November 19, 2008
IN RE: WASHINGTON TOWNSHIP.
On appeal from the State Health Benefits Commission, Department of Treasury.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 29, 2008
Before Judges Rodríguez and Waugh.
Appellant Township of Washington (Township) appeals the decision of the State Health Benefits Commission (Commission), denying its application for an evidentiary hearing before the Office of Administrative Law (OAL), as well as the Commission's denial of its application to be relieved from the obligation to make payments to the Commission on behalf of a predecessor entity.*fn1 We affirm.
This matter has its origins in the decision of the Township and the Washington Township Fire District No. 1 (District) to dissolve the District and transfer its functions, employees, assets, and obligations to the Township.*fn2 The process was initiated in or before June 2006, as the result of a petition from Township residents. On July 27, 2006, the Township Council adopted a resolution authorizing the dissolution of the District and the filing of an application for the necessary approval from the Local Finance Board in the New Jersey Department of Community Affairs.
Approval was given by the Local Finance Board on November 9, 2006. On November 30, 2006, the Township Council set December 31, 2006, as the effective date of the dissolution and amended the municipal code to provide for firefighting services supplied by the Township.
Up to the time of its dissolution, the District was a "public employer" eligible to enroll its employees in the State Health Benefits Plan (Plan). N.J.S.A. 52:14-17.37. The District had participated in the Plan since at least 1989. Its employees received health benefits through the Plan, and the District was obligated to pay premiums to the Plan in return. Certain retirees and former employees of the District were also eligible for benefits from the Plan, although it is not clear from the record whether any were receiving such benefits at the time of the dissolution.
Public employers are permitted to withdraw from the Plan pursuant to N.J.A.C. 17:9-1.5, under the following conditions:
(a) A resolution furnished by the Division of Pensions and Benefits must be completed by employers who wish to voluntarily terminate their participation in the program.
(b) When a participating employer voluntarily terminates coverage, the coverage for the employer's active and retired employees and COBRA participants shall terminate as of the first of the month following a 60-day period beginning with the receipt of the resolution by the Health Benefits Commission.
(c) The employer shall notify all active employees of the date their coverage in the program has terminated.
(d) The Division of Pensions and Benefits shall act to notify all affected [COBRA] and retired members of the termination of coverage. Upon request from the employer, the Division shall forward a list of the names and addresses of terminating retirees and COBRA participants so that the employer may offer them an opportunity to enroll under its new group health insurance plan.
As can be seen, the regulatory scheme embodied in this section provides for a continuation of coverage for the covered individuals during the sixty-day period between receipt of notice of termination by the Board and the effective date of the termination. It also provides for them to receive advance notice of the termination.
Neither the District nor the Township made any attempt to contact the Commission with respect to the termination of the District's participation in the Plan until November 2006, even though planning for the dissolution started at least five months earlier in June 2006. According to the District fire chief, who subsequently became the Township's fire chief, after he learned that the Local Finance Board had approved the dissolution on November 9, 2006, he scheduled a meeting with the Township's financial officer for November 17, 2006. The purpose of the meeting was to develop a "to do list" to complete the transition of firefighting responsibilities from the District to the Township. Thus, contact with the Commission was not even placed on the "to do list" until after the deadline to apply for a termination effective as of the end of December 2006.
The fire chief telephoned the Division of Pensions and Benefits on November 20, 2006. He was transferred to the Commission. Unable to reach a staff member, he left a detailed message about the purpose of his call. He was apparently unable to reach anyone at the Commission until December 21, 2006, when he spoke to an employee who promptly faxed him the form of resolution required for termination.*fn3 The District's commissioners met on December 27, 2006, and adopted the resolution to terminate its participation in the Plan. The resolution was forwarded to the Commission, and received on January 9, 2007.
Under a strict reading of the applicable regulation, the District's termination would have become effective on April 1, 2007, which was the first day of the month following the sixtieth day after the Commission's receipt of the resolution. However, at the Township's request, the Commission agreed to treat the resolution as if it had been received prior to December 31, 2006. Consequently, the Commission terminated the coverage as of March 1, 2007, and the Township was not required to pay for coverage during March 2007.
The Plan billed the Township, as the District's successor, for the January and February 2007 premiums. During that two-month period, the Plan also continued coverage for the former District employees, their dependants, and any others eligible to receive coverage. The Township appealed the premium charge to the Commission, arguing that the payments should not be sought from the Township and that the Commission should waive any such requirement for payment of premiums during the termination period.
The Commission considered the appeal at its June 13, 2007, meeting. The Township's municipal administrator appeared at the meeting and spoke on behalf of the Township. By letter dated June 21, 2007, the Commission notified the Township that it had denied the Township's application, and advised the Township that it had the further right to appeal to the Commission and request a hearing at the OAL.
By letter dated July 30, 2007, the Township confirmed its oral notice to the Commission that it was exercising its right to appeal further and requested an OAL hearing. By letter dated November 14, 2007, the Commission notified the Township that it had determined that there were no issues of material fact requiring an OAL hearing. The letter also expanded upon the Commission's findings of fact and conclusions of law in support of its prior decision not to waive the premiums for January and February of 2007.
As is the case with any administrative agency, we will normally show considerable deference to the decisions reached by the Commission.
We will ordinarily defer to the decision of a State administrative agency unless the appellant establishes that the agency's decision was arbitrary, capricious, or unreasonable, or that it was unsupported by sufficient credible, competent evidence in the record. Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963); Henry v. Rahway State Prison, 81 N.J. 571, 579-80 (1980). If we conclude that the record supports the agency's decision, we will affirm, even if we might have reached a different conclusion had we considered the matter de novo. Clowes v. Terminix Int'l Inc., 109 N.J. 575, 587 (1988). However, it is incumbent on the agency to explain its decision in sufficient detail to assure us that the agency actually considered the evidence and addressed all of the issues before it. Failure to address critical issues, or to analyze the evidence in light of those issues, renders the agency's decision arbitrary and capricious and is grounds for reversal. See Authorization for Freshwater Wetlands General Permits, Water Quality Certification and Waiver of Transition Area for Access, 372 N.J. Super. 578 (App. Div. 2004); Bailey v. Bd. of Review, 339 N.J. Super. 29, 33 (App. Div. 2001); Lister v. J.B. Eurell Co., 234 N.J. Super. 64, 73-74 (App. Div. 1989). [Green v. State Health Benefits Com'n, 373 N.J. Super. 408, 414-15 (App. Div. 2004).]
Based upon our review of the record and the applicable law, we are satisfied that the Commission's actions were not "arbitrary, capricious, or unreasonable" or "unsupported by sufficient credible, competent evidence in the record." Green, supra, 373 N.J. Super. at 414.
First, we note that the Commission's requirements for termination of membership in the Plan, including the sixty-day notice requirement, were clearly set forth in the applicable regulation. N.J.A.C. 17:9-1.5. Neither the District nor the Township can seek to rely upon ignorance of those regulatory requirements to excuse their failure to give timely notice. See S.P. v. Collier High School, 319 N.J. Super. 452, 465 (App. Div. 1999); Graham v. New Jersey Real Estate Comm'n, 217 N.J. Super. 130, 138 (App. Div. 1987); Widmer v. Twp. of Mahwah, 151 N.J. Super. 79, 83 (App. Div. 1977).
In addition, both the Township and the District knew from at least June 2006 that the District would eventually be dissolved. It was also known at least as early as September 2006 that the District's employees would be transferred to the Township and that there would be a change in health care plans. The Township, in its application to Local Finance Board, stated:
"The Township will incorporate the Fire District employees into the Township health benefits plan to avoid excessive costs inherent in the current Fire District benefits plan." Yet, neither the District nor the Township even attempted to contact the Commission until November 2006, after it was too late to give notice so that the termination could be effective on January 1, 2007.
Clearly, the District and the Township could have contacted the Commission earlier in the process, by letter if necessary, to notify the Commission of its plans to terminate the District's membership and to coordinate a smooth transition. That it failed to do so is not a basis for relieving it of its financial obligation, particularly when the Commission's decision is reviewed under an abuse of discretion standard.
The Township also argues that it should not have been held responsible for the financial obligation incurred by the District after its dissolution date. We disagree. Indeed, in our view, the obligation was incurred prior to the December 31, 2006, dissolution date, rather than following it as the Township argues.
Under the provision of Sections 3 and 4 of the Township's Ordinance No. 2006-41, which initiated the dissolution of the District, the Township was to receive all of the District's assets and "assume or pa[y] off" all of the "obligations of the District." Under the Commission's regulations, particularly N.J.A.C. 17:9-1.5, the District had an ongoing obligation to pay premiums to the Plan until such time as it terminated its membership, which required sixty-days advanced notice.
By sending out the required notice of termination in December 2006, the District effectively limited its, and consequently the Township's, ongoing obligation to pay the premiums, so that it ended as of March 1, 2007. On January 1, 2007, the Township assumed the District's assets and obligations, including the premiums incurred through the end of the notice period. For that reason, we are satisfied that the Commission properly sought payment from the Township.
The Township's estoppel argument is equally unconvincing. It contends that even if the Township is deemed to have notice of the Plan's termination requirements because of N.J.A.C. 17:9-1.5, the Commission should be estopped from relying on that provision because of the failure of its staff to respond to the fire chief in a timely manner.
Equitable estoppel is "the effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed . . . as against another person, who has in good faith relied upon such conduct, and has been led thereby to change his position for the worse." Walsh v. Mattera, 379 N.J. Super. 548, 559 (App. Div. 2005) (quoting W.V. Pangborne & Co., Inc. v. New Jersey Dep't of Transp., 116 N.J. 543, 553 (1989)) (internal quotation marks omitted). "It is a doctrine founded on 'the fundamental duty of fair dealing imposed by law' and 'designed to prevent injustice by not permitting a party to repudiate a course of action on which another party has relied to his detriment.'" Ibid. (quoting Marsden v. Encompass Ins. Co., 374 N.J. Super. 241, 249 (App. Div.), certif. denied, 183 N.J. 257 (2005)).
The requirements of equitable estoppel are "quite exacting." Pangborne, supra, 116 N.J. at 553. Of particular importance for the purposes of this case, "equitable estoppel is rarely invoked against public entities." Id. at 554 (citing O'Malley v. Dep't. of Energy, 109 N.J. 309, 316 (1987)).
Equitable estoppel is simply not applicable in this case, inasmuch as neither the District nor the Township changed its position in reliance on anything the Commission did. As noted above, by the time the District began to prepare its "to do list," it was already too late to give sufficient notice for termination of coverage prior to its dissolution on December 31, 2006. There is no allegation in this case, for example, that Commission staff told the District fire chief that the District's participation in the Plan would terminate on December 31, 2006, so that the District could take its time in submitting the required resolution. While we do not condone the apparent failure of the Commission's staff to respond to the District's inquiry, a governmental entity's delay in responding to a telephone request for information is simply not the basis for an equitable estoppel. The Township has cited no law to support such a legal position.
Finally, we see no merit to the Township's contention that the Commission erred in refusing to provide an evidentiary hearing to the OAL. The administrative agency has the authority in the first instance to determine whether a matter is a contested case that requires a hearing. N.J.S.A. 52:14F-7(a). In this matter, the Commission afforded the Township a hearing, but declined to order an evidentiary hearing at the OAL, a determination it was empowered to make in the first instance. In re Farmers' Mut. Fire Assurance Ass'n of N.J., 256 N.J. Super. 607, 618 (App. Div. 1992).
"An evidentiary hearing is mandated only when the proposed administrative action is based on disputed adjudicatory facts." Ibid. See also Contini v. Board of Educ. of Newark, 286 N.J. Super. 106, 120 (App. Div. 1995), certif. denied, 145 N.J. 372 (1996). As stated in a footnote of its decision, we understand the Commission to have accepted as true the facts put forth by the Township for the purposes of its final administrative decision. We have taken the same approach in our analysis of the facts underlying the Commission's decision. And, as explained above, based upon those facts, we have determined that the Commission's decision to waive the March, but not the January and February, premiums for 2007 was not "arbitrary, capricious, or unreasonable," and was supported by "sufficient credible, competent evidence in the record." Green, supra, 373 N.J. Super. at 414. Consequently, there was no error in the Commission's decision to refuse to order a hearing at the OAL.
In summary, after a careful review of the record in light of the applicable law, we conclude: (1) that the Township was not entitled to an evidentiary hearing at the OAL; (2) that the Township is obligated to pay the premiums arising out of the dissolution of the District and the transfer of its operations, personnel, assets, and obligations to the Township; (3) that the Commission's failure to respond to the fire chief in a timely manner was not grounds for imposition of equitable estoppel; and (4) that the Commission's determination to waive the March, but not the January and February, premiums for 2007 was not "arbitrary, capricious, or unreasonable," and was supported by "sufficient credible, competent evidence in the record." Consequently, we affirm the Commission's decisions under appeal.