4-2-13 DDS Letter to RMB

7/28/2019 4-2-13 DDS Letter to RMB

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Demian D. Schroeder14 Meadow Street CHAMBEHJ vrBrooklyn, NY RICHARD M. BERMANU.S.D.J.

April 2, 2013BYHANDThe Honorable Richard M. Berman M E ~ 1 0 E t ~ D O R S E Dnited States District JudgeDaniel Patrick MoynihanUnited States Courthouse V1SOO Pearl StreetNew York, NY 10007-1312Re: United States of America v. District Council of New York City and Vicinity of the UnitedBrotherhood of Carpenters and Joiners of America, et al., Case 1:90-cv-OS722-RMB-THKDear Judge Berman:I am writing to: (1) ask for a seven-day time period to file reply papers after the April 4 responsedeadline; (2) request that District Council counsel James M. Murphy provide me with copies of thecited cases as enclosed in his March 29, 2013 letter [Doc.1290] addressed Your Honor; and, (3) includefor this Court the status of union approval/ratification of the District Council/Wall-Ceiling collectivebargaining Agreement, dated March 12, 2013.1. A SEVEN DAY PERIOD TO FILE REPLY PAPERS, AFTER THE APRIL 4 RESPONSEDEADLINE, IS APPROPRIATE.

S.D.N.Y Civ. R. 6.1. Service and Filing of Motion Papers: "(b) On all civil motions, petitions, andapplications, other than those described in Rule 6.1 (a), and other than petitions for writs of habeascorpus, (1) the notice of motion, supporting affidavits, and memoranda of law shall be served by themoving party on all other parties that have appeared in the action, (2) any opposing affidavits andanswering memoranda shall be served within fourteen days after service of the moving papers, and (3)any reply affidavits and memoranda oflaw shall be served within seven days after service of theanswering papers. In computing periods of days, refer to Fed. R. Civ. P. 6 and Local Civil Rule 6 andLocal Civil Rule 6.4."On March 11,2013 I filed a Motion for Intervention of Limited Standing (Re: specifically limited tocontract negotiations for new successor CBAs) and Temporary Restraining Order (14-21 days, toprevent implementation of Full Mobility) [Doc. 1246].In Counsel Murphy's March 21, 2013 submission [Doc. 1282] to the Court, wherein he answers myMotion, there was no service addressed to, nor any received by, me. The lapse is also evident in hisMarch 29, 2013 submission [Doc. 1290]; below the cc line I am again not named, and yet to be served.Murphy should comply with the rules of this honorable Court and provide service for the plaintiff.With April 4, 2013 set as deadline for all answering responses, seven-day period for the Movant to filereply papers is provided for by our local rules, and consistent with individual practice of Your Honor.

Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 1 of 18


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Page 22. COUNSEL JAMES M. MURPHY SHOULD PROVIDE COPIES OF HIS CASE CITATIONSTO THIS PRO SE LITIGANT AS WERE ENCLOSED FOR THE COURT.S.D.N.Y Civ. R. 7.2. Authorities to Be Provided to Pro Se Litigants: "In cases involving a pro selitigant, counsel shall, when serving a memorandum oflaw (or other submissions to the Court), providethe pro se litigant (but not other counselor the Court) with copies of cases and other authorities citedtherein that are unpublished or reported exclusively on computerized databases. Upon request, counselshall provide the pro se litigant with copies of such unpublished cases and other authorities as are citedin a decision of the Court and were not previously cited by any party."With Counsel Murphy's March 29, 2013 submission [Doc. 1290] to the Court, said enclosures (copiesof cited cases) have not been served to this pro se litigant. Proper reply to Counsel's memorandum oflaw requires service ofthe cited case copies, as according to Court rules.THE STATUS OF UNION APPROVALIRATIFICATION OF SUCCESSOR CBA'S ISONGOING AND WARRANTS CONTINUED INTERVENTION BY MOVANT.In my March 20, 2013 submission [Doc. 1280] to Your Honor, I reported that District CouncilExecutive Secretary-Treasurer Michael Bilello was found to have allocated $2.13 raise of the WallCeiling CBA to the Welfare Fund, in violation ofCouncil bylaws, Section 21.On March 23, 2013 it was discovered that Bilello had allocated $2.59 raise of the Hoisting andScaffolding Trade Association (HASTA) CBA-- signed June 29, 2012-- to the Welfare Fund, inviolation ofCouncil bylaws.And later it was discovered Bilello had allocated $2.46 raise ofIndependent Millwright CBA raise-signed January 1,2013- - to the Welfare Fund, in violation ofCouncil bylaws.The Executive Committee is also on record (see attachment) at their February 27, 2013 Meeting ashaving approved allocation of the WC&C raise without notice to, debate, or vote by the Delegate Body,as required of the District Council Bylaws:

President McInnis asked ifthere was any Old Business; Brother Harvey asked about the statusofthe Wall & Ceiling contract. VP Cavanaugh responded stating that Judge Berman will acceptfeedback from members up until March 12th; afterwards a decision will be made. Discussioncontinued amongst Executive Committee members regarding the timeframe for theimplementation of wage increases. [ .. ] Discussion continued regarding the dues check offprocess and the $2.13 that will go directly into the Welfare Fund.

On March 25, 2013 prior to the March 27, 2013 scheduled Council Delegate Body Meeting, ReviewOfficer Dennis Walsh stated in an email message to Carpenter John Musumeci:Regarding the welfare fund allocations, my office is investigating the circumstances involvinghow and by whom the allocation decisions involving at least three contracts were made. As partofmy inquiry, the DC's counsel has told me that allocation decisions will be put before thedelegates on Wednesday (acknowledging the applicability ofBylaw Section 21). DW



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Page 3On March 26,2013 the RO issued a Notice ofPossible Action (see attachment) to EST Bilello, stating:

The facts and circumstances under review involve suspected violations of (I ) Paragraph5.b.iii(c), (d) and (e) of the Stipulation and Order entered in this matter on June 3, 2010, and(2)violation of Paragraph 7 of the Stipulation and Order; to wit:(a) from on or about July 1,2012, through March 12,2013, you failed to abide by Section 21 ofthe District Council Bylaws and caused or attempted to cause employer compensation formembers to be directed to the New York City District Council ofCarpenters Welfare Fund

Review Officer Walsh further advised, he is considering a veto ofBilello as EST for not implementingthe WC&C CBA:(f) from on or about August 22, 2012, through October 2012, you failed to take reasonable andprudent measures to implement the terms of the Memorandum ofAgreement between theDistrict Council and the Association ofWall-Ceiling andCarpentry Industries ofNew York, Inc.

The afternoon ofMarch 27, 2013 (at time ofthe Executive Committee meeting) prior to the DelegateBody meeting, I sent an email message(seeattachment)totheReviewOfficer.cc.edto parties of theCourt, advising: "EST Mike Bilello and the Executive Committee should recuse themselves, or besuspended" from recommending vote on allocation, for conflict of interest due to the investigation.Amidst protest at the Delegate meeting, EST Bilello did recommend allocation votes; instead of ascheduled update about the Welfare Fund with Director Laura Kalick or another specialist reporting,Counsel Murphy instructed the assembled Delegates on legitimacy of retroactive voting for theillegal allocations, citing "nunc pro tunc" now for then. And the allocations passed by a wide margin.From the Frequently Asked Questions (FAQs) About the Welfare Fund section of the Benefit FundsNews, Fall 20 11 inaugural issue:

Q. Why not just increase the employer hourly contribution rate?A. A contribution rate of $11.25 per hour is already substantial and represents over 13% of yourtotal hourly compensation. Increasing the employer contribution rate is not the solution. In fact,it may be counter-productive to improving the employment situation. Because it is in everyone'sinterest that our union employers remain competitive with non-union employers, we must startwith controlling our costs.

While this policy position was forwarded during tenure of former Funds Executive Director JosephEpstein (who was later vetoed by Review Officer Dennis Walsh for improper use of a credit card topurchase food and alcohol,) according to the Review Officer, Epstein was "particularly focused onachieving cost efficiencies, and has presented to the Trustees an estimate of savings of approximately$5 million for the fiscal year ending June 30, 2012."EST Bilello and the Executive Committee, under the tutelage and supervision ofCounsel Murphy andRO Walsh, failed to provide the Delegate Body with adequate outside expert opinion on the status ofour Welfare Fund, for an informed debate. Overriding concerns about pending investigation toward

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Page 4Section 20 bylaw violations and de facto complicity among those involved have outweighed thefulfilling of their Officer fiduciary obligations to Membership, and played a part in swaying the vote.The Review Officer, in his Notice ofPossible Action to EST BileIlo, has stated the foIlowing terms:

Pursuant to procedures promulgated by the Review Officer to supplement the record insuch matters (enclosed), and as provided for herein, you [Bilello] may deliver a writtensubmission to this office via email stating any facts, law or arguments (and appending anyexhibits) which might be, in your view, relevant to consideration of this matter. Said submissionmust be delivered by noon on April 9, 2013. A pre-action conference will be scheduled to occurat a later date.Considering present circumstances of administration and governance at the District Council, I thereforeask Your Honor to allow seven-day time period for filing of reply papers after the April 4, 2013response deadline.Respectfully,~ ; Y . ~ Demian D. Schroeder

Enclosure

cc: BY E-MAILBenjamin H. TorranceAssistant United States AttorneyCivil DivisionOffice of the United States Attorneyfor the Southern District of New York86 Chambers StreetNew York, NY 10007Dennis M. Walsh, Esq.Review OfficerThe Law Office of Dennis M. Walsh415 Madison Avenue, 11th FloorNew York, NY 10017Bridget M. Rhode, Esq.Counsel to the Review Officer

SOORDrr:Date: Y ., '3 ? ~ . , J ".'i?...NRichard M. Berman, U.S.D.J.

Mintz, Levitz, Cohn, Ferris, Glovsky & Popeo, P.e.666 Third AvenueNew York, NY 10017



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Page 5New York City & Vicinity District Council of CarpentersExecutive Secretary-Treasurer Michael Bilello395 Hudson StreetNew York, NY 10014James M. MurphyCounsel for the New York City & Vicinity District Council of CarpentersSpivak- Lipton, LLP1700 BroadwayNew York, NY 10019John DeLollisExecutive DirectorAssociation of Wall-Ceiling & Carpentry Industries of New York, Inc.125 Jericho Turnpike, Suite 301Jericho, NY 11753-1022MarkA. Rosen, Esq.Counsel for the Association of Wall- Ceiling & Carpentry Industries of New York, Inc.McElroy, Deutsch, Mulvaney, & Carpenter, LLP1300 Mount Kemble AvenueMorristown, NJ 07962-2075

ADDITIONAL SERVICE via E-Mail:Robert F. Makowski,Sterling Dadone,Norman Saul,Raynier Gamboa,Veronica Session



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[ATTACHMENT]

NEW YORK CITY AND VICINITY DISTRICT COUNCIL OF CARPENTERS

Executive Committee Meeting Minutes February 27,2013

The regular monthly meeting of the New York City an d Vicinity District Council of CarpentersExecutive Committee was held on Wednesday, February 27, 2013, at 3:00 p.m., at 395 Hudson Street,President McInnis presiding and Vice-President Cavanaugh being present. EST Bilello was absent dueto attendance at the UBC EST Meeting in Florida. Also in attendance were Executive Committeemembers John Daly, Raymond Harvey, Joseph Sabatino, Paul Tyznar, Robert Villalta, Daniel Walcott,and Christopher Wallace. Local Union 1556 had no representative, due to the resignation of BrotherHughes; position remains vacant. Also present was Inspector General Scott C Danielson and Directorof Operations Matthew Walker. The minutes of the last meeting were not approved; will be approvedat March 13, 2013 meeting.

The Director of Operations Matthew Walker reported the bills an d expenditures (see Exhibit 1).Mr. Walker stated that the expense approval process had been recently reviewed with the Trustees. Healso outlined costs associated with the Compliance Piece of the Wall & Ceiling contract - specificallyRedEye expense; this being more cost effective than hiring full-time staff person. Brother Sabatinoinquired about Operation Watchdog; Mr. Walker an d IG Danielson responded to tlle question.Discussion continued regarding Operation Watchdog. Brother Daly asked about the CorporateCampaign expense on Mr. Walker's report. Mr. Walker replied that the District Council has no furtherpayments after the one in question. Discussion continued regarding Corporate Campaign.Mr. Walker continued with report, outlining the proposed cost of approximately $2,500 in order topurchase Carhartt jackets for the eighteen Shop Stewards that participated in the Pilot Program; $125each with the DC logo.

Mr. Walker outlined proposal received from Public Relations firm Mercury Public Affairs topotentially be hired by the DC to handle the Barclays/Madison Square Garden/Forest City Ratnerissues with 32BJ. Cost would be $7,500 per month; first week would be at no cost. President McInniselaborated on the issues at hand. Brother Sabatino inquired as to what services would be providedspecifically by Mercury Public Affairs. President McInnis responded - articles and other mediacoverage to raise public pressure on Forest City Ratner. Motion was made by Brother Sabatino toapprove the expense of Mercury Public Affairs; seconded by Brother Wallace. Motion was carried.

Mr. Walker gave update on percentage of WDA's received up to date. VP Cavanaugh gaveadditional information about the WDA payment status as it relates to checks that were sent out withinvoices but had been voided due to failure to reach members at valid addresses. Mr. Walker outl inedincrease approval for DC employees that were eligible based upon merit an d duration of employmentin accordance with the DC Salary Program. Mr. Walker read list of staff members that receivedpreliminary approval by EST Bilello for salary increases within their particular bands. The questionwas pu t by Brother Daly as to the specific amounts requested. Mr. Walker stated the amounts for each.Motion was made by Brother Wallace to approve salary increases; seconded by Brother Walcott.Motion was carried. Brother Daly stated for the record that the members should get raises, too.

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Mr. Walker responded that the DC was working on that same intended goal. Motion was made toapprove the Director of Operation's report by Brother Wallace; seconded by Brother Walcott. Motionwas carried.

VP Cavanaugh stated there would be no EST report due to the fact that EST Bilello was at theUBC EST meeting taking place in Florida. In lieu of EST Bilello, communications regarding expenserequests were addressed by VP Cavanaugh. VP Cavanaugh read donation request from New YorkCollaboration for Women in Construction summit that will take place on March 18 th; EST Bilello will bespeaking on the panel for this event that will be a discussion on the future of women in constructionand ways to enhance their opportunities and working conditions. Motion was made by Brother Tyznarfor a $5,000 donation which includes logo display at event and in all promotional materials; secondedby Brother Villalta. Motion was carried. Attendance/participation request was read by VP Cavanaughfor Tyrone GFC New York Football Club Dinner Dance that will take place on March 9th. Motion wasmade by Brother Tyznar for a $500 Corporate Page journal ad and a table of ten for $1,000; seconded byBrother Daly. Motion was carried.

President McInnis asked if there was any Old Business; Brother Harvey asked about the statusof the Wall & Ceiling contract. VP Cavanaugh responded stating that Judge Berman will acceptfeedback from members up until March 12th; afterwards a decision will be made. Discussion continuedamongst Executive Committee members regarding the timeframe for the implementation of wageincreases. VP Cavanaugh also made the announcement that beginning with July 1, 2013 assessmentswill be paid directly through I-Remit; weekly deduct ions from members. Discussion continuedregarding the dues check off process and the $2.13 that will go directly into the Welfare Fund. BrotherHarvey inquired about the status of the GCA. President McInnis gave update on negotiations with theGCA. They are still working on diver issues; proposals have been exchanged and are being reviewed.Mr. Walker stated that there are two impending trainings - delegate and trustee training thatwould take place at the UBC facility in Las Vegas. Mr. Walker outlined the purpose of these trainingsessions and the proposed time for each. Brother Daly asked if the newly elected delegates would be

sworn in later on at the meeting. President McInnis responded that i t is still pending final ROapproval. Brother Sabatino questioned the status of the Brooklyn Bridge Hotel. Brother Walcott gaveupdate; it is still at the discussion stage and there will be further demonstrations. Brother Sabatino alsoposed the question of whether or not the District Council will be on opposite sides of 32BJ now, due tothe Barc1ays situation. Brother Walcott responded that jurisdiction is not the issue. Discussioncontinued regarding Barclays/Fores t City Ratner/32BJ issue. Brother Daly asked about the status ofnegotiations with the Cement League. President McInnis gave update on Cement League negotiations.Discussion continued regarding the Cement League, which led to discussion about the BCA contractpending delegate approval.

President McInnis asked i f there was any New Business; nothing addressed. Good of theOrder - nothing addressed. Motion was made by Brother Daly to adjourn; seconded by BrotherWallace. Motion was carried.

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[ATTACHMENT]

Office of Dennis M. WalshThe Review Officer

90 Civil 5722 (SDNY)415 Madison Avenue, 11th Floor

New York, New York 10017212.553.1357

NOTICE OF POSSIBLE ACTION BY THE REVIEW OFFICERTo: Michael Bilello, Local Union 157Executive Secretary-Treasurer

Pursuant to Paragraph 5.bjii of the Stipulation and Order entered on June 3, 2010, in thematter of United States v. District Council, 90 Civil 5722 (SDNY) (RMB) (the "Stipulation andOrder"), please be advised that the Review Officer is considering issuing a veto of your serviceas Executive Secretary-Treasurer of the New York District Council of Carpenters.

The facts and circumstances under review involve suspected violations of (I) Paragraph5.b.iii (c), (d) and (e) of the Stipulation and Order entered in this matter on June 3, 2010, and (2)violation of Paragraph 7 of the Stipulation and Order; to wit:(a) from on or about July 1,2012, through March 12,2013, you failed to abide by Section21 of the District Council Bylaws and caused or attempted to cause employercompensation for members to be directed to the New York City District Council ofCarpenters Welfare Fund;(b) on March 22, 2013, you directed a business representative of the District Councilattempting to properly enforce the collective bargaining agreement at the Javits Center tolet a suspended member work at the Javits Center knowing that the person had beensuspended as a member;(c) on March 13, 2013, you refused to answer questions about your report to theDelegates properly posed to you by a delegate at a meeting of the Delegate Body of theDistrict Council;(d) on July 25, 2012, you engaged in indecorous and undemocratic behavior in a debatewith a delegate at a meeting of the District Council Delegate Body;(e) from on or about September 2012, to the present, you failed to continue thedevelopment of the business representative cross-training program recommended by theReview Officer and begun by the former District Council President and Assistant to theEST;(t ) from on or about August 22, 2012, through October 2012, you failed to takereasonable and prudent measures to implement the terms of the Memorandum ofAgreement between the District Council and the Association of Wall-Ceiling andCarpentry Industries of New York, Inc.;

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(g) from on or about January 11,2012, to the present, you failed to review minutes of themeetings of the Board of Trustees of the Benefit Funds with the District CouncilExecutive Committee;(h) on March 22,2013, you failed to cooperate with an investigation of the ReviewOfficer by falsely stating, in sum and substance, that a certain business representative"suggested to me that I give [a suspended member] to the end of the week [working atJavits Center], like we are doing for others."Pursuant to procedures promulgated by the Review Officer to supplement the record insuch matters (enclosed), and as provided for herein, you may deliver a written submission to thisoffice via email stating any facts, law or arguments (and appending any exhibits) which mightbe, in your view, relevant to consideration ofthis matter. Said submission must be delivered bynoon on April 9, 2013. A pre-action conference will be scheduled to occur at a later date. Pleaseemail any submission or other communications relevant to this notice to d m w f w ( j y e r i z o l 1 . n ~ l ,with copies to jacknmitchtil@gmaiLcol1l and Bill O'Flaherty at [email protected].

Dated: March 26, 2013 Dennis M. WalshReview Officer

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mailto:[email protected]:[email protected]


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[ATTACHMENT]

----- Forwarded Message ----From: demian schroeder To: Dennis Walsh Cc: Benjamin Torrance ; Bridget Rhode ; EST Mike Bilello ; James Murphy ; Mark Rosen ; John Delollis ; John Musumeci Sent: Wednesday, March 27, 2013 3:38 PM Subject: URGENT Allocation decisions at CDB Meeting

Dear Mr. Walsh:

According to the Review Officer, and District Council attorney James Murphy, the WC&C Agreement was already ratified (in the form of a 4 page MOU,) by the Delegate Body on August 22, 2012. However, on March 21, 2013 Judge Berman issued an Order stating: "Mr. Walsh and Mr. Murphy are requested to supply authorities for the proposition that this Court can approve a collective bargaining agreement where only an MOU has been approved by a delegate body."

More recently, Mr. Walsh reported:

"Regarding the welfare fund allocations, my office is investigating the circumstances involving how and by whom the allocation decisions involving at least three contracts were made. As part of my inquiry, the DC's counsel has told me that allocation decisions will be put before the delegates on Wednesday (acknowledging the applicability of Bylaw Section 21)." It appears EST Michael Bilello, or another Member of the Executive Committee-- at tonight's Council Delegate Body-- may recommend a vote to retroactively approve allocation of the WC&C raise, for their purpose of memorializing the CBA, in attempt to comply with the Bylaws, and render Judge Berman's Order moot. Nevertheless, a Notice of Possible Action by the Review Officer has been served to the EST, and the Executive Committee is on record at their February 27,2013 Meeting as having approved allocation of the WC&C raise without notice, debate, or vote by the Delegate Body, as required by the District Council Bylaws: "President Mcinnis asked if there was any Old Business; Brother Harvey asked about the status of the Wall & Ceiling contract. VP Cavanaugh responded stating that Judge Bennan will accept feedbackfrom members up until March 12th; afterwards a decision will be made. Discussion continued amongstExecutive Committee members regarding the timeframe for the implementation of wage increases. [ .. ]Discussion continued regarding the dues check off process and the $2.13 that will go directly into theWelfare Fund."

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mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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[ATIACHMENT]

Attempt by EST Bilello and the Executive Committee to recommend any vote (at tonight's DelegateBody meeting) for approval of the already executed WC&C CBA, and/or illegal raise allocationtherein, would be a conflict of interest on their part-- to obtain vote for approval provides defenseagainst charges that they were complicit in violating the Bylaws, and Federal Statues. RO Walsh maydetermine that the matter reviewed:(c) is contrary to or violates any law or Court order entered in this case; or (d) is contrary to anyfiduciary responsibility imposed by 29 U.S.C. 501 or the Employee Retirement Income Security Act,29 U.S.c. 1001 et seq. ("ERISA"); or (e) is inconsistent with the objectives of this Stipulation andOrder.EST Mike Bilello and the Executive Committee should recuse themselves, or be suspended.The Agreement between the District Council and the Wall-Ceiling Association must be voided, andpost-disposition of any Notice(s) ofPossible Action-- and further investigation-- a new proposal maybe submitted to the Delegate Body, for proper review and vetting, before any ratitication or allocationvote is scheduled.As you know, allocation of a raise to the Welfare Fund without approval from the Delegate Body isviolation of the Bylaws, and Federal Statues; for the Review Officer, or District Counsel attorney, tofacilitate the memorializing of illegal acts is against the Stipulation and Order.Regards,DemianAttached:Notice ofPossible actionStipulation and Order

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[ATTACHMENT]

NEW YORK CITY DI S T RI CT COUNCI LOF CARPENTERS BENEFIT FUNDSBenefit Funds News

A publication of the New York CityDistrict Council ofCarpenters Benefit FundsFall 2011Message from the Executive DirectorWelcome to the inaugural issue of Benefit Funds News. It is a privilege to take this opportunity tointroduce myself as the new Executive Director of the Benefit Funds. I came on board on July 1 2011, andI have spent the last few months getting familiar with all of the Funds' operations and working with theBoards of Trustees and the Fund Office staff to institute various changes. Our goal is to improve all facetsof the Funds' operations so that the Fund Office can best serve you and your families . .Although I am new to the Carpenters' Funds, I am not new to employee benefits or to Taft-Hartley benefitfunds. In fact, I have spent the last 35 years working in the employee benefits field. I began my career inemployee benefits at George Buck in 1977 in New York. I then spent 10 years first as the AssistantAdministrator and later as the Administrator of the ACTWU Health Plan and 14 years as the Director ofEmployee Benefits at the National Railway Labor Conference in Washington, DC, three years as theBenefits Director for the State of Maryland, and, most recently, I served as the Fund Director at PaintersDistrict Council #30 in Illinois. In addition, I am originally a New Yorker and my family and I are delighted tobe home again.The Boards of Trustees are launching this newsletter to communicate with you and your families aboutyour welfare, penSion, vacation and scholarship benefits. As we explore ways to provide you and yourfamilies with the highest level of service, please feel free to let us know your suggestions on how toaccomplish this goal. You can contact us at [email protected]. Our doors are open and we want to hearfrom you.There have been several changes among the staff as we strive to improve for your benefit. You can seethe bios of some of the new employees on page 2 of this newsletter. In addition, this newsletter covers theDependent Audit, changes to the Medicare-Eligible Retiree Prescription coverage and the CarpentersAssistance Program (CAP).It is our goal to keep you and your family informed of all the happenings at the Funds and all issuesregarding your benefits. To that end, we are working on improving the Funds' website,https:/Iwww.nyccbf.com. In addition, we plan to issue this newsletter two times a year. We welcome anysuggestions you have on topiCS that you would like to see covered in an upcoming newsletter.We greatly value your participation in the Funds and we are here to serve you.On behalf of the Board of Trustees and the Fund Office staff, we wish you and your families a joyousholiday season.Best wishes,Joseph EpsteinExecutive Director

mailto:[email protected]:///reader/full/https:/Iwww.nyccbf.commailto:[email protected]:///reader/full/https:/Iwww.nyccbf.com


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Staff ChangesThree individuals have recently joined the senior management team of the Benefit Funds. They are RalphChetcuti as the Human Resources Director, Jennifer Gordon as Project Manager and Laura Kalick as theBenefits Director. They each have extensive experience in their respective areas of responsibility.Ralph has been involved in human resources, benefits and labor relations for a number of years. He hasserved as a Trustee on several Taft-Hartley plans. Ralph held several different positions while working atThe New York Times. He has also worked at The New York Racing Association, HOP Energy andNewmark Knight Frank.Jennifer Gordon, as Project Manager, will be responsible for the overall direction, testing andimplementation of a new benefits administration system. Prior to joining us, she worked for the T era ThinkCorporation, where she managed a large modernization program for the Department of Defense inWashington, DC.Laura Kalick has considerable experience in benefits and benefits administration. She will oversee the dayto-day operation of the Funds Office. She has held similar positions with the Summit Medical Group,Verizon and Ingersoll-Rand.Also, Luke Powers was recently promoted to the new position of Director of Contractor Accounting. In thisrole, Luke will be responsible for overseeing audits, evaluating discrepancies, collections and arbitrations.Are Your Dependents Eligible?The Trustees of the Welfare Fund strive to provide the highest quality benefits for you and your family whileprotecting the long-term financial health of the Welfare Fund. To that end, the Trustees authorized a projectto make sure that only eligible individuals are enrolled in our health plans.A program to verify eligibility for all enrolled dependents began in August and is scheduled to end inNovember. By now, you should have provided documentation of your dependents' eligibility to Secova byfax to 888-290-1523 or by mail to Secova Service Center, P.O. Box 1901, Wall, NJ 07719-9966. If youhaven't yet responded, please do so by the end of November to ensure coverage for you and your enrolleddependents continues without interruption.Your eligible dependents are your: Legal spouse (or registered domestic partner, if you work for the City ofNew York); Biological child, step child, or adopted child under age 26; Disabled child older than age 26;Dependent parent(s) who live with you provided that you cover no other dependents.Please contact Secova at 877-652;..0379 if you have any questions.Prescription Drug Coverage for Medicare-Eligible RetireesBeginning January 1,2012, the Welfare Fund will provide prescription drug benefits to its Medicare-eligibleretirees and dependents under a type of Medicare Part 0 program called an "Employer Group WaiverPlan." You should have received a letter in the mail recently from Medco about this program-and there willbe more communications coming later this month and in December. The Part 0 prescription drug coverageprovided by the Welfare Fund will be Significantly better than Medicare's standard Part 0 benefit; however,there may be changes in how some prescriptions are covered due to Medicare regulations. Medco willcontinue to administer Welfare Fund's prescription drug benefits.No action is required on your part to be enrolled in the Welfare Fund's Part 0 prescription drug plan. Youshould continue to use your current Medco 10 card for all prescriptions filled before January 1,2012. Youwill receive a new 10 card in the mail from Medco to use starting on January 1, 2012.

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Medco's Customer Service can assist you with questions about the Medicare Part D program as well asother prescription drug coverage questions you may have.Medco Customer Service representatives will be able to answer specific Part D questions beginningDecember 1, 2011. You may contact them at 800-311-2757, 24-hours a day, and 7-days a week. TTYfTDDusers should call 800-716-3231. Customer Service is available in English and other languages.

CAP CornerIn efforts to support our members and your families, the Trustees felt we should have a program in place toassist the membership in any way possible. The Carpenters Assistance Program (CAP) has been createdand implemented to do just that. Members' needs, whether pertaining to benefits, the District Council orobtaining other outside resources, can be assessed and addressed through this program.The Carpenters Assistance Program is dedicated to ensuring that every member is helped in the best waypossible. Our goals are to educate you about your benefits and provide other resources that may beavailable in your communities for you and your families; to be a support system and to advocate on yourbehalf.For example, one of the biggest issues we encounter is members losing coverage due to lack of hours. Wecan assist members who are in this situation, and help them obtain medical coverage through otheravailable resources. We also encourage members to have yearly physical exams that are available at theFunds Office at 395 Hudson Street.We are also concerned about the members' financial health. We recently held a financial workshop wherea representative from Prudential spoke about financial planning and answered members' questions. Weplan to hold more workshops in the near future and are looking into implementing some new classes at theLabor Technical College for apprentices, journeyman and shop stewards.We take great pride in the fact that we have been able to meet and assist so many of our members andplan on doing much more. If you have any suggestions for future workshops, please let us know.Welfare Fund FocusYou may have heard that the Trustees have several benefit changes and participant cost-sharingmeasures under consideration. While this is true, you should know that the Trustees continually review andevaluate the Welfare Fund's operations to ensure that it remains financially viable and can continue toprovide health benefits to participants and their families in the years to come. As you may also recall, theTrustees have made changes in the past to help control costs, including higher office visit and prescriptiondrug co payments.Although you receive a Summary Annual Report each year that includes basic financial information for theFund, in light of poor economic and industry conditions as well as increasing health care costs, we believeit is important to give you more detailed information. That's why we have developed the Frequently AskedQuestions (FAQs) that follow in this newsletter to help you better understand the Fund's financial statusand why changes are under consideration, as well as clarify some of the rumors that have been circulating.We will continue to communicate with you as we weigh the various options. If we decide to make changes,we'll let you know about them, how they will impact you, and what you will need to do to make the most ofyour benefits. Our goal is to be as transparent and informative as possible throughout this process.Please take the time to carefully read this newsletter. If you have questions, contact the Fund Office at 212-366-7300.

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Frequently Asked Questions (FAQs) About the Welfare FundQ. Why is the Fund considering cost-control measures now?A. The Fund has not been immune to the economic problems plaguing our nation. Over the last severalyears, the combination of fewer big construction projects and an increased presence of non-unioncontractors in our area has reduced the number of jobs for Carpenters. The result: an increasedunemployment rate, an overall reduction of man-hours worked by participants, and a decline in theFund's contribution income.Q. Doesn't the increase in contributions over the years offset the increase in costs? Is the hourly

contribution rate sufficient to cover the actual cost of benefits?A. Unfortunately, increased costs outpace the rise in contributions. It currently costs the Fund $9.67 perhour to provide health and welfare coverage to active partiCipants and $4.98 per hour to provide healthand welfare coverage to retirees. That is a total of $14.65 per hour to provide benefits to ourparticipants. In other words, it costs $3.40 more per hour to provide coverage to participants than thehourly employer contribution rate ($11.25).Q. Can you describe how man-hours and contribution income have changed over the last few

years?A. There are currently 11,727 active Outside and Shop Carpenters participating in the Fund. This is a 14%decline since last year, and more than a 20% decline since 2009. This decline may well continue in2012 and 2013 unless the economy rebounds soon.

In the fiscal year that ended June 30, 2009, our participants worked a total of 21 million man-hours.Results for the fiscal year that ended June 30, 2011 indicate that participants worked a total of 15.7million man-hours, a reduction of approximately 5.3 million man-hours since 2009.During this same period, employer hourly contribution rates increased from $10.25 per hour in 2009 to$11 .25 per hour in 2010 and 2011. As shown in the chart below, the increased contribution rate doesnot compensate for the loss in man-hours. In fact, total contributions have declined by more than $38million, or 17.5%, since 2009.

Q. Why not just increase the employer hourly contribution rate?A. A contribution rate of $11.25 per hour is already substantial and represents over 13% of your totalhourly compensation. Increasing the employer contribution rate is not the solution. In fact, it may becounter-productive to improving the employment situation. Because it is in everyone's interest that ourunion employers remain competitive with non-union employers, we must start with controlling our costs.Q. How much does i t cost to cover an active participant and his/her family?A. The premium equivalent cost to the Fund of your benefits (based on the Fund's COBRA Continuation

Coverage rates) is $500.55 per month, or $6,000 per year, for individual coverage-and $1,351.51 permonth, or $16,200 per year, for family coverage. These rates are high, but they are much less thanwhat it would cost to purchase similar coverage on your own. Because of the size of the Fund, it cannegotiate the best possible rates. If you tried to purchase similar coverage on your own through aninsurance company, you would have to pay whatever the insurance company demanded-which wouldlikely be a lot more than what your coverage costs the Fund.

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Q. How many retirees are there, and how much does it cost to cover a retiree and his/her family?A. There are approximately 6,700 retirees covered by the Plan. It costs approximately $1,525 per month,

or $18,300 per year, to cover an early retiree, i.e., a retiree between the ages of 55 and 64 and his/herdependents. For retirees and dependents who are age 65 and over and who get primary benefitsthrough Medicare, the cost is approximately $626 per month and $7,512 per year.Benefit expenses fo r retired participants make up approximately 31% of the Fund's total annual benefitsexpense, averaging $72.9 million for fiscal years 2009, 2010 and 2011. Retiree expenses have asignificant impact on the Fund 's overall operating results.

Q. Are any contributions made to the Welfare Fund for retirees?A. The employer contribution rate is for both active and retiree benefits. There is no separate contribution

for retiree benefits, and retirees do not pay a contribution or premium for their benefits.Q. How does the reduction in the number of active employees affect the Fund?A. The reduction in the number of active partiCipants in the Fund means that expenses are spread over asmaller number of participants. Therefore, even though the size of the overall group has declined, the

cost per active participant increased 10.5%.Q. Are there other external factors impacting the Fund's expenses?A. As everyone knows, health care is very expensive, and costs increase every year at a steep rate.Medical costs have been increasing about 11 % per year since 2007 for multiemployer health planssuch as this Fund.

In addition to the general increase in health care costs each year, the Fund has made a number oflegally required benefit changes. For example, as required by the Patient Protection and AffordableCare Act ("health care reform"), we have extended coverage for eligible dependent children to age 26at no cost to the partiCipant or dependent. Additional changes will be required next year in order tocomply with the Mental Health Parity and Addiction Equity Act. Simply stated, these changes costmoney.

Q. Since the Fund's contributions are not sufficient to cover expenses, how does the Fund makeup the difference?

A. The Fund also relies on investment income that may be earned annually to make up the differencebetween employer contributions and the actual cost of providing benefits. The chart below shows howour expenses have outpaced our total income in recent years and how stock market volatility hasaffected our bottom line.

* Includes COBRA premium payments, Association premium payments and City contributions.In the fiscal years ending June 30, 2009, June 30. 2010, and June 30. 2011, the Fund's expensesexceeded its income. Due to the Fund's investment losses in the fiscal year ending June 30, 2009, theoperating deficit for that year was worse than the deficits for the fiscal years ending June 30, 2010 andJune 30, 2011, even though there was approximately $36 million more in employer contributions in2009 than the average contributions in 2010 and 2011. In those three years, the Fund's total incomedid not cover its expenses which remained steady at approximately $240 million.Therefore, to the extent that contributions and investment income fall short of expenses, we are forcedto spend our reserves. These reserves have built up over the years when employment was strong andcontributions exceeded expenses .

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[ATTACHMENT]Q. It seems that investment returns can have a positive or negative effect on the Fund's assets.Can you give some more detail on how the Fund is invested?A. The Fund maintains about 10% of its assets as liquid assets and works with a variety of investmentmanagers who have broad exposure to different market segments in order to achieve consistentreturns by building a diversified portfolio across asset classes. These include domestic andinternational equity securities, fixed income securities and alternative investments.Q. What does the future look like fo r the Fund?A. Based on estimates prepared by the Fund's consultant and actuary, if man-hours remain at 16 millionman-hours per year and the hourly contribution rate stays at $11.25, the Fund is projected to rundeficits of $42 million in 2012, $60 million in 2013 and $84 million in 2014. These projections do not tellthe complete financial picture for the Fund, however, because they do not take into account potentialinvestment gains or losses.

As you can see in the chart above, investment returns for fiscal years 2009, 2010 and 2011 weredramatically different. Because no one can predict investment results, actual results often vary widelyfrom projections. The difference between projections and actual results is due to the fact that theFund's actuary does not factor in anticipated investment gains or losses when developing projections.The Fund currently has approximately one year of reserves. This refers to the level of net assets atyear-end compared to the following year's projected operating expenses. However, with projectionsanticipating future operating deficits, the Fund's reserves may decline to less than a month's reserve byJune 30, 2014.

Q. Is there anything I can do to use my benefits wisely and help control Fund costs-and my ownout-of-pocket costs as well?A. Here are some examples of how you can help control costs: Visit network doctors instead of out-of-network providers. Opt for generic medications over brand-name drugs when possible. Fill prescriptions for maintenance medications by mail order instead of at a retail pharmacy. Quit smoking. Limit emergency room visits to "true" emergencies. Take advantage of preventive benefits like annual physical exams and diagnostic screening tests. Eat healthy and exercise.

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Q. What are the Trustees doing to strengthen the Fund?A. We want the Fund to continue to provide you with valuable benefits while preserving the Fund's futurefinancial stability and controlling costs to you, your employers and the Fund. Over the last few months,we have been exploring a wide array of cost-control measures and will continue to do so.

We have already put into place some cost-control measures. For example, the Fund is currentlyconducting a dependent eligibility verification to make sure that only eligible dependents are covered bythe Fund, and we are confident that this verification project will result in savings to the Fund. EffectiveJanuary 1, 2012, the Fund will implement a new Medicare Part 0 retiree prescription drug plan that willsave the Fund money, while offering Medicare-eligible retirees the same level of benefits as under thecurrent Plan. (Medicare-eligible retirees will receive separate notices about the new prescription plan.)The Fund is also participating in the Early Retiree Reinsurance Program that is part of the AffordableCare Act.Unfortunately, we also have to consider benefit changes and sharing a portion of the costs withpartiCipants. Such measures might include imposing a deductible for in-network benefits, increasing theout-of-network deductible, increasing co-payments, adding in-network co-insurance, modifying benefitsand coverage levels, changing eligibility rules, and restructuring retiree benefits. We are very aware ofhow difficult it is to make ends meet in these uncertain economic times and we know that such changeswill carry a financial impact. While we do not want to do anything to make these times more difficultthan they already are for our participants, we all have to be aware that, without a significant increase inman-hours, changes may be necessary to preserve the Fund.We will continue to analyze various options and the impact of various changes on you and the Fund.Whether we make any changes in the foreseeable future will depend on the various factors discussedthroughout these FAQs. Please read this newsletter carefully to better understand the state of yourWelfare Fund.

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4-2-13 DDS Letter to RMB

Documents

Transcript of 4-2-13 DDS Letter to RMB