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Faculty Association of Ocean County College v. State Health Benefits Commission

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


January 17, 2008

FACULTY ASSOCIATION OF OCEAN COUNTY COLLEGE, PETITIONER-APPELLANT,
v.
STATE HEALTH BENEFITS COMMISSION AND OCEAN COUNTY COLLEGE, RESPONDENTS-RESPONDENTS.

On appeal from State Health Benefits Commission.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted December 18, 2007

Before Judges Skillman and Winkelstein.

Appellant Faculty Association of Ocean County College (Faculty Association), which is the collective bargaining representative of the faculty at respondent Ocean County College (College), appeals from a final decision of the State Health Benefits Commission (SHBC), which upheld the SHBC's grant of a waiver to the College of the requirements governing optional dental benefits coverage contained in the SHBC Guidelines for Dental Expense Contracts (Dental Guidelines).

The Faculty Association entered into a series of collective bargaining agreements with the College beginning in 1984. The agreement in effect for the period from August 2000 through August 2006 required the College to pay the full premium for dental coverage for the Faculty Association's members but a maximum of $27.62 per month for coverage for the members' dependents, with the members being responsible for the excess. A similar provision apparently was included in the prior collective bargaining agreements between the Faculty Association and the College.

On October 31, 2001, more than a year after the beginning of the term of the current collective bargaining agreement, counsel for the Faculty Association sent a letter to the SHBC, requesting the SHBC to inform the College that it had to pay the full cost of dental insurance premiums for its members' dependents and reimburse its members for any premiums they had paid previously. The basis for this request was a section of the Dental Guidelines adopted by the SHBC in 1975, which required local public employers to "pay the full cost of premium charges for employees or for employees and dependents[.]" The College sent a letter to the SHBC opposing this request.

The SHBC staff denied this request by a letter dated February 2, 2002, which stated in part:

Although the "Guidelines for Dental Expense Contracts Issued Pursuant to Chapter 12, P.L. 1975" did provide for the employer to pay the full cost of premium charges for employees or for employees and dependents, this portion of the guidelines has never been enforced or litigated. In fact, when the State Dental Expense Plan came into existence in 1978, the Commission adopted an administrative rule (N.J.A.C. 17:9-9.1) which required state employees to pay half of the premium charges for dental coverage.

The Faculty Association appealed this denial to the SHBC. The SHBC rejected the appeal and granted a retroactive waiver to the College of the requirements of the Dental Guidelines. This waiver was granted under the authority of N.J.A.C. 17:9-1.7, which stated:

Pursuant to the provisions of N.J.S.A. 52:17-17.25 et seq., it is the policy of the State Health Benefits Commission that when local governments purchase insurance contracts of health benefits, such as prescription drug, dental expense and vision care coverages, such contracts and coverage therein must adhere to the guidelines approved by the State Health Benefits Commission for such contracts or coverages, as such guidelines were transmitted to all public employers by the Division of Pensions. Local governments cannot deviate from such guidelines in purchasing such contracts or coverages without the approval of the State Health Benefits Commission. [Emphasis added.]

The SHBC subsequently granted the Faculty Association's request for a hearing before the Office of Administrative Law. Christine Servis, Chief of the State Health Benefits Program, testified at that hearing that the SHBC had never enforced the part of the Dental Guidelines requiring a local public employer to pay the full cost of its employees' dental insurance coverage. Servis also testified that "[i]n fact, it was very rare, in all the years that I've been with the program, that an employer even questioned us on the guidelines." For these reasons, she concluded that the Dental Guidelines were "obsolete" and recommended that the SHBC repeal the regulation that required local public employers to comply with them. The SHBC accepted this recommendation and repealed the regulation, effective November 3, 2003.

Based on the evidence presented at the hearing, the Administrative Law Judge (ALJ) who heard the case concluded that the SHBC had authority to waive the requirements of the Dental Guidelines and that its grant of a waiver to the College was not arbitrary or capricious. In reaching this conclusion, the ALJ stated:

[The Faculty Association's] actions support [the SHBC's] contention that the guideline had never been enforced and was in fact outdated. Notwithstanding the longstanding existence of the guideline, [the Faculty Association] voluntarily negotiated a provision in its collective bargaining agreement contrary to the language of the guideline. . . .

. . . . . . . Ms. Servis' testimony provides a reasonable basis for the [SHBC's] action.

It is undisputed that the regulation at issue was about to be repealed [when the SHBC granted the waiver], and has since that time been repealed. [The Faculty Association] could offer no evidence contradicting the [SHBC's] assertion that the regulation had never been enforced.

The SHBC adopted the ALJ's recommended decision and upheld the grant to the College of a waiver from the part of the Dental Guidelines requiring a local public employer to pay the full premiums for dental insurance coverage for their employees' dependents.

On appeal, the Association presents the following arguments:

I. THE COMMISSION'S DECISION WAS NOT SUPPORTED BY SUBSTANTIAL, CREDIBLE EVIDENCE AND WAS INCONSISTENT WITH THE APPLICABLE CASE LAW, AND THEREFORE ITS DETERMINATION WAIVING THE REQUIREMENTS OF N.J.A.C. 17:9-1.7 SHOULD BE REVERSED.

A. THIS COURT SHOULD NOT DEFER TO THE COMMISSION'S INTERPRETATION OF N.J.A.C. 17:9-1.7.

II. THE STATE HEALTH BENEFIT PROGRAM'S GUIDELINES WERE BINDING AND HAD THE FORCE AND EFFECT OF LAW.

III. THE COMMISSION'S DECISION TO WAIVE THE REGULATION, N.J.A.C. 17:9-1.7, DISREGARDED THE IMPORTANT POLICY OF PROVIDING UNIFORMITY OF COVERAGE AMONG STATE AND LOCAL EMPLOYEES.

IV. PETITIONERS AND THEIR MEMBERS ARE ENTITLED TO RETROACTIVE RELIEF BECAUSE RESPONDENTS' IMPROPER ACTIONS VIOLATED APPELLANTS' AND THEIR MEMBERS' LEGAL RIGHTS.

We reject these arguments and affirm the SHBC's final decision substantially for the reasons set forth in the ALJ's recommended decision. We add the following supplemental comments.

The Faculty Association's primary argument is that the SHBC failed to adopt any standards for exercise of its authority under the final sentence of N.J.A.C. 17:9-1.7 to grant a waiver from the requirements of the Dental Guidelines. However, the statute pursuant to which this now repealed regulation was adopted specifically provided that "[a]ll provisions of [the State Health Benefits Program Act] will . . . be construed as to participating employers and to their employees and to dependents of such employees the same as for the State, employees of the State and dependents of such employees." N.J.S.A. 52:14-17.36. This section expresses a legislative intent that there be uniformity in the benefits provided to state employees and the employees of participating local employers such as the College. N.J. Sch. Bds. Ass'n v. State Health Benefits Comm'n, 183 N.J. Super. 215, 218 (App. Div. 1982). It is undisputed that the State only pays half the premium for the dental coverage of its employees. Consequently, enforcement of the provision of the Dental Guidelines requiring local employers to pay the full premiums for dental coverage for their employees' dependents would be contrary to the uniformity standard set forth in N.J.S.A. 52:14-17.36. Moreover, the SHBC presented uncontradicted evidence that this requirement had never been enforced against other local employers. In addition, the Faculty Association entered into a series of collective bargaining agreements that did not require the College to pay the full premiums for its employees' dental coverage. Therefore, we conclude that SHBC's grant of a waiver from the requirement of the former N.J.A.C. 17:9-1.7 that a local employer pay the full costs of premiums for dental coverage for its employees and their dependents was supported by the standard of uniformity of benefits between State and local employees set forth in N.J.S.A. 52:14-17.36 and was not arbitrary or capricious.

Affirmed.

20080117

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