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Board of Educ. of Newark v. New Jersey Dept. of Treasury

July 15, 1996

THE BOARD OF EDUCATION OF NEWARK, A BODY CORPORATE ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF NEW JERSEY; EUGENE C. CAMPBELL, EXECUTIVE SUPERINTENDENT OF SCHOOLS OF THE BOARD OF EDUCATION OF NEWARK; AND EUGENE C. CAMPBELL, INDIVIDUALLY, PLAINTIFFS-APPELLANTS,
v.
NEW JERSEY DEPARTMENT OF THE TREASURY, DIVISION OF PENSIONS; MARGARET M. MCMAHON, DIRECTOR OF DIVISION OF PENSIONS, ACTING SECRETARY OF THE STATE HEALTH BENEFITS COMMISSION AND/OR CUSTODIAN OF RECORDS; SAMUEL F. CRANE, NEW JERSEY STATE TREASURER; WILLIAM G. SCHEUER, COMMISSIONER OF THE DEPARTMENT OF PERSONNEL AND MERIT SYSTEM BOARD, DIVISION OF PENSIONS; SAMUEL F. FORTUNATO, COMMISSIONER OF THE DEPARTMENT OF INSURANCE; PATRICIA A. CHIACCHIO, SECRETARY, STATE HEALTH BENEFITS COMMISSION AND AS CUSTODIAN OF RECORDS, STATE HEALTH BENEFITS COMMISSION; JOHN DOE (A FICTITIOUS INDIVIDUAL), CUSTODIAN OF RECORDS, STATE HEALTH BENEFITS COMMISSION, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court, Appellate Division, whose opinion is reported at 279 N.J. Super. 489 (1995).

Counsel Amended.

The opinion of the Court was delivered by Stein, J. Justices Handler, Pollock, O'hern, Garibaldi and Coleman join in Justice STEIN's opinion. Chief Justice Wilentz did not participate.

The opinion of the court was delivered by: Stein

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

THE BOARD OF EDUCATION OF NEWARK, ETC., ET AL. V. NEW JERSEY DEPARTMENT OF THE TREASURY, DIVISION OF PENSIONS, ET AL. (A-67-95)

Argued January 16, 1996 -- Decided July 15, 1996

STEIN, J., writing for a unanimous Court.

The State Health Benefits Plan (Plan) provides health insurance to workers employed by participating public entities. It is managed by the State Health Benefits Commission (Commission), which functions within the Division of Pensions of the Department of Treasury (Division). Private health insurance companies, Blue Cross/Blue Shield and Prudential Insurance Company, administer the Plan under contract with the Commission. Participation in the Plan by local governmental employers is voluntary. The Plan is "community-rated," which means that the risk is analyzed and the premiums are set based on the overall loss experience of all of the participants, instead of calculating different premiums for each employer based on its individual risk. Claims are paid by the Plan's private administrators and are reimbursed by the State. The individual employees's records are maintained by claims administrators at Blue Cross/Blue Shield and Prudential in a computerized data base. The files are listed by the social security number of the individual employees, and are assigned a code denominating the file as belonging either to a State or local government employee.

During the 1990-91 school year, the Board of Education of Newark (Board) paid the Division more than $25 million in premiums for health insurance coverage for its employees. Other than salaries, health benefits constitute the largest single expenditure in the Board's budget. In May 1991, the Board sought various financial statistics concerning its participation in the Plan, including premiums paid by it, claims paid for its employees, and administrative charges paid by it. The Board requested this information in order to determine whether its continued participation in the Plan was an effective use of its funds allocated to employee health benefits. The Commission denied the Board's request.

The Board brought an action in lieu of prerogative writ to compel the production of the requested information. The Board alleged that it has the right to the information under New Jersey's Right-To-Know Law and under the common-law right to inspect public documents. The Law Division initially denied cross-motions for summary judgment and ordered discovery on the issue of the feasibility and cost of extracting the Board's claims experience data from the master data base of all employees covered by the Plan. Deposition testimony of Prudential and Blue Cross/Blue Shield personnel involved in administering the Plan established that: extracting the claims history of individual employees from the master data base is feasible; both Prudential and Blue Cross/Blue Shield have produced the type of reports requested for private employers in the past; and writing any necessary program to extract the information from the data base is a routine matter. The record contains differing estimates of the cost and reliability of the finished report.

Based on the additional record, the Law Division held that it is feasible for the Commission to produce the data subject to the Board's reimbursement to the producing party of the costs of reproducing the information. The court noted that because the Commission is required to preserve the information to carry out its statutorily imposed duty to prepare an annual report, the information is required by law to be made, maintained or kept on file. As such, it is subject to disclosure under the Right-To-Know Law. The court also held that the information is subject to disclosure under the common-law right to inspect public documents because the Board has a legitimate interest in the information that outweighs any interest in withholding it. Accordingly, the court granted summary judgment to the Board on both statutory and common-law grounds, except as to information concerning the administrative costs the Board had paid.

The Appellate Division granted leave to appeal and affirmed on essentially the same grounds relied on by the Law Division.

Before the Supreme Court on leave to appeal, the Commission argues that: the Board's claims history does not exist as a distinct document or compilation and, therefore, it is not subject to the common-law or statutory rights of inspection; neither the common-law nor the Right-To-Know Law can be construed to compel it to compile new information when existing records are not responsive to the Board's needs; forcing it to extract the claims history for individual employers would constitute an unfair burden on a public entity and impair the efficient administration of the Plan; and the Court lacks jurisdiction because the Board first was required to exhaust its administrative remedies before making a direct appeal. The Board claims that the Commission refuses to provide information on claims paid in order to discourage participating employers from leaving the Plan. According to the Board, the Commission is concerned that employers whose workers are better health risks than the average for the "community-rated" pool will choose to leave the Plan and seek lower-cost insurance elsewhere. This will leave the Plan with participants who are poorer risks, thereby jeopardizing the program's affordability. The Board argues that it has a compelling interest in the information it seeks; and that the burden on the Commission would be minimal, noting that private administrators have produced similar reports to other clients in the past. The Board also states that it is willing to absorb the cost of extracting the information from the master data plan.

HELD:

The Board of Education of Newark is not entitled to the information it seeks under the Right-To-Know Law. However, the information is subject to disclosure under the common-law right-to-inspect public documents.

1. The information that the Board ultimately seeks, the amount of claims paid on behalf of its own employees, cannot constitute a Right-To-Know document because it is not required by law to be made, maintained or kept on file. The Legislature has recently amended the Right-To-Know Law, however, to provide that persons seeking access to records "maintained by a system of data processing" are entitled only to printed copy of those records. The amendment applies retroactively to pre-enactment requests to inspect public records. Therefore, even if the individual claims history were subject to the Right-To-Know Law, only a printed copy of that data could be compelled to be produced. Nonetheless, only access to the computerized data from which the Board's own claims experience may be extracted will satisfy the Board's needs, and, such access is excluded from the mandate of the Right-To-Know Law. (pp. 9-12)

2. The common-law right to inspect extends to any document made by public officers in the exercise of public functions. The records of claims paid are made by public officials in the exercise of their duties in administering the Plan; therefore, they constitute common-law public records. The Board has an interest in the information it seeks. The Commission has alleged no interest in preventing disclosure that would outweigh the Board's need to obtain the information. Moreover, producing the Board's claims experience is feasible and the Board will reimburse the Plan's private administrator for the expense of creating and running the necessary computer programs. Further, the Commission's concern that ...


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