Tecumseh Products Co.

TECUMSEH PRODUCTS CO. Tecumseh Products Company and United Product Workers of Tecumseh. Case 7-CA-25865 11 September 1987 DECISION AND ORDER By CHAIRMAN DOTSON AND MEMBERS JOHANSEN AND BABSON On 25 March 1987 Administrative Law Judge Leonard M. Wagman issued the attached decision. The Respondent filed exceptions and a supporting brief. The General Counsel filed cross-exceptions and a brief in support thereof and in response to the Respondent's exceptions. The Charging Party filed a brief in opposition to the Respondent's ex- ceptions. The National Labor Relations Board has delegat- ed its authority in this proceeding to a three- member panel. The Board has considered the decision and the record in light of the exceptions and briefs' and has decided to affirm the judge's rulings, findings, and conclusions, to modify the remedy, 2 and to adopt the recommended Order. ORDER The National Labor Relations Board adopts the recommended Order of the administrative law judge and orders that the Respondent, Tecumseh Products Company, Tecumseh, Michigan, its offi- cers, agents, successors, and assigns, shall take the action set forth in the Order. We deny the Respondent's motion to strike the General Counsel's cross-exceptions. S In accordance with our decision in New Horizons for the Retarded, 283 NLRB 1173 (1987), interest on and after January 1, 1987, shall be computed at the "short-term Federal rate" for the underpayment of taxes as set out in the 1986 amendment to 26 U.S C. § 6621 . Interest on amounts accrued prior to 1 January 1987 (the effective date of the 1986 amendment to 26 U S.C. § 6621) shall be computed in accordance with Florida Steel Corp., 231 NLRB 651 (1971). Dennis Bonn, Esq., for the General Counsel. Richard J. Seryak and Ingrid Brey, Esgs (Miller, Canfield, Paddock & Stone), of Detroit, Michigan, for the Re- spondent. John R. Runyan Jr., Esq. (Sachs, Nunn, Kates, Kadushin, O'Hare, Helveston & Waldman, P.C.), of Detroit, Michigan, for the Charging Party. DECISION STATEMENT OF THE CASE LEONARD M. WAGMAN, Administrative Law Judge. On a charge filed on 27 May 1986,1 by United Product I Unless otherwise stated, all dates occurred in 1986. 781 Workers of Tecumseh (the Union), the Regional Direc- tor for Region 7, on 21 July, issued a complaint and notice of hearing against the Respondent, Tecumseh Products Company (the Company). The complaint al- leged that the Company violated Section 8(a)(5) and (1) of the National Labor Relations Act, as amended, 29 U.S.C. Sec. 151 et seq. (the Act), by unilaterally imple- menting a precertification program in the administration of the health insurance provisions in a collective-bargain- ing agreement between the Company and the Union. The Company, by its answer to the complaint, denied commission of the alleged unfair labor practice. The hearing in this case was held on 23 and 29 Octo- ber at Ann Arbor, Michigan. On the entire record in the case, including my observation of the demeanor of the witnesses, and after consideration of the'briefs filed by the General Counsel, the Company,2 and the Union, I make the following FINDINGS OF FACT The Company, a Michigan corporation, is engaged in the manufacture, nonretail sale, and distribution of com- pressor motors at its plant in Tecumseh, Michigan. The Company annually manufactures, sells, and distributes products valued in excess of $500,000, of which products valued in excess of $50,000 are shipped from its Tecum- seh, Michigan plant directly to points located outside of Michigan. The Company, in the course of its business operations, also annually purchases and causes to be de- livered to its Tecumseh, Michigan plant, goods and ma- terials valued in excess of $50,000, directly from points located outside of Michigan. The Company admitted the foregoing data, and that it is, and has been, at all times material to this case, an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act, and I so find. The Company also admitted, and I find, that the Union is, a labor organization within the meaning of Section 2(5) of the Act. 1. THE ALLEGED UNFAIR LABOR PRACTICE A. The Facts3 Since at least 1970, and at all times material to this case, the Company has recognized the Union as the ex- clusive collective-bargaining representative of the Com- pany's employees-in the following unit, which I find ap- propriate for purposes of collective bargaining within the meaning of Section 9(b) of the Act: All employees employed at the Company's Te- cumseh, Michigan, plant who are paid on an hourly or piece-work basis but excluding all time study em- ployees, time study checkers, methods engineers, experimental and development engineers, personal secretaries, budget department employees, exclusive of clerk typists, paymasters, assistant accounts pay- 2 On 29 January 1987, the Company filed a reply brief and a motion requesting consideration of that brief As neither the General Counsel nor the Union filed any opposition, I now grant the Company's motion. 3 The testimony in this case presented no issues of credibility The es- sential facts were undisputed. 285 NLRB No. 104 782 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD able supervisors, assistant accounts receivable super- visors, mail clerks, plant protection employees and guards and supervisors as defined in the Act. Thereafter, the Company and the Union entered into a succession of collective-bargaining agreements covering the described unit. Their most recent collective-bargain- ing agreement is effective from 15 May 1984 until 14 May 1988. Article XXIV, paragraph 243 of the current agree- ment, entitled, "Insurance Program" states: The Company has established an Insurance Plan for employees covered by this Agreement, and this Plan shall remain in effect for the duration of the Labor Agreement without a premium cost to said employees. All benefits of the Insurance Plan as agreed to by the Company and the Union are ex- plained in an insurance booklet provided by the Company. Aetna Life Insurance Company prepared the booklet referred to in the collective-bargaining agreement, which is entitled "Your Group Plan." On the first page Aetna announced that the booklet described "[t]he benefits and principal provisions" of the plan. The booklet made no reference to a precertification program. The current agreement, in article XXVII, paragraph 250, also contains the following management rights clause : "Management reserves the right to operate its business is an efficient and economic manner, which in- cludes all rights not limited to or modified by the terms of this Agreement." Since 1 March 1967, Aetna Life Insurance Company has administered a health insurance program for all the Company's employees. As administrator, Aetna has paid employees medical expenses, including surgical expenses, physicians' and nurses' fees, prescriptions, diagnostic lab- oratory and x-ray examinations, ambulance service, semi- private hospital rooms and board, second surgical opin- ions and convalescence. Prior to 1 May, the Company's bargaining unit em- ployees seeking hospital benefits obtained claim forms from the Company's insurance office, located within the plant, and submitted them to their physician, who com- pleted and filed the claim form with the Company. The Company, after determining the patient's eligibility, sent the claim to Aetna for its review and payment. At the conclusion of their negotiations for the 1984 collective-bargaining agreement, the Company and the Union executed a settlement agreement covering eco- nomic issues including health and medical benefits. In the negotiations leading up to the settlement agree- ment, the Company had expressed serious concern about the increasing cost of the health insurance program in the bargaining unit. The settlement agreement reflected this concern. The first page of the settlement agreement contained the following declaration of intent: The following provisions together with the con- tractual changes, understandings and interpretations shall constitute full and complete settlement of all matters discussed in connection with Contract nego- tiations concluded on April 23, 1984. It is agreed that the new Contract will take effect on May 15, 1984. All Contract language and other matters dis- cussed between the Company and the United Prod- ucts Workers Union during these negotiations are considered resolved by both parties on the basis of the attached Settlement agreed to during the negoti- ations meetings. The parties included the following provisions covering hospital, medical and surgical costs in a section entitled "Group Life, Health, Medical and Surgical Benefits." Active, Seniority Employees and Eligible Depend- ents The intention of these changes is to attempt to con- tain and/or reduce the escalating costs of hospitali- zation, medical and surgical benefits, while main- taining the highest level of required health care available for the employees and their dependents. Hospitalization A. Hospital confinement charges will be reimbursed only if the reason for the stay is medically neces- sary. There will be no reimbursement if the hospi- talization is for purposes of a surgery which is not covered by our medical plan, or if the hospitaliza- tion is for observation or diagnostic testing which could have been performed on an outpatient basis. B. Non-emergency hospital admissions on a Friday, or a Saturday will not be covered. Hospital con- finement charges for a medically required, non- emergency stay will be reimbursed beginning the first non-holiday weekday, or beginning the after- noon prior to the surgery, through the end of the required confinement period, to a maximum of 365 days. Emergency admissions are reimbursable regard- less of the day of the week. C. Reimbursement for Hospital Room & Board, and miscellaneous charges will be reduced by a de- ductible of $100 during each required hospital stay. Surgery A. Inpatient, non-emergency surgery will be reim- bursed at 80% of all Hospital and Physician charges if that surgery could have safely been per- formed on an outpatient basis. The 20% reduction of charges will not be covered by the Major Med- ical Benefit. B. Charges for anesthesia administered during a non- covered surgery will not be reimbursed. C. If the anesthesia is for an inpatient surgery which could have been performed on an outpatient basis, the anesthesia charges will be processed at 80% rather than at 100%. TECUMSEH PRODUCTS CO., 783 D. Mandatory Second Surgical Opinion-In order to receive full reimbursement under the plan, cer- tain voluntary surgeries will require a second opinion. Charges for second surgeon's opinion will be paid in full. If a second opinion is not ob- tained, the surgeon's charge and all related ex- penses including the hospitalization will be reim- bursed at 80%. Medical A. Provide coverage for intermediate and outpatient effective treatment of substance (alcohol & drug) abuse. Such coverage shall provide a maximum of $2,000 per calendar year for expenses while not confined in a hospital or treatment facility. B. No payment shall be made for charges relating to outpatient or hospital confinement for treatment of substance (alcohol or drug) abuse, unless the in- dividual completes the entire, recommended course of effective treatment. which is considered not necessary for treating an ill- ness or injury. Rather than have hospital charges denied after you have been released from a hospital, the Compa- ny has, therefore, reached an agreement with Aetna, which says that Aetna will accept the opin- ion of an independent third party about the need for and length of any' hospital stay. They will respect this impartial opinion, however, only if you get such an opinion in advance of any hospitalization. To prevent the potential for considerable expense on your part, the Company has, therefore, contract- ed with an outside organization to administer a hos- pital "pre-certification" program. This program pro- vides for a pre-notification of all elective hospital- izations, as soon as they are known, and notification within 72 hours after any emergency admission. The program will require that, when recom- mending a hospital admission, your doctor will need to call one of the following toll-free numbers to cer- tify the medical necessity of your hospital stay: Within Ohio-1-800-468-5124 Outside Ohio-1-800-468-5123 D. Any excess charges for inpatient hospitalization, At that time a Registered Nurse at Health Care surgical or anesthesia reduced because the surgery Review Systems (HCRS) will discuss with your was not performed on an outpatient basis will not physician the treatment to be undertaken and will be eligible for reinbursement under Major Medi- then, if appropriate, certify an acceptable length of cal. stay in the hospital, which Aetna has agreed to Absent from both the current collective-bargaining agreement and the settlement agreement is any reference to a precertification program. I also find that the parties did not discuss or even mention precertification during the negotiations leading up to those detailed agreements. On 25 April, the Company sent the following letter to bargaining unit and retired employees announcing the in- ception of a precertification requirement for hospital in- surance claims: Hospital inpatient charges represent the greatest portion of Tecumseh Products' annual health care expenses. Throughout the Company, nearly $.60 of each health care dollar is spent for hospitalization. According to national statistics, for every one thousand people, 500 to 600 days are spent in the hospital each year. At Tecumseh, however, we have been experiencing almost double that number; in 1985 for example, Tecumseh Division had slight- ly more than 1,100 hospital days per thousand people. The health care plans covering Tecumseh Prod- ucts employees generally provide coverage for serv- ices that are considered reasonable and medically necessary. Because of the fact that the number of hospital days for Tecumseh Division is double the national average, Aetna feels that many of these charges may not be medically necessary and as a result has informed us that they will begin enforcing the "medical necessity" provision in our contracts. Beginning May 1, 1986, Aetna will be excluding hospital benefits for any portion of a confinement honor. If your doctor fails to utilize the pre-certification program, however, after your release from the hos- pital Aetna will determine the appropriate number of days you should have been hospitalized based on your diagnosis and medical standards. That, of course, could result in a reduction of benefits. This new pre-certification program, scheduled to start May 1, 1986, will in the long run benefit ev- eryone concerned, but most particularly you since you will now have the benefit 'of an independent opinion backing up your doctor's recommendation for any hospitalization. And, the program will free you of any concerns about Aetna's willingness to pay for a hospital stay. The Company has gone to considerable expense and effort to establish this pre-certification program for your benefit and convenience. It is now up to you to make your doctor aware of this new plan feature to ensure that you will not be liable for any unnecessary hospital expenses. On the same date, the Company sent letters to local physicians and hospitals stating in pertinent part: Beginning May 1, 1986, all hospital admissions proposed for Tecumseh Products' hourly employees and retirees, and their covered dependents, will re- quire pre-certification. The Company has contracted with Health Care Review Systems (HCRS) to administer the pre-cer- tification program. This program will require that, 784 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD when recommending a hospital admission the physi- cian will be required to certify the medical necessity of the individual's hospital confinement in order to avoid a reduction in the individual's reimbursement for the hospital expenses. This program requires pre-notification of all elec- tive hospitalizations as soon as they are known, and notification within 72 hours after any emergency admission. In the event of an emergency admission, the admitting physician must certify the stay by calling one of the following toll-free numbers: Within Ohio-1-800-468-5124 Outside Ohio-1-800-468-5123 As in the past, it will be necessary for your ad- mitting department to contact Tecumseh Products at 517-423-8401 to verify the eligibility status of certified stay. In a letter dated 28 April, the Company's insurance and health care administrator, Larry Sheridan, instructed Aetna on the new precertification program for the bar- gaining unit employees as follows: The HCRS certification determination letter will indicate to Aetna the appropriate length of stay. If, during a concurrent review, additional days are ap- proved, HCRS will notify us of the extension, and we will advise the claim office. Aetna, however, should reimburse in patient stays only on the basis of the HCRS determination. There may be occasions when an inpatient bill does not contain an HCRS determination, is re- turned to me, and we subsequently are unable to obtain the necessary certification. In this situation, if the bill is for Tecumseh division employee or retiree or dependent, I will return the claim to Aetna with a request that the bill be subject to Aetna's "medical necessity" and "reasonable charge" parameters. On 28 or 29 April, Union President Raymond R. Jack- son, for the first time, learned of the impending precerti- fication requirement from retired company employees. On 29 April, after he had read the Company's letter to the unit employees and the retirees, Jackson confronted the Company's divisional personnel director, Robert K. Robinson. Jackson asked why the Company had failed to notify the Union and afford it an opportunity to bargain about this change. Robinson responded that the Compa- ny was not obligated to negotiate this matter with the Union. Robinson explained that the Company had the right to establish the precertification plan unilaterally under the "medically necessary" language in the settle- ment agreement. The Company's precertification program became effec- tive for the bargaining unit employees on 1 May, without the Union's approval and without compliance with Sec- tion 8(d)(2) of the Act which provides inter alia: That where there is in effect a collective bargaining contract covering employees in an industry affect- ing commerce, the duty to bargain collectively shall also mean that no party to such contract shall ter- minate or modify such contract unless the party de- siring such termination or modification- (2) offers to meet and confer with the other party for the purpose of negotiating a new contract or a contract containing the proposed modifications. I find from the testimony of David D. Manning, the Company's corporate director of employees benefits, that HCRS, in making its certifications, looks to information available in its own medical reference materials and con- sults with its own trained staff medical personnel. The Company's agreement with HCRS does not require the latter to consult Aetna's physicians or other medical per- sonnel in determining medical necessity. Since 1 May, with one modification, the Company, HCRS, and Aetna have enforced the procedure that Sheridan described in his letter of 28 April. On 19 Sep- tember the Company, in a letter to Aetna, announced a modification of the precertification program, as follows: During the early period of our pre-certification program, Aetna correctly denied any hospital days which had not been approved by the pre-certifica- tion organization. We subsequently determined that days were not being certified because there had been no follow up with medical documentation by the admitting physicians, specifically during emer- gency admissions. We have now contracted with HCRS, the pre- certification organization, to utilize a retrospective review of such emergency admissions. If, during the hospital stay, the physician fails to follow up with HCRS, no days will be immediately certified. Upon our receipt of the hospital bill, the summary of charges will be referred to HCRS to review the stay. Their retrospective certification will then be attached to the hospital's billing for Aetna's han- dling. With this new procedure in mind, I am attaching several EOB denials of non-credited hospital stays. We are referring the hospital bills to HCRS for review, and we would like you to immediately issue corrected EOB's to indicate the previously denied charges are being "pended" for a review of the medical necessity of each hospital stay. Subsequent to the review you can handle each claim as appro- priate. I will be notifying each provider, by letter, that the charges are being reviewed and that any additional payments will be based on the determina- tion of medical necessity. Review of some explanations of benefits, referred to as EOB's was helpful in understanding the precertification program. One such case is that of bargaining unit em- ployee Harlan Johnston, whose wife was hospitalized from 28 May through and including 17 July which re- flected the impact of precertification upon hospitalization claims. On 11 June, 2 weeks after his wife's hospitaliza- tion began, Johnston received a precertification from HCRS for 5 days of hospital confinement. Thereafter, in an explanation of benefits dated 29 August, Aetna ad- O TECUMSEH PRODUCTS CO vised Johnston that out of submitted expenses totaling $22,729.83, it had paid only $2,648.35. In the "remarks" section of its explanation, Aetna, referring to the disal- lowed expenses, stated: "These benefits have been calcu- lated at a reduced level because our records indicate you did not comply with hospital pre-certification proce- dures." In a second EOB, prepared and sent to employee Johnston about 29 September, Aetna reported that it was reviewing claims for his wife's treatment and hospital costs totaling $20,081.48. In the "remarks" section of its explanation, Aetna declared that it was reviewing the "medical necessity of the hospital confinement." Finally, in an EOB that it prepared for Johnston on 20 October, 3 days before the inception of the hearing in this case, Aetna agreed to pay $20,081.48. Another case demonstrating operation of the precerti- fication program, involved bargaining unit employee Earl Case, who was hospitalized from 16 June to 22 June. Aetna's EOB issued to Case about 3 September, showed that out of a claim totaling $4093.80, Aetna was disapproving $1348.07 because he "did not comply with hospital pre-certification procedures." However, about 29 September, Aetna, in a second EOB, told Case that the amount it had previously disapproved was now "pending for a review of the medical necessity of the hospital confinement." Finally, in an EOB dated 13 Oc- tober, Aetna said it would pay the previously disallowed amount of $1348.07 in hospital costs. However, two other bargaining unit employees did not fare as well as employees Case and Johnston. In the first instance, employee Dusseau submitted a claim of $4819.72 for hospital expenses incurred by his wife from 30 May until 10 June. In an EOB issued to Dusseau about 3 September, Aetna stated that expenses totaling $2097 were not covered by medical insurance "because our records indicate you did not comply with hospital pre-certification procedures." Aetna also advised Dus- seau in the same document that additional hospital ex- penses of $2256.72 were pending for lack of information, which Aetna requested from him. Thereafter, on 25 Sep- tember, Aetna notified Dusseau that it would not pay $1750.17 of the pending claim because he "did not comply with hospital pre-certification procedures." Thus, out of submitted hospital expenses totaling $4819.72, Aetna paid only $872.55. Finally, at the time of the hear- ing in this case, an additional claim of $65 in hospital ex- penses incurred on 6 June was "pending for a review of the medical necessity of the hospital confinement." In the second instance, employee Dave Schultz sub- mitted an insurance claim totaling $4735 for hospital ex- penses incurred by his wife from 22 June to 1 July. In an EOB issued to Schultz on 15 September, Aetna stated that $1881.62 of the hospital expenses would not be paid because his wife's inpatient stay was longer than the cer- tification period. Aetna also informed Schultz that $425 of the submitted expenses "have been referred for addi- tional review within our office." The record did not dis- close the outcome of Aetna's review On 1 May, the Company implemented a further cost containment program called "checking out." The check- ing out program encouraged employees to review their 785 hospital bills for overcharges and clerical errors by re- warding them with 25 percent of the savings resulting from their review. The Company implemented this pro- gram without giving the Union the opportunity to bar- gain about it. B. Analysis and Conclusions It is well settled that an employer by altering an ele- ment of a health insurance provision that intimately af- fects its employees, during the effective period of a col- lective-bargaining agreement, without the approval of its employees' collective-bargaining representative and with- out complying with Section 8(d)(2) of the Act, violates Section 8(a)(5) and (1) of the Act. Athey Products, 282 NLRB 203, 205 (1986); Keystone Consolidated Industries, 237 NLRB 763, 767 (1978). In the instant case, the Com- pany, looking to the Board' s test as set forth in Keystone, supra at 766, insists that its unilaterally imposed precerti- fication program did not constitute such a substantial and significant alteration in the contractual health insurance provision as would require compliance with the Act's bargaining requirements. I disagree. In Keystone, supra at 766, the Board recognized that "[i]f the choice of an administrator makes a difference then the parties must bargain about the choice." Here, the Company, for the first time, contracted with HCRS during the term of current collective-bargaining agree- ment to precertify the medical necessity of hospitilization for unit employees and their dependents as a precondi- tion to obtaining payment of hospitalization claims by Aetna. Neither the settlement agreement, nor the current collective-bargaining agreement, nor the booklet pre- pared by Aetna referred to a precertification program as part of the insurance plan In its testimony before me, and in the correspondence shown above, the Company made plain that it was sup- planting Aetna with HCRS as the administrator responsi- ble for determining the medical necessity of hospitaliza- tion and the duration of confinement. Even in emergency situations where precertification could not be obtained, HCRS' retrospective determination of medical necessity will govern Aetna's payment of claims. Further, if HCRS performs as the Company expects, a reduction in benefits is likely to befall the unit employees. The Company also made clear in its testimony before me, and in its announcements to employees and Aetna, that the objective of this mandatory precertification pro- gram was to reduce the flow of health care benefits to the bargaining unit employees and their dependents. The Company warned its employees that failure to obtain precertification of hospital expenses was likely to result in out-of-pocket expenses to them. After 1 May, Aetna's explanations of disapproved claims showed that unit employees who failed to obtain precertification were likely to bear at least some of the costs of hospitalization. Prior to 1 May, there was no such precertification program to satisfy. The record also showed that the Company and the Union did not bargain about such a precertification pro- gram prior to its implementation . The parties did not dis- cuss precertification during the negotiations for either 786 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD the current collective-bargaining agreement or the de- tailed settlement agreement. Nor did the Company make any effort to discuss this innovation with the Union at any time. Under Board law, the significance of this change in the administration of the contractual health in- surance benefits required the Company to comply with Section 8(d)(2) of the Act, and to obtain the Union's ap- proval before it implemented the precertification pro- gram. That Aetna finally paid all of employee Johnston's and all of employee Case's hospitalization claims did not sup- port the Company's contention that the precertification made no substantial or significant impact on the contrac- tual health insurance program. For there was no show- ing that either of the payments represented a departure from the instruction in the Company's letter of 28 April, that henceforth Aetna was to defer to HCRS' determina- tion of medical necessity. Indeed, the Company reaf- firmed that instruction in its letter to Aetna, dated 19 September. The Company further contends that the Union has waived its right to bargain about the precertification pro- gram on the grounds that the management rights clause in the current contract expresses such a waiver, and that the Union remained silent in the face of the Company's unilateral implementation of its checking out plan. I find no merit in the Company's contention. The Board has long held that a union may waive its statutory right to bargain about a mandatory subject of bargaining; that such a waiver will not be readily in- ferred and that there must be a showing that the union made the waiver in clear and unmistakable language. E.g., Rockford Manor Care Facility, 279 NLRB 1170, 1172 (1986). Here the Company's reliance on the follow- ing management rights clause in the current collective- bargaining agreement is misplaced: ARTICLE XXVII GENERAL PROVISIONS Paragraph 250. Management reserves the right to operate its business in an efficient and economic manner, which includes all rights not limited to or modified by the terms of this Agreement I find that the quoted management rights clause does not include a "clear and unmistakable" waiver of the Union's statutory right to bargain about a substantial alteration in the contractual health benefits provision such as the pre- certification program. Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 708 (1983); Suffolk Child Development Center, 277 NLRB 1345, 1349 (1985). Nor do I find merit in the Company's further argu- ment that the Union's treatment of the checking out plan was also a waiver. The Union's silence in the face of the checking out program did not constitute a waiver of its entitlement to bargain about the precertification pro- gram . The checking out program was not a material, substantial, and significant change in the unit employees' terms and conditions of employment. Therefore, the Company was not required to comply with Section 8(d) of the Act before implementing it, and the Union had no waivable right to bargain. United Technologies Corp., 278 NLRB 306 (1986). In contrast to the checking out program, the precertifi- cation program was a substantial and significant change warranting compliance with Section 8(d) of the Act. Section 8(d)(2) requires that the Company offer to meet and confer with the Union for the purpose of negotiating about the precertification program. Having failed to extend such an offer to the Union, the Company cannot succeed in its contention that the Union has by its con- duct waived its right to bargain. Suffolk Child Develop- ment Center, supra. In short, the Company's neglect in this regard and its negative response to the Union's in- quiry of 29 April, deprived the Union of any opportunity to waive its bargaining right under the Act. Having re- jected the Company's waiver contention, I find the Com- pany violated Section 8(a)(5) and (1) of the Act by uni- laterally implementing its precertification program. Key- stone Consolidated Industries, 237 NLRB 763, 767 (1978). CONCLUSIONS OF LAW 1. Respondent, Tecumseh Products Company, is an employer engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. 2. The Union, United Product Workers of Tecumseh, is a labor organization within the meaning of Section 2(5) of the Act. 3. At all times material, the Union has been, and con- tinues to be the exclusive representative of Respondent's employees in the following bargaining unit found appro- priate for the purposes of collective bargaining within the meaning of Section 9(b) of the Act: All employees employed at Respondent's Tecum- seh, Michigan, plant who are paid on an hourly or piece-work basis but excluding all time study em- ployees, time study checkers, methods engineers, experimental and development engineers, personal secretaries, budget department employees, exclusive of clerk typist, paymasters, assistant accounts pay- able supervisors, assistant accounts receivable super- visors, mail clerks, plant protection employees and guards and supervisors as defined in the act. 4. By unilaterally, without complying with Section 8(d)(2) of the Act, and without the consent of the Union, modifying the collective-bargaining agreement as it per- tains to health insurance provisions, by implementing a precertification program, Respondent has engaged in and is engaging in unfair labor practices within the meaning of Section 8(a)(5) and (1) of the Act. REMEDY Having found that Respondent has committed an unfair labor practice, I shall recommend that it be or- dered to cease and desist from such conduct and take such affirmative action as I find necessary to remedy the effects of the unfair labor practice and to effectuate the policies of the Act. Having found that Respondent unilaterally changed its employees' health insurance benefits on 1 May, by imple- menting a precertification program, I shall order that Re- spondent, at the Union's request, rescind that change and TECUMSEH PRODUCTS CO. 787 reimburse those employees who were required to make out-of-pocket expenditures as a result of that unilateral change.4 Interest on all such reimbursements shall be computed in the manner prescribed in Florida Steel Corp., 231 NLRB 651 (1977).5 On these findings of fact and conclusions of law and on the entire record , I issue the following recommend- ed" ORDER The Respondent, Tecumseh Products Company, Te- cumseh, Michigan, its officers, agents, successors, and as- signs, shall 1. Cease and desist from (a) Refusing to bargain in good faith with United Product Workers of Tecumseh as the exclusive repre- sentative of its employees with respect to rates of pay, wages, hours of employment, and other terms and condi- tions of employment, in an appropriate unit consisting of. All employees employed at Respondent's Tecum- seh, Michigan, plant who are paid on an hourly or piece-work basis but excluding all time study em- ployees, time study checkers, methods engineers, experimental and development engineers, personal secretaries, budget department employees, exclusive of clerk typists, paymasters, assistant accounts pay- able supervisors, assistant accounts receivable super- visors, mail clerks, plant protection employees and guards and supervisors as defined in the Act. (b) Making unilateral changes in the health insurance program for bargaining unit employees, by requiring em- ployees' hospital charges to be precertified by Health Care Review Services, an independent third party, during the term of the contract, without first reaching agreement with the United Product Workers of Tecum- seh concerning such changes and without complying with provisions of Section 8(d) of the Act. (c) In any like or related manner interfering with, re- straining, or coercing employees in the exercise of their right to self-organization, to form labor organizations, to join or assist the above-named Union, or any other labor organization, to, bargain collectively through representa- tives of their own choosing, and to engage in other con- certed activities for the purpose of collective bargaining or other mutual aid or protection, or to refrain from any or all such activities. 2. Take the following affirmative action necessary to effectuate the policies of the Act. (a) On the request of United Product Workers of Te- cumseh, rescind the precertification program, which Re- * Under the circumstances of this case, I find that the visitatorial clause requested by the General Counsel for inclusion in the recommended Order is unnecessary Two M, 281 NLRB 502 (1986) 5 See Ogle Protection Service, 183 NLRB 682, 683 (1970), and see gener- ally Isis Plumbing Co, 138 NLRB 716 (1962) 9 If no exceptions are filed as provided by Sec 102 46 of the Board's Rules and Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec 102 48 of the Rules, be adopted by the Board and all objections to them shall be deemed waived for all pur- poses spondent announced in its letter to employees dated 25 April (b) Reimburse employees for hospital charges that they were required to pay as a result of the unilateral changes in the health insurance program, as announced in Re- spondent's letter to employees dated 25 April 1986, with interest. (c) Post at its place of business in Tecumseh, Michi- gan, copies of the attached notice marked "Appendix."7 Copies of the notice, on forms provided by the Regional Director for Region 7, after being signed by the Re- spondent's authorized representative, shall be posted by the Respondent immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respond- ent to ensure that the notices are not altered, defaced, or covered by any other material. (d) Notify the Regional Director in writing within 20 days from the date of this Order what steps the Re- spondent has taken to comply. ' If this Order is enforced by a judgment of a United States court of appeals, the words in the notice reading "Posted by Order of the Nation- al Labor Relations Board" shall read "Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the National Labor Relations Board " APPENDIX NOTICE To EMPLOYEES POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD An Agency of the United States Government The National Labor Relations Board has found that we violated the National Labor Relations Act and has or- dered us to post and abide by this notice. Section 7 of the Act gives employees these rights. To organize To form, join, or assist any union To bargain collectively through representatives of their own choice To act together for other mutual aid or protec- tion To choose not to engage in any of these protect- ed concerted activities. WE WILL NOT refuse to bargain in good faith with United Product Workers of Tecumseh, by: (a) Refusing to bargain in good faith with United Product Workers of Tecumseh as the exclusive repre- sentative of its employees with respect to rates of pay, wages, hours of employment, and other terms and condi- tions of employment, in an appropriate unit consisting of: All employees employed at our Tecumseh, Michigan, plant who are paid on an hourly or piece-work basis but excluding all time study em- ployees, time study checkers, methods engineers, experimental and development engineers, personal 788 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD secretaries , budget department employees, exclusive of clerk typists, paymasters, assistant accounts pay- able supervisors , assistant accounts receivable super- visors, mail clerks, plant protection employees and guards and supervisors as defined in the Act. (b) Making unilateral changes in the health insurance program for bargaining unit employees, by requiring em- ployees' hospital charges to be precertified by Health Care Review Services , an independent third party, during the term of the contract, without first reaching agreement with the United Product Workers of Tecum- seh concerning such changes and without complying with Section 8(d) of the Act. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the exercise of the rights guaranteed them by Section 7 of the Act. WE WILL at the request of United Product Workers of Tecumseh, rescind the precertification program that was announced in our letter to employees, dated 25 April 1986. WE WILL reimburse our employees for hospital charges that they were required to pay, as a result of the unilateral changes in the health insurance program, as an- nounced in our letter to employees dated 25 April 1986, with interest. TECUMSEH PRODUCTS COMPANY