use the SHBP's
uniformity rules as a shield to claim immunity from an arbitrator's remedy." In
reaching its decision, PERC analogized several of its prior decisions that
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"consistently held" an employer's concerns about the "hypothetical arbitrator's
remedy . . . cannot preclude arbitration over a negotiable health benefits issue."
PERC also cited its "policy of declining to consider before arbitration
what remedies may be appropriate or enforceable if an arbitrator were to find a
contractual violation." In that context, PERC concluded a party can challenge
whether an award is authorized under the contract or conflicts "with the public
interest, welfare, and other pertinent statutory criteria" after arbitrat ion. This
appeal followed.
On appeal, the County argues PERC erred and the grievance, in its
entirety, should be restrained from arbitration. The County contends PERC's
decision was arbitrary, capricious, and unreasonable because it subverted the
SHBP's uniformity requirement and undermined the County's managerial
prerogative to change benefit providers. The County claims PERC's decision
therefore places the County and the remaining twenty-two bargaining units in a
vulnerable position because they face both the prospect of losing the preferred
health benefits under the SHBP and increased costs under another plan. The
County also contends the grievance is not mandatorily negotiable because the
change from the self-insured Aetna plan to the SHBP does not negatively affect
the terms and conditions of employment, such as the level of benefits offered.
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Our scope of review of PERC's decision is limited. See e.g., In re County
of Atlantic, 445 N.J. Super. 1, 11 (App. Div. 2016). "In the absence of
constitutional concerns or countervailing expressions of legislative intent, we
apply a deferential standard of review to determinations made by PERC." City
of Jersey City v. Jersey City Police Officers Benevolent Ass'n, 154 N.J. 555,
567 (1998). That standard is particularly germane here, where the Legislature
has explicitly authorized PERC "upon the request of any public employer or
majority representative" to determine whether a "matter in dispute is within the
scope of collective negotiations." N.J.S.A. 34:13A-5.4(d); see also Borough of
Keyport v. Int'l Union of Operating Eng'rs, 222 N.J. 314, 351 (2015) (Albin, J.,
dissenting) (recognizing "PERC is a specialized administrative agency
designated by statute to interpret, implement, and enforce the [Employer-
Employee Relations Act]," N.J.S.A. 34:13A-1 to -49).
When a party appeals a scope-of-negotiations determination, we review
PERC's final decision under a "'thoroughly settled'" standard. Jersey City Police
Officers Benevolent Ass'n, 154 N.J. at 568 (quoting In re Hunterdon Cnty. Bd.
of Chosen Freeholders, 116 N.J. 322, 329 (1989)). PERC's determination must
be upheld unless the party appealing it clearly demonstrates that it is " 'arbitrary
or capricious.'" Ibid. "[T]he test is not whether an appellate court would come
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to the same conclusion if the original determination was its to make, but rather
whether the factfinder could reasonably so conclude upon the proofs." Charatan
v. Bd. of Rev., 200 N.J. Super. 74, 79 (App. Div. 1985). Accordingly, we will
not disturb an agency determination unless it was arbitrary, capricious , or
unreasonable, its findings lacked support in the evidence, or it violated the
legislative grant of authority governing the agency. In re Herrmann, 192 N.J.
19, 27-28 (2007).
Applying these well-established legal principles, we discern no basis to
disturb PERC's well-reasoned decision and affirm substantially for the reasons
articulated therein. In doing so, we determine PERC's decision was not
arbitrary, capricious, or unreasonable. We add these remarks.
As PERC correctly determined, the County's change in health care
providers is mandatorily negotiable here, where the parties' CNA expressly
provided that "[t]he County may change insurance carriers or be self-insured, so
long as it does not reduce existing benefits." PERC did not however, determine
the County effected a change in that level, thereby violating the CNA. That
decision falls within the scope of the arbitrator's duties, even if the changed
benefits resulted from legislative or regulatory changes to the SHBP.
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Although in Borough of East Rutherford v. East Rutherford PBA Local
275, 213 N.J. 190 (2013), our Supreme Court ultimately decided the merits of
an arbitration award, its rationale nonetheless is instructive here. In that case,
the Borough and the PBA were parties to a four-year collectively bargaining
agreement (CBA). Id. at 193. The Borough contracted with the SHBP for health
insurance benefits. Ibid. The CBA stipulated employees would pay five dollars
in co-payment, but two years after the CBA became effective the co-payment
was increased to ten dollars. Ibid. The PBA filed a grievance and demanded
arbitration. Id. at 196. The Borough petitioned PERC for a scope-of-
negotiations determination, contending arbitration of the alleged violation of the
CBA "was preempted by statutory provisions governing the SHBP." Ibid.
PERC denied the Borough's petition, reasoning that:
[t]o restrain arbitration, we would have to first conclude
that the PBA is not entitled to pursue its claim that the
Borough was obligated to maintain a contractual level
of benefits. Such a holding would be a departure from
well-established case law. Purchasing insurance from
the SHBP does not insulate an employer from
enforcement of an agreement over a level of health
benefits. Absent a preemptive statute or regulation not
present here, an employer must reconcile its contractual
obligations with its choice of health insurance
providers.
[Id. at 197.]
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The Court ultimately upheld the arbitrator's award, concluding
The framework for reviewing a public-sector
arbitration award accounts for the interplay between the
SHBP and the CBA by requiring a reviewing court to
determine whether the arbitration award actually causes
direct contradiction with law or public policy. [N.J.
Tpk. Auth. v. Local 196, I.F.P.T.E., 190 N.J. 283, 293-
94 (2007)]. We fail to see that this arbitration award
met the demanding standard of a direct conflict between
law and public policy on the one hand and the award's
make-whole remedy on the other. Employees remained
obligated under the award to adhere to the increased co-
payment amount of $10.00 for each doctor's office visit.
[Id. at 207.]
Although the County did not address Borough of East Rutherford in its
merits brief, during oral argument before us, the County attempted to distinguish
the Court's decision because it did not "address the meaning or effect of the 2010
amendment" to the SHBP. Id. at 207-08 (citing L. 2010, c. 2, § 8). Nor did the
Court address the 2011 amendment to the SHBP, which required employee
contributions for health benefits based on the employee's base salary. See L.
2011, c. 78. Because the 2011 amendment "required [employees] to contribute
toward health benefits" the County argued "the Legislature has set forth a clear
public policy that health insurance contributions are mandatory and cannot be
negotiated away unless the employer agrees." The County's argument is
misplaced.
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The merits of the County's claimed violation of the CNA were not at issue
before PERC. Instead, PERC's inquiry only concerned whether the matter in
dispute was within the scope of the parties' collective negotiations and therefore
may be submitted to an arbitrator for a determination on the merits. See
Ridgefield Park Educ. Ass'n., 78 N.J. at 154. It is PBA 382's allegation that the
County "failed to maintain a contractual level of benefits" that is arbitrable.
Whether PBA 382 will succeed on that claim is within the arbitrator's purview.
Moreover, as PERC correctly concluded, the County was not required to
select the SHBP as its health care provider. In that regard, PERC's decision is
consonant with its earlier decision in Borough of East Rutherford, which the
Court cited with approval. 213 N.J. at 197. Here there is no "direct
contradiction with law or public policy," id. at 207, largely because the County's
arguments are premised on a hypothetical arbitration award. We therefore
discern no error in PERC's decision that the County's public policy argument is
premature.
To the extent not specifically addressed, the County's remaining
arguments lack sufficient merit to warrant discussion in a written opinion. R.
2:11-3(e)(1)(E).
Affirmed.
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