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Rosenstein v. State

Superior Court of New Jersey, Appellate Division

December 31, 2014

HETTY ROSENSTEIN, LABOR CO-CHAIRPERSON OF THE STATE HEALTH BENEFITS PLAN DESIGN COMMITTEE and CHARLES WOWKANECH, PRESIDENT, NEW JERSEY STATE AFL-CIO, Appellants,
v.
STATE OF NEW JERSEY, DEPARTMENT OF TREASURY, DIVISION OF PENSIONS AND BENEFITS, Respondent

Argued November 12, 2014

Approved for Publication December 31, 2014.

On appeal from the Division of Pensions and Benefits.

Ira W. Mintz argued the cause for appellants ( Weissman & Mintz, LLC, attorneys; Mr. Mintz, on the brief).

Eileen Schlindwein Den Bleyker, Senior Deputy Attorney General, argued the cause for respondent ( John J. Hoffman, Acting Attorney General, attorney; Robert T. Lougy, Assistant Attorney General, of counsel; Ms. Den Bleyker, on the brief).

Before Judges FISHER, NUGENT and MANAHAN. The opinion of the court was delivered by FISHER, P.J.A.D.

Page 1141

[438 N.J.Super. 494] OPINION

FISHER, P.J.A.D.

In 2011, the Legislature enacted Chapter 78,[1] making numerous and significant changes to public employee pension and health care benefits. See Berg v. Christie, 436 N.J.Super. 220, 240, 93 A.3d 387 (App.Div. 2014). As part of this overhaul, the Legislature provided the State Health Benefits Plan Design Committee (SHBPDC) with the exclusive authority to design state health benefits plans -- a power previously possessed by the State Health Benefits Commission (SHBC). The SHBPDC consists of six labor and six public employer representatives. N.J.S.A. 52:14-17.27(b). It cannot pass any measures without seven affirmative votes; consequently, neither the governor's appointees nor the union [438 N.J.Super. 495] appointees can act alone in designing the state health benefit plan or any of its components. Ibid. When a six-to-six impasse occurs, a super-conciliator

Page 1142

is randomly selected from a list developed by the Public Employment Relations Commission. N.J.S.A. 52:14-17.27b.

Motions in the SHBPDC regarding retiree prescription copayments for the calendar year 2013 failed to garner more than six votes, resulting in an impasse. As a result, SHBPDC union members sought conciliation. Notwithstanding the impasse and a demand for the appointment of a super-conciliator, the SHBC was presented in September 2012 with -- and its three administration members voted to approve -- revised premium rates in which retiree copayments were adjusted in accordance with the plan that failed to obtain seven votes in the SHBPDC process. Accordingly, even though the SHBPDC was ineffectual in determining the level of retiree copayments for the calendar year 2013, and even though SHBPDC members had demanded super-conciliation to resolve the impasse, the Division of Pensions and Benefits (the Division) increased retiree copayments effective January 1, 2013.

Two members of the SHBPDC -- Hetty Rosenstein and Charles Wowkanech -- appeal to this court, arguing the Division exceeded its authority by raising retiree copayments pursuant to a regulation whose statutory authority had been abrogated by Chapter 78. The Division argues in response that the appeal should be dismissed, claiming appellants lack standing and the super-conciliatory process should be exhausted before there can be a resort to the courts. As for the merits, the Division argues that when the SHBPDC fails to act, " existing statutes, rules, regulations, policies and procedures of the State Health Benefits Program continue in effect." We reject the Division's argument that appellants lack standing as well as its alternative argument that administrative rights must first be exhausted. And we conclude, on the merits, that the Division lacked the authority to increase ...


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