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Weiner v. County of Essex

Decided: July 10, 1992.

DAVID H. WEINER AND LOUIS DEBELLO, AS CLASS REPRESENTATIVES OF THE EMPLOYEES OF THE FORMER ESSEX COUNTY WELFARE BOARD, PLAINTIFFS,
v.
COUNTY OF ESSEX, DEFENDANT



Villanueva, J.s.c.

VILLANUEVA

Plaintiffs, one retired and one present employee of the County of Essex and both former employees of the now-defunct Essex County Welfare Board, seek a declaratory judgment that Essex County is required to pay them post-retirement medical benefits.

The issue is whether Essex County, as successor to the former Essex County Welfare Board, is obligated to continue payments for health benefits coverage of those retirees of the county welfare agency who were covered by a 1974 resolution of the Essex County Welfare Board affording benefits to employees who retire with twenty-five or more years of service.

The court holds that the post-retirement medical benefits conferred by the 1974 Welfare Board resolution are property rights of employees employed at that time, which the County cannot unilaterally terminate. In addition, since the County failed to raise the issues belatedly asserted herein in a prior proceeding involving the subject resolution and in a prior appeal in this case, it is collaterally estopped from raising them now.

I.

Since 1972 the State has paid the cost of health insurance for eligible state employees who retire from service, or were retired from state service as of July 1, 1964, on a pension after twenty-five years of service or disability. L. 1972, c. 75, § 7 and by L. 1977, c. 136, § 1. N.J.S.A. 52:14-17.32. The option of

providing similar benefits to their retirees was extended to local employers participating in the State Health Benefits Program by virtue of L. 1974, c. 88, § 1. N.J.S.A. 52:14-17.38. Although payment of the health benefits premiums by local employers for their retirees was not mandatory, participation in any program under the State Health Benefits Plan must be "subject to and in accordance with the rules and regulations of the Commission relating thereto." N.J.S.A. 52:14-17.37. Regulations promulgated by the State Health Benefits Commission prescribed that any local employer who elected the option for free health benefits for eligible pensioners must do so by adopting a resolution providing that payment will:

1. Apply to all eligible present and future pensioners of the employer and their dependents;

2. Continue as long as the State is paying the cost of its eligible pensioners and their dependents in accordance with the provisions of Chapter 75, P.L. 1972.

3. Provide for local employer reimbursement of Federal Medicare premiums for eligible pensioners and/or their spouses, as well as the payment of health insurance premiums required by the program, on a basis comparable to the reimbursement made by the State to its eligible pensioners and their spouses in accordance with the provisions of Chapter 75, P.L. 1972 (see N.J.A.C. 17:9-5.8);

4. Require the local employer to pay the full cost of such premiums and Medicare charges;

5. Provide for an effective date not earlier than the first day of the month at least 90 days following the receipt of the local employer's resolution on forms approved by the division. N.J.A.C. 17:9-5.5(a).

On December 23, 1974, the Essex County Welfare Board, then an autonomous agency, passed Resolution No. 74-12-3,*fn1

containing the terms prescribed by State regulations promulgated by the State Health Benefits Commission under N.J.S.A. 52:14-17.38, which provided for payment of health insurance premiums and charges under Part B of the Medicare Program for "all eligible present and future pensioners of the employer" who retire after 25 years of credited service or upon a disability pension. This resolution, forwarded to the State Health Benefits Commission on January 13, 1975, became effective May 1, 1975. Eligible retirees of the Welfare Board thereafter began and continued to receive free health benefits coverage during its existence.

On May 1, 1979, Essex County reorganized its form of government pursuant to the Optional County Charter Law, N.J.S.A. 40:41A-1, et seq. The Welfare Board was abolished, restructured and its functions were assumed by the Essex County Department of Citizen Services, Division of Welfare. The Essex County Administrative Code provided that "[p]ension fund membership and rights of any officer or employee shall not . . . be adversely affected by any transfer pursuant to the Code."

Plaintiffs DeBello and Weiner then became employees of the County of Essex pursuant to Section 14.3 of the Code which provided inter alia:

All offices, positions and employments, which are continued or re-established by this Code, are transferred to the respective departments, offices and agencies to which their functions are allocated and assigned by this Code.

Employees of the former Welfare Board were assimilated as employees of Essex County in the Division of Welfare. Essex County ("County") was a participant in the State Health Benefits Program, but never adopted any resolution pursuant to N.J.S.A. 52:14-17.38 for payment of health benefits coverage of county retirees.

The transfer of welfare functions was provided under Article 14 of the Essex County Administrative Code, which was adopted effective May 1, 1979. Section 14.1(I) sets forth the various autonomous County agencies whose functions were not

changed by the Code. Section 14.1(II) sets forth various County agencies, boards and commissions whose functions were transferred to and assumed by departments of the Essex County government, including the Welfare Board whose functions were assumed by the Department of Citizen Services, Division of Welfare.

After the welfare functions became part of county government on May 1, 1979, the County, through its 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 prior to May 1, 1979. The County of Essex does not have, and has not had, an employment policy like that of the Welfare Board Resolution 74-12-3. After the County welfare operations and personnel were transferred to the County Division of Welfare on May 1, 1979, the County continued to pay health benefits for those former Welfare Board retirees who had been receiving such benefits prior to May 1, 1979; however, reimbursement for Medicare Part B premiums for such Welfare Board retirees did not continue after May 1, 1979. In addition, employees of the Division of Welfare who retired from County employment between May 1, 1979 and January 1, 1985 and met the retirement service criteria of Resolution 74-12-3 began to receive paid health benefits but not Medicare Part B reimbursement. No explanation as to why or how these payments continued to be made has been provided by the County, nor why Medicare Part B premiums were not continued.

When the County Administration realized that certain welfare retirees were receiving County paid health benefits not afforded other County retirees, they requested an opinion of County Counsel, which concluded that providing health insurance retirement benefits to one group of retirees and not to others was contrary to State policy set forth in N.J.S.A. 40A:10-23. The County unilaterally discontinued payment of health benefits coverage to welfare retirees as of January 1, 1985, which action resulted in the suit by one such retiree. See

Gauer v. Essex County Div. of Welfare, 108 N.J. 140, 528 A.2d 1 (1987), where the Supreme Court held that the County was bound by the resolution of the Welfare Board to reimburse the health insurance premiums of employees who retired with twenty-five years or more of service.

Although the County sent a notice to the employees who had retired that it was terminating such benefits, it did not send a notice to employees, such as plaintiffs, who were still employed.

The County, by resolution, on April 27, 1988 terminated its participation in the State Health Benefits Program, because it believed it could afford better service for less costs but indicated that "the county will continue to provide the current level of employee health benefits coverage by way of a self-insurance and reinsurance health benefits plan."

Plaintiff Louis DeBello became employed by the Essex County Welfare Board on August 24, 1959, continued said employment until transferred to the County of Essex on May 1, 1979, and thereafter until his retirement on April 1, 1992 with more than twenty-five years of service. When DeBello was finishing graduate school while employed by the Essex County Welfare Board, he learned of the 1974 resolution. Relying thereon he decided to forgo his doctorate which would have taken six to eight years to complete.

The County has advised DeBello that his medical benefits will be terminated at the end of the first year of his retirement, i.e., April 1, 1993.

Plaintiff David H. Weiner became employed by the Essex County Welfare Board in July 1977, continued said employment until transferred to the County of Essex on May 1, 1979, and is still so employed. He is president of Local 1081 of the Communications Workers of America, AFL-CIO, the collective bargaining representative.

II.

Plaintiffs brought this action "as class representatives of the former Essex County Welfare Board", seeking an adjudication that upon retirement the County is legally required to provide them with paid health insurance coverage and to reimburse them for their Medicare Part B payments conferred by the 1974 Welfare Board resolution and to declare null and void the termination of these benefits as of January 1, 1985.

Defendant's answer asserted three affirmative defenses: res judicata, collateral estoppel and the time bar of R. 4:69-6 (limitation on bringing ...


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