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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 Benefits Comm'n, 264 N.J. Super. l4l, 144 (App. Div. l993). The regulation states:

The Commission adopts by reference all of the policy provisions contained in the contracts between the health and dental plans and the Commission, as well as any subsequent amendments thereto, to the exclusion of all other possible coverages. The plans handbook supplements the master contracts and contains the specific provisions for services to be covered and those which are excluded. [N.J.A.C. l7:9-2.14.]*fn1

The SHBP summary program description (January 2005 edition) and CIGNA-HMO handbook (4/0l) that were provided to state health benefits members, including appellant, informed them of the mandatory PCP consultation and referral procedure, service area of participating providers in New Jersey, New York, Connecticut, Philadelphia and Delaware, and expressly provided that "[i]f you receive care that is not provided or authorized by your PCP, you will be responsible for paying the entire cost." There is an exception, however, for "emergency care expenses incurred anywhere in the world."

The referral process is utilized so the HMOs can ensure that specialists selected are appropriate and procedures are performed when medically necessary. The HMO referral process is a cost containment method that allows members to pay lower premiums and less out-of-pocket costs than an indemnity plan such as the traditional plan or a point of service plan such as NJ Plus. Since appellant selected an HMO, she is subject to its terms. The plain language of appellant's medical benefit plan required that services must be performed by in-network physicians in order to be covered, absent an emergency situation. As the Commission noted, it is undisputed the physician and facility utilized by appellant were outside of CIGNA's network of providers, the services were provided in a foreign country, and the services were not due to an emergency.

Appellant provides no details, let alone evidence, to support her bald allegation that she was "barred" from following the internal policies required by CIGNA. Appellant asserts only the generalized statement in her brief that she "contacted CIGNA by telephone in March 2004 and was advised that the surgery would not be covered." CIGNA responds that neither it nor SHBP has any record indicating that appellant made any inquiry to them. Appellant has not provided any such evidence or more specific information regarding the contact. The party who challenges the validity of the administrative decision bears the heavy burden of showing that it was arbitrary, capricious or unreasonable. Boyle v. Riti, l75 N.J. Super. l58, 166 (App. Div. l980). Nor does appellant support her claim that "there were no doctors within the network that were sufficiently skilled to perform the [gender reassignment] surgery." In fact, appellant provides no evidence that she made any attempt to locate an in-network provider, let alone even considered any surgeon in the United States. Although appellant may have believed that traveling to Canada for the surgery was her only viable option, her proofs neither establish that following the internal procedure would have been futile or that her situation was an emergency.


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