Health Administrator’s Involvement In Union Election Held Improper

The contract covering Lodge 5 of Fraternal Order of Police (FOP), which represents Philadelphia police officers, provides active and retired members and their families medical, dental, vision and prescription drug coverage. It also establishes a “Joint Trust Board.” The FOP’s President appoints 80 percent of the Joint Trust’s members, and the City appoints 20 percent of the members, to supervise and manage the delivery of healthcare benefits.

The Joint Trust selected a nonprofit corporation known as Health Benefits to administer the healthcare benefits. Health Benefits is funded solely by funds required to be made by the City pursuant to the terms of the FOP contract.

During the 2010 FOP president election in which Frank Zampogna was a candidate, Health Benefits’ Board was concerned about statements Zampogna had made that it believed were misleading and false. In response, the Board approved the decision to respond to Zampogna’s statements through the expenditure of monies it received from the Joint Trust by publishing and mailing Union election materials against Zampogna and in support of and expressly endorsing the current Union President who subsequently won the election.

Zampogna filed a declaratory judgment action against Health Benefits requesting a permanent injunction to prevent Health Benefits from using public monies to engage in partisan activities. Pennsylvania’s Commonwealth Court agreed with Zampogna that Health Benefits had acted improperly.

The Court found that “while the law permits nonprofit corporations to make donations and contributions, it expressly provides that the donations and contributions are limited by the corporation’s Articles of Incorporation. Health Benefits’ Articles of Incorporation specifically state that the Corporation receives funds, holds funds, invests funds, administers funds and distributes funds for its Members’ health insurance.

“According to Health Benefits’ Articles of Incorporation, its purpose is to provide health and welfare benefits for its Members. Notwithstanding that Health Benefits has an additional function ‘to engage in other proper purposes incidental to’ providing health and welfare benefits, campaigning for a union presidential candidate does not appear, even remotely, within Health Benefits’ Articles of Incorporation. In addition, although to endorse a candidate through mailings may be considered a donation or contribution, said donation or contribution here is to the endorsed candidate’s campaign. As the candidate is an individual unrelated to Health Benefits’ purpose ‘to receive, hold, invest, administer and distribute funds to provide health and welfare benefits’ or ‘incidental to the foregoing,’ a donation or contribution to his campaign clearly falls outside of both the law, and Health Benefits’ Articles of Incorporation. Thus, the Board exceeded its authority by expending City funds for the Union President campaign mailing.”

Zampogna v. Law Enforcement Health Benefits, Inc., 2013 WL 6190186 (Pa. Cmwlth. 2013).