For reversal and remandment -- Chief Justice Hughes and Justices Mountain, Sullivan, Pashman and Schreiber. For affirmance -- Judge Conford. The opinion of the Court was delivered by Sullivan, J. Conford, P.J.A.D., Temporarily Assigned (dissenting).
The Appellate Division, in an opinion reported at 128 N.J. Super. 472 (1974), held that the Hospital Service Plan of New Jersey and the Medical-Surgical Plan of New Jersey (hereinafter sometimes referred to as Blue Cross and Blue Shield, or the Plans) were not given the power or authority in the respective statutes under which they operate to write a particular group student accident insurance policy, the issuance of which allegedly had been authorized by the Commissioner of the Department of Insurance, State of New Jersey.*fn1
The Appellate Division also held that to construe the statutes as authorizing the issuance of such student accident insurance by Blue Cross and Blue Shield would deny insurance companies that write similar indemnity accident insurance equal protection of the laws in violation of our Federal and State Constitutions since Blue Cross and Blue Shield are not subject to the requirements of capital and
assets imposed on insurance companies and enjoy an exemption from taxation not granted to insurance companies. Blue Cross and Blue Shield have appealed as of right. R. 2:2-1(a). For reasons hereinafter set forth we reverse.
Blue Cross and Blue Shield, organized respectively under N.J.S.A. 17:48-1 et seq. and N.J.S.A. 17:48A-1 et seq., are non-profit hospital and medical organizations serving in the broad field of health care. Both Plans are authorized to provide service benefits but also include indemnity payments as a matter of course in specified circumstances.
The Appellate Division held that the Plans, under their enabling statutes, were limited to the furnishing of service benefits, and that the question presented was whether looking at the proposed student accident policy as a whole, service rather than indemnity was its principal object and purpose. The Appellate Division reviewed the proposed student accident policy and found that, except for its excess features, it in no way differed from the usual accident policy issued by an ordinary insurance company, in that it was a contract to pay a sum of money upon the happening of a particular event or contingency.*fn2
We find this analysis to be an oversimplification of the function of the proposed student accident policy in the overall picture. The record indicates that 92% of all students in this State are already insured under some form of health coverage. The proposed student policy would complement such underlying insurance and provide additional
coverage of substantially the same risks*fn3 but on an excess basis, over and above the basic coverage. However, the proposed policy coverage is limited to accidental bodily injury and is school oriented. Hospital and other non-medical health care benefits are in the form of indemnity payments to the student's parents or guardian; while payment for medical benefits ordinarily is made directly to the physician in those instances where the physician is a participant in the Blue Shield program.
As to the estimated 8% of the student population who will receive primary coverage under the proposed policy, these students will be insured against substantially the same risks as under basic Blue Cross-Blue Shield insurance, but the coverage will be school oriented and restricted to accidental bodily injury.
We agree with the Appellate Division that Blue Cross and Blue Shield are limited by their enabling statutes to the providing of essentially service benefits in the area of health care. However, a student accident policy, so oriented and effective on an excess basis where there is existing health coverage, would complement the Plans' primary operations and would be clearly within the scope of the statutory authorization.
We do not understand that the Commissioner has given his approval to the particular benefits offered in the proposed student accident policy. His letter of April 27, 1972 merely approves the concept of Blue Cross-Blue Shield, as part of permitted activity in the health care field, to provide non-duplicative student accident insurance coverage on a service benefit basis. It is obvious that this letter was not intended to be an ...