On appeal from Superior Court of New Jersey, Law Division, Bergen County.
Approved for Publication April 11, 1997.
Before Judges Petrella, Landau and Wallace. The opinion of the court was delivered by Landau, J.A.D.
The opinion of the court was delivered by: Landau
The opinion of the court was delivered by
This is an appeal and cross appeal from a Law Division order dated May 16, 1996 striking down, as violative of N.J.S.A. 40A:10-23, a 1988 Borough of Fair Lawn ordinance which established a multi-tiered plan for sharing cost of medical insurance coverage with its retirees. The trial court reinstated a 1977 ordinance which had provided a 50%-of-premium payment for its retired employees.
Plaintiff, Fair Lawn Retired Policemen (FLRP), an unincorporated association of former policemen who retired prior to 1988, appeals, disputing this Disposition. Defendant, Borough of Fair Lawn (Borough) cross appeals, contending that the court erred in holding that the 1988 ordinance was invalid in derogation of N.J.S.A. 40A:10-23.
Ordinance No. 1077, adopted March 25, 1975, provided in part that employees who retired or terminated employment after a minimum of twenty years service were entitled to continue "with the same hospitalization, medical, and major medical coverage plan or plans as provided by the Borough for active employees, provided however, that the cost will be shared on a 50-50 basis."
In 1979, the Legislature adopted c. 230, embodied in N.J.S.A. 40A:10-1 to -34. N.J.S.A. 40A:10-16 to -25 incorporated guidelines for municipalities and counties participating in group insurance programs. N.J.S.A. 40A:10-23 provides:
Retired employees shall be required to pay for the entire cost of coverage for themselves and their dependents at rates which are deemed to be adequate to cover the benefits, as affected by Medicare, of the retired employees and their dependents on the basis of the utilization of services which may be reasonably expected of the older age classification; provided, however, that the total rate payable by a retired employee for himself and his dependents, for coverage under the contract and for Part B of Medicare, shall not exceed by more than 25% the total amount that would have been required to have been paid by the employee and his employer for the coverage maintained had he continued in office or active employment and he and his dependents were not eligible for Medicare benefits.
The employer may, in its discretion, assume the entire cost of such coverage and pay all of the premiums for employees who have retired on a disability pension or after 25 years' or more service with the employer, or have retired and reached the age of 62 or older with at least 15 years of service with the employer, including the premiums on their dependents, if any, under uniform conditions as the governing body of the local unit shall prescribe.
In December 1988, the Borough adopted Ordinance No. 1414-88, amending Ordinance No. 1077. The new ordinance established four categories of health benefits payments:
1. Any full time employee who retired prior to December 31, 1987, shall be entitled to benefits, with costs shared on a 50-50 basis. *fn1
2. "Any full-time employee of the Borough who has not terminated employment or retired as of December 31, 1987 and who meets the other requirements of this ordinance shall receive the benefits as set forth in this ...