by Daniel Tubb and Samantha Ponting

On Oct. 31, the Carleton University Graduate Students’ Association (GSA) filed legal proceedings against the Carleton University Students’ Association (CUSA). The two associations are at odds over three issues: the way that CUSA broke a decade-old agreement between the two parties pertaining to a shared health, accident, and dental plan; what to do with the almost $500,000 contingency fund that the not-for-profit health insurance provider Green Shield Canada holds; and how best to provide affordable, high quality insurance to their members.

“It is now unfortunate that the GSA has decided to waste more of their members’ money by bringing a legal action,” said CUSA Vice-President Finance Michael De Luca in an email to the Leveller.

The Graduate Students’ Association believes it is protecting its members’ financial interests through the lawsuit.

The GSA suit concerns the ownership of a $484,877 surplus in the health plan generated by the insurance premiums. The GSA legal action aims to prevent attempts by CUSA to liquidate the health plan reserve funds for the exclusive benefit of CUSA. The GSA asserts that the GSA and CUSA jointly own these funds, and that they must be used in a manner consistent with the purpose for which the GSA and CUSA accumulated them. In a membership advisory, the GSA argues that they have repeatedly attempted to hold conversations with CUSA to discuss the plan and the surplus, but that CUSA has refused to attend.

“We have written to Green Shield requesting they hold the funds until the matter has been settled,” said GSA President Kelly Black in an interview with the Leveller.

While the ownership of the health plan reserve funds is a major tenet of the lawsuit, Black emphasized that, above all, “We would like reinstatement of the plan.”

The GSA alleges that CUSA unilaterally and illegally withdrew from a shared agreement that both organizations signed in 2000 and from a Letter of Appointment signed in 2011, which appoints Morneau Shepell as the insurance broker. According to the GSA’s legal filings, the agreements can be terminated only either by mutual agreement of a joint oversight committee composed of two representatives from each of the student associations, or unilaterally by either organization, provided they hold a referendum on the matter in accordance with each organization’s internal bylaws, policies, and constitutions.

The GSA lawsuit purports that CUSA broke its contractual obligations by changing the definition of “referendum” in its bylaws. During the summer semester, CUSA’s council modified the term to mean a vote of the CUSA Board of Trustees—three CUSA executive officers—instead of its original meaning: a vote of CUSA’s entire membership.

The GSA alleges that CUSA councillors amended CUSA bylaws in a manner that was not in accordance with the procedures of CUSA. That is, there is no authority in the CUSA constitution, bylaws, or policies that gives CUSA the power to redefine a referendum as being just amongst the CUSA Board of Trustees. The GSA states that these actions are “profoundly undemocratic” and that it breaks contracts in a way that is not “legally defensible.”

Profit vs. not-for-profit health care

According to De Luca, “CUSA offered the GSA an opportunity this past summer to get a better health plan at a lower cost. The GSA rejected this offer despite the fact that it was in their members’ best interest. “

Black said that the GSA is happy with the existing health plan and that the organization had just made improvements to it in April.

In their membership advisory, the GSA states that the major advantage of a not-for-profit plan is its “’refund’ (or ‘retention’) accounting method,” which means that “after student health claims and administrative fees are paid out, any surplus accrues in a reserve account.” The GSA highlights that “under many for-profit plans, these funds simply result in additional profit for the broker and/or insurer.”

As the GSA notes, the “CUSA-GSA joint plan’s reserve fund could be applied against future unexpected losses, (such as in the event of a pandemic),” and that it “allowed the GSA and CUSA to improve the plan’s benefits without risking its stability, and facilitated better rates for GSA and CUSA members.”

The membership advisory affirms that the GSA will “utilize all lawful means to prevent CUSA from claiming exclusive ownership of this reserve fund.”

Black says there has been no impact on coverage for GSA members as it was announced in April. However, CUSA’s decision to withdraw from the plan has posed problems for the organization.

“All of our full-time and part-time staff has had to spend a lot of time administering the health plan. A lot of the day-to-day work that we do for grad students has been more difficult to tend to. It’s created a lot of burden on our staff when we could be providing campaigns and services to graduate students.”

“There is clearly a lot of tension around how CUSA has treated the GSA on issues such as the health plan,” said Black.

However, he stressed, “We have never closed the door on working with CUSA on issues they would like to work with us on.” He cited the co-signed letter sent to Ottawa’s City Council regarding cycling dangers on Bronson Avenue.

Currently, there are no scheduled hearings for the lawsuit. The GSA is awaiting CUSA’s response.

This article first appeared in the Leveller newspaper – Vol. 5, No. 3 (Nov/Dec 2012)