OSEA recently sent individual tort claim notices to 95 school districts, ESDs and community colleges. Here is OSBA's position from Executive Director Kevin McCann that explains OSBA's position and what members should know.

NOT A LAWSUIT
First, it's important to note that a tort claim is not a lawsuit -- just legal notice that the OSEA may file one on behalf of its union members (your employees).

OSBA MEMBERS ON STRONG LEGAL GROUND
Second, based on OSBA's outside counsel, we're very confident OSBA and its members have NOT violated any wage and hour law, insurance code, trust laws or its own Trust Agreement.

IF YOU GET A NOTICE -- WHAT YOUR DISTRICT SHOULD DO

1. FAX a copy of the tort claim to your insurance carrier and to your general counsel.
2. FAX a copy to our Associate Executive Director Dori Brattain at OSBA (503-588-2813).
3. Call or email Dori if you have any questions; OSBA is in the process of deciding how to help members with legal assistance, should they need it. She will be working closely with our attorney John Osburn. 

KEY POINT TO SHARE: NO WAGE AND HOUR VIOLATION
OSEA alleges that districts have violated wage and hour laws by retaining employee wages to help pay insurance premiums. No money was retained -- all those payroll deductions went directly to Regence BlueCross BlueShield of Oregon. OSBA and the Health Insurance Trust have thoroughly reviewed this allegation and firmly believe there is no legal basis for such a claim. The money paid to Regence purchased fully-insured plans. It's important to note that insurance contracts are NOT through OSBA -- they are through Regence. 

COMMON QUESTION YOU MAY BE ASKED 
"If school districts have been paying premiums over several years, why can't they withdraw their interest on a prorated basis when the Trust ends, because isn't it "their" money?"

School districts (and their employees) have NOT paid premium dollars to the Trust. They've been buying what is commonly referred to as "fully insured" coverage not unlike home or car insurance. OSBA members buy insurance from Regence, based on plans that Trustees who govern the Insurance Trust approve each May. Regence assumes the risk and enrolls OSBA-member districts in the Trust-sponsored group health insurance programs offered by Regence. Consider a car insurance analogy -- if you don't file any claims (or get speeding tickets) this year, you don't get a premium refund. 

HOW THE TRUST WORKS WITH REGENCE
The Health Insurance Trust was set up 42 years ago to help OSBA-member boards benefit from pooling. This arrangement allowed OSBA the bargaining power to work with Regence to provide competitive health plans for employees. OSBA has negotiated contracts with Regence so that Regence retains only part of its normal reserve (money above claims and administrative costs) and the Trust manages a smaller portion of this reserve. It is these trust-managed funds that become any "reserve" funds that the Trust can then use to buy down rates, establish new programs, or offset large claim losses to moderate future rate increases. If you need more information about the workings of this Trust, check our Q&A section. 

TRUST TO BE USED FOR MEMBER SERVICES
When the Trust ends, these reserve funds, after paying all claims and expenses, go to OSBA -- as noted in the Trust Agreement adopted 42 years ago by locally elected school board members representing school board members from throughout Oregon.

The Trust Agreement states that a major purpose of the Trust is to "promote the common interests of its members and to institute programs to assist those members in performing their governmental functions in a cost effective
way." 

Craig Prewitt, OSBA President-Elect and chair of the Trust, said it best when the Board voted in May to end the Trust and preserve its assets: "By preserving the assets of our trust, we meet three major needs: Continue health insurance services for as long as we can, maintain core OSBA services that keep boards running smoothly -- and dedicate a major financial asset to meet future needs."

WHAT WILL OSBA DO WITH THE TRUST ASSETS?
The OSBA Board has strongly voiced -- through its unanimous vote at a May 5 meeting -- that Trust assets be preserved, as stated above by Craig Prewitt. At its Sept. 14-15 meeting, the OSBA Board will consider passing a resolution to establish a fund, or entity, to preserve Trust assets. The Board will also decide how interest earnings will be used. 

PRESERVING OSBA SERVICES
Based on OSBA Board action in May, a major priority will be to somehow preserve member services that have been traditionally supported through endorsement fees from the health insurance pool. When OSBA ends its health insurance program because of the new mandatory insurance pool (OEBB) requiring all eligible districts and ESDs to join by 2010, these funds -- which provide 55 percent of OSBA's operating budget -- will also end. The board will discuss earmarking interest earnings on a portion of Trust assets as a way to replace this resource. 

Again, OSBA has not violated any Oregon insurance codes, Trust laws, or its own Trust Agreement, in preserving the remaining assets. Decisions are made by your OSBA Board, which represents locally elected school board members from throughout Oregon. 

Kevin McCann
OSBA Executive Director

Dori Brattain
Associate Director/Director of Legal Services