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Middletown Township Policemen's Benevolent Association Local No. 124 v. Township of Middletown

February 09, 2000

MIDDLETOWN TOWNSHIP POLICEMEN'S BENEVOLENT ASSOCIATION LOCAL NO. 124, ON BEHALF OF ITS MEMBERS, AND ALL PERSONS ENTITLED TO THE BENEFITS OF ITS COLLECTIVE BARGAINING AGREEMENT WITH DEFENDANT; AND IRVIN BEAVER, ON BEHALF OF HIMSELF AND ALL OTHER PERSONS SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS,
v.
TOWNSHIP OF MIDDLETOWN, DEFENDANT, AND LARRY S. LOIGMAN, INTERVENOR-RESPONDENT.



The opinion of the court was delivered by: Garibaldi, J.

Argued January 3, 2000

On certification to the Superior Court, Appellate Division.

Plaintiffs, Irvin Beaver ("Beaver"), a retired Middletown Township police officer, and the Middletown Township Policemen's Benevolent Association Local No. 124 ("PBA"), appeal from an order for summary judgment in favor of Defendant, Middletown Township ("Township"), declaring Beaver was not entitled to medical benefits as a retired police officer of the Township. The specific issue in this appeal is whether a municipality may be equitably estopped from terminating post-retirement health benefits of a former municipal employee where that employee has received (and relied on) those benefits for a period of years.

I.

The facts are not in dispute. The Township employed Beaver as a police officer from October 11, 1966 until November 1, 1988. Prior to his retirement in 1988, Beaver discussed with Township officials the continuation of free health insurance benefits for himself, his wife, and his two young children. Township officials repeatedly assured Beaver that he and his family would receive free health benefits upon his retirement.

The Township's assurances were consistent with Article XV of the collective bargaining agreement ("Agreement") between the PBA *fn1 and the Township, which obligated the Township to provide free health insurance coverage "to all employees who have retired." Under the Agreement, the free health benefits included "a health insurance plan . . . of a quality and continuing series of benefits at least equal to those provided by the New Jersey State Health Benefits Program Blue Cross/Blue Shield," as well as dental insurance, and a prescription drug plan. Beaver retired on November 1, 1988, and received free health benefits for his entire family for approximately ten years.

However, in January 1998 Intervenor-Respondent, Larry S. Loigman, Esq. ("Loigman"), filed a prerogative writ complaint, and in March 1998 filed an amended prerogative writ complaint, in the Chancery Division of the Monmouth County Superior Court against the Township. Loigman's action demanded that the Township's health insurance coverage be reviewed to remove any ineligible municipal or retired employees. Specifically, Loigman contended that Beaver received post-retirement health benefits contrary to N.J.S.A. 40A:10-23, which provided, in part, that "[r]etired [municipal] employees shall be required to pay for the entire cost of coverage for themselves and their dependents." N.J.S.A. 40A:10-23 (1988). However, the statute also stated that "[t]he employer may, in its discretion, assume the entire cost of such coverage and pay all of the premiums for employees who have retired . . . after 25 years or more service with the employer." N.J.S.A. 40A:10-23 (1988)(emphasis added). According to Loigman, Beaver had not satisfied the statute's threshold requirement of 25 years of "actual service" to the employer, and therefore was not entitled to free post-retirement benefits.

As a result of Loigman's complaint, Edward Dunn, the Township's Assistant Administrator, sent Beaver a letter dated March 17, 1998 stating:

At the direction of the Township Attorney, I must inform you that the Township is legally unable to continue your current enrollment in the Township health plan. Therefore, effective today, your name will be removed from the retiree health enrollment listing. I understand the Township attorney has been in contact with you concerning this matter.

However, you can continue your health coverage for a period of up to 18 months under COBRA continuation coverage. You must pay a monthly premium for this coverage as outlined in the attached memo. Coverage under COBRA will be retroactive to this date so you can continue coverage without a lapse. You have 60 days to decide if you want to enroll.

On March 20, 1998, as a result of the termination of his benefits by the Township, Beaver paid $839 to temporarily continue coverage for his family under COBRA for thirty days.

On March 25, 1998, PBA and Beaver filed a verified complaint in the Chancery Division of the Monmouth County Superior Court asserting improper termination of post-retirement health benefits by the Township. Plaintiffs also moved for an Order to Show Cause seeking an injunction against the termination of Beaver's benefits. Relying on Wolfersberger v. Borough of Point Pleasant Beach, 305 N.J. Super. 446 (App. Div. 1996), aff'd, 152 N.J. 40 (1997), the trial court dismissed the verified complaint, determining that Beaver was not entitled to continued post-retirement health benefits.

Simultaneously, in Loigman v. Township of Middletown, the trial court granted Loigman's motion for summary judgment finding that the Township had provided free health benefits to ineligible retirees, including Beaver. The PBA and Beaver then moved to amend the judgment dismissing their complaint or, in the alternative, for a stay pending appeal to the Appellate Division. *fn2 The trial court denied plaintiffs' motion to amend the judgment and their motion for a stay, but entered an order permitting the PBA and Beaver to intervene in the matter of Loigman v. Township of Middletown. The issue that remained in that action was whether Beaver was required to reimburse the Township for the benefits received since his retirement in 1988.

Plaintiffs then appealed the grant of summary judgment. Prior to deciding the appeal, the Appellate Division granted plaintiffs' motion for a stay of the termination of health benefits. In an unpublished decision, the Appellate Division panel affirmed the trial court's ruling essentially for the reasons expressed by the trial court. We ...


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