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New Jersey School Boards Association v. State Health Benefits Commission

Decided: February 26, 1982.

NEW JERSEY SCHOOL BOARDS ASSOCIATION, AND THE EWING TOWNSHIP BOARD OF EDUCATION, MERCER COUNTY, APPELLANTS,
v.
STATE HEALTH BENEFITS COMMISSION, RESPONDENTS



On appeal from a final action of the State Health Benefits Commission.

Matthews, Pressler and Petrella. The opinion of the court was delivered by Matthews, P.J.A.D.

Matthews

[183 NJSuper Page 216] This is an appeal from the final decision of the State Health Benefits Commission increasing the health benefits available to participating local government employers under the New Jersey State Health Benefits Program Act. N.J.S.A. 52:14-17.25 et seq.

The State Health Benefits Commission has been statutorily delegated the function of negotiating and procuring contracts for the provision of health benefits for state and participating local government employees. N.J.S.A. 52:14-17.27, 17.28. On October 7, 1981 the Commission was advised by the State Office of Employee Relations that, as a result of a recently negotiated agreement, the State was obligated to provide increased health benefits to its employees. More specifically, the agreement mandated a change in Blue Shield coverage from the 750 plan to the 1420 plan.*fn1 Consequently, on October 13, 1981 the Secretary of the Commission wrote to the program's health insurance carriers, informing them of the expected benefit level increase for state employees effective January 1, 1982, and also advising them to anticipate a similar increase in benefits for the local government employee group effective May 1, 1982. In explaining the latter increase, the Secretary stated that " N.J.S.A. 52:14-17.36 mandates a uniform benefit schedule for local government employees and State employees." He added that "the statute is fairly explicit so that we cannot provide benefits for State employees without providing comparable benefits for local government employees at the earliest possible time."

In response to requests from the Commission, the Attorney General gave two advisory opinions regarding the effectuation of the negotiated agreement and its impact on participating local government groups. The first opinion, dated October 22, 1981, advised the Commission that it had "the authority under the existing scheme to provide for the purchase of the more

favorable Blue Shield reimbursement called for in the collective negotiations agreement." In the second opinion, issued November 6, 1981, the Commission was informed that the statute mandated the extension of these increased Blue Shield benefits to all participating groups.

On December 3, 1981 the Commission met and approved the change to the 1420 series of Blue Shield benefits, voting to implement the increase for state employees effective January 1, 1982 and for local government employees effective May 1, 1982. Notification to this effect was sent to all participating local employees on December 10, 1981.

The New Jersey School Boards Association, acting on behalf of 426 boards of education who are participants in the state health benefits program, and Ewing Township Board of Education, one of the 426 participating boards, filed this appeal, challenging the extension of the increased Blue Shield benefits to local groups. We accelerated the hearing date on motion. The New Jersey Association of School Administrators, the Ewing Township Education Association and the New Jersey Education Association were permitted to intervene as amici curiae.

Appellants essentially take issue with the Commission's legal conclusion that the State Health Benefits Program Act, N.J.S.A. 52:14-17.25 et seq. , mandates a uniform benefit schedule for all participating employees, state and local. They assert that the statute requires that the level of benefits provided be "substantially equivalent" to those benefits in effect when the act first became law in 1961. Since the level of benefits provided by both the 750 and 1420 plans exceeds the minimum 1961 level, appellants maintain that the extension of the higher benefits to local groups is discretionary and not mandated. We disagree. Our reading of the explicit language of the statute, and review of the legislative history, and the administrative practice has led us to conclude that the act mandates one level of basic benefits for both state employees and participating local groups.

The law which created the State Health Benefits Commission was originally enacted by the Legislature in 1961. Pursuant to

that act the Commission was created and consisted of the State Treasurer, the Commissioner of Insurance*fn2 and the President of the Civil Service Commission. The Commission was directed to establish a health benefits program for state employees, N.J.S.A. 52:14-17.25, and to negotiate and procure contracts for the provision of such benefits from licensed carriers. It was not to enter into a contract unless the health benefits provided thereunder were equal to or exceeded the minimum standards specified in the act. N.J.S.A. 52:14-17.28.

In 1964 the act was amended to permit voluntary participation in the state program by local government units, including counties, municipalities and school districts. N.J.S.A. 52:14-17.34. The Commission was instructed to prescribe rules and regulations by which local employers could elect to participate in "the health benefits ...


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