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HomeMy WebLinkAboutUnion 23-01-2006 IN THE MATTER OF AN ARBITRATION BETWEEN: Peterborough Regional Health Care and OPSEU (Grievance re: OHIP Premium) Before: William Kaplan Sole Arbitrator Appearances For the Employer: Lynn Hamden Emond Harnden Barristers & Solicitors For OPSEU: Donald Eady Paliare Roland Barristers & Solicitors This case proceeded to a hearing in Peterborough on January 11, 2006. Introduction On July 23, 2004, the union filed a policy grievance. In brief, the union takes the position that the employer is obliged, pursuant to Article 17.01 of the collective agreement, to pay the Ontario Health Premium recently introduced by statute in Ontario (hereafter "the OHP"). For its part, the employer disagrees, taking the position that the collective agreement provision relied upon by the union does not require it to pay what it characterizes not as a premium but as a tax, a tax based on income. The case proceeded to a hearing in Peterborough, at which time the parties made detailed legal submissions None of the facts were in dispute. The Collective Agreement The relevant portion of article 17 of the collective agreement is as follows: ARTICLE 17 - HEALTH AND LIFE iNSURANCE AND PENSIONS 17.01 Hospitalization and Medical Benefits The Hospital will contribute to the Ontario Health Insurance Plan (OHIP) an amount equal to one hundred percent (100%) of the billed premium at the rate applicable to each full-time employee, commencing from the first of the month following completion of three months' service. Union Argument Union counsel began his submissions by observing that Article 17.01 has been part of the collective agreement since 1980, regularly and successively 2 renewed by the parties. It was there for a number of reasons, union counsel argued, and those reasons included ensuring that should a health care premium be reintroduced, the employer would assume responsibility for the cost of that premium. Reference was made to the voluminous case law that has developed since the OHP was introduced, both arbitral and judicia!. Turning to specific awards, union counsel commended the reasoning in National Steel Car Ltd. and US~ [2005] OLAA No 435 (Herlich) and O?G and?~U 2005 CLASJ Lexis 608 (Swan), along with the reasons o£the Divisional Court in £apointe-Fisher Nursir~g Home v. UFC~ [2005] OJ No 4411. Reference was also made to the more recent decision of the Diyisional Court, City of Hamilton v. H_PFFA (January 10, 2006), upholding an arbitration award of R. Goodfellow. Under the old OHIP regime, union counsel pointed out, there was no requirement, statutory or otherwise, that the OHIP premiums fund the health care system. Indeed, it was clear that they did not. Nor was there any requirement that the premiums collected be devoted to paying for the insured services. Moreover, eligibility for coverage did not depend on health or risk, nor were the premiums calculated with those factors in mind. Many of the same observations could be, and were, made about the OHP. Provided one enjoyed an income over a prescribed amount, the OHP had to be paid. The OHP did not come close to covering health care costs, nor was it required that the money be spent on health care. There was also no relationship between the premium and health and risk. As was the case with the OHIP premiums, OHP monies were directed to consolidated revenue. When the OHIP and OHP schemes were compared, there was, union counsel submitted, an overwhelming basis to conclude that they were, in substance and effect, the same. The two judicial reviews, referred to above and upholding arbitral findings that the OHP was encompassed in an OHIP premium obligation to pay provision reinforced the conclusion that the two were one and the same and the obligation to pay the latter, when correctly interpreted and applied, encompassed the former. Turning next to the collective agreement, it was clear, the union submitted, that what the parties intended in Article 17.01 was that the employer assume this health care burden. Under both OHIP and the OHP, individual employees were required to pay the cost unless a negotiated agreement was reached that the cost be assumed by the employer. That is what happened in this case. Indeed, it was extremely significant, in the union's view, that even after OHIP premiums were no longer collected, the parties retained the 4 provision in the collective agreement reflecting a shared intention that should it ever be reintroduced, and in sum and substance the OHP and OHIP were the same, the obligation to provide coverage and assume the cost would continue. In this regard, it mattered little whether one was called the OHP and the other was called OHIP: for collective agreement interpretation purposes, they were the same. Accordingly, for all of these reasons and others, the union asked that the grievance be allowed, a declaration be issued and that I remain seized with respect to the implementation of the award. Employer Argument In the employer's submission, OHIP was not the same thing as the OHP. Under the OHIP scheme, an individual had to pay OHIP premiums to receive coverage. In general, employers were required to deduct the premiums from wages. It was a premium to receive the insurance. OHIP was then replaced by an Employer Health Tax (hereafter "EHT"). Under the EHT eligibility for coverage did not depend upon payment of an OHIP premium. In fact, once the EHT arrived there were no more OHIP premiums. Eligibility for coverage did not depend on payment of an OHIP premium. In 2004, the OHP was introduced as an amendment to the Income Tax Act. Under the OHP, whether one paid or not, one received coverage. 5 There are certain reporting requirements as to expenditures of revenues collected through the OHP. The statute does not, however, stipulate how the monies collected are to be spent. The employer did not agree that the OHIP premium and the OHP tax were similar at ail and made a number of observations in that regard. The OHP was a tax based on all sources of income minus allowable deductions. The amount owing fluctuated with income, unlike the OHIP premium. Moreover, it was not payable with reference to insured benefits. Payment did not have to be made to receive benefits. The OHP, unlike the OHIP, was remitted with other taxes, not separately. Like other taxes, the OHP, unlike the OHIP premium, was remitted annually. It was remitted based on residence on December 31 ~t of a taxation year. And most important of all, it was not intended to and did not replace the OHIP premiums. It was not collected to finance the health care system. The two schemes, very simply, were neither the same nor substantially similar. And the collective agreement provision relied on by the union did not encompass the OHP. The employer relied on a number of arbitration awards in support of these submissions, most notably the decision of 6 Arbitrator Burkett in Canada Post Corporation and CUP gz (unreported decision dated November 16, 2005). Accordingly, for all of these reasons and others, the employer requested that the grievance be dismissed. Decision Having carefully considered the submissions of the parties, I am of the view that the grievance must be dismissed. It is most important, obviously, to look at the intention of the parties when they negotiated Article 17.01. The provision makes it clear that they intended to provide OHIP premium relief- relief of the insurance premiums that had to be paid to receive the insurance coverage. That situation no longer applies and has not applied since the introduction of the EHT. Premiums for OHIP, whether single or family coverage, were in determinable amounts, amounts that could have been, and undoubtedly were, costed by the parties as part of their collective agreement negotiations. An annual tax based on all sources of income is quite different. Moreover, commitments made in budget documents and legislative debates to use taxes collected, broadly speaking, for health initiatives are not sufficient to convert the tax to a premium that must be paid as a prerequisite to receiving health care coverage. That is what the parties negotiated in Article 17.01, 7 along with the provision of various other benefits such as life insurance and pensions. Obviously, in reaching this result I have paid careful attention to the two decisions of the Divisional Court. Unfortunately, the decision of the court in Lapointe-Fisher Nursing'Home v. UFCW did not provide as much analysis and instruction as one might have hoped, while the more recent decision of the Divisional Court, City of Hamilton v. HPFFA, clearly considers very specific collective agreement language arguably open to a broader interpretation with little resemblance to the provision at issue in this case. In the case at hand the employer is obligated by the collective agreement to pay an OHIP premium. There is no OHIP premium and there has not been an OHIP premium for many years. Residence in Ontario determines entitlement to medical and hospitalization coverage. That has nothing to do with the collective agreement obligation the parties reached. The OHP is not an OHIP premium. By any objective analysis it is something quite different. OHIP required premiums to receive a benefit. OHP is, no matter how you look at it, a tax based on all sources of income and enacted under the Income Tax Act. Whether it is paid or not, medicare benefits are still received. The 8 collective agreement provision at issue provides for hospitalization and medical benefits. Those benefits continue. Should the government reintroduce premiums that are the same or substantially similar to the OHI? premiums as a precondition for medical coverage and should this provision remain in the collective agreement, then the employer will undoubtedly be required to pay 100% of the cost of those premiums. That is what the provision requires. That is what the parties negotiated. Stated somewhat differently, they did not negotiate that should the government, at some point in the future, levy a new tax, even one said to be health related, that tax, based on all sources of income, would be an obligation to be assumed by the employer, particularly in circumstances where that tax had nothing to do with continued receipt of medical coverage. At the end of the day, the question is whether the OHP triggers the Article 17.01 obligation. The answer is no. Other than calling it a "premium," the OHP is a tax, and it is one that makes no reference to the delivery or receipt of medical and hospital services, which is what Article 17.01 is all about. There is absolutely no linkage between the provision of medical and hospital services, which is what the parties negotiated, and the payment of the tax. 9 Accordingly, and for the foregoing reasons, the grievance is dismissed. DATED at Toronto this 23rd day of January 2006. "William Kaplan" William Kaplan, Sole Arbitrator 10