11206

Demian D. Schroeder
14 Meadow Street
CHAMBEHJ vr
Brooklyn, NY RICHARD M. BERMAN
U.S.D.J.
April 2, 2013
BYHAND
The Honorable Richard M. Berman

United States District Judge
Daniel Patrick Moynihan
United States Courthouse
V
1
SOO Pearl Street
New York, NY 10007-1312
Re: United States of America v. District Council of New York City and Vicinity of the United
Brotherhood of Carpenters and Joiners of America, et al., Case 1:90-cv-OS722-RMB-THK
Dear Judge Berman:
I am writing to: (1) ask for a seven-day time period to file reply papers after the April 4 response
deadline; (2) request that District Council counsel James M. Murphy provide me with copies of the
cited cases as enclosed in his March 29, 2013 letter [Doc.1290] addressed Your Honor; and, (3) include
for this Court the status of union approval/ratification of the District Council/Wall-Ceiling collective
bargaining Agreement, dated March 12, 2013.
1. A SEVEN DAY PERIOD TO FILE REPLY PAPERS, AFTER THE APRIL 4 RESPONSE
DEADLINE, IS APPROPRIATE.
S.D.N.Y Civ. R. 6.1. Service and Filing of Motion Papers: "(b) On all civil motions, petitions, and
applications, other than those described in Rule 6.1 (a), and other than petitions for writs of habeas
corpus, (1) the notice of motion, supporting affidavits, and memoranda of law shall be served by the
moving party on all other parties that have appeared in the action, (2) any opposing affidavits and
answering 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 the
answering papers. In computing periods of days, refer to Fed. R. Civ. P. 6 and Local Civil Rule 6 and
Local Civil Rule 6.4."
On March 11,2013 I filed a Motion for Intervention of Limited Standing (Re: specifically limited to
contract negotiations for new successor CBAs) and Temporary Restraining Order (14-21 days, to
prevent implementation of Full Mobility) [Doc. 1246].
In Counsel Murphy's March 21, 2013 submission [Doc. 1282] to the Court, wherein he answers my
Motion, there was no service addressed to, nor any received by, me. The lapse is also evident in his
March 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 file
reply 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
Page 2
2. COUNSEL JAMES M. MURPHY SHOULD PROVIDE COPIES OF HIS CASE CITATIONS
TO 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 se
litigant, counsel shall, when serving a memorandum oflaw (or other submissions to the Court), provide
the pro se litigant (but not other counselor the Court) with copies of cases and other authorities cited
therein that are unpublished or reported exclusively on computerized databases. Upon request, counsel
shall provide the pro se litigant with copies of such unpublished cases and other authorities as are cited
in a decision ofthe Court and were not previously cited by any party."
With Counsel Murphy's March 29, 2013 submission [Doc. 1290] to the Court, said enclosures (copies
of cited cases) have not been served to this pro se litigant. Proper reply to Counsel's memorandum of
law requires service ofthe cited case copies, as according to Court rules.
THE STATUS OF UNION APPROVALIRATIFICATION OF SUCCESSOR CBA'S IS
ONGOING AND WARRANTS CONTINUED INTERVENTION BY MOVANT.
In my March 20, 2013 submission [Doc. 1280] to Your Honor, I reported that District Council
Executive Secretary-Treasurer Michael Bilello was found to have allocated $2.13 raise of the Wall
Ceiling CBA to the Welfare Fund, in violation of Council bylaws, Section 21.
On March 23, 2013 it was discovered that Bilello had allocated $2.59 raise of the Hoisting and
Scaffolding Trade Association (HASTA) CBA-- signed June 29, 2012-- to the Welfare Fund, in
violation of Council 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 of Council bylaws.
The Executive Committee is also on record (see attachment) at their February 27, 2013 Meeting as
having 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 status
ofthe Wall & Ceiling contract. VP Cavanaugh responded stating that Judge Berman will accept
feedback from members up until March 12th; afterwards a decision will be made. Discussion
continued amongst Executive 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 the Welfare Fund.
On March 25, 2013 prior to the March 27, 2013 scheduled Council Delegate Body Meeting, Review
Officer Dennis Walsh stated in an email message to Carpenter John Musumeci:
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). DW
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 2 of 18
Page 3
On March 26,2013 the RO issued a Notice of Possible 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) ofthe 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 of
the District Council Bylaws and caused or attempted to cause employer compensation for
members to be directed to the New York City District Council of Carpenters Welfare Fund
Review Officer Walsh further advised, he is considering a veto of Bilello as EST for not implementing
the WC&C CBA:
(f) from on or about August 22, 2012, through October 2012, you failed to take reasonable and
prudent measures to implement the terms of the Memorandum of Agreement between the
District Council and the Association of Wall-Ceiling andCarpentry Industries ofNew York, Inc.
The afternoon of March 27, 2013 (at time ofthe Executive Committee meeting) prior to the Delegate
Body meeting, I sent an email message(seeattachment)totheReviewOfficer.cc.ed to parties of the
Court, advising: "EST Mike Bilello and the Executive Committee should recuse themselves, or be
suspended" 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 ofa
scheduled 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 the
illegal 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 Funds
News, 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 your
total 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's
interest that our union employers remain competitive with non-union employers, we must start
with controlling our costs.
While this policy position was forwarded during tenure of former Funds Executive Director Joseph
Epstein (who was later vetoed by Review Officer Dennis Walsh for improper use of a credit card to
purchase food and alcohol,) according to the Review Officer, Epstein was "particularly focused on
achieving 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 of Counsel Murphy and
RO Walsh, failed to provide the Delegate Body with adequate outside expert opinion on the status of
our Welfare Fund, for an informed debate. Overriding concerns about pending investigation toward
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 3 of 18
Page 4
Section 20 bylaw violations and de facto complicity among those involved have outweighed the
fulfilling of their Officer fiduciary obligations to Membership, and played a part in swaying the vote.
The Review Officer, in his Notice of Possible Action to EST BileIlo, has stated the foIlowing terms:
Pursuant to procedures promulgated by the Review Officer to supplement the record in
such matters (enclosed), and as provided for herein, you [Bilello] may deliver a written
submission to this office via email stating any facts, law or arguments (and appending any
exhibits) which might be, in your view, relevant to consideration of this matter. Said submission
must be delivered by noon on April 9, 2013. A pre-action conference will be scheduled to occur
at a later date.
Considering present circumstances of administration and governance at the District Council, I therefore
ask Your Honor to allow seven-day time period for filing of reply papers after the April 4, 2013
response deadline.
Respectfully,
~ ; Y . ~
Demian D. Schroeder
Enclosure
cc: BY E-MAIL
Benjamin H. Torrance
Assistant United States Attorney
Civil Division
Office of the United States Attorney
for the Southern District of New York
86 Chambers Street
New York, NY 10007
Dennis M. Walsh, Esq.
Review Officer
The Law Office of Dennis M. Walsh
415 Madison Avenue, 11th Floor
New York, NY 10017
Bridget M. Rhode, Esq.
Counsel to the Review Officer
SOORDrr:
Date: Y ., '3
? ~ . , J ".'i?...N
Richard M. Berman, U.S.D.J.
Mintz, Levitz, Cohn, Ferris, Glovsky & Popeo, P.e.
666 Third Avenue
New York, NY 10017
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 4 of 18
Page 5
New York City & Vicinity District Council of Carpenters
Executive Secretary-Treasurer Michael Bilello
395 Hudson Street
New York, NY 10014
James M. Murphy
Counsel for the New York City & Vicinity District Council of Carpenters
Spivak- Lipton, LLP
1700 Broadway
New York, NY 10019
John DeLollis
Executive Director
Association of Wall-Ceiling & Carpentry Industries of New York, Inc.
125 Jericho Turnpike, Suite 301
Jericho, NY 11753-1022
MarkA. Rosen, Esq.
Counsel for the Association of Wall- Ceiling & Carpentry Industries of New York, Inc.
McElroy, Deutsch, Mulvaney, & Carpenter, LLP
1300 Mount Kemble Avenue
Morristown, NJ 07962-2075
ADDITIONAL SERVICE via E-Mail:
Robert F. Makowski,
Sterling Dadone,
Norman Saul,
Raynier Gamboa,
Veronica Session
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 5 of 18
[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 and Vicinity District Council of Carpenters
Executive 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 due
to attendance at the UBC EST Meeting in Florida. Also in attendance were Executive Committee
members 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 Brother
Hughes; position remains vacant. Also present was Inspector General Scott C Danielson and Director
of Operations Matthew Walker. The minutes of the last meeting were not approved; will be approved
at March 13, 2013 meeting.
The Director of Operations Matthew Walker reported the bills and expenditures (see Exhibit 1).
Mr. Walker stated that the expense approval process had been recently reviewed with the Trustees. He
also outlined costs associated with the Compliance Piece of the Wall & Ceiling contract - specifically
RedEye expense; this being more cost effective than hiring full-time staff person. Brother Sabatino
inquired about Operation Watchdog; Mr. Walker and IG Danielson responded to tlle question.
Discussion continued regarding Operation Watchdog. Brother Daly asked about the Corporate
Campaign expense on Mr. Walker's report. Mr. Walker replied that the District Council has no further
payments 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 to
purchase Carhartt jackets for the eighteen Shop Stewards that participated in the Pilot Program; $125
each with the DC logo.
Mr. Walker outlined proposal received from Public Relations firm Mercury Public Affairs to
potentially be hired by the DC to handle the Barclays/Madison Square Garden/Forest City Ratner
issues with 32BJ. Cost would be $7,500 per month; first week would be at no cost. President McInnis
elaborated on the issues at hand. Brother Sabatino inquired as to what services would be provided
specifically by Mercury Public Affairs. President McInnis responded - articles and other media
coverage to raise public pressure on Forest City Ratner. Motion was made by Brother Sabatino to
approve 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 gave
additional information about the WDA payment status as it relates to checks that were sent out with
invoices but had been voided due to failure to reach members at valid addresses. Mr. Walker outlined
increase approval for DC employees that were eligible based upon merit and duration of employment
in accordance with the DC Salary Program. Mr. Walker read list of staff members that received
preliminary approval by EST Bilello for salary increases within their particular bands. The question
was put 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.
Page 1 of 3
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 6 of 18
[ATTACHMENT]
Mr. Walker responded that the DC was working on that same intended goal. Motion was made to
approve the Director of Operation's report by Brother Wallace; seconded by Brother Walcott. Motion
was carried.
VP Cavanaugh stated there would be no EST report due to the fact that EST Bilello was at the
UBC EST meeting taking place in Florida. In lieu of EST Bilello, communications regarding expense
requests were addressed by VP Cavanaugh. VP Cavanaugh read donation request from New York
Collaboration for Women in Construction summit that will take place on March 18
th
; EST Bilello will be
speaking on the panel for this event that will be a discussion on the future of women in construction
and ways to enhance their opportunities and working conditions. Motion was made by Brother Tyznar
for a $5,000 donation which includes logo display at event and in all promotional materials; seconded
by Brother Villalta. Motion was carried. Attendance/participation request was read by VP Cavanaugh
for Tyrone GFC New York Football Club Dinner Dance that will take place on March 9
th
. Motion was
made by Brother Tyznar for a $500 Corporate Page journal ad and a table of ten for $1,000; seconded by
Brother Daly. Motion was carried.
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 Berman will accept
feedback from members up until March 12th; afterwards a decision will be made. Discussion continued
amongst Executive Committee members regarding the timeframe for the implementation of wage
increases. VP Cavanaugh also made the announcement that beginning with July 1, 2013 assessments
will be paid directly through I-Remit; weekly deductions from members. Discussion continued
regarding the dues check off process and the $2.13 that will go directly into the Welfare Fund. Brother
Harvey inquired about the status of the GCA. President McInnis gave update on negotiations with the
GCA. 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 that
would take place at the UBC facility in Las Vegas. Mr. Walker outlined the purpose of these training
sessions 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 it is still pending final RO
approval. Brother Sabatino questioned the status of the Brooklyn Bridge Hotel. Brother Walcott gave
update; it is still at the discussion stage and there will be further demonstrations. Brother Sabatino also
posed the question of whether or not the District Council will be on opposite sides of 32BJ now, due to
the Barc1ays situation. Brother Walcott responded that jurisdiction is not the issue. Discussion
continued regarding Barclays/Forest City Ratner/32BJ issue. Brother Daly asked about the status of
negotiations 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 contract
pending delegate approval.
President McInnis asked if there was any New Business; nothing addressed. Good of the
Order - nothing addressed. Motion was made by Brother Daly to adjourn; seconded by Brother
Wallace. Motion was carried.
2
Page 2 of 3
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 7 of 18
[ATTACHMENT]
Office of Dennis M. Walsh
The Review Officer
90 Civil 5722 (SDNY)
415 Madison Avenue, 11th Floor
New York, New York 10017
212.553.1357
NOTICE OF POSSIBLE ACTION BY THE REVIEW OFFICER
To: Michael Bilello, Local Union 157
Executive Secretary-Treasurer
Pursuant to Paragraph 5.bjii of the Stipulation and Order entered on June 3, 2010, in the
matter of United States v. District Council, 90 Civil 5722 (SDNY) (RMB) (the "Stipulation and
Order"), please be advised that the Review Officer is considering issuing a veto of your service
as Executive Secretary-Treasurer of the New York District Council of Carpenters.
The facts and circumstances under review involve suspected violations of (I) Paragraph
5.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 for members to be directed to the New York City District Council of
Carpenters Welfare Fund;
(b) on March 22, 2013, you directed a business representative of the District Council
attempting to properly enforce the collective bargaining agreement at the Javits Center to
let a suspended member work at the Javits Center knowing that the person had been
suspended as a member;
(c) on March 13, 2013, you refused to answer questions about your report to the
Delegates properly posed to you by a delegate at a meeting of the Delegate Body of the
District Council;
(d) on July 25, 2012, you engaged in indecorous and undemocratic behavior in a debate
with 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 the
development of the business representative cross-training program recommended by the
Review Officer and begun by the former District Council President and Assistant to the
EST;
(t) from on or about August 22, 2012, through October 2012, you failed to take
reasonable and prudent measures to implement the terms ofthe Memorandum of
Agreement between the District Council and the Association of Wall-Ceiling and
Carpentry Industries of New York, Inc.;
3
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 8 of 18
[ATTACHMENT]
(g) from on or about January 11,2012, to the present, you failed to review minutes of the
meetings of the Board of Trustees of the Benefit Funds with the District Council
Executive Committee;
(h) on March 22,2013, you failed to cooperate with an investigation of the Review
Officer 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 at
Javits Center], like we are doing for others."
Pursuant to procedures promulgated by the Review Officer to supplement the record in
such matters (enclosed), and as provided for herein, you may deliver a written submission to this
office via email stating any facts, law or arguments (and appending any exhibits) which might
be, in your view, relevant to consideration ofthis matter. Said submission must be delivered by
noon on April 9, 2013. A pre-action conference will be scheduled to occur at a later date. Please
email any submission or other communications relevant to this notice to
with copies to jacknmitchtil@gmaiLcol1l and Bill O'Flaherty at of1ah267@optonline.net.
Dated: March 26, 2013
Dennis M. Walsh
Review Officer
4
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 9 of 18
[ATTACHMENT]
----- Forwarded Message ----
From: demian schroeder <demianschroeder@yahoo.com>
To: Dennis Walsh <dmwfw@verizon.net>
Cc: Benjamin Torrance <benjamin.torrance@usdoj.gov>; Bridget Rhode <BMRohde@mintz.com>;
EST Mike Bilello <mbilello@nycdistrictcouncil.org>; James Murphy <jmurphy@spivaklipton.com>;
Mark Rosen <mrosen@mdmc-Iaw.com>; John Delollis <association@wcc-ny.com>; John Musumeci
<jmusumeci 157@gmail.com>
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 feedback
from members up until March 12th; afterwards a decision will be made. Discussion continued amongst
Executive 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 the
Welfare Fund."
5
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 10 of 18
[ATIACHMENT]
Attempt by EST Bilello and the Executive Committee to recommend any vote (at tonight's Delegate
Body meeting) for approval of the already executed WC&C CBA, and/or illegal raise allocation
therein, would be a conflict of interest on their part-- to obtain vote for approval provides defense
against charges that they were complicit in violating the Bylaws, and Federal Statues. RO Walsh may
determine that the matter reviewed:
(c) is contrary to or violates any law or Court order entered in this case; or (d) is contrary to any
fiduciary 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 and
Order.
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, and
post-disposition of any Notice(s) of Possible Action-- and further investigation-- a new proposal may
be submitted to the Delegate Body, for proper review and vetting, before any ratitication or allocation
vote is scheduled.
As you know, allocation of a raise to the Welfare Fund without approval from the Delegate Body is
violation of the Bylaws, and Federal Statues; for the Review Officer, or District Counsel attorney, to
facilitate the memorializing of illegal acts is against the Stipulation and Order.
Regards,
Demian
Attached:
Notice of Possible action
Stipulation and Order
6
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 11 of 18
[ATTACHMENT]
NEW YORK CITY DISTRICT COUNCIL
OF CARPENTERS BENEFIT FUNDS
Benefit Funds News
A publication ofthe New York City
District Council ofCarpenters Benefit Funds
Fall 2011
Message from the Executive Director
Welcome to the inaugural issue of Benefit Funds News. It is a privilege to take this opportunity to
introduce myself as the new Executive Director of the Benefit Funds. I came on board on July 1 , 2011, and
I have spent the last few months getting familiar with all of the Funds' operations and working with the
Boards of Trustees and the Fund Office staff to institute various changes. Our goal is to improve all facets
of 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 benefit
funds. In fact, I have spent the last 35 years working in the employee benefits field. I began my career in
employee benefits at George Buck in 1977 in New York. I then spent 10 years first as the Assistant
Administrator and later as the Administrator of the ACTWU Health Plan and 14 years as the Director of
Employee Benefits at the National Railway Labor Conference in Washington, DC, three years as the
Benefits Director for the State of Maryland, and, most recently, I served as the Fund Director at Painters
District Council #30 in Illinois. In addition, I am originally a New Yorker and my family and I are delighted to
be home again.
The Boards of Trustees are launching this newsletter to communicate with you and your families about
your welfare, penSion, vacation and scholarship benefits. As we explore ways to provide you and your
families with the highest level of service, please feel free to let us know your suggestions on how to
accomplish this goal. You can contact us at suggest@nyccbf.org. Our doors are open and we want to hear
from you.
There have been several changes among the staff as we strive to improve for your benefit. You can see
the bios of some of the new employees on page 2 of this newsletter. In addition, this newsletter covers the
Dependent Audit, changes to the Medicare-Eligible Retiree Prescription coverage and the Carpenters
Assistance Program (CAP).
It is our goal to keep you and your family informed of all the happenings at the Funds and all issues
regarding 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 any
suggestions 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 joyous
holiday season.
Best wishes,
Joseph Epstein
Executive Director
Case 1:90-cv-05722-RMB-THK Document 1296 Filed 04/04/13 Page 12 of 18
[ATTACHMENT]
Staff Changes
Three individuals have recently joined the senior management team of the Benefit Funds. They are Ralph
Chetcuti as the Human Resources Director, Jennifer Gordon as Project Manager and Laura Kalick as the
Benefits 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 has
served as a Trustee on several Taft-Hartley plans. Ralph held several different positions while working at
The New York Times. He has also worked at The New York Racing Association, HOP Energy and
Newmark Knight Frank.
Jennifer Gordon, as Project Manager, will be responsible for the overall direction, testing and
implementation of a new benefits administration system. Prior to joining us, she worked for the T era Think
Corporation, where she managed a large modernization program for the Department of Defense in
Washington, DC.
Laura Kalick has considerable experience in benefits and benefits administration. She will oversee the day
to-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 this
role, 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 while
protecting the long-term financial health of the Welfare Fund. To that end, the Trustees authorized a project
to 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 in
November. By now, you should have provided documentation of your dependents' eligibility to Secova by
fax to 888-290-1523 or by mail to Secova Service Center, P.O. Box 1901, Wall, NJ 07719-9966. If you
haven't yet responded, please do so by the end of November to ensure coverage for you and your enrolled
dependents continues without interruption.
Your eligible dependents are your: Legal spouse (or registered domestic partner, if you work for the City of
New 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 Retirees
Beginning January 1,2012, the Welfare Fund will provide prescription drug benefits to its Medicare-eligible
retirees and dependents under a type of Medicare Part 0 program called an "Employer Group Waiver
Plan." You should have received a letter in the mail recently from Medco about this program-and there will
be more communications coming later this month and in December. The Part 0 prescription drug coverage
provided 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 will
continue 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. You
should continue to use your current Medco 10 card for all prescriptions filled before January 1,2012. You
will 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 as
other prescription drug coverage questions you may have.
Medco Customer Service representatives will be able to answer specific Part D questions beginning
December 1, 2011. You may contact them at 800-311-2757, 24-hours a day, and 7-days a week. TTYfTDD
users should call 800-716-3231. Customer Service is available in English and other languages.
CAP Corner
In efforts to support our members and your families, the Trustees felt we should have a program in place to
assist the membership in any way possible. The Carpenters Assistance Program (CAP) has been created
and implemented to do just that. Members' needs, whether pertaining to benefits, the District Council or
obtaining 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 way
possible. Our goals are to educate you about your benefits and provide other resources that may be
available in your communities for you and your families; to be a support system and to advocate on your
behalf.
For example, one of the biggest issues we encounter is members losing coverage due to lack of hours. We
can assist members who are in this situation, and help them obtain medical coverage through other
available resources. We also encourage members to have yearly physical exams that are available at the
Funds Office at 395 Hudson Street.
We are also concerned about the members' financial health. We recently held a financial workshop where
a representative from Prudential spoke about financial planning and answered members' questions. We
plan to hold more workshops in the near future and are looking into implementing some new classes at the
Labor 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 and
plan on doing much more. If you have any suggestions for future workshops, please let us know.
Welfare Fund Focus
You may have heard that the Trustees have several benefit changes and participant cost-sharing
measures under consideration. While this is true, you should know that the Trustees continually review and
evaluate the Welfare Fund's operations to ensure that it remains financially viable and can continue to
provide health benefits to participants and their families in the years to come. As you may also recall, the
Trustees have made changes in the past to help control costs, including higher office visit and prescription
drug co payments.
Although you receive a Summary Annual Report each year that includes basic financial information for the
Fund, in light of poor economic and industry conditions as well as increasing health care costs, we believe
it is important to give you more detailed information. That's why we have developed the Frequently Asked
Questions (FAQs) that follow in this newsletter to help you better understand the Fund's financial status
and 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 of
your 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 Fund
Q. 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 several
years, the combination of fewer big construction projects and an increased presence of non-union
contractors in our area has reduced the number of jobs for Carpenters. The result: an increased
unemployment rate, an overall reduction of man-hours worked by participants, and a decline in the
Fund'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 per
hour to provide health and welfare coverage to active partiCipants and $4.98 per hour to provide health
and welfare coverage to retirees. That is a total of $14.65 per hour to provide benefits to our
participants. In other words, it costs $3.40 more per hour to provide coverage to participants than the
hourly 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 in
2012 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 15.7
million 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 does
not compensate for the loss in man-hours. In fact, total contributions have declined by more than $38
million, 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 total
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's interest that our
union employers remain competitive with non-union employers, we must start with controlling our costs.
Q. How much does it 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 per
month, or $16,200 per year, for family coverage. These rates are high, but they are much less than
what it would cost to purchase similar coverage on your own. Because of the size of the Fund, it can
negotiate the best possible rates. If you tried to purchase similar coverage on your own through an
insurance company, you would have to pay whatever the insurance company demanded-which would
likely 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/her
dependents. For retirees and dependents who are age 65 and over and who get primary benefits
through Medicare, the cost is approximately $626 per month and $7,512 per year.
Benefit expenses for retired participants make up approximately 31 % of the Fund's total annual benefits
expense, averaging $72.9 million for fiscal years 2009, 2010 and 2011. Retiree expenses have a
significant 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 a
smaller 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 plans
such as this Fund.
In addition to the general increase in health care costs each year, the Fund has made a number of
legally required benefit changes. For example, as required by the Patient Protection and Affordable
Care Act ("health care reform"), we have extended coverage for eligible dependent children to age 26
at no cost to the partiCipant or dependent. Additional changes will be required next year in order to
comply with the Mental Health Parity and Addiction Equity Act. Simply stated, these changes cost
money.
Q. Since the Fund's contributions are not sufficient to cover expenses, how does the Fund make
up the difference?
A. The Fund also relies on investment income that may be earned annually to make up the difference
between employer contributions and the actual cost of providing benefits. The chart below shows how
our expenses have outpaced our total income in recent years and how stock market volatility has
affected 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 expenses
exceeded its income. Due to the Fund's investment losses in the fiscal year ending June 30, 2009, the
operating deficit for that year was worse than the deficits for the fiscal years ending June 30, 2010 and
June 30, 2011, even though there was approximately $36 million more in employer contributions in
2009 than the average contributions in 2010 and 2011. In those three years, the Fund's total income
did 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 forced
to spend our reserves. These reserves have built up over the years when employment was strong and
contributions exceeded expenses.
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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 investment
managers who have broad exposure to different market segments in order to achieve consistent
returns by building a diversified portfolio across asset classes. These include domestic and
international equity securities, fixed income securities and alternative investments.
Q. What does the future look like for the Fund?
A. Based on estimates prepared by the Fund's consultant and actuary, if man-hours remain at 16 million
man-hours per year and the hourly contribution rate stays at $11.25, the Fund is projected to run
deficits of $42 million in 2012, $60 million in 2013 and $84 million in 2014. These projections do not tell
the complete financial picture for the Fund, however, because they do not take into account potential
investment gains or losses.
As you can see in the chart above, investment returns for fiscal years 2009, 2010 and 2011 were
dramatically different. Because no one can predict investment results, actual results often vary widely
from projections. The difference between projections and actual results is due to the fact that the
Fund'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 at
year-end compared to the following year's projected operating expenses. However, with projections
anticipating future operating deficits, the Fund's reserves may decline to less than a month's reserve by
June 30, 2014.
Q. Is there anything I can do to use my benefits wisely and help control Fund costs-and my own
out-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 future
financial 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 currently
conducting a dependent eligibility verification to make sure that only eligible dependents are covered by
the Fund, and we are confident that this verification project will result in savings to the Fund. Effective
January 1, 2012, the Fund will implement a new Medicare Part 0 retiree prescription drug plan that will
save the Fund money, while offering Medicare-eligible retirees the same level of benefits as under the
current 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 Affordable
Care Act.
Unfortunately, we also have to consider benefit changes and sharing a portion of the costs with
partiCipants. Such measures might include imposing a deductible for in-network benefits, increasing the
out-of-network deductible, increasing co-payments, adding in-network co-insurance, modifying benefits
and coverage levels, changing eligibility rules, and restructuring retiree benefits. We are very aware of
how difficult it is to make ends meet in these uncertain economic times and we know that such changes
will carry a financial impact. While we do not want to do anything to make these times more difficult
than they already are for our participants, we all have to be aware that, without a significant increase in
man-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 discussed
throughout these F AQs. Please read this newsletter carefully to better understand the state of your
Welfare Fund.
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