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Prospect East Holdings, Inc. v. United Nurses & Allied Professionals, Inc.

United States District Court, D. Rhode Island

July 8, 2019

PROSPECT EAST HOLDINGS, INC., and PROSPECT CHARTERCARE, LLC, Plaintiffs,
v.
UNITED NURSES & ALLIED PROFESSIONALS, INC., Defendant.

          MEMORANDUM AND ORDER

          JOHN J. MCCONNELL, JR. UNITED STATES DISTRICT JUDGE.

         This case involves the Court's review of a labor arbitrator's decisions arising from a Collective Bargaining Agreement ("CBA"). Plaintiffs Prospect East Holdings, Inc. and Prospect CharterCARE, LLC ("Prospect") and Defendant United Nurses & Allied Professionals ("UNAP") filed cross-motions for summary judgment. The parties have stipulated that the issues underlying their dispute are pure questions of law and thus are right for summary judgment. The Court finds that Prospect has not established a case for vacatur either under the Federal Arbitration Act (9 U.S.C. § 10(a)(4)) ("FAA") or under the common-law manifest-disregard grounds.

         I. FACTS

         Prospect owns and operates Our Lady of Fatima Hospital in North Providence, R.I, Prospect and UNAP entered into a CBA that remained in force between October 30, 2016 and October 29, 2018. Prospect claims that a Memorandum of Understanding ("MOU") containing contract language material to this dispute preceded the CBA by several months.[1]

         The CBA contains two sections important here. Article VI sets forth procedural rules for grievances and arbitration for disputes arising under the CBA. ECF 1-1 at 16-18. Specifically, Part 6.6 authorizes an arbitrator to interpret and apply specific provisions of the CBA. Id. at 18. Consistent with the FAA, Part 6.6 limits an arbitrator's authority when she would modify any term of the CBA instead of merely interpreting it.

         The second important section of the CBA is Article XVI: Insurance. Id. at 36-39. Part 16.2 permits Prospect to modify medical and dental plan designs or other aspects of the benefit plans, provided the changes apply equally to non-represented employees "as specified herein." Id. at 36. Part 16.2 also limits out-of-pocket maximum increases to no more than $400 per year. Finally, Part 16.2 allows Prospect to make additional changes to "carrier, eligibility, coverage, benefits, or cost of the insurance programs, provided such changes provide benefits that are substantially equivalent to those in effect as of the date of the CBA.

         In 2017, Prospect introduced a wellness incentive program that reduced insurance premium co-pays for participants by $50 monthly in exchange for program participation. Prospect subsequently modified the qualification criteria for the program, maintaining the $50 reduction in co-pays as a reward for participation. Separately, in late 2017, Prospect announced that it would limit spousal eligibility for vision and dental insurance to match the existing limitations in place for medical insurance.

         UNAP filed one grievance against Prospect for each of these three actions. Those grievances were consolidated into a single arbitration proceeding before an Arbitrator, when the parties stipulated to resolution of two questions' "Did [Prospect] violate the CBA when it made changes to the employee medical, dental, and vision coverage and introduced and changed a wellness plan? If so, what shall be the remedy?" ECF 7 at 17.

         At arbitration, the Arbitrator found for UNAP on all three counts. First, he concluded that the phrase "as specified herein" introduced a degree of ambiguity into Prospect's ability to change insurance coverage. ECF 1-2 at 26. He went on to conclude that the imposition of a $50 surcharge on employees not participating in the wellness incentive program flouted Part 16.2's prohibition on annual out-of-pocket cost increases more than $400 per year. ECF 1-1 at 37, ECF 1-2 at 28. The Arbitrator next struck the change to spousal insurance eligibility because, in his estimation, it was impermissible for a third party to a CBA to participate in changes to insurance coverage. ECF 1-2 at 30. In the alternative, he found that elimination of spousal eligibility for vision and dental coverage was also invalid because it did not comport with Part 16.2's requirement of "substantially equivalent" benefits. Id. at 31.

         II. STANDARD OF REVIEW

         Summary judgment is warranted when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. The Court must look to the record and view all the facts and inferences in the light most favorable to the non-moving party. Audette v. Town of Plymouth, 858 F.3d 13, 20 (1st Cir. 2017).

         When evaluating "cross-motions for summary judgment, the standard does not change; [courts] view each motion separately and draw all reasonable inferences in favor of the respective non-moving party." Bonneau v. Plumbers & Pipefitters Local Union 51 Pension Tr. Fund ex rel Bolton, 736 F.3d 33, 36 (1st Cir. 2013) (quoting Roman Catholic Bishop of Springfield v. City of Spring field, 724 F.3d 78, 89 (1st Cir. 2013)). The Court must determine whether either party is entitled to judgment as a matter of law based on the undisputed facts. Scottsdale Ins. Co. v. Torres, 561 F.3d 74, 77 (1st Cir. 2009).

         III. DISCUSSION

         Within the First Circuit, there are two sources of authority to vacate an arbitrator's award: statutory and common-law. The first source of authority is the Federal Arbitration Act at 9 U.S.C. ...


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