National Education Ass'n-Topeka v. Unified School District No. 501

7 P.3d 1174, 269 Kan. 534, 2000 Kan. LEXIS 609, 164 L.R.R.M. (BNA) 3108
CourtSupreme Court of Kansas
DecidedJuly 14, 2000
Docket81,073
StatusPublished
Cited by6 cases

This text of 7 P.3d 1174 (National Education Ass'n-Topeka v. Unified School District No. 501) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Education Ass'n-Topeka v. Unified School District No. 501, 7 P.3d 1174, 269 Kan. 534, 2000 Kan. LEXIS 609, 164 L.R.R.M. (BNA) 3108 (kan 2000).

Opinions

The opinion of the court was delivered by

Six, J.:

The dispute here is over entitlement to a health insurance premium “divisible surplus” refunded to Unified School District No. 501 (the District) by Blue Cross Blue Shield of Kansas, Inc. (BCBS). Plaintiffs National Education Association-Topeka, Inc., Penny Roberts, Linda Baker, and Leslie Kuhns, individually' and for ah persons similarly situated, (NEA-T) claim the surplus. NEAT sued the district and BCBS seeking declaratory relief under K.S.A. 60-1705 (allowing judicial construction of a contract in event of a breach), class certification, mandamus, and damages under the Kansas Tort Claims Act. The trial court granted summary judgment to the District, ruling that NEA-T was required to follow the employment contract grievance procedure. The claims against BCBS were dismissed. NEA-T appeals.

Our jurisdiction is under K.S.A. 20-3018(c) (a transfer from the Court of Appeals on our own motion).

The questions before us are whether the trial court erred in ruling: (1) NEA-T was required to follow the grievance procedure, (2) the action is now time barred, (3) the issue of class certification was moot after dismissal of NEA-T’s claims, (4) NEA-T’s claims for breach of fiduciary duty, conversion, and unjust enrichment, as well as the claim against BCBS, should be dismissed.

Finding no error, we affirm.

[536]*536FACTS

NEA-T is a nonprofit corporation organized for, among other things, conducting professional negotiations and protecting the conditions of teacher employment under K.S.A. 72-5414. NEA-T is the recognized exclusive bargaining representative of professional employees of the District under the Professional Negotiations Act, K.S.A. 72-5413 et seq. Penny Roberts, Linda Baker, and Leslie Kuhns are professional employees of the District.

NEA-T and the District regularly enter into Professional Agreements (PA’s). These agreements set forth the terms and conditions of professional employment. At issue here are the PA’s for 1993-1994 and 1995-1996. Both PA’s contained Article 41, entitled Fringe Benefits, which says in part:

“The Board of Education shall establish for all eligible professional employees a fringe benefit program (hereinafter referred to as “Cafeteria Plan”) pursuant to Section 125 of the Internal Revenue Code of 1986, as amended, and regulations issued thereunder.
“A. Each professional employee performing the equivalent of fifty percent (50%) or more of a full-time position shall be eligible to participate in the Defined Health Insurance and Cafeteria Plan.1
Professional employees who are hired to begin employment or who otherwise become eligible for benefits for the first time for the 1989-90 school year, or thereafter, will automatically receive coverage of a single low option Defined Health Insurance Plan and the difference, if any, in cash between a single low option health insurance plan and $166.68. In the event that the low option monthly premium exceeds $166.68, the employee will pay tire difference. Such professional employees may decline the health insurance, but will only receive the difference in cash between the low option health insurance and $166.68.

Under Article 41 of the PA’s, the District executed a group contract with BCBS to provide employee health insurance. Roberts, Baker, and Kuhns were covered. The contract has a “divisible surplus rider” (“Rider”) which governs the distribution of any divisible surplus held by BCBS at the end of a plan year. A “divisible surplus” occurs because of a lower use of insurance benefits by the subscribers (insureds) than was anticipated when the premiums [537]*537were determined. U.S.D. No. 259 v. Kansas-National Education Ass'n, 239 Kan. 76, 80, 716 P.2d 571 (1986). The surplus here accumulated during the policy period of August 1, 1993, to July 31, 1995, and August 1, 1995, to July 31,1996. BCBS provides the District with two types of plans, a low-option plan and a high-option plan. On the cover sheet of each contract between the District and BCBS, the Contract Holder is defined.

Articles 9 and 10 of the PA’s govern the grievance procedure for the resolution of problems concerning the interpretation and application of the PA. The PA provides for a formal grievance procedure or in the alternative an oral complaint to a principal at any time without initiating a formal grievance procedure. If the problem is not resolved, the grievance may be submitted to an arbitrator if the application or interpretation of the PA is involved.

The District contracted with NEA-T to offer a fringe benefit program to professional employees. The District also created a “Cafeteria Plan” to allow professional employees to structure their benefits as they desired. See 26 U.S.C. § 125 (1994). A cafeteria plan is defined as a “[t]ype of fringe benefit plan whereby [the] employee, in addition to receiving certain basic fringe benefits, is permitted to also select and structure certain other types of benefits up to a specified dollar amount.” Black’s Law Dictionary 203 (6th ed. 1990.) The health insurance fringe benefit package here was $166.68 per month.

The PA's during the relevant period referred to the $166.68 monthly {Moment at issue as a “Board of Education paid fringe benefit contribution.” The cafeteria plan refers to the single low-option insurance as a “Board-paid defined benefit” and the District’s communications with its employees consistently break down the premium payments into “employee paid” and “board paid” portions.

In 1994, BCBS refunded to the District $731,046.47 as divisible surplus. The District distributed half of this amount among plan participants including the three individual plaintiffs. The remainder was placed in a premium stabilization fund to adjust future premiums. In 1995, the refund to the District was $1,007,678. The District retained $395,000 ($15,000 for an employee wellness fund [538]*538and $380,000 to adjust future premiums). The remainder of the surplus was distributed to insureds, including Roberts, Baker, and Kuhns. The District presently offers both health insurance plans and flexible savings accounts as optional benefits under its cafeteria plan. The divisible surpluses at issue here arose from health insurance plans, not flexible spending accounts. Before the District decided the distribution of the surpluses, it alerted its employees to the surpluses and discussed disposition at length in its insurance committee. NEA-T representatives were participants on the insurance committee. The District’s distribution decisions were made in public meetings.

THE TRIAL COURT’S RESOLUTION

The trial court said:

“The disagreement between the District and Plaintiffs centers on the interpretation of the PA.

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Cite This Page — Counsel Stack

Bluebook (online)
7 P.3d 1174, 269 Kan. 534, 2000 Kan. LEXIS 609, 164 L.R.R.M. (BNA) 3108, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-education-assn-topeka-v-unified-school-district-no-501-kan-2000.