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In re H.S.

July 14, 2010


On appeal from the State Health Benefits Commission, Department of the Treasury.

Per curiam.


Submitted: May 5, 2010

Before Judges Axelrad, Fisher and Espinosa.

H.S. appeals from a final determination of the State Health Benefits Commission (Commission), which found she was not entitled to reimbursement pursuant to the State Health Benefits Program (SHBP) for costs incurred for gender reassignment surgery she underwent in Canada in 2005. We affirm.

We recite only those facts that are necessary for our resolution of this appeal. Participants in the SHBP select a provider among a number of options. During the relevant time period, these plans fell under one of three basic types: the traditional plan, which allows members to use any licensed medical provider or hospital facility, with benefits payable subject to deductibles and coinsurance; NJ Plus, which has both in-network benefits, which apply when an in-network provider is chosen by the member, and out-of-network benefits, which apply when an out-of-network provider is chosen; and HMOs, such as CIGNA, which offer a list of participating providers from which members select a Primary Care Physician (PCP). The PCP coordinates all of the member's care. Unless an HMO allows open access to participating specialists, referrals must be obtained from the PCP in order for the member to visit a specialist. Appellant chose the CIGNA-HMO for her health insurance coverage.

On December l, 2005, appellant sent correspondence to CIGNA requesting reimbursement for gender reassignment surgery performed in Montreal, Canada on September 27, 2005, totaling $12,088.07. CIGNA denied payment of the claim. Appellant initiated a first level internal appeal and by letter of February l6, 2006, CIGNA upheld its original decision to deny her claim. CIGNA reached the same result in its second level internal appeal, of which it informed appellant by letter of July 31, 2006. Appellant appealed CIGNA's denial to the Commission.

At its October 8, 2008 meeting, the Commission reviewed the record and denied the appeal based on the following reasons: gender reassignment surgery is not a covered benefit, the CIGNAHMO does not provide out-of-network benefits, and out-of-country elective care is not covered. Appellant requested the matter be presented to the Office of Administrative Law as a contested case. The Commission denied this request, determining that no issue of material fact existed. Following its review of the record, the Commission issued its final determination on February l7, 2009, again denying coverage based on the findings that the CIGNA-HMO does not provide out-of-network benefits and out-of-country elective care is not covered. The Commission noted that the CIGNA-HMO contract expressly excludes transgender surgery coverage. However, it declined to reach the question of whether or not gender identity disorder is a biologically-based mental illness (BBMI) and, if so, how that determination affects the exclusion, as there was insufficient medical information presented by appellant on this issue and in light of its denial based on the out-of-network provider. This appeal ensued.

Appellant argues she suffers from a gender identity disorder, which is a BBMI as defined by New Jersey law, N.J.S.A. 52:14-17.29d, which any provider contracting with the SHBP is required to provide coverage for under the same terms and conditions as any other sickness under the contract, N.J.S.A. 52:14-17.29e. She further argues the Commission cannot deny coverage based on a failure to take procedural steps imposed by the Commission that would have been futile for her to follow. We are satisfied the record contains sufficient credible evidence to support the Commission's findings. We affirm substantially for the reasons set forth in the Commission's final determination, namely that either the services were performed by an out-of network provider or because it was an non-emergent procedure performed outside the country, or both. We are in accord with the Commission that a determination of the BBMI issue is not necessary on this record.

Our standard of review is well settled. Courts have a limited role when reviewing the decision of an administrative agency. Henry v. Rahway State Prison, 81 N.J. 571, 579 (1980). We defer to the expertise of the agency entrusted by the Legislature to carry out its statutory purpose. Riverside Gen. Hosp. v. N.J. Hosp. Rate Setting Comm'n, 98 N.J. 458, 469 (1985). We will not upset a final agency determination unless it is shown that it was arbitrary, capricious or unreasonable, or that it violated legislative policies expressed or implied in the act governing the agency. Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963). An agency decision is considered arbitrary, capricious or unreasonable where it is not supported by substantial credible evidence in the record as a whole, offensive to the federal or state law or inconsistent with its statutory mission. Circus Liquors, Inc. v. Middletown Twp., 199 N.J. 1, 9-10 (2009).

The Legislature created the Commission to administer and regulate the SHBP. N.J.S.A. 52:14-17.27. Those duties include utilizing its expertise to provide comprehensive health benefit coverage for public employees, with a critical eye toward the efficient utilization of finite State resources. See N.J.S.A. 52:14-17.29. Pursuant to N.J.S.A. 52:14-17.29(D), in pertinent part:

Benefits under the contract or contracts purchased as authorized by this act may be subject to such limitations, exclusions, or waiting periods as the commission finds necessary or desirable to avoid inequity, unnecessary utilization, duplication of services or benefits otherwise available, including coverage afforded under the laws of the United States, such as the federal Medicare program or for other reasons.

No benefits shall be provided beyond those stipulated in the contracts held by the State Health Benefits Commission.

Pursuant to this statutory authority, the Commission adopted regulations incorporating the policy provisions contained in the insurance providers' contracts with it, and created a handbook to "embody the terms of the Program as communicated to the employees . . . ." Heaton v. State Health ...

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