Can Arbitrators Place a Cap on the City's Contribution to Health Care Cost ?
In Appeal of Upper Providence Township, 514 Pa. 501, 526 A.2d 315 (1987), the supreme court held that arbitrators exceeded their powers, i.e., mandated a violation of law, when they eliminated post-retirement hospital and medical benefits in an interest arbitration award.
The court based its holding on a statutory provision that prohibits home rule municipalities from diminishing the rights or privileges of any present or former employee in his pension or retirement system. Id.
In City of Pittsburgh v. Fraternal Order of Police, 595 Pa. 47, 938 A.2d 225 (2007), the supreme court held that arbitrators did not exceed their powers by placing a cap on the City's contribution to the cost of health care for retiring officers.
The court explained that, despite a statutory provision prohibiting the City from diminishing the rights and privileges of any present employee in his pension or retirement system, the arbitrators' award did not diminish any retirement rights and privileges because the cap on the City's contribution existed in the previous collective bargaining agreement. Id.