Sterling Lebanon Packaging Corp.

National Labor Relations Board - Board Decisions

Sep 12, 2000

332 N.L.R.B. 11 (N.L.R.B. 2000)

STERLING LEBANON PACKAGING CORP. 11
Sterling Lebanon Packaging Corporation and United
Steel Workers of America International Union
and its Local 175G, AFL–CIO, CLC. Case 6–
CA–27846
September 12, 2000
DECISION AND ORDER
BY CHAIRMAN TRUESDALE AND MEMBERS FOX
AND HURTGEN
On July 10, 1997, Administrative Law Judge Martin J.
Linsky issued the attached decision. The General Coun-
sel filed exceptions and a brief in support and the Re-
spondent filed an answering brief.
The Board has delegated its authority in this proceed-
ing to a three-member panel.
The National Labor Relations Board has considered
the decision and the record in light of the exceptions and
briefs and has decided to affirm the judge’s rulings, find-
ings, and conclusions and to adopt the recommended
Order.1
ORDER
The recommended Order of the administrative law
judge is adopted and the complaint is dismissed.

Sandra Beck Levine, Esq., for the General Counsel.
E. Donald Ladov, Esq., of Pittsburgh, Pennsylvania, for the
Respondent.
Roy Albert, International Representative, of Pittsburgh, Penn-
sylvania, for the Charging Party.
DECISION
STATEMENT OF THE CASE
MARTIN J. LINSKY, Administrative Law Judge. On Janu-
ary 31 and October 1, 1996, the charge and first amended
charge were filed against Sterling Lebanon Packaging Corpora-
tion, the Respondent.

1 In dismissing the complaint, we observe that the General Counsel
alleged that the Respondent failed and refused to bargain in good faith
with the Union “within the meaning of Section 8(d) of the Act” by
unilaterally introducing a third health benefit plan (which we find, in
agreement with the judge, was an HMO) in addition to the Indemnity
Plan and the Keystone HMO Plan previously available under the con-
tract. As explained in Mead Corp., 318 NLRB 201, 202 (1995), “Sec-
tion 8(d) of the Act provides that a party which seeks to modify a term
or condition of employment ‘contained in’ a current collective-
bargaining agreement must obtain the consent of the other party before
implementing the change.” Here, the General Counsel contends that
art. 36, sec. 13, of the contract, which provides that “[e]mployees are
entitled to enroll in a Health Maintenance Organization (HMO),” limits
to one the number of HMOs that the Respondent may offer to its em-
ployees at any given time. Contrary to the General Counsel, we find
that art. 36, sec. 13, is ambiguous and does not, on its face, preclude the
Respondent from introducing employees to more than one HMO plan.
In these circumstances, the burden was on the General Counsel to clar-
ify the ambiguity by the introduction of extrinsic evidence. We find
that the General Counsel has not met that burden here.
On October 1, 1996, the National Labor Relations Board, by
the Regional Director for Region 6, issued a complaint which
alleges that Respondent violated Section 8(a)(1) and (5) of the
National Labor Relations Act (the Act), when it failed to con-
tinue in effect all the terms and conditions of its collective-
bargaining agreement with the Union by unilaterally including
therein and making available to its employees a third managed
care health plan not contained in the agreement and when it
bypassed the Union and dealt directly with its employees in the
unit by soliciting employees to enroll in the third health plan.
Respondent filed an answer in which it denied that it violated
the Act in any way.
A hearing was held before me in Pittsburgh, Pennsylvania,
on February 28, 1997.
On the entire record, to include posthearing briefs submitted
by the General Counsel and Respondent, and on my observa-
tion of the demeanor of the witnesses, I make the following
FINDINGS OF FACT
I. JURISDICTION
At all material times Respondent, a corporation, with an of-
fice and place of business in Jeannette, Pennsylvania, has been
engaged in the manufacture and nonretail sale of folding boxes
and other packaging materials.
Respondent admits, and I find, that at all material times it has
been a employer engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
II. THE LABOR ORGANIZATION INVOLVED
Respondent admits, and I find, that at all material times the
United Steelworkers of America International Union and its
Local 175G AFL–CIO, CLC (the Union), have been labor or-
ganizations within the meaning of Section 2(5) of the Act.
III. THE ALLEGED UNFAIR LABOR PRACTICES
For many years Respondent has recognized the Union as the
exclusive collective-bargaining representative of its production
and maintenance employees. This recognition has been embod-
ied in successive collective-bargaining agreements, the most
recent of which was effective from April 15, 1992, to April 16,
1995, and was extended by agreement of the parties to April 14,
1998.
Article 2, section 4 of the collective-bargaining agreement
described above provides as follows:

This agreement cannot be modified, amended or added
to or subtracted from except by agreement in writing
signed by the Company and both the International Union
and Local Union.

Article 36 of the collective-bargaining agreement provides as
follows:
ARTICLE 36
HOSPITALIZATION-MEDICAL-SURGICAL
Section 1. During the term of this contract, the Com-
pany will provide to the employees a hospitalization insur-
ance plan for employees and their dependents for 120 days
of hospital care in a semi-private room each calendar year
for each qualifying person.
332 NLRB No. 6
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 12
Section 2. The benefit level for medical-surgical shall
be usual and customary for the employees and their de-
pendents. There shall be a $100 deductible per year for
each insured family member for all Blue Shield (medical-
surgical) charges.
Section 3. The Company will provide to the employee
major medical insurance of $250,000.00 with $300.00 de-
ductible per person per year, $900.00 maximum per fam-
ily, per year.
Section 4. Those employees who are enrolled in either
the family or the husband/wife categories shall be entitled
to terminate their health insurance coverage and receive
$1,000 per year in equal monthly installments from the
Company provided that they have access to coverage
which is equivalent to or better than the Company’s.
Section 5. The Company will provide for the employ-
ees and their dependents at no cost to the employees, a di-
agnostic x-ray and laboratory benefits payment of usual
and customary. There shall be a $300 deductible for each
family member for each in-hospital admission and a $25
deductible for every hospital visit, out patient service, in-
cluding emergency room.
Section 6. The Company agrees that all hospitaliza-
tion-medical-surgical benefits shall be maintained at not
less than the highest standard in effect at the time of the
signing of this Agreement.
Section 7. Coverage for an employee and his eligible
dependents will continue during the period an employee is
laid off up to a maximum of two (2) months following the
month in which the employee was laid off.
Section 8. The Company will pay the full premium for
hospitalization for a twelve (12) month period for employ-
ees who are unable to work due to sickness or accident.
Thereafter, they may continue to carry their coverage by
paying the full group rate.
All employees desiring the Company Hospitalization-
Medical-Surgical plan shall make the following monthly
contribution:

INDIVIDUALS TWO FAMILY
PERSONS (3 OR MORE)

$6.00 $10.00 $12.00

Section 9. Coverage for employees who are on leave
of absence will cease at the end of the month in which the
leave commences. However, employees on such leave
may continue the coverage for the duration of the leave of
absence by payment in full of the monthly premium.
Section 10. Employees who have completed their pro-
bationary period shall be eligible for hospitalization-
medical-surgical insurance benefits as provided for in this
Agreement and subject to Section 12 herein.
Section 11. Employees are eligible for a “change of
status” on their coverage if there is a change in their fam-
ily status.
Section 12. The Employer shall provide for new em-
ployees (hired after 4–15–92), when eligible, individual
hospitalization-medical-surgical benefits only. Said new
employees may purchase additional coverage for his/her
dependents at the applicable group rates.
Section 13. Employees are entitled to enroll in a
Health Maintenance Organization (HMO), if they so
choose, for their health coverage. The Company will pay
the monthly cost of the HMO up to, but not exceeding, the
monthly cost of the Company provided hospitalization
plan.
Section 14. The Employer will pay the entire first year
increase (Oct. 1, 1992—Sept. 30, 1993) in hospitalization-
medical-surgical premiums;
The Employer will pay a maximum of a 10 percent in-
crease in hospitalization-medical-surgical premiums in the
second year (Oct. 1, 1993 to Sept. 30, 1994). The 10 per-
cent maximum will be calculated by taking the total first
year costs of all hospitalization-medical-surgical premi-
ums, including HMO and buy-out costs, divided by the to-
tal number of hours worked during the first year to deter-
mine a composite average hourly cost for all employees.
The proposed monthly increases shall then be substituted
for the first year costs and annualized and the Company
shall pay a maximum 10 percent increase over the first
year cost.
The Employer will pay a maximum of a 10 percent in-
crease over and above its second year cost of hospitaliza-
tion-medical-surgical premiums in the third year (Oct. 1,
1994 to Sept. 30, 1995). The method to determine the
second year cost as outlined above shall be used to calcu-
late the Company’s obligation in the third year.
If the premium increases exceed 10 percent in either
the second or third year, the parties agree to meet to re-
duce benefits to contain costs, add deductibles and/or in-
crease employee contributions to pay for such increases.

It is clear that the employees under the collective-bargaining
agreement have a choice in health insurance plans between an
indemnity plan spelled out in great detail in sections 1 through
12 of article 36 and a health maintenance organization (HMO)
plan spelled out with little or no specifics in section 13 of arti-
cle 36.
Section 13 of article 36 provides that “Employees are enti-
tled to enroll in a Health Maintenance Organization (HMO), if
they so choose for their health coverage.” (Emphasis added.)
As a matter of fact only one HMO plan was offered to the
employees at the time the contract went into effect. The HMO
offered was the Keystone HMO. The cost of the Keystone
HMO was community rated.
There came a time in 1995 when Respondent found out
about another HMO plan which was being offered by Blue
Cross-Blue Shield which was called the Blue Cross-Blue Shield
Point of Service plan or Select Blue. The Indemnity plan and
the Keystone HMO are also Blue Cross-Blue Shield products.
It had not previously been available. At or about this same time
Respondent learned that the costs of the health insurance Re-
spondent offered its employees was going up approximately 17
percent.
The benefits to those enrolled in the Blue Cross-Blue Shield
Point of Service plan were better than the benefits under the
STERLING LEBANON PACKAGING CORP. 13
Keystone HMO, i.e., the benefits were exactly the same under
both plans but if enrolled in the Blue Cross-Blue Shield Point
of Service plan there was some coverage if the covered em-
ployee went out of network to a doctor or medical provider not
in the plan whereas under the Keystone HMO there was no
coverage at all if a covered employee went out of network. The
doctors, etc., who were “in network” were the same under both
the Blue Cross-Blue Shield Point of Service plan and the Key-
stone HMO plan.
The cost of the Blue Cross-Blue Shield Point of Service plan
to Respondent would be lower than the cost of the Keystone
HMO plan because the cost was based partially on Respon-
dent’s own experience versus being totally community rated
like the Keystone HMO.
In October and November 1995, Respondent met with the
Union and urged the Union to agree that Respondent could
drop both the Indemnity plan and the Keystone HMO and have
its employees covered by just the Blue Cross-Blue Shield Point
of Service plan. The Union wanted to share in any savings
Respondent would realize from this and when the Respondent
refused to share any of the savings with the Union the Union
refused to go along with this change. Respondent agreed it
could not do what it wanted to do on this score without the
consent of the Union. Indeed had the Respondent dropped the
Indemnity and Keystone plans and unilaterally modified the
contract to provide only the Blue Cross-Blue Shield Point of
Service plan to its employees this would have been a violation
of Section 8(a)(1) and (5) of the Act. See St. Vincent Hospital,
320 NLRB 42 (1995).
Thereafter, in January 1996, Respondent unilaterally and
over union objection offered to its employees during the life of
the collective-bargaining agreement the option of switching
from the Indemnity plan or the Keystone HMO into the Blue
Cross-Blue Shield Point of Service plan. No one was required
to switch.
The record reflects that 42 out of the 110 employees in the
unit voluntarily elected to switch to the Blue Cross-Blue Shield
Point of Service plan.
The record further reflects that any employee is eligible at
any time to switch to any of the three plans or if they switched
to the new Point of Service plan they are eligible to switch back
to either the Indemnity plan or the Keystone HMO plan. The
employees, in other words, are free to switch back and forth
and there are no time limits on doing so and no preexisting
medical condition will limit their right to transfer from one plan
to another.
The Keystone HMO plan and the Blue Cross-Blue Shield
Point of Service plan are both HMOs or managed care type
plans. Since the collective-bargaining agreement provided in
section 13 of article 36 that employees could enroll “in a Health
Maintenance Organization (HMO), if they so choose” (empha-
sis added), I see no modification of the contract by Respondent
if they offer two or more separate HMOs from which the em-
ployee can select “a Health Maintenance Organization (HMO)”
as called for in the collective-bargaining agreement.
I note that the Union did not file a grievance over this matter
and that at the hearing before me Respondent would not waive
the time limits for filing a grievance so that this dispute could
proceed to arbitration. Accordingly, this is not an appropriate
case for deferral to the arbitral process. See United Technolo-
gies Corp., 268 NLRB 557 (1984).
The expansion of the number from one to two of the HMOs
in which employees can enroll does not modify the collective-
bargaining agreement since employees can enroll still in either
the Indemnity plan or an HMO. Accordingly, no violation of
Section 8(a)(1) and (5) of the Act occurred when Respondent
unilaterally and without consent of the Union offered a second
HMO option to its employees in the unit.
If the Blue Cross-Blue Shield Point of Service plan is not an
HMO, which I find it is, then the offering of the Point of Ser-
vice plan in addition to the other two plans would be a mid-
term modification done without the required union consent and,
therefore, a violation of Section 8(a)(1) and (5) of the Act.
However, I find that the Blue Cross-Blue Shield Point of Ser-
vice plan is an HMO. I do so because James Hinerman, a sales
executive for Blue Cross-Blue Shield, described the Point of
Service plan or Select Blue as “not a pure HMO but it is a hy-
brid HMO.” If a pure HMO is an HMO then one can make the
case that a hybrid HMO is an HMO. Both plans are managed
care plans and the only difference to those enrolled is that if in
the Point of Service plan there is some coverage if you go out
of network but no coverage if you go out of network and are
enrolled in the Keystone plan. Hinerman noted that the 95
percent of the coverage under the Point of Service plan has
been in network.
If exceptions are filed to the decision and the Board con-
cludes I am wrong and the Blue Cross-Blue Shield Point of
Service plan is not an HMO then there may be a violation of the
Act1 but I see no need for a remedy, if that occurs, beyond the
posting of a notice because:
1. Forty–two (42) of 110 employees voluntarily selected the
Point of Service plan.
2. Any employee is free to switch into or back into any of
the plans with no time limit and without regard to preexisting
medical conditions.
3. There is no evidence of employee dissatisfaction with
having the three options for health care made available to them
since not one single employee, as of the date of the hearing
before me, wanted to switch out of the Blue Cross-Blue Shield
Point of Service plan.
Since the Respondent did not violate the Act by offering to
the employees in the unit the Blue Cross-Blue Shield Point of
Service plan it did not constitute unlawful direct dealing for the
Respondent to have its personnel department advise the em-
ployees about this health insurance option.
CONCLUSIONS OF LAW
1. Sterling Lebanon Packaging Corporation is an employer
engaged in commerce within the meaning of the Act.
2. United Steel Workers of America International Union,
AFL–CIO, CLC, and its Local 175G are labor organizations
within the meaning of Section 2(5) of the Act.
3. Respondent did not violate the Act as alleged in the com-
plaint.

1 See Martin Marietta Energy, 283 NLRB 173 (1987).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 14
On these findings of fact and conclusions of law and on the
entire record, I issue the following recommended2

2 If no exceptions are filed as provided by Sec. 102.46 of the Board’s
Rules and Regulations, the findings, conclusions, and recommended
Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all pur-
poses.
ORDER
The complaint is dismissed in its entirety.