In this case, the Union challenged the Hospital’s unilaterally imposed restriction on where employees could purchase compression stockings under their extended health care benefit plan.
Until November 2017, under the Hospital’s benefit plan, currently provided by Green Shield, employees were entitled to be reimbursed for a maximum of six pairs of compression stockings per calendar year when prescribed by a physician, up to their “reasonable and customary” cost.
However, in 2016, the Hospital noticed that the cost of compression stockings had been increasing year over year, and that two particular suppliers were responsible for a significant percentage of these rising costs. On November 1, 2017, the Hospital informed employees that only compression stockings purchased through the Hospital’s own pharmacies would be reimbursed.
The Union argued that this unilateral change violated the benefits language in the collective agreement. Specifically, under Article 18.01 of the central language of the collective agreement, the Hospital is required to contribute 75% of the billed premium towards coverage of eligible employees under the Blue Cross Extended Health Care Benefits Plan in effect as of September 28, 1993 (the “Blue Cross Plan”) “or comparable coverage with another carrier.”
The Blue Cross Plan provided a benefit of 6 pairs of compression stockings per year, but also contained a general provision stating that benefits “apply anywhere in the world.” The Union argued that denying all claims except those processed through the Hospital’s pharmacies was a clear and substantial change to the Green Shield Plan, rendering it non comparable to the Blue Cross Plan.
The Hospital argued that there were sound business reasons for its change, which had effectively contained costs, and that the term “comparable” did not mean “equivalent” coverage. The language of comparability, it argued, was meant to give the Hospital flexibility, and that there was no evidence of inconvenience. It also relied on further unilateral changes that were made post-grievance, including the elimination of a need for a prescription for compression stockings, which arguably improved the plan.
The majority of the arbitration board chaired by Christine Schmidt rejected the Hospital’s arguments. While it accepted that there was a sound business reason for the decision, the majority concluded that the change rendered the existing Plan no longer comparable to the Blue Cross Plan.
The majority held that while comparability implies some level of flexibility in fashioning of coverage, the changed plan must be “at least as beneficial as the comparator plan in addressing the needs of the local employee population.” In this case, the change did not meet that test.
The majority ordered the Hospital to immediately instruct Green Shield to amend the extended health care plan to rescind the appointment of the Hospital’s pharmacies (and mobile clinics) as the sole supplier of compression stockings.
This case makes an important contribution to the Article 18.01 jurisprudence. It confirms that costs considerations, however legitimate, cannot override the Article 18.01 requirement that any benefits plan be at least as beneficial as the comparator plan. It also establishes that place of purchase is relevant to the comparability assessment. This case will likely prevent other hospitals from seeking to control benefits costs by imposing place of purchase restrictions on reimbursement under their plans.