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Gauer v. Essex County Division of Welfare

Decided: July 27, 1987.


On certification to the Superior Court, Appellate Division, whose opinion is reported at 211 N.J. Super. 706 (1986).

For reversal -- Chief Justice Wilentz and Justices Pollock, Handler, O'Hern, Garibaldi and Stein. For affirmance -- None. The opinion of the Court was delivered by Handler, J. Justice Clifford did not participate.


[108 NJ Page 142] The Division of Welfare of the County of Essex discontinued certain benefits that it had been paying to certain retired employees. As a result, plaintiff, a retired employee aggrieved by this decision, brought suit on behalf of other similarly

situated retired employees challenging its validity. The narrow issue raised by this litigation is the statutory authority of Essex County to terminate the retirement benefits previously granted to the subject employees on the basis that N.J.S.A. 40A:10-23 mandates that all retirees of the county receive uniform treatment.


The benefits that are the subject of this litigation were provided for more than ten years prior to the decision to discontinue them. On December 3, 1974, the Essex County Welfare Board, the predecessor of the defendant, Division of Welfare, adopted Resolution No. 74-12-3, pursuant to regulations promulgated by the State Health Benefits Commission under N.J.S.A. 52:14-17.38. This Resolution authorized the Board, which was at the time an autonomous agency expressly designated as a corporate entity by N.J.S.A. 44:7-7, to reimburse those employees who retire with twenty-five or more years of service for their health insurance and Medicare Part B premiums upon retirement. The Board notified its employees of the Resolution. Plaintiff Gauer was an employee of the Board when these benefits were authorized.

On May 1, 1979, pursuant to the Optional County Charter Law, N.J.S.A. 40:41A-1 to -147, Essex County reorganized its form of government. The Welfare Board was abolished as an autonomous body and its functions were assumed by the Essex County Division of Welfare. Pursuant to its reorganization, the County promulgated an Administrative Code that spelled out the abolition of various autonomous boards and specified which county agencies would assume the functions of the abolished boards. The Administrative Code also delineated the rights of employees of the boards who were transferred to county employment. Section 14.6 provided specifically that "Pension Fund membership and rights of any officer or employee shall not . . . be adversely affected by any transfer pursuant

to the Code." The County, through the Division of Welfare, continued to reimburse health insurance costs for retirees of the Welfare Board who had been receiving such retirement benefits from the Board. It also began to reimburse such health insurance and Medicare premium costs to Division of Welfare employees who retired from County employment with twenty-five years or more service in a state or locally administered retirement system in accordance with the earlier Resolution.

In 1981, plaintiff, then a County employee in the Division of Welfare, retired from County employment. He received reimbursed premium costs for health insurance and Part B Medicare as part of his retirement benefits. In 1984, specifically by a letter dated December 3, 1984, the County decided to discontinue its reimbursement of health insurance and medicare costs of retired welfare employees effective January 1, 1985. Its decision was in reliance upon legal opinion of the Essex County counsel stating the County could not, under N.J.S.A. 40A:10-23, discriminate among retired County employees in the provision of health insurance benefits.

Plaintiff brought suit against the County, and the County moved for summary judgment, which was granted. Gauer v. Essex County Div. of Welfare, 205 N.J. Super. 592 (Law Div.1985).*fn1 Plaintiff then moved for relief from the adverse summary judgment in order to have the court consider the impact of Woolley v. Hoffman-La Roche, Inc., 99 N.J. 284, modified, 101 N.J. 10 (1985). The court denied the motion.

Plaintiff appealed to the Appellate Division. In a per curiam decision, the Appellate Division affirmed the summary judgment for defendant and the denial of plaintiff's post-judgment motion. Gauer v. ...

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