Background
Article XXI, Section D of the collective bargaining agreement (CBA) between Allegheny County and the Allegheny County Deputy Sheriff’s Association (Union) provides a monthly healthcare reimbursement of up to $700 for retired deputies who are not eligible for Medicare and do not receive health coverage through employment or a spouse. The reimbursement is paid one of two ways: directly to the County’s COBRA insurer when a retiree enrolls in COBRA coverage, or directly to the retiree when the retiree obtains private insurance. The County treated COBRA reimbursements as non-taxable but treated direct-to-retiree reimbursements as taxable wages—a practice it had followed since 2004.
In July 2022, the Union filed a grievance challenging the tax deductions on retirees’ direct reimbursements. The County moved to dismiss the grievance as untimely: the 10-business-day filing period in Article III, Section D(1) of the CBA had long since elapsed because the County had applied this tax treatment for nearly two decades. An arbitrator conducted hearings and in December 2023 issued an award sustaining the grievance. Expert CPAs from both sides agreed that under IRS Revenue Ruling 61-146 the direct reimbursements were excludable from income as actual insurance premium payments. The arbitrator found the County’s inconsistent treatment—non-taxable for COBRA, taxable for private insurance—inconsistent with Article XXI, Section D’s description of the reimbursement as a post-retirement benefit for “actual insurance costs incurred.” She ordered the County to pay the benefit as non-taxable going forward and treated the violation as “continuing,” with each improper deduction constituting a fresh grievable act.
The County petitioned the Allegheny County Court of Common Pleas to vacate the award. The trial court granted the petition, holding that the CBA was silent on taxation and that the arbitrator had effectively added a missing term—ordering the County to absorb the tax burden—in excess of her authority under Article XIV (Management Rights). The Union appealed to the Commonwealth Court.
The Court’s Holding
The Commonwealth Court reversed (Senior Judge Leadbetter, with Judges McCullough and Tsai), reinstating the arbitration award. The court applied the narrow certiorari standard governing Act 111 arbitrations—the law governing police officer and firefighter collective bargaining in Pennsylvania, Act of June 24, 1968, P.L. 237, 43 P.S. §§ 217.1-217.12. Under narrow certiorari, a court reviews an Act 111 award only for (1) the arbitrator’s jurisdiction; (2) the regularity of the proceedings; (3) whether the arbitrator exceeded her authority; and (4) constitutional violations. Errors of law alone do not warrant reversal. The court is bound by the arbitrator’s factual and legal determinations, “even if incorrect,” as long as the award is within the scope of the CBA and does not require performance of an illegal act.
On the authority question, the court concluded the arbitrator had interpreted—not reformed—Article XXI, Section D. The CBA expressly provides the reimbursement for “actual insurance costs incurred,” characterizing it as a post-retirement benefit. The arbitrator found the County’s differential tax treatment inconsistent with that characterization. Crucially, the court distinguished City of Pittsburgh v. Fraternal Order of Police Fort Pitt Lodge No. 1 (On- and Off-duty Pay), 111 A.3d 794 (Pa. Cmwlth. 2015), the case the trial court relied on: in that case the arbitrator had explicitly invoked equity and fairness rather than CBA language. Here, in contrast, the arbitrator cited and interpreted specific CBA provisions. Silence on taxation does not prevent an arbitrator from drawing conclusions about the tax status of a benefit from the benefit’s defined character. “The absence of language specific to an issue does not prevent an arbitrator from drawing conclusions related to that issue.”
On timeliness, the court declined to disturb the arbitrator’s finding that each tax deduction constituted a continuing violation triggering a fresh grievance window—a legal determination fully within the arbitrator’s interpretive authority under the “extreme deference” owed to Act 111 awards. The County’s waiver of the municipal pension cost-estimate argument (raised for the first time on appeal) was also noted.
Key Takeaways
- Under Act 111’s narrow certiorari standard, an arbitrator who interprets CBA provisions—even when the CBA is silent on the specific issue—does not exceed her authority; silence on taxation does not make a benefit-characterization ruling a prohibited reformation of the agreement.
- An arbitrator’s finding that payroll deductions from a CBA-defined post-retirement benefit constitute a continuing violation is binding on judicial review under narrow certiorari, even if a reviewing court might disagree with the legal conclusion.
- Arguments not raised before the arbitrator—including whether a pension cost estimate was required under the Municipal Pension Plan Funding Standard and Recovery Act—are waived on appeal under Pa.R.A.P. 1551(a).
- The decision reinforces the Pennsylvania Supreme Court’s holding in City of Pittsburgh v. FOP, 224 A.3d 702 (Pa. 2020), that an Act 111 arbitrator has authority to fill gaps in CBA language when doing so constitutes interpretation rather than contract reformation.
Why It Matters
Act 111 governs arbitration for Pennsylvania police officers and firefighters—including deputy sheriffs—and the narrow certiorari standard is among the most deferential forms of judicial review in Pennsylvania labor law. Courts and counties have frequently clashed over whether arbitrators exceed their authority by ordering benefits on issues the CBA does not explicitly address. Allegheny County v. Deputy Sheriff’s Association reinforces that silence on a specific issue (here, taxation) does not mean the issue is “missing” from the CBA when the express benefit language implies the answer—and that an arbitrator who works from CBA text rather than fairness principles stays within jurisdictional bounds.
For Pennsylvania public-employer labor counsel, the decision is a reminder that decades-long past practice does not insulate a benefit-administration policy from arbitral challenge if the CBA’s text can be read to require different treatment—and that a continuing-violation theory can revive otherwise time-barred grievances when each new deduction constitutes a discrete CBA breach. Employees and unions should note that IRS Revenue Ruling 61-146 may provide a basis for challenging employer taxation of direct healthcare reimbursements that replicate COBRA coverage.