COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING COMMITTEE ON LAW AND GOVERNMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Tuesday 7/10/01 12:16 p.m. - - - RESOLUTION 000476 - Authorizing the Committee on Law and Government to investigate whether the City-administered health plan currently and in the past has provided the most comprehensive and cost-efficient coverage to City employees for the premiums paid, and whether the City Could provide more comprehensive and less costly coverage to the approximately 8,000 employees and retirees currently covered by this plan if other options were pursued. PRESENT: COUNCILMAN DAVID COHEN, Chair COUNCILMAN ANGEL L. ORTIZ, Vice Chair COUNCILWOMAN JANNIE L. BLACKWELL - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 2 7/10/01 LAW AND GOVERNMENT COMMITTEE I N D E X Kenneth Trujillo, Esquire . . . . . . . . . . Philadelphia City Solicitor 5 Deborah R. Willig, Esquire. . . . . . . . . . 26 6 Willig, Williams & Davidson, counsel for District Council 47 and Firefighters Local 22 7 Linda Berkowitz Deputy Secretary. . . . . . . 42 8 Financial Oversight 9 T. O'Drain, President, Firefighters Union 60 10 Joseph Goldberger, Retired City Employee. . . 69 Rev. Harold Blount, Retired City Employee 74 Thomas Lamb, Administrator. . . . . . . . . . 76 Law Enforcement Health Benefits - Philadelphia FOP Lodge 5 Blue Cross Health and Welfare Fund Stacey Albert, City Controller's Office . . . 77 3 7/10/01 LAW & GOV'T - RES. 000476 P R O C E E D I N G S
All right. Good afternoon. I'm Councilman David Cohen, the chair of the Council Committee on Law and Government. We're here today in our continuing investigation of the City-administered health plan under Resolution 476. We've been investigating this issue for over a year and a half, and in that time, we've conducted seven hearings. On my way in, I met three veterans of the City Council staff, none of whom are currently in this hearing room, but all are veterans of Council studies and investigations. And I reminded them of this hearing, and they said, Well, we never were able to get any information and we don't think you're going to. And I said, well, we've only spent a year and a half in trying to get some; so far, you've been proven right that we haven't gotten very much, if anything, but we're ready to try at least another year and a half if necessary. But we've conducted seven hearings in the last year and a half, and I hope we don't have to conduct that many in the next year and a half. What we're still trying to do is to get 4 7/10/01 LAW & GOV'T - RES. 000476 to the facts on how much the City actually spends on the health benefits coverage that it provides to over 8,000 unrepresented City employees and retirees, including City Councilmembers and their staff. And we're trying to find out whether or not it makes more sense to maintain the present kind of coverage in which there are four union plans and one plan administered by the City. We're trying to find out whether or not it would be better if they were all covered by one plan, which was what the City proposed, according to press announcements and according to reports we've gotten from both the press and from labor negotiators at various times as to the City's position in bargaining. We're trying to get to the facts. We'd like to know whether the plans are negotiated or does the City have anybody who's knowledgeable, does the City do what some of the union-represented plans do -- that is, get experienced staff to help them negotiate plans? Is there any form of negotiations? If there is, who does it? All of this seems to be cloaked in mystery. And we appreciate what Secretary Berkowitz's has testified to, that the documentation 5 7/10/01 LAW & GOV'T - RES. 000476 in the City's files seems sparse and in many cases unsatisfactory or inadequate or nonexistent. I think those adjectives are pretty apt descriptions of what she has reported to us over time. Incidently, no one intends to cause anyone grief by these hearings. What we intend to do is to provide health care for all employees in the best possible way, and that's the function of the legislative body, to see that City employees get the best available and best affordable health plan coverage and do it in the way that is the -- that guarantees the best results for the employees. We think that's what the City Administration ought to be about, they probably are about that, but we'd like to get the facts. And if the facts lead us in a different direction, we'd like to feel that we're making decisions based on an understanding of the facts. Now, we've requested from the Administration writing information and documents in furtherance of this investigation. To date, we received bits and pieces. It was only at our June 12th hearing that this committee authorized me to issue subpoenas to get this information. As I said 6 7/10/01 LAW & GOV'T - RES. 000476 then, and I'm going to repeat it, I hope it's not taken from the point of view that, Oh, it doesn't mean anything, because I'm afraid if that's the way in which the Administration regards our good-faith efforts to get information voluntarily, I believe that it will be to their disadvantage that we are very serious about this. I said originally that I hoped that such action as issuing subpoenas would not be necessary, but it seems to me that we're moving in that direction.
Section 2-401 of our Home Rule Charter explicitly grants City Council the right to issue subpoenas in conjunction with Council investigations. Back in 1951, shortly after the doctrine of the Home Rule Charter, Gerald Flood, a very venerable and highly respectable jurist, had a case before him in which the City Council was investigating the Water Department and the mayor then -- I don't believe it was Joe Clark yet -- but the then-Mayor said, Well, Council, you know, you never acted up like this before, we'll put you in your place. And they just refused to obey, and so the President of City Council filed the necessary papers in court to require compliance. And in a 7 7/10/01 LAW & GOV'T - RES. 000476 very fine decision, Judge Flood said, Yes, Council has to have a power to get the information necessary to conduct its Home Rule Charter activities and that the Council had the right to that information, that the subpoenas had to be obeyed. Since that time, it's been accepted as the law, and it's never been necessary for the Council to move in the direction. This, to many, appears to be required to move because, I have to tell you, this committee is not going to be satisfied with just dribs and drabs of material. We think we're entitled to it if in fact -- let's take one document and talk about it. I'm going to ask the City Solicitor to appear as a witness in moment. About seven years ago, there appeared in the press a statement that the City said that it was going to be demanding consolidation of all of the health plans. This item appeared, I believe, during the time that there were negotiations between the City unions and the City Administration. The City said it had made studies and had documents approved that such a consolidation would be economical and in the best interests of everyone in the City. Since then, I've received complaints over the years that no such information 8 7/10/01 LAW & GOV'T - RES. 000476 was ever produced, and allegations were made that the City was not acting in good faith when it made that statement. I took the position -- and I hope I'm not forced to eat crow about it later, but I took the position that if the City said it, it had to be so. Because my theory is that the only way a city government survives is by continually acting in good faith with the people it represents. I said if the City said so, then there had to be evidence of it, and that's important evidence for this committee to consider as it studies the whole subject. Well, thus far, we have not gotten evidence. First, there was doubt expressed as to whether there ever was any such document. Then we were told that there might have been one document, that one person might have had it, but nobody inquired as to whether the person had it. Then we were told that yet another person had it, but still no inquiry had been made of the person to produce it. We were then told, Well, the person did finally produce something that appears to be such a document, and then the last refuge was chosen. And, Mr. City Solicitor, you're 9 7/10/01 LAW & GOV'T - RES. 000476 apparently (inaudible) it because what we got in the mail was not the document but a letter from you, and I'm now inviting you to come to the witness stand. We got a letter addressed to -- I believe it was signed by you but I believe it was addressed to the Chief of Staff, Joyce Wilkerson, saying that the material is proprietary, confidential, and privileged and that it would be harmful to the City if the information were released. Well, with that statement, what I would like to remind you is that Section 2-401-A of our Charter requires the Mayor to -- and I don't want to quote from that section of the Charter -- to communicate to (inaudible). Now, our request is for financial matters. With respect to my question to you, Mr.
Trujillo, in light of the legal obligation of the Mayor, how can you legally justify your advice to deny the City Council, a coequal branch of the government, that is exercising its Charter-granted power to conduct inquiries and investigations, how can you deny this Council access to this financial information? And I'd like you to provide this committee with an answer that takes into account the 10 7/10/01 LAW & GOV'T - RES. 000476 requirements spelled out in the Law Department Client News -- that's the name, I think, of the publication issued by the Law Department. " And I've studied your letter, both as a member of Council and as a member of the bar, and I do not find any statements in the letter that would give reasons that are precise and certain. So, Mr. Trujillo, please go ahead and respond to the questions I've raised. And we thank you for your presence. We know you're busy elsewhere, and we're hopeful that you're going to put an end to the bobbing and weaving and that we're going to be getting real information.
Thank you, sir. Good afternoon, Mr. Chairman. My name is Kenneth Trujillo. I'm the City Solicitor of Philadelphia. And my understanding of your request relates specifically to a document -- actually a request, number 6-21-14, relating to a document 11 7/10/01 LAW & GOV'T - RES. 000476 which was a request which was, "Analysis by City Administration regarding the cost-saving that could be achieved if all health plans covering City employees were consolidated." And my office in connection with this request, upon the request of the Chief of Staff and Linda Berkowitz, reviewed documents that would be responsive to that request by this committee. There is a document that was responsive that was not turned over, which is a privileged document, and the privilege that has been asserted and is being asserted in connection with that is the work product privilege. The document that we're speaking about is a document that was prepared at the request of counsel in connection with the preparation for the last set of municipal labor negotiations, and it was a document that was prepared by an expert for counsel. And, accordingly, it is fairly classic work product privilege.
Prepared for counsel, counsel that was representing the City? 12 7/10/01 LAW & GOV'T - RES. 000476
Are you maintaining that the City is defined as the executive office, the Mayor's Office, and that we are not a part of that coequal aspect and a coequal branch of that?
Well, if you're saying that it is the City's proprietary business information, then I believe that we're a part of that structure. That's a part of our proprietary business information.
And that's information that we would need to make any decisions and develop any position positions as to what policies and public policies should be implemented.
Well, there's no question that City Council is a part of the City, but I also think that -- 13 7/10/01 LAW & GOV'T - RES. 000476
So when you say that this is the City, you don't mean to say the City, a/k/a the Mayor's Office, not excluding -- and excluding the City Council, you don't mean to say that.
Well, Councilman, I think you're aware that very often, the City acts through its -- (Sound system failure.)
Would the sergeant-at-arms please restore the -- the cutoff was not at the request of the committee, Mr. Trujillo.
Very often, the City will act through its -- one of the its departments or agencies or commissions. And very often, in fact, this Council authorizes, for instance, a classic example is the Commissioner of Public Property to 14 7/10/01 LAW & GOV'T - RES. 000476 act on behalf of the City. The City branch of government that is charged with the negotiation of contracts with its municipal unions is not City Council; rather, it is part of the Administration. We have an Office of Labor Relations and the Law Department and the Mayor's Office --
Well, we're talking about withholding information from this body. We're not talking about taking away the authority of giving certain agencies of the City to go ahead and negotiate for the City, but we function on the basis of information. And when we give the authority to go out, we expect to be informed as to what happened and how that performance took place. And what you're saying is that once we give the authority for you to negotiate, we have no 18 business getting any information as to what happened in your negotiations.
To the contrary, Councilman. I'm not saying, first of all, that you've given the Administration the authority to negotiate those contracts. I think that those negotiations are not a creature of City Council's authority. The authority that the Administration 15 7/10/01 LAW & GOV'T - RES. 000476 has --
You mentioned Public Property and you mentioned that we authorize, and as an example, that's what I was referring to.
And, again, what we're saying is that you are part -- and you have to because we are the authority that appropriates. When you sign a contract, you got to come back to us and we have to see where that money is going to come from. And how are we going to know that unless get hold of the basic information as to how you made those decisions? Very easy. I don't think between the Mayor's Office and this Council that there is a legal privilege to withhold information.
Is there in your opinion, City Solicitor, and if so, we'd ask, are there any cases that support your position? Because I noted in your opinion, I found no citation of any authorities because it represents points of view that are mysterious to us. We have the duty of making out the budget, of passing a budget, of appropriating money. We're very much interested in the question 16 7/10/01 LAW & GOV'T - RES. 000476 of economy of services because that helps us to decide the budgetary requirements, whether there's a need for tax increases. It's very vital to our duties to have all of the information. So we're very much interested in the policy question as to whether or not consolidation of all of the plans into one will achieve economic gains for the City. It's not the only issue involved, but it's one of the major issues that are involved. And, therefore, as Councilman Ortiz just said, we don't understand that there could be such a thing as a privilege that protects one part of the government from the other part of the government. We're all part of the same government.
First of all --. (Unintelligible, parties talking over each other.)
And I'm prepared to respond whenever you're ready for me to respond. If the first question -- and I think we're talking right now about two questions. I was 17 7/10/01 LAW & GOV'T - RES. 000476 here to respond specifically about a privilege that was asserted in connection with one document.
A privilege asserted as a reason for not furnishing to Council information?
Correct, that's correct. And that privilege -- and you'd asked for the specific privilege. And I think I responded that it was the work product privilege. Now, the second question, as I understand Councilman Ortiz's question, is --
But the work product that was produced for the City -- and I think we have -- we are owners of that we are owners of that, we are owners of that work product.
And, Councilman, if what your request is to me now is for me to opine as to whether City Council -- or as to whether there is this broad -- that the privilege that is being asserted on behalf of the City is any one of the branches of government is the owner of that privilege as well? I mean, is -- to make a distinction? I'm just trying to get to your question. 18 7/10/01 LAW & GOV'T - RES. 000476
I just want to know how we are supposed to make decisions as to whatever contracts you negotiate and that you then bring back to this Council to be funded, and then when we ask for information as to how those contracts got done, you say that that's work privilege.
No, I'm just talking about one document, Councilman. And my understanding is that with respect to every other request that has been put, at least every request that the Law Department has reviewed, all documents, with the exception of this one document, has been turned over to this committee. And so, remember one thing about privilege -- both of you are lawyers. The essence of privilege is a fact and the only way a document can remain privileged is by it not being turned over to third parties.
You and us are the 19 7/10/01 LAW & GOV'T - RES. 000476 City.
In connection with who is the holder of the privilege, and I'll be happy to do it in a more formal way, and I'll be happy to respond in an opinion as to whether it -- because if the question is, is there a distinction between Council and the Administration or Council and other departments and agencies for purposes of privilege? I'll be happy to respond to that. I'm not -- sitting here today, I'm not prepared to give you an opinion on that, but I'd be happy to do that in writing.
I'm just trying to figure out what it was, Mr. Solicitor, that you just said. Are you saying that your letter was not a final answer?
No. To that document, as to the document, as to the document that we're 20 7/10/01 LAW & GOV'T - RES. 000476 talking about, which was a request under 6-21-14, we responded, and a privilege was asserted based primarily upon attorney work product. And so the document is not -- the advice given by the Law Department was that it needed not be turned over, that it was protected by privilege.
The attorneys representing the City in connection with the labor negotiations.
And who authorized the appropriations that pay the salaries of those City employees?
Well, then we must have something to do with their employment.
And so we must have been the people, at least in part, for whom the information was prepared. How could the privilege be asserted against those who are paying for the 21 7/10/01 LAW & GOV'T - RES. 000476 services?
Councilman, I'm absolutely, absolutely happy to respond to the question -- again, if the question is, is there a distinction between a department and an agency and Council in connection with a privilege and can a department or an agency have a privilege that is separate from being citywide, I'm happy to respond to that. I'm fairly confident I know what the answer will be. I did not come here today to respond to that question, but I'm happy to do so.
I'd prefer to do that in writing. I'll be happy to give you an opinion on this.
We could probably do that 22 7/10/01 LAW & GOV'T - RES. 000476 within a week.
And just so I'm clear, the question, as I understand it, is: Can a department of the City assert a privilege for purposes of that department as opposed to -- which it holds, as opposed to other parts of City government?
The question as I see it is that City Council is engaged in a fundamental part of its functioning, arriving at a policy position with respect to what is in the best interests of the City employees economically and from every point of view. It understands that the City, in the form of the Mayor's Office and those subordinates of the Mayor, prepared a study allegedly indicating that a different form than exists now with respect to the provision of health services is desirable. We would like to consider that. 23 7/10/01 LAW & GOV'T - RES. 000476 If we find that it is desirable, it would be helpful to us because it will mean that we're going to have to appropriate less money than we do now. On the other hand, if it indicates that it's going to provide an inadequate service or is more costly than the current system, then we are going to probably feel unkindly toward adopting this method because it will mean a greater financial burden for the City. Now, that's what we're investigating. In the course of that investigation, we have asked you for information on that study. We said produce the study, we'd like to see it, 'cause we've never seen it. We've seen reference to it in the press. We don't know how it got in the press; it may well have been that the City announced that to the press, but we don't know how it actually got into the press as of this moment. But, certainly, it's information that we need to reach a conclusion. Now, that's the question.
It also-- Councilman, it involves credibility, it involves credibility. (Applause.)
It involves the 24 7/10/01 LAW & GOV'T - RES. 000476 statements that are made to this Council time and time and over again without any documentation whatsoever of how much money is going to be saved or how much money is going to cost, and we make decisions based on non-information. And I think it's a basis right now of credibility of statements that are made to the public. And obviously, statements were made to the press based on this document. And we just want to be able to get down to the aspect of believing what is said to us, not what is painted but an issue of credibility and that we would like to make a decision based on facts and not on just plain rhetorical exercises.
And, Mr. Solicitor, my recollection of the press report was that it was based on the City's statement stating that the labor organizations were acting against the best interests of their members a and against the best interests of the taxpayers because they were refusing to consider a proposal offered by the City to consolidate the plans, which would provide both a more economic system of providing health care for City employees and a better system. And it was the City who, I 25 7/10/01 LAW & GOV'T - RES. 000476 strongly believe, issued that press release. So that what we're doing is asking for information which you may have made available -- I don't mean you personally, but which the City executives may have made available to the press because I cannot -- I just cannot believe that the press would have accepted the statement without saying, Well, we'd like to see it, show us. And in view of that, we can't understand why that information is not being made available to us in the City.
Mr. Chairman, I do not have the benefit of a lot of background on this. Again, I will look at the legal issue involved here, which is whether or not there is privilege that attaches, and we'll be happy to respond to you. I will want to take a look at the transcript because that question got a little longer as the last couple of minutes went by, and so I will respond to that again within a week.
All right, we'll accept your notion. I understand the attorney for one of the labor groups -- maybe more than one, I have no idea 7/10/01 LAW & GOV'T - RES. 000476 -- is here. Miss Willig? I noticed you indicating agreement or disagreement with what the City Solicitor was saying. Why don't you come forward.
And we'll expect to hear from you, Mr. Trujillo, within a week.
Very good and thank you very much for being here. Miss Willig? (Witness comes forward.)
Thank you very much, Councilman Cohen and Councilman Ortiz. I frankly don't know where to begin.
My name is Deborah Willig of Willig, Williams & Davidson. And for the past thirty years, we have had the privilege of representing District Council 47; for the past fourteen years, we've had the privilege of 27 7/10/01 LAW & GOV'T - RES. 000476 representing Firefighters Local 22; and we are formally general counsel to District Council 33. So, unlike Mr. Trujillo, we -- in particular, I have substantial experience in the negotiations of the labor contracts with the City of Philadelphia. I'd like to address first the question of whether the City Administration would be obligated to produce the consolidation memo in response to a request of one of our clients and also whether the City's argument of proprietary business information would justify a refusal. I'm going to cite cases and I will submit them this the Council if they would like. "The duty to bargain includes an employer's obligation to provide information to the unions that is necessary for the unions to carry out their bargaining functions. This duty to provide information is very broad. Requested information need only be relevant to the union's exercise of its duties as bargaining unit representatives in order for the obligation to attach." Commonwealth of Pennsylvania, Department of Public Welfare. "Whether requested information is relevant to the union's bargaining function is to be 28 7/10/01 LAW & GOV'T - RES. 000476 determined under a liberal discovery-type standard which allows the union to obtain a broad range of potentially useful information, this process does not entail a burdensome showing by the union before it can gain access to requested information. Fraternal Order of Police Lodge 5 vs. The City of Philadelphia finding that the City violated its bargaining obligation by failing to provide information regarding a field associate's program. "Statutory information requests are not limited soley to the process of grievances. An employer will violate Sections 1201-A-1 and A-5 of the Public Employee Relations Act if it refuses to provide information that the bargaining representative needs to formulate a bargaining proposal or to police the administration of their collective bargaining agreement." Commonwealth of Pennsylvania, Department of Public Welfare citing the (indiscernible) Acme Industrial Standards. Industrial standards. See also West Hanover Township, the final order, and North Hill School District final order. By the way, these are all 1998 and 1999 29 7/10/01 LAW & GOV'T - RES. 000476 cases. As applied to our facts, a City union request for the consolidation memo would clearly fall within the scope of the employer's duty to provide information since the memo is relevant to the formulation of bargaining proposals on the issue of health care and arguably relevant to existing -- to policing the existing contract. As stated above, we are guaranteed access to the information that's relevant. The right is not absolute, however, and it can be limited. The employer cannot merely, however, assert confidentiality, for example, and issue a blanket rejection of the union's request for information. The employer asserting the confidentiality must first make a reasonable effort to accommodate the information request, including bargaining with the union about its response. If the employer makes no effort, then the employer has committed an unfair labor practice, even if the information is in fact confidential. I could go on, but it is well settled.
Let me announce the 30 7/10/01 LAW & GOV'T - RES. 000476 presence of Councilman Blackwell as well as Councilman Ortiz and myself.
Miss Willig, I can see when there is employer-employee negotiations taking place and the employer trying to keep information from the employees. And I know that at the one point -- but we are -- they're trying to keep information from us.
Councilman Ortiz, I do not profess to be an expert in privilege, although I've had some experience with it. And I will tell you that I spoke in depth to my colleague and partner Ralph Teti, who, as you may remember, was Chief Deputy City Solicitor for Labor Relations for this City for 16 years.
And when he saw Mr. Trujillo's response to City Council, he said in his knowledge there is no intergovernmental, no 21 interagency, no interdepartment privilege that he knew of and, although it was a bad time in his life, I can tell you that he was counsel to several, if not many, of the City officials during the MOVE investigation. 31 7/10/01 LAW & GOV'T - RES. 000476
And if anyone would no 4 whether there's an intragovernmental privilege, Mr. Teti would know. But let me put this in a slightly different context. Although reliving the pain of the 2000 negotiations is not easy, but the City Solicitor's letter to this Council and statements today are a repetition of the arrogance and ignorance of the entire legal team during the 2000 negotiations, as I can speak to it, with District Council 47 and Local 22. And let me say how. I don't believe that you have even been given the name of the so-called consultant whose study is allegedly work product. I firmly believe that the work product -- just because it's requested by an attorney, if it has not been done by an attorney doesn't provide that it is work product, and I think you have both eloquently stated that basically you paid for the study so you're entitled to it, and I think that is well settled. But having said that, if this study was one done by one Frank Doyle & Associates, let's give a little bit of history to that because I have not 32 7/10/01 LAW & GOV'T - RES. 000476 had the privilege of attending the previous hearings of this committee. And if I am repeating, please feel free to stop me. But through, I guess, beginning in May and through July or August of the year 2000, there were teens, if not dozens, of hearings in an Act 111 proceeding, which is the basis for formulating uniform collective bargaining contracts in this state, as you are well aware. I had the responsibility and privilege of preparing the health care testimony for Local and for cross-examining 13 the City's so-called expert. 14 The first thing that came to mind when 15 Mr. Trujillo was testifying was if I thought that a 16 subpoena issued to us wouldn't include the turning 17 over of my expert's reports as confidential, that is 18 so far from accurate that I can't even imagine 19 someone who has practiced law asserting that. 20 Now, I can pull out the subpoenas that 21 we issued to the City of Philadelphia requesting 22 each and every document they had concerning the allegation, bold allegation, never proven that consolidation of the four union health care and non-represented plans would be in the best 33 7/10/01 LAW & GOV'T - RES. 000476 economical interests of the City. They never produced this consolidation memo to us, which means they committed a fraud upon the arbitration panel. That is outrageous and probably illegal. And I can tell you, after today, we will be investigating that. But can you imagine your predecessor City Council President sitting up on that podium when a City Solicitor of the former administration refused to turn over a document that he passed a budget to pay for, a veritable United Nations, four law firms hired by the City, in addition to the Solicitor's Office to defend these proceedings, four law firms saying we can't turn this over. He would have gone ballistic. There isn't any question in my mind about that.
I cross-examined Frank Doyle of Doyle & Associates. And I believe getting through all of the periphery of turning over the document with regard to the seminal issue that this committee is confronting, and that is what is -- what comprises the cost of health care, what comprises the cost? And let me actually take a step 34 7/10/01 LAW & GOV'T - RES. 000476 backwards. I also asked Mr. Doyle for his credentials. Local had hired the hired the Segal 5 Company, which is a nationally known employee 6 benefits consulting company with offices all over 7 the United States, including one recently opened in 8 Philadelphia. They testified, in answer to the same 9 question, that it was demographics, experience, and 10 a margin. Mr. Doyle, with experience virtually 11 nowhere except in the State of New Jersey, 12 representing some districts with employers-only 13 sponsored plans, no negotiated plans, basically did 14 testify to the same answer: experience, 15 demographics, and margin. 16 And I asked him -- and if no one has 17 submitted this -- the testimony of these hearing to 18 the Council, I have checked with the new president 19 of Local 22, I will be happy to dig them out of 20 storage and submit this to you. Demographics is how 21 many single people are in a unit, how many married 22 people are in a unit, how many kids, and what are their ages. Experience is over a past defined period, a year or two of a given contract with Blue Cross or Aetna or whoever, how many people have gone 35 7/10/01 LAW & GOV'T - RES. 000476 to the doctor, how many lab tests have been performed, how many people have undergone surgery. And I said to him, after I think a day or a day and a half of cross examination, so if the experience is for the firefighters what the experience is, then how would it be different if they were consolidated into one health plan? It wouldn't. In fact, if you talk to the people from Blue Cross, there are some who will tell you that if you put the firefighters into one consolidated health plan, it would raise everybody's rates, because whether we like it or not, these people who put their lives on the line every day get sicker for a living from doing it. Exposure to smoke, exposure to toxic chemicals causes increased risk of heart disease, pulmonary disease. I mean, we went through all of these studies. This man, whose only claim to fame is contributions to the current administration's political campaigns, which we asked him about --
Yes, unfortunately, it is. Basically said the only margin may be in 36 7/10/01 LAW & GOV'T - RES. 000476 the percentage of profit that Blue Cross wants to take, and when asked about that, it was like 1 percent, if I recall his testimony, meaning that 98 or 99 percent of a premium for health care costs is based on the demographics and experience, and 1 percent is the margin for contingencies. What if these people get sicker than we predict? Then we came to the Administration, and it was remarkably similar to the shell game that the Administration is playing with you today. Allegedly, allegedly, there are, I think, two or three people in the Personnel Department who administer the non-represented class health. It's such a boldfaced lie that it is offensive. The arrogance level is just extraordinary. When questioning the City official, Well, when somebody's hired in a department, who do they talk to? Well, they talk to the personnel officer. Where do they get their health-care information from? I really don't care whether they're represented by any of the four City unions or not represented. They get their initial information from the Personnel Department, and each one of the, how many, 17, 21, whatever it is, City 37 7/10/01 LAW & GOV'T - RES. 000476 departments. Well, did you count any of their salaries in the administrative costs? No. I mean, it's just -- it is a shell game. What also occurred to me listening to Mr. Trujillo is one thing: Why, I asked myself, are they afraid to show you that memo? We, by law, will have to make a demand by November of this year to start bargaining again on behalf of Local 22. We will be very shortly in the process of formulating our proposals for bargaining. Formulating the proposals for bargaining is one of the legal bases on which we are entitled to information. Rest assured that we will be looking for that information, and if they don't give it to us, we will go to court for sanctions.
Let me just finish if I play. Why won't they give it to you? Because it either doesn't exist, or if it does exist, it doesn't prove what they say. If it did support their contentions that consolidation would save them money, they would have given it to you right off the bat. Here we are, this is our proof. 38 7/10/01 LAW & GOV'T - RES. 000476 But the bottom line is, I would bet almost everything I own that Frank Doyle did the study, that the study is flawed, that it was bought and paid for by political contributions, and that it has no merit. And you can see that in the directed cross examination of the Local interests 8 arbitration hearings in of last year. 9
What makes you think 13 anything you negotiate is going to be complied 14 with? 15
You know, I would say, 16 having talked to members of the executive board, but 17 also attending numerous meetings with members of 18 Local 22, the single most asked question after 19 November 30th, whenever the award finally came out, 20 was, what does "final" mean? We thought the award 21 was final and binding. 22 Regrettably, this administration follows closely in the footsteps of the prior administration of ignoring the law when it so chooses. And we are currently in the process of arbitrating one of the 39 7/10/01 LAW & GOV'T - RES. 000476 key provisions very clear from the arbitrator regarding turning in sick leave and using it to purchase additional health care coverage after retirement. It is outrageous at best that the City has chosen to follow this course. It is once again paying for the architect of this entire consolidation, Mark Foley, who has, I think, never sat at a health and welfare meeting in his entire professional life and, therefore, is ignorant of the working of health and welfare coverage and is, frankly, I believe, from his own mouth to me, the single most vociferous proponent of this meaningless, baseless, and unsupported contention.
Miss Willig, we were told at the last hearing that the City was refusing to pay the medical expenses for work-related injuries. Are you familiar with that problem?
A little bit from District Council 47, a little bit more from Local 22. There is an ongoing problem. It affects all of the City unions and I think, frankly, FOP Lodge 5 has made a little bit more progress than we have, not for lack of trying. 40 7/10/01 LAW & GOV'T - RES. 000476 It's kind of -- again, it's just ignorant because you're robbing Peter to pay Paul. The City, as I'm sure Council is well aware, is self-insured for Worker's Compensation, but there are benefits -- there are benefits and burdens for going one of two routes that you can if you are a City employee injured on the job. You can either go under what we call Regulation 32 of the civil service regulations or you can proceed through Worker's Compensation. The City insures most of its employees or -- I take that back. Most of the employees of the city are insured through Blue Cross, regardless of what union they're in or non-represented. A wholly-owned subsidiary of Blue Cross, Comp. Services Inc. (CSI), is the third-party administrator of the Worker's Compensation program. The unions' argument has been that the union health and welfare funds should not be providing either health coverage -- for example, operations, which are part of the experience that goes into a premium factor, or maybe even a bigger per-person cost, the prescription dollars, because in the City-administered plans, we pay the 41 7/10/01 LAW & GOV'T - RES. 000476 prescription for people who are injured on duty. They ought to be covered by CSI. It is a huge bone of contention. It has been an ongoing problem for years that I know of. But, again, it's myopic, it's robbing Pete to pay Paul. What the City ought to be doing is making sure that CSI is monitoring the claims and paying the ones that it should, because when we come to the bargaining table, the City's -- and I don't care what union it is. The City's first answer is always, You cost too much. Well, yeah, when we're shouldering the burden of work-related injuries that ought to be on your budget line, not ours, maybe we are, but they don't care.
'Cause that's a problem I think we're going to be having to deal with at a later time.
All right, any further questions? (No further questions.)
Thank you for being here today. 42 7/10/01 LAW & GOV'T - RES. 000476 (Applause.)
Miss Berkowitz, would you come forward. (Witness comes forward.)
We'd like to know the status of the production of the documents and the information we've requested.
Good morning, Councilman Cohen and members of the committee.
I'm Linda Berkowitz, Deputy Secretary of Financial Oversight. At the last hearing, the committee requested certain information, and I have a packet, I have material with a cover letter to the committee Chair and I'll be happy to go through. . . the material. (Packet of information distributed to committee members.)
I would also, if I may, just like to make a very brief statement about something that's of concern to me. I have a copy of a letter that was sent 43 7/10/01 LAW & GOV'T - RES. 000476 to the committee chair by AFSCME District Council 47 in which my comments to the committee were characterized, and characterized very inaccurately. According to the letter, it says that Linda Berkowitz's recent testimony before the subcommittee on Law and Government was that the -- that I testified about the poor quality of both the benefits and administration of the City's health plan. I think, as everyone who was present for all of those hearings is well aware, I never testified to that effect. In fact, at the first hearing that I did testify before, Joyce Wilkerson was here, the Mayor's Chief of Staff, and we both characterized the benefits as excellent. And what we said and that was in Miss Wilkerson's letter to the Councilman, the first letter, conveying material to the committee was that the benefits were excellent. It was the documentation, not the administration, but the documentation that was unsatisfactory. So I want to clarify that before the committee and those who were here in the audience who may have had a part in the erroneous 44 7/10/01 LAW & GOV'T - RES. 000476 characterization of my testimony. Thank you.
All right, the committee notes Miss Berkowitz's interpretation of her previous testimony. Now I'm going to ask the staff members -- to what degree do you believe you've complied with the request of the committee for the production of the material?
The question was, to what extent have you complied with the request of the committee?
I believe that in going through your request of June 4th, we have complied with, I would say, the vast majority of documentation, with the exception of the request that the City Solicitor testified to earlier today.
In the letter dated July 10th from Miss Wilkerson to you, we have -- and I would like to read that record if I may into the record. 45 7/10/01 LAW & GOV'T - RES. 000476
Dear Councilman Cohen: In further response to the request from the Committee on Law and Government for information on the City-administered health plan, additional information is enclosed. 3-8-13. The attached is an analysis of the health plan savings and avoided costs generated by the City since FY 1993 with the assistance of Capital Management Inc. 3-8-16. The attached compares the medical, dental, optical and prescription coverage under the City-administered plan with that provided through District Council 47's plan. In addition to this material, the committee requested a chronology of the process used for the City-administered year 2001 health plan. That timeline is attached and it also includes the anticipated schedule for the year 2002 plan. The committee also requested information pertaining to spousal coverage. The new labor contracts with DC 33 and DC 47 negotiated last year extended retiree health benefits for spouses and other eligible dependents for five years after 46 7/10/01 LAW & GOV'T - RES. 000476 retirement effective July 1, 2000. This benefit was also extended to the spouses and dependents of City retirees who were not represented by a union. Questions had also been raised concerning the change in prescription coverage for post-City credit retirees in 2001. In year 2000, these individuals could purchase prescription coverage for approximately $682 annually with co-payments of the higher of $5 generic, $10 brand, or percent, up to a maximum benefit of 1500 12 annually. 13 Unfortunately, the existing provider, 14 PCS, quoted substantially increased costs for year 15 2001 due to the high utilization rates among 16 subscribers. In effect, continuing the existing 17 program would have meant that a single subscriber 18 would have had to pay approximately $1500 annually 19 in order to receive the maximum annual benefit of 20 $1500. In an effort to provide coverage options for retirees at more reasonable costs, the City's personnel director approached Independence Blue Cross, which agreed to include prescription coverage in its plan options. In January 2001, 47 7/10/01 LAW & GOV'T - RES. 000476 representatives of Blue Cross and the Administration briefed interested members of City Council and Council staff on the various alternatives. Subsequently, five different prescription options were offered to retirees, depending upon the medical plans they selected. For example, a retiree under age 65 who selected the Keystone HMO plan receives unlimited prescription drug coverage. Additional information concerning coverage rates for post-City credit retirees was already given to the committee. As we continue to gather documentation on the City-administered health plan, we will share it with you. And attached is the Philadelphia City-administered group dental, optical, and prescription savings; comparison of plans, both medical and prescription; and the timelines for the year 2001; and the tentative schedule for the year 2002.
Thank you. We'll have the staff go through the material and we will be further in touch with you. There's one question, though, that I would like as direct an answer to as possible. 48 7/10/01 LAW & GOV'T - RES. 000476 There's been testimony presented at various times that in whatever the calculation may be by the City of its health costs, there is no inclusion of any amount of money for administered services by the City of a given health plan. In other words, there's no note of any administrative expenses connected with that plan. Does that mean, what our experience leads us to believe occurred in a number of cases, that no services have been afforded to employees who have complaints about the quality of the services they receive either from the prescription plan or from the general health plan? Why is there no 15 cost?
Councilman, I do believe that there is a cost. I think when I testified earlier, we were talking not about the costs associated with benefits administration in the Personnel Department but in those activities conducted within the other City departments. And as I expressed to you, the City does not allocate its costs based on a small percentage of an individual's time. Those people are not considered benefits 49 7/10/01 LAW & GOV'T - RES. 000476 administrators, and if they did not explain a benefit to a new employee, if they did not hand out a form and collect a form, they would still have a full-time job. And we would certainly include in the cost of administering the City-administered plan the cost of any overtime engendered by those other departmental employees. But to our knowledge, that overtime cost is not incurred.
Well, is there any study or any documentation of what services are rendered by any departments, by whom and how much time it takes?
So that if, for example, someone is devoting half of their time to benefits administration, there would be no record of it, say, in the Public Property Department?
Councilman, I know of having talked about personnel and budget issues with departments in the City for eleven years now, I do not believe that there are employees in the various departments, outside of the central personnel 50 7/10/01 LAW & GOV'T - RES. 000476 department, that expend half of their time on benefits administration.
I think it's a lot less than a quarter. I think it is a minimal amount of their regular job duties. And most City job descriptions include the wording "and other duties as required." They are a small, a very, very small portion of the responsibilities of people outside of the Personnel Department.
Well, from the experience of my office, if a small amount of time is spent on benefits administration, it's not because there are not problems. It may be because employees have learned by experience that the City does not represent them.
'Cause we get many complaints in our office. 51 7/10/01 LAW & GOV'T - RES. 000476
I do not accept that as a true depiction, number one. Number two, I don't know what material you have. I don't know the volume of complaints that come to your office, and I don't know the magnitude that those complaints represent. Perhaps if you would be willing to share that -- as you know, the Mayor's Office has asked me to look at the City-administered plan over the next few months, and if you have any information that could inform my review, I would be very appreciative in receiving it.
Well, my personal experience has been that whenever I've sought to get assistance either because of problems I've had or problems that have been brought to our office that I became acquainted with, I would be told to call the person who is the -- who gets paid by the company furnishing, say, the prescription plan. With respect to health benefits, I never was able to discover anybody who would be able to give us any information to me or to any employee of the City. With respect to the prescription plan, there was one person not paid by the City but paid 52 7/10/01 LAW & GOV'T - RES. 000476 by the company that supplied the prescriptions.
Councilman, I hear what you're saying, and consumer advocacy will be one of the things that I will be looking at in my review, because I agree with you that that is important. I do not now know the extent to which we do or do not perform that activity, and I don't know how we perform it if we do.
All right. Then we'll look forward to some recommendation from you with respect to that. All right, well, thank you, Miss Berkowitz.
Yeah, for today, because there will be a recessed hearing. Following the examination by the staff, they may want to communicate with you informally with respect to any questions they may have about material that they feel should have been supplied which may not have been or for further clarification of what you've 53 7/10/01 LAW & GOV'T - RES. 000476 supplied.
Mr. O'Drain, the new President of the Firefighters Union, we welcome you to these hearings and congratulate you upon your installation as president and console you with respect to the burdens you're about to begin bearing or that you've already begun bearing. And we're convinced that you will do an outstanding job.
Councilman, before President O'Drain speaks, may I just respond to a couple of comments.
I don't believe Miss Berkowitz attended any of the Act 111 proceedings last summer for Local 22, but in response to what she just said to you, a chart, or several charts, were prepared for Local 22, as I'm sure the City 54 7/10/01 LAW & GOV'T - RES. 000476 prepared them for FOB Lodge 5. In their charts in order to try to support the allegation that the City-administered plans had less administrative costs than the union plans, they listed, I think, for example, two and one half bodies in the Personnel Department as one of the costs of administration. Linda Seyda, Director of Personnel, in my experience, a truth-teller, when asked on cross-examination, Well, when someone, for example, in the Health Department wants to add a dependent to the health care plan, who do they see? Do they see one of these two people on the chart? No. When someone in Recreation wants to do similar, do they see one of the people on this chart? No. In fact, people in every department, as I stated earlier, in the Personnel Department of every department answers those kinds of questions, so it may not be halftime but it's not a small percentage. In addition, there were, for example, typically both in public-sector and private-sector health and welfare plans -- and, again, this comes out of the ignorance of the chief negotiator for the City, because he's never sat at a health and welfare 55 7/10/01 LAW & GOV'T - RES. 000476 meeting. It is required that these plans be audited and it is required that they comply with the law. In order to do so, generally they hire legal counsel. In 1992 City negotiations, under the Rendell Administration, there were mammoth fights both for Local and, I believe, for Lodge 5 in 9 connection with their health-care plans. They 10 lasted for, I think, a year and a half after the 11 expiration of the contract. Nothing, nothing is 12 included for the legal costs of that kind of fight 13 any more than the City will currently account for 14 what it is paying outside counsel to fight the 15 health care portion of the firefighters' contract 16 right now. It is deliberately -- at worst, it is 17 deliberately misleading; at best, it is deliberately 18 ignorant. 19 So these costs don't bear any, any 20 realistic assessment of what it costs the City. 21 Thank you. 22
Thank you. Miss Berkowitz, if you choose to, you would have the opportunity to offer a reply to what Miss Willig just stated. If not, you don't have to. 56 7/10/01 LAW & GOV'T - RES. 000476 I'm just offering you the opportunity.
Councilman Cohen, Linda Berkowitz. The one point I would like to make and I agree with Miss Willig that in my experience, Linda Seyda is a truth-teller. It was Linda Seyda, the City's Personal Director, I think, who should have a feel for this, that only a very small portion of the time of departmental employees is used for benefits administration and that benefits administration is done out of the central personnel department. And we can put costs together on that. With regards to whether the cost of legal counsel hired by the unions or hired by the City to perform labor negotiations should be included in either the administrative costs of the unions or the administrative costs for the City's plan, I think, I think that that is a specious argument, and I'll just leave it at that. I think that there are legitimate costs that ought to be looked at, and the City will be doing that, I will be doing that. I have expressed that from my very first testimony here that I am going to be looking at the way in which the City 57 7/10/01 LAW & GOV'T - RES. 000476 administers its plan. If I determine that much more than a minimal amount of time is used by departmental employees to provide benefits administration, those costs -- I will attempt to document those costs.
But if you find, say, that only a minimal amount of attention is presently being expended, isn't that an indictment to the way in which the plan is being administered?
I don't think so. I think we're talking about time and attention. And I think the City should have the mechanism for understanding the extent to which the consumers of the City-administered plan have complaints about their plans.
And if your findings are such, will those findings be allowed to be shared with us, with the City Council? (Applause.)
I believe that both Miss Wilkerson and I testified to the fact that when I have completed my review, we will share my 58 7/10/01 LAW & GOV'T - RES. 000476 findings with this committee.
Just one more point. I didn't say the cost for legal services for negotiating a contract. Not only should that not be included, it would be illegal for a health and welfare fund to pay for that. What I did say, however, is that in fighting -- in fighting for particular issues on health and welfare, they have never included a cost. But let me give you a more neutral for-instance. I find it hard to believe that the City would enter into an agreement with a prescription provider or an insurance provider such as Blue Cross without reviewing the contract. I'd bet my house that if the contract, if it's reviewed, 59 7/10/01 LAW & GOV'T - RES. 000476 is reviewed by a lawyer. Even if it's reviewed by the City Solicitor's Office as opposed to outside counsel, not one minute of time is recorded as part of the administration of the health plan benefits. It has to be. Under any negotiated plan, it would be a legality, it would be a legal requirement. But when I asked again, when I asked Mr. Doyle, Does anybody review the contracts? You know, does the City Solicitor's Office or outside counsel look at the legal underpinnings of your agreements with your health-care providers, where is the cost associated with that? Zero. That's why I said they're living in a fantasy world. I mean, Miss Berkowitz would have you believe that they can't tell you the truth. Maybe that's true, but they should be required to tell you the truth in order to make an apples-to-apples comparison. If they say, My client's plan cost too much, then they'd better be required to make the apples-to-apples comparison of what it costs for them to run their plan. They don't do it. I'll end it there.
All right, I think 60 7/10/01 LAW & GOV'T - RES. 000476 that's helpful. Miss Berkowitz, I have one question of you. I admit I learned one new thing today, and that is the name of Frank Doyle?
Well, I believe it was not maybe the last hearing but the hearing before, I could not recall the name, and the benefits administrator from District Council 47 graciously shouted it out from the audience, and I said, yes, that was him.
'Cause that was a new name; I had never heard that name before.
The shout did not 61 7/10/01 LAW & GOV'T - RES. 000476 read my hearing-aided ears.
Yeah, we'd like to know the services he provides and the pay he receives, if there is services and/or pay.
And if there's a history of his prior services, the payment for that too and the amount of the services. We'd like to know what services --
Mr. O'Drain, sorry for the delay, but I think the witnesses were helpful in bringing more clarity. Why don't you go ahead and tell us what you feel.
Okay. Good afternoon, Councilmembers and members of the committee. My name is Tom O'Drain, and I'm the newly elected president of Local 22. As you remember, earlier this year, George Casey, who was just retired as president of Local 22, addressed this committee. On behalf of Local 22, I commend the subcommittee for its investigative work in disclosing the slipshod and haphazard manner in which the City of Philadelphia administers its own health plans. I believe I can provide the City with some insight into the issue of the City's refusal to provide any documentation to support its claim that the City could save money by consolidating all of the current health plans. Last summer, I attended the Act 111 interest arbitration hearings and listened to the City's high-priced lawyers and their high-priced consultants tout the alleged benefits that could be 63 7/10/01 LAW & GOV'T - RES. 000476 achieved if the health plans were all consolidated. Representatives of the union and the trustees of the fund were forced to listen day after day to claims that the City could administer the health benefits much more efficiently and economically than the trustees of the firefighters' fund. The City's presentation was full of claims that the firefighters' plan was mismanaged and claims that the City could administer the benefits much more professionally. I might note, as the Act 111 neutral arbitrator did, that during all of those days, notwithstanding the charts and graphs and expensive suits, neither the City's lawyers nor their consultants produced even a single piece of hard evidence about how any of these savings were to be achieved. Given all of these claims, you can imagine how surprised I was to find out during the course of these hearings that the City not only has no streamlined process for administering its health plans but has so little idea of how its benefits plans runs, it only has now appointed a special person to investigate how the health plans are run. 64 7/10/01 LAW & GOV'T - RES. 000476 This subcommittee's investigation simply proves that the City doesn't do a good job in administering its own health benefits and is not ready to administer ours. We reviewed the transcripts recently and we were struck by the fact that although there were a lot of lofty claims about achievable cost savings and efficiencies, there were never any facts to support the claims. Moreover, the charts that the City's experts provided were deliberately misleading. For example, the City tried to show that the police and fire funds provided were more expensive than those provided by the City. I'm not talking about the fact that the experts did not conduct an apples-to-apples comparison of the benefits; I'm talking about fact that the City's experts gave an amount for the cost of police and fire benefits that, of course, included only people who actually received benefits as well as the fund's administrative cost. Interestingly, when the excerpts calculated the City's supposed cost of benefits, they reduced the City's costs by one, failing to include the cost that has been shifted to the 65 7/10/01 LAW & GOV'T - RES. , employees' payroll deduction of the portion of the premium; and number two, including in their calculation of benefits hundreds of people for whom no benefits are actually provided; and three, most notably, including no administrative expenses. We also know now that the reason that no 8 administrative costs are included in the City's benefit costs is because the City doesn't know them and won't let anybody else know them, including the City Comptroller calculating them. It's like the old saying: Figures lie and liars figure. It's easy to doctor the numbers if you just don't pay too closer attention to the facts. Local applauds this committee's 16 efforts to get to the facts.
The City's failure to 17 respond to the committee's request for the alleged 18 study that allegedly supports the City's position 19 that it would save money by consolidating the health 20 plans is just another round in a shell game. 21 Although I'm surprised that the 22 Administration treats City Council with the same disrespect that it treats its employees and their representatives, if the City wants to prove that consolidation of the plans is really in the best 66 7/10/01 LAW & GOV'T - RES. 000476 interests of the City and its employees and not just the naked power grab that it appears to be, why is it afraid to release the facts that support it? There are at least two answer: The City won't release the facts and figures because, one, they don't exist and, two, if they exist, they don't support the City's position. Local adds its support to your effort 10 to say to the City, Enough playing politics with the 11 health benefits. It might just be a part of the 12 power game to the City but it's a matter of the 13 utmost seriousness to the men and women of Local 22. 14 The firefighters and paramedics of this city and all 15 City deserve better. 16 Thank you. ) 18
We want to welcome 19 you to this scenario. Your predecessors have 20 enjoyed sitting in that chair and not getting the 21 information that you need. Now you understand how 22 difficult government is at times. But it would be interesting for you to know that while hepatitis C and the firefighters still do not have a contract that is being complied 67 7/10/01 LAW & GOV'T - RES. 000476 with, the Eagles today announced their price schedule for the new stadiums, and they -- I don't know whether any citizens of Philadelphia -- well, I know that no working-class individual of Philadelphia will be able to afford any of their tickets. So they have come out very well sitting at that table. Those individuals that come and they have the magnificently -- now you have to get a license to buy a seat and then you got to buy the ticket for that seat. And we never asked them about their financial information, by the way. We asked the Eagles to produce why the taxpayers should subsidize the stadiums and to prove that in essence why they could not afford it, and the City actually told us that they didn't have to do that. The executive branch of this government did not ask for that information. Meanwhile, over $400 million and growing of taxpayers' money is going to that, but we cannot afford to give our firefighters health coverage for hepatitis C. I think it's sort of obscene. I think it's not equitable.
Councilman I don't know if 68 7/10/01 LAW & GOV'T - RES. 000476 you were here when Debbie Willig talked about the piece of the contract that is not being complied with by the City. There are also four additional pieces of our contract that are still not being complied with. This morning, I had a meeting with Labor Relations and it's to no avail. You know, we're not going to get to any middle ground until get to arbitration.
How can you negotiate a new contract when your old one is still not being complied with?
I know. That's what I'm going to be faced with as the new president.
This is a very surreal situation. I don't think we ever had that in our history.
Are there any other 69 7/10/01 LAW & GOV'T - RES. 000476 union representatives who wish to be heard who have not been heard? (No response.)
Kathy Scott or Linda Ryan or from any other union? If not, Joe Goldberger from the retirees. And then if there's anyone else present who wishes to be heard, the committee will be glad to hear you. Reverend Blount, if there's anything you would like to add, you would be welcome.
My name is Joe Goldberger, a retired City employee. Mr. Chairman, thank you for allowing me to again present my thoughts about problems in developing an adequate pharmaceutical benefit for retired non-represented City employees. There are numerous important issues that this committee has uncovered in its attempts to 70 7/10/01 LAW & GOV'T - RES. 000476 investigate the City's failure to develop a cost-effective and efficient pharmaceutical benefit for non-represented retirees and non-represented employees. Perhaps the most important related issue is the Administration's failure to cooperate by providing requested documents and answers to past Administration actions. The role of the City Council in Philadelphia government has been minimized, and this committee represents the finest attempt to correct this government imbalance. The use of the subpoena power is absolutely critical. If the Administration is allowed to ignore City Council's requests, what can retirees expect from that administration in resolving our problem? The Administration has exercised poor or no judgment in past pharmaceutical benefit negotiations, as evidenced by their inability or unwillingness to answer specific questions related to existing and past pharmaceutical benefit plans, coverage statistics, contract negotiations, and actual contract documents. This said, where are we now and what should be the priority? There is a need to focus on 71 7/10/01 LAW & GOV'T - RES. 000476 a priority issue critical, I believe, to the issues of future retiree and non-represented employee benefits and future labor negotiations. And that is the elimination of the discriminatory grouping of older non-represented retirees from newer non-represented retirees. The need to eliminate this inequity prior to negotiating a pharmaceutical benefit plan is clear and the time frame so immediate that I believe efforts must prove successful, or any negotiation for new plans scheduled to begin January 1, 2002 and which are to be presented to us in the fall of 2001 will present a continued unsatisfactory benefit. Until this inequitable grouping is replaced by a larger "blended" rate, many non-represented retirees will be substantially disadvantaged by higher costs and less benefits. The smaller the group, the less likely costs can be spread as they properly should be over as large as possible a number of individual to see obtain an adequate plan, a plan such as presently available for School District of Philadelphia, Commonwealth of Pennsylvania, and District Council 47 retirees. I have used the term "discriminatory" in 72 7/10/01 LAW & GOV'T - RES. 000476 referring to the invidious separation of older non-represented retirees from other non-represented retirees. While I am not a lawyer, I wish to bring to your attention a Third District Court of Appeals ruling affecting the States of Delaware, New Jersey, and Pennsylvania that the County of Erie, Pennsylvania violated the Age Discrimination in Employment Act by providing Medicare-eligible retirees with health insurance benefits that were inferior to those provided to younger retirees. Perhaps the City Law Department can shift its attention away from studying ways to prevent this committee from obtaining necessary documents to examine the effects of this decision. Or should we plan on taking the City to the United States District Court to obtain resolution? The City Administration has over the years been allowed to follow a path of no resistance in its poor health benefit negotiations. The City has been "rewarded" by having retirees drop from the City-administered plans to fend for themselves. Those retirees who dropped out of City-administered plans last December, who did not participate in the may plans offering must be allowed to return to 73 7/10/01 LAW & GOV'T - RES. 000476 newly negotiated adequate plans effective January 1, 2002.
No negotiation or fact-gathering can be undertaken without some idea of the values the negotiator wishes to maximize. We have been treated to the Personnel Director's statements that the City has no "obligation" to those retired over four or five years. Isn't that strange, when the City provides free pharmaceuticals to the City health Center clients who do not have insurance coverage? This Council has been providing funding for that program for many years. City Council in the Resolution No. 15 000476 establishing this investigation stated a value that should be shared by Administration benefit negotiators. It asks the question whether the City could provide more comprehensive and less costly coverage. . if other options were pursued? Can we expect the same value from the Administration? Is this ran unreasonable question request? I conclude my remarks by again stating that although there are very vital issues to be resolved with respect to past union negotiations and 74 7/10/01 LAW & GOV'T - RES. 000476 under-funding of District Council 47's health plans and the critical need to establish a strong City Council presence in the conduct of municipal government, there is an immediate and time-critical need for announced decision to abolish the discriminatory grouping of non-represented retirees (over four or five years) for health benefit purposes. Thank you.
Thank you very much, Mr. Goldberg. The committee will consider your comments. Is there anybody else to be heard? Please come forward. Whoever wishes to be heard, please come forward and sit around the table. (Witnesses come forward.)
Reverend Blount, identify yourself for the record and proceed. REV. BLOUNT: Yes. Reverend Harold Blount. I am also a retired employee for the City of Philadelphia. And I'd like to apologize for the way I sound but I came straight from the dentist's office this morning to be here at the hearing. So, therefore, the novocain is wearing off a bit, 75 7/10/01 LAW & GOV'T - RES. 000476 period. But one of the things from listening and particularly from the City Solicitor, and I'm not a lawyer. However, you know, I have a master's degree from Temple, I have a master's degree from the University of Pennsylvania, and I'm now pursuing a master's degree at Eastern College in education. And what I don't understand for one thing is how do you come up here and you have to develop a written response to a request by City Council about some document that he had that he's concerned being privileged; when, in fact, Miss Berkowitz, who is doing almost the same kind of thing, presenting a document of some kind, and she had no problem whatsoever in complying with that request that came from the chair of the Council at this time, period. And to me, you know, I don't understand hop City Council and itself and this committee will allow itself to be placed in a position where they are third-class in the City of Philadelphia.
Thank you very much. We share your sentiments and are working to try to avoid being second- or third-class citizens. Thank you very much, Reverend Blount. 76 7/10/01 LAW & GOV'T - RES. 000476 We appreciate your coming here today. REV. BLOUNT: I had no intentions of saying anything whatsoever, but I just couldn't sit by here and go through this shenanigan.
Very good, sir. Please identify yourself for the record.
Yes, sir, Mr. Chairman. Thomas Lamb. I administer the FOP Blue Cross Program. Today with us is Robert Hirsch (ph.), who administers our dental, optical, prescription plan. If the chairman would, I'm requesting an update. In previous hearings, you requested the City Controller's employees be present to conduct an audit. I think the last two audits were 1994 and 1995. Regretfully during those hearings, we heard the same smoke and mirrors that we've heard all along and that we've experienced in the last four contracts. Is there any update, Mr. Chairman, on when the City Controller can finally review the City medical plans?
Is there anyone here from the Controller's office that's authorized to give us a reply? 77 7/10/01 LAW & GOV'T - RES. 000476 (No response.)
We understood that there was a promise by the City to comply with the City Controller's request. Yes, Miss Albert. We don't want you to go beyond your authorization, but if you could shed any light. (Witness comes forward.)
My name is Stacey Albert of Controller's Office. I'm auditor of the City Controller's Office. I came today as just an observer; I'm not authorized to answer any questions, I can't answer any questions.
Yes, sir, I have been to the hearings as an observer and I've been receiving documents that you've been receiving.
And I know that the City Controller is very anxious to conduct the audit. We will further communicate with him. Today's hearing was basically for the purpose of 78 7/10/01 LAW & GOV'T - RES. 000476 getting clarity on the production of document requests we made to the City and to see to what degree they were ready to comply with it. We were not expecting a call to the City Controller because he has his own relationship with the City and we want to do respect his right to work it out, but he's assured us that he's very serious about getting the information and that he's been promised that the City will cooperate. Okay, we're going to stand in recess until Tuesday, July the 31st, at 2 p.m. And among the questions raised will be the question, and you may, Miss Albert, so inform the City Controller --
I'm going to him or a representative of his office to be present to update us on the status of the City Controller's request to audit the health records of the City.
All right and thank you very much. The committee will stand in recess until Tuesday, July 31st at 2 p.m. 79 7/10/01 LAW & GOV'T - RES. 000476 Thank you. (Adjourned 1:52 p.m.) 80 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Tuesday, July 10, 2001, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON LAW AND GOVERNMENT RES. NO. 000476 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter