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153074 - Shelby Twp v Command Officers Assn of MI

Shelby Township,
Craig W. Lange
(Appeal from Ct of Appeals)
Command Officers Association of Michigan,
James R. Andary
John J. Bursch
Alecia M. Golm
Charging Party-Appellee.


In 2011, the Legislature enacted the Publicly Funded Health Insurance Contribution Act, 2011 PA 152, allowing public employers to choose from three options for the payment of health insurance benefits to their employees and elected officials: (1) a hard cap on monies spent by the employer; (2) an 80/20% split between the employer and the employees; or (3) an opt out of the spending limits entirely by a two-thirds vote of the governing body. The issue in this case concerns the second option, which provides that “[t]he public employer may allocate the employees’ share of total annual costs of the medical benefit plans among the employees of the public employer as it sees fit.” MCL 15.564. The Michigan Employment Relations Commission (MERC) held that allocation of costs under this provision is subject to mandatory collective bargaining under the Public Employee Relations Act (PERA), MCL 423.215(1). The MERC further held that, where the definition of “medical benefit plan” specifically excludes benefits to retired employees, and where an “unbundled” rate limited to active employees (rather than including retirees) was available, the respondent Shelby Township was required to use that unbundled rate to calculate employee premiums. The Court of Appeals affirmed the MERC’s decisions. The Supreme Court granted leave to appeal to address the following questions: Is calculation and/or allocation of employee contributions a mandatory subject of collective bargaining? Does the MERC have the authority to interpret the health insurance act, and, if so, to what extent? Can the MERC preclude a public employer’s use of illustrative insurance rates that include retiree health insurance costs when the Department of Treasury allows such use?