On appeal from the Superior Court, Appellate Division.
For reversal -- Chief Justice Wilentz and Justices Clifford and O'Hern. For affirmance -- Justices Schreiber and Handler. The opinion of the Court was delivered by O'Hern, J. Schreiber, J., dissenting. Justice Handler joins in this opinion.
The question is whether a legislative change of a state health benefits program applies to a collective negotiations agreement reached before the legislative change. Based on the language of the collective agreement, we hold that the change applies and reverse the judgment of the Appellate Division.
Defendant State Troopers Fraternal Association of New Jersey, Inc., the exclusive representative of the unit of employees representing State Troopers employed by the State of New Jersey, entered a collective agreement with the State covering a two-year term commencing July 1, 1978. The agreement provided for the Troopers to participate in the State's Prescription Drug Program, which is a statewide program of health benefits applicable to all State employees and their dependents. As that program existed on July 1, 1978, the State would pay the cost of
eligible prescription drugs, but the employee would pay a deductible of $1.25 on each prescription.*fn1
On June 28, 1979, the Legislature enacted its annual Appropriation Act and allocated funds for the program in a line item called "Prescription drug program." L. 1979, c. 119, p. 119. The bill provided that "[t]he amount hereinabove for Prescription drug program is based upon a copayment of $2.50 for each eligible prescription." L. 1979, c. 119, p. 121. As a consequence, the Division of State Police changed the deductible from $1.25 to $2.50, effective during the second year of the collective negotiations agreement.
The Association filed a grievance alleging that the change in copayment violated the collective agreement, specifically asserting a violation of Article XXV, Section B of the agreement, which states:
The State agrees that all mandatorily negotiable benefits, terms and conditions of employment relating to the status of Troopers of the Division of State Police covered by this Agreement shall be maintained at standards existing at the time of the agreement.
The grievance procedure produced no resolution and the matter was submitted to arbitration.
Before the arbitrator, the State argued that the 1979-1980 Appropriation Act changed the copayment requirement from $1.25 to $2.50, and that since there was no longer an appropriation for the program at the $1.25 level, maintenance of the $1.25 copayment would violate Article X, Section B, paragraph 1 and Article XXV, Section E of the agreement. The Association countered with Article X, Section B, paragraph 7, which discussed
the Prescription Drug Program specifically. Unlike the provisions for salaries and other fringe benefits such as maintenance allowance, transportation, and clothing allowance, that paragraph contained a statement that "the State shall provide any necessary funds to maintain the program." Therefore, the Association argued, the parties intended to except the Prescription Drug Program alone from the dependence on legislative enactment otherwise expressed in paragraph 1 of that Article.
The provisions in question show the dispute quite clearly.
Article X, Section B, paragraph 1 provides:
Subject to Legislative enactment providing full appropriation of funds for these specific purposes, the State agrees to provide the following benefits [among which is the Prescription Drug Program] during fiscal years 1978-1979 and 1979-1980, effective at the time stated, and payable then or within a reasonable time after enactment of the appropriation.
Article X, Section B, paragraph 7, however, which deals specifically with the Prescription Drug Program, provides:
The State administered Prescription Drug Program shall be continued for the remainder of the Agreement and the State shall provide any necessary funds to maintain the program. Each employee shall be provided with an authorization and ...