Arbitrator advances carrier health care network proposal

An arbitrator has ruled that the nation’s Class I freight railroads may advance all but one aspect of a proposal to make network changes to the national railroad health plans, the National Railway Labor Conference announced today.

These health plans – which provide among the most generous health care benefits in the nation – are administered by joint labor-management committees that have a legal obligation to properly administer the plans and to control costs and preserve resources. When these committees are unable to agree on a matter related to how the plans should be administered, the parties’ agreements provide for binding arbitration.

Following an unsuccessful challenge by the labor organizations in federal court, the parties arbitrated whether the proposal  could be advanced to the joint committees. 

The proposal to realign insurance providers in certain geographic markets to obtain more favorable provider discount terms would reduce wasteful spending by the plans and save money for plan members without any change in the overwhelming majority of cases to the in-network status of a member’s doctor or other health care service providers.

At the Aug. 31 arbitration hearing, the railroads contended that the proposal involves typical, but important, plan administration matters that are within the authority of the joint committees. The labor organizations countered that the entire proposal – for various reasons – could only be addressed in the ongoing national collective bargaining between the railroads and the unions and could not be progressed to the joint committees and arbitration.

Rejecting the labor organizations’ arguments, the arbitrator agreed with the railroads that the proposal, with the exception of all but one aspect relating to utilization of a single vendor in some markets, is administrative in nature and appropriate for handling by the plans’ joint committees. In reaching this conclusion, the arbitrator held that the selection of insurance providers is within the joint committees’ “inherent discretionary authority” and any prior bargaining over a matter does not alter the joint committees’ authority to address the matter outside of collective bargaining.   

The railroads now look forward to resolution of these matters in discussions with the joint committees in the coming months.