Some unions are transparent with their financial records, giving members a clear picture of how the locals’ money is spent. Other unions, unfortunately, are not so up front. The is the problem one retired electrical worker – and longtime AUD supporter – has come up against in trying to determine how much his local has spent in legal costs trying to fight him on insurance coverage from the Health and Welfare Fund.
This past March, David Hatchigian filed a civil action against the Health and Welfare Fund of his IBEW local in the Eastern District of Pennsylvania. He filed under sub-section 201(c) of the LMRDA, 29 USC Sec. 431(c), which requires a union to allow member access “for just cause to examine any books, records, and accounts necessary to verify” the LM2 financial information all private-sector unions are required to file with the Secretary of Labor.
Hatchigian filed the original complaint in 2011. On August 17, 2007 he received a notice that dental, prescription, and disability benefits would be retroactively terminated as of August 1, 2007 because he had not worked enough hours in the previous year to qualify for benefits. He received another notice that his and his spouse’s group health insurance coverage would also be terminated. The reason for the termination of coverage given was that Hatchigian had not worked the requisite number of hours to qualify for coverage. On September 1, 2007, Hatchigian appealed the decision under the “supplemental coverage under emergency economic conditions” provision, Article IV, Section E of the IBEW Health and Welfare Fund Summary Plan Description, which was established in early 1975. This article allows for supplemental assistance to union members if the member can be shown to be “ready, willing, and available to work for a contributing employer,” even if the member has been unable to accumulate the required number of quarterly eligibility work hours due to the availability of work opportunities.
The application of Article IV, Section E, however, is subject to the discretion of the Board of Trustees. In Hatchigian’s case, the Trustees unfortunately decided to deny his appeal and uphold the original decision by the account administrator. Hatchigian meanwhile appealed to the Department of Labor, arguing that the decision was arbitrary and that the original article was intended for situations just like his. The DoL investigated, but did not remedy the situation.
Hatchigian retired in 2010 at age 63, which allowed him and his wife to resume their health benefits. Because of the union’s refusal to apply Article IV, Section E, however, Hatchigian chose to retire earlier than planned.
Having exhausted all administrative remedies, Hatchigian filed the 2011 civil suit in hopes of recovering “damages and medical expenditures in excess of $23,000 for the time period between August 1, 2007 and June 1, 2010,” when his benefits were restored following his retirement.
Unfortunately, Hatchigian’s 2011 civil suit failed. His most recent suit was filed in an attempt to ascertain how much money the union had spent defending the Health and Welfare Fund from his previous suit. Hatchigian wanted to know if the money spent defending the Fund was the same or in excess of the amount he believes he is owed for the period during which the Fund denied him and his wife coverage. Prior to filing the second suit, he sent several letters to the fund requesting information on the cost of the defense. These requests were dismissed or denied.
On March 25, 2015, the court denied Hatchigian’s request for financial information, but he has not been deterred and has filed a Motion for Reconsideration after the most recent denial on the grounds that the ruling was a “clear error of law or fact.” Hatchigian believes that the judge was in error: the decision was based on the judge ruling that the Health and Welfare Fund is not a labor organization and therefore not under the same financial transparency obligations as the union itself. Hatchigian argues that the Health and Welfare fund is a “trust in which a labor organization is interested,” which, per the LMRDA means
A trust or other fund or organization (1) which was created or established by a labor organization , or one or more of the trustees or one or more members of the governing body of which is selected or appointed by a labor organization, and (2) a primary purpose of which is to provide benefits for the members of such labor organization or their beneficiaries.
Having established that the Health and Welfare Fund is a jointly managed trust fund, Hatchigian cites two cases in his motion that dispute the claim that it is not obligated to provide the same financial disclosure required of “labor organizations.” He quotes Morrissey v. Curran, 650 F.2d 1267, 1284 (2d Cir. 1981), which states “with respect to the entities covered, the language of § 501 is certainly broad enough to include jointly-administered trusts” and notes that Hood v. Journeymen Barbers, 454 F.2d 1374, 1351 (7th Cir. 1972) also applies the fiduciary standard to a union-employer trust fund.
This argument seems cogent and well-reasoned to AUD. Look for updates in future issues of UDR.