On certification to the Superior Court, Appellate Division, whose opinion is reported at 166 N.J. Super 219 (1979).
For reversal and remandment -- Justices Sullivan, Pashman, Clifford, Schreiber, Handler and Pollock. For affirmance -- none. The opinion of the Court was delivered by Pashman, J.
This case presents the question whether a State agency which, pursuant to N.J.S.A. 45:1-3.2, collects fees under the authority of a rule that is judicially invalidated is obligated to refund monies collected in excess of its statutory authority. We answer this question in the affirmative and accordingly remand the case to the New Jersey State Board of Dentistry for a calculation of a refund based on the guidelines set out below.
Until 1974, the license and registration fees charged by the New Jersey State Board of Dentistry were set by statute. N.J.S.A. 45:6-10. In 1974, the Legislature delegated to the Board of Dentistry and several other licensing boards the authority to set by rule their "charges for examinations, licensures and other services." N.J.S.A. 45:1-3.2.
On November 6, 1975, the Board of Dentistry (Board), pursuant to this new statutory authority, published in the New Jersey Register a proposal for an increase in the registration fees for dentists and dental hygienists. Among other things, the Board proposed to increase the fees for dentists in active practice within the State from $8 per year to $50 every two years.
The day after publication, the New Jersey Dental Association (Association) wrote to the Board calling its attention to pertinent language in the recently enacted enabling statute:
Any board's or commission's charges established, prescribed or changed pursuant to this section shall be established, prescribed or changed to such extent as shall be necessary to defray all proper expenses incurred by the board or commission in the performance of its duties but such charges shall not be fixed at a level that will raise amounts in excess of the amount estimated to be so required. [ N.J.S.A. 45:1-3.2 (emphasis added)]
The Association requested information about the Board's estimated expenses so that it could evaluate the legality of the proposed increases.
The Board promptly responded by providing data showing that, for the first year under the new fee schedule, projected receipts were $184,100 and estimated expenses were $156,800. It is not clear from the record whether the Association formally objected to the proposed fee increases following the receipt of this information. The Board adopted the proposed fee schedule
without change on December 10, 1975. The schedule became effective on January 14, 1976.
The Association immediately appealed to the Appellate Division for review of the Board's action, R. 2:2-3(a)(2), but did not seek a stay of the revised fee schedule pending judicial review, R. 2:9-7.
Litigation was prolonged by settlement negotiations which ultimately broke down. The Appellate Division heard argument in February 1979 on the Association's request that the revised fee schedule be invalidated and that the court "order the return of funds collected pursuant thereto." The court rendered its decision holding that "the Board's amended regulation, N.J.A.C. 13:30-8.1, is in conflict with ...