The MEA’s Control Over MESSA

If there was any doubt that MESSA and the MEA have a single corporate conscience, an analysis of MESSA's decision-making cabinet should eliminate all skepticism. As stated in an MEA pamphlet, "MESSA is a part of the MEA Family. It's a membership organization governed by MEA members."⁸⁵ The members of the "MEA Family" and their interlocking governing structure is shown in Figure 2. The MEA maintains control over MESSA through the authority of the MEA executive director and MESSA's thirteen member Board of Trustees. All of the decisions relating to the official business policies and practices of MESSA originate within this Board. With its leverage on the MESSA Board, the MEA is able to implant its will into MESSA's operations.

The two most recent appointees to the MESSA Board of Trustees are the incumbent president and vice president of the MEA.⁸⁶ In addition, six of the trustees are elected from and by the MEA Board of Directors. The five remaining trustees are elected from the MESSA membership by MESSA's voting members, which include incumbent MESSA trustees and officers along with all MEA directors who are also MESSA members. Therefore, the MEA still has a prominent role in electing the five other trustees.

All trustees are appointed to three year terms, but the eight trustees sponsored by the MEA may only hold appointments while incumbent in their MEA positions. In short, eight of the thirteen people who actually control MESSA also control the MEA. The five remaining officers are selected in part by other people who control the MEA. According to the definition of a quorum in MESSA's bylaws, the MEA members alone constitute enough members to conduct valid transactions of business.⁸⁷

Every year, the MESSA Board of Trustees must also select its executive officers. As outlined in the bylaws, "The Board shall select as Secretary and Chief Executive Officer of MESSA the Executive Director of MEA, whose title shall be Executive Secretary of MESSA."⁸⁸ The executive director of the MEA follows suit by appointing the executive director of MESSA, who serves as its chief administrative officer. In addition to the role of executive secretary, the MEA's executive director serves as corporate treasurer of MESSA.⁸⁹ In other words, the person who controls the MEA is ultimately responsible for MESSA's money. Recently, Beverly Wolkow of the MEA conceded the point by acknowledging that she fulfills two roles as the "Chief Executive Officer" of both MESSA and the MEA.⁹⁰

MESSA is particularly sensitive about accusations that it is controlled by the MEA. The standard rebuttal contends that all MESSA trustees are conditioned to eliminate any bias towards the MEA which might impair their fiduciary obligations to MESSA. The trustees do, in fact, participate in an annual training seminar, which explains their position of trust for MESSA. According to MESSA's attorney, "The training is intended to insure (sic) that those trustees who have dual roles, as well as the independent trustees, understand that while sitting on MESSA's board, the decisions they make must be in MESSA's best interest."⁹¹ But does this training absolve MESSA of control by the MEA? The judge in the latest court case involving MESSA did not think so, when he stated: "Although the testimony describes various conflicts between the MEA and MESSA, and the MESSA Board members receive 'training' regarding their fiduciary duty to MESSA, the evidence of independence or separation from the MEA Board is insufficient to overcome the evidence of control and agency."⁹² As previously mentioned, even if the MESSA Board of Trustees did not consist predominantly of MEA directors, the corporate affiliation of the two companies still permits the MEA to exercise control over MESSA.

MESSA cannot establish its independence from the MEA because of the MEA's ownership and control; therefore, the decisions of MESSA almost always appear to reflect the larger concerns of the MEA. For example, one document identifying MESSA's mission for 1988-90 illustrates MESSA's subservience to the MEA:

MESSA's mission is to serve the members of the Michigan Education Association by providing comprehensive health and related employee benefit plans which respond to the financial and special requirements of the membership with a continued commitment to personalized service.⁹³

The document goes on to explain the "goals, objectives, and strategies" of MESSA, which clearly coincide with those of the MEA. Included among these are the following:

• "Participate in the development of a coordinated membership system that will meet the needs of the MEA and the constituent organizations and programs."

• "Strengthen the working relationship between MESSA and the MEA to enhance service delivery to the membership."

• "Facilitate the greater input of the MEA, MEDNA, and MEA Financial Services leadership in the critical decisions and activities of MESSA through improved communication and consultation."

It seems as if the MEA has dictated the crucial priorities and policies of MESSA. This is not to suggest, however, that MESSA cannot think for itself. The Executive Director of MESSA is given reasonable latitude in deciding matters which relate strictly to the business of administering insurance and managing the organization. Yet, when the issue at stake involves even a remote interest of the MEA, the MEA will often signify its intentions. If MESSA ever did make a decision in disregard of the MEA's desires, the MEA would almost certainly intervene.

With its domination of the MESSA Board of Trustees, the MEA obviously exercises a considerable degree of control over MESSA. How does this affect Michigan's school districts? The most important power retained by the MEA pertains to the actual construction of MESSA insurance coverage. School districts need to realize that the MEA ultimately approves MESSA's insurance plans, and once a school district signs a contract for MESSA coverage, it surrenders exclusive authority to the teachers' union regarding:

Control of premium prices. The MEA authorizes the annual premiums which school districts pay in order to receive employee insurance. If a limit to annual premium increases has been negotiated, employees may need to participate in the premium increase, but school districts tend to absorb the rising costs.

Design of benefit packages. The MEA approves the design of the benefit packages and has the discretion to change the level of benefits at any time without consulting MESSA's customer school districts. This authority is now being challenged by the St. Clair Intermediate School District in a court of law.

Payment of claims. MESSA's claims processing system is operated by various employees of the MEA conglomerate. Claims are paid in such a way that the interests of the MEA members are given priority above the interests of school districts or taxpayers.

Size of reimbursements. Under normal circumstances, the "reasonable and customary" fee schedules which determine the reimbursements for covered services would be determined by MESSA's underwriters. In the case of MESSA's health plans, however, the MEA endorses the fees that are paid to providers who do not participate with Blue Cross/Blue Shield of Michigan. The MEA reduces the personal liability of its members by setting a fee schedule well above the Blue Cross schedule. This schedule, which may be set 15 percent higher than the similar Blue Cross schedule, contributes to the rising cost of health care, and only the MEA can change it.

Expenses for administration. School districts can hold the MEA accountable for MESSA's high administrative expenses, because the MEA both supervises the expenses of MESSA and can alter these expenses at any time in various ways. One way the MEA could decrease expenses is by adjusting the efficiency of MESSA's claims processing department. Several years ago, for example, the MEA hired summer interns from nearby Michigan State University, but when the interns outperformed regular MESSA employees and depleted the work supply, the program was discontinued.

By all indication, the MEA will not relinquish its aggressive control over MESSA at any future point. Judging from the integration of both corporations, it is apparent that MESSA could not survive without rigid control by the MEA, and the MEA would suffer a curtailment of power if it could no longer manipulate MESSA. Of course, MESSA's unique benefit packages allow the MEA to guarantee that members will be loyal. If this enforcement mechanism were eliminated, the MEA might falter, but eventually regain strength. In the opposite case, MESSA could not function if it ever stopped collaborating with the MEA.