SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION DOCKET NO. A-0076- 21 MICHELLE ROCHE, IN HER INDIVIDUAL CAPACITY AND AS CLASS REPRESENTATIVE, Plaintiff-Appellant,

v. AETNA, INC., AETNA HEALTH INC., AETNA INSURANCE CO. and AETNA LIFE INSURANCE CO., Defendant-Respondent.

_________________________________

Submitted September 19, 2023

– Decided November 28, 2023 Before Judges Smith and Perez Friscia. On appeal from the State Employees' Health Benefits Commission. Ryan Nicholson Boland (Offit Kurman, PC) and Charles Kannebecker, attorneys for appellant (Ryan Nicholson Boland and Charles Kannebecker , on the briefs). Anthony M ichael Ch ristina (Lowey Dannenberg, PC) attorney for respondents Aetna Inc., Aetna Health I nc.,

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court. " Although it is posted on the internet, this opinion is binding only on the parti es in the case and its use in other cases is limite d. R. 1:36- 3.2 A- 0076

- 21 Aetna Insurance Co., and Aetna Life Insurance Co. (Anthony Michael Christina, on the brief). Matthew J. Platkin, Attorney General, attorney for respondent School Employees' Health and Benefits Commission (Melissa H. Raska, Assistant Attorney General, of counsel; Alison Keating, Deputy Attorne y General, on the brief).
PER CURIAM Plaintiff Michelle Roche appeals the final decisi on of the School Employees Health Benefits Commission (Commission) r ejecting her appeal as untimely filed. Roche argues Aetna issued a defective adverse benef its
determination , which relieved her of the obligation to file an appeal within 180 days

. For the reasons which follow, we affirm.
I. In 2007 Roche sustained serious injuries in a motor vehicl e accident. She sued the tortfeasor and obtained a monetary recover y. At all relevant times, Roche was enrolled in the School Employees Health B enefits Program (SEHBP) through a n HMO plan administered by defendant Aetna Life Insur ance Company (Aetna) 1

. The SEHBP paid $86,601.72 in benefits for medical

1 We refer to defendants, Aetna, Inc., Aetna Health I nc., Aetna Insurance C o. , and Aetna Life Insurance Co., collectively as "Aetn a" throughout this opinion.3 A- 0076

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treatment Roche received in 2009 and 2010. From Se ptember 2010 through July
2012 , Aetna, through its agent, the Rawlings Company, L LC (Rawlings), sent Roche a series of letters, in which Aetna asserted its right to be reimbursed from any proceeds she recovered in her personal injury l awsuit. SEHBP detailed its plan terms in a handbook titled, "Aetna Member Handbook for Employee and Retirees Enrolled in the State Health Benefits Program." The 2009 and 2010 Handbooks, at page 59, include a paragrap h entitled, "Reimbursement." It states in full :

In addition, if a Covered Person receives any payme nt from any Responsible Party or Insurance Coverage as a result of an injury, illness, or condition, the Pla n has the right to recover from, and be reimbursed by, the Covered Person for all amounts this Plan has paid a nd will pay as a result of that injury, illness, or co ndition, up to and including the full amount the Covered Person receives from any Responsible Party. Roche, through her counsel, re imbursed Aetna $88,075.29 on January 4,
2013. Shortly afterwards, Roche filed a class action comp laint in the Superior Court of New Jersey on May 28, 2013. Her complai nt alleged, "Aetna engaged in illegal subrogation, in violation of New Jersey Law, which prohibits insurers from subrogating against personal injury insurers." Aetna removed her claim to4 A- 0076

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the United States District Court for the District o f New Jersey (Roche I) 2 and filed a motion to dismiss. Aetna argued that their subrogation of Roche's settlement was permissible, and that Roche failed t o exhaust her administrative remedies pursuant to the appeals requirements under her insurance policy as detailed in the 2009 -10 Aetna Handbooks. The Handbooks, at page 55, co ntain a paragraph entitled, "Appeals of Adverse Benefits Determinations." The pertinent language states:

Adverse benefit determinations [(ABD)] are decision s Aetna makes that result in denial, reduction, or termination of a benefit or the amount paid for it. It also means a decision not to provide a benefit or service.

. . . . Aetna will send you written notice of an adverse benefits determination. The notice will give the reason for the decision and will explain what steps you mu st take if you wish to appeal. The notice will also t ell you about your rights to receive additional information that may be relevant to the appeal. Requests for appeal mu st be made in writing within 180 days from the receipt of the notice.

. . . . The Plan provides for two levels of appeal, plus an option to seek external review of the ABD. You mus t

2 Roche v. Aetna, Inc., 165 F. Supp. 3d 180 (D.N.J. Feb 29, 2016).5 A- 0076

- 21 complete the two levels of appeal before bringing a lawsuit against the plan.

. . . . If the Plan's appeals process upholds the original adverse benefits determination, you may have the ri ght to pursue a Health Benefits Commission review of yo ur claim. [emphasis added]. The district court found the Rawlings letters const ituted an adverse benefits determination, and that Roche was required "to seek administrative review before filing suit" even though the letters lacked specific notice regarding administrative appeal steps. Roche, 165 F. Supp. 3 d at 187. The court noted Roche possessed the SEHBP handbook and could read t he appeals process on her own. Id. at 188. The district court granted defendants' motion to di smiss without prejudice and ordered Roche to exhaust her administrative remedi es prior to fil ing a class action complaint. Roche appealed to the Third Circuit (Roche II) 3 on March 28, 2016, which affirmed the exhaustion of remedies requirement. I t also noted Roche was "in possession of the appeal procedures" contained in the han dbook. Roche, 681 F. App 'x at 124.

3 Roche v. Aetna, Inc., 681 F. App'x 117 (3d Cir. M ar. 9, 2017).6 A- 0076

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Next, in 2017, Roche filed an appeal with the New J ersey Department of Banking and Insurance (DOBI), citing "exemplar cont racts produced by Aetna in the district court litigation which expressly au thorized a first level appeal to [DOBI]". DOBI declined jurisdiction

. Over a year later, Roche sought an appeal hearing t hrough the New Jersey Division of Pensions and Benefits (Division), to be heard before the State Health Benefits Commission (SHBC), an entity that is separ ate and distinct from the Commission. The Division declined jurisdiction as well. Finally, in 2019, six years after she sued Aetna in a class action lawsuit to contest her adverse benefits determination , Roche filed her first and second level internal appeals with Aetna. After some delay, Aetna denied both appeals. Roche then filed her first SEHBC appeal on November 13, 2019. The SEHBC heard argument by the parties and found R oche's appeal untimely in an initial decision dated June 19, 2020. The SEHBC issued its final administrative decision on July 26, 2021 , finding the Rawlings letters constituted an adverse benefits determination pu rsuant to the terms of the Handbook, and that the absence of an appeals notice with in the letters was not "fatal."7 A- 0076

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On appeal, Roche contends her appeal should not be barred on timeliness grounds because: defendants failed to provide her with an adverse benefit determination letter containing proper notice langu age; defendants breached their duty of good faith and fair dealing and are e quitably estopped from asserting the timeliness defense ; defendants waived the ir untimeliness defense ; and Roche was not required to exhaust administrativ e remedies.
II. Appellate "review of administrative agency action i s limited." Russo v. Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 27 (2011) (citing In re Herrmann, 192 N.J. 19, 27 (2007)). "A reviewing court 'may not substitute its own judgment for the agency's, even though the cour t might have reached a different result.'" In re Stallworth, 208 N.J. 182 , 194 (2011) (quoting In re Carter, 191 N.J. 474, 483 (2007)). The appellate c ourt may reverse a decision "if it is arbitrary, capricious, or unreasonable, o r if it is not supported by substantial credible evidence in the record as a wh ole." P.F. on Behalf of B.F. v. New Jersey Div. of Dev. Disabilities, 139 N.J. 5 22, 529

– 30 (1995) (citing Dennery v. Bd. of Educ., 131 N.J. 626, 641 (1993)). We defer to an agency' s "technical expertise, its superior knowledge of its subject matter area, and its fact-finding role. " Messick v. Bd. of Review, 420 N.J. Super. 321, 325 (App.8 A- 0076

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Div. 2011). However, the appellate court applies " de novo review to an agency' s interpretation of a statute or case law." Russo, 206 N.J. at 27 (citing Tol l Bros., Inc. v. Twp. of W. Windsor, 173 N.J. 502, 549 (2002 )).
III. Roche 's main points on appeal are all premised upon the same contention:
her 180 -day appeal deadline , clearly stated on page 55 of her 2009 and 2010 Handbooks, was not triggered because defendants nev er satisfied the condition precedent of providing a proper adverse benefit det ermination to her. She maintains the handbook unambiguously requires that an adverse benefit determination must contain: a reason for the decis i on; an explanation of the steps the insured must take to appeal; and an expla nation of the insured's right to receive additional information relevant to the a ppeal. She contends the Rawlings letters do no t meet these requirements. We are not persuaded. "The parties to a contract 'may make contractual li ability dependent upon the performance of a condition precedent.'" Libert y Mut. Ins. Co. v. President Container, Inc., 297 N.J. Super. 24, 34 (App. Div. 1997) (quoting Duff v. Trenton Beverage Co., 4 N.J. 595, 604 (1950)). A c ondition precedent is an event that must happen before a contractual right a ccrues or a contractual duty arises. Restatement (Second) of Contracts § 224 (Am. L. Ins t. 1981).9 A- 0076

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"[G]enerally, 'no liability can arise on a promise subject to a condition precedent until the condition is met.'" Duff, 4 N.J. at 604. And "because a promisor's duty
does not become absolute unless and until the condi tion precedent occurs, the failure or non-performance of the condition is a de fense to an action against the promisor for breach of its promise. " 4 Williston on Contracts § 38.7 (Lord ed. 2013).
We quote the clear and succinct findings of the Commission: First, the Commission concludes the Rawlings Letter s are an adverse benefit determination as defined by the Handbooks. In doing so, the Commission adopts the finding in Roche II that the exercise of the SEHBP’s right of recovery to request reimbursement for the amount paid to cover Roche’s medical expenses after her receipt of settlement proceeds is "unquestionab ly" an adverse benefit determination. 681 Fed. Appx. a t 122. The Commission also adopts the finding in Roche I that the Rawlings [l]etters give the reason for t he decision, as they "very clearly state why" the SEHB P believes it can exercise its right of recovery. 16 5 F. Supp. 3d. at 188. Thus, the Rawlings letters serve as a written notice of an adverse benefit determination and give the reason for the decision. Second, the lack of notice regarding the Roche appeal procedures in the Rawlings [l]etters is not fatal. The Commission fo llows Roche II and concludes the "initial lack of notice of [the appeal] procedures d[oes] not extinguish the [SEHBP’s] exhaustion requirement. " 681 Fed. Appx. at 124. As the Third Circuit reasoned, "R oche was in possession of the appeal procedures and offers no reason for why she could not have appealed other th an her mistaken belief that no adverse benefit10 A- 0076

- 21 determination had been made." Ibid. The Commission also follows Roc he I, 165 F. Supp. 3d at 188, and adopts the reasoning of the court in Neuner v. Horizon Blu e Cross Blue Shield of N.J. (In re LymeCare, Inc.), 3 01 B.R. 662, 667 (Bankr. D.N.J. 2003), which found members of the State Health Benefits Plan had "all of the information regarding the appeal procedures . .

. available to them in the plan handbook" and were, therefore, required to exhaust administrative remed ies, even though they did not get proper claims denial notices. As the court in Neuner reasoned, any unfairness to Roche occasioned by the initial lack of notice of the appeal procedures "is mitigated by th e fact that the Plan Handbook, which has been readily available to [members], clearly reflects the administrative course for appeal[s]." [Ibid.] We defer to the Commission's findings , Messick, 420 N.J. Super. at 325 and discern no reason to disturb the Commission's adop tion of the sound legal reasoning expressed by the federal district court i n Roche I and the Third Circuit
in Roche II . We find no error. Next, Roche argues defendants breached their duty of good faith and fair dealing when they failed to produce a "compliant no tice of adverse benefits determination and /or Aetna's contract with the SEHBC." We disagree. The implied covenant of good faith and fair dealing requires parties to a contract to "refrain from doing 'anything which wil l have the effect of destroying or injuring the right of the other party to receive ' the benefits of the contract."11 A- 0076

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Brunswick Hills Racquet Club, Inc. v. Route 18 Shop ping Ctr. Assocs., 182 N.J. 210, 224-25 (2005) (quoting Palisades Props., Inc. v. Brunetti, 44 N.J. 117, 130 (1965)). Aetna contracted with the SEHBC to provide health benefits services to SEHBC members. There was no contract between Aetna and Roche. "In the absence of a contract, there can be no breach of an implied covenant of good faith and fair dealing." Noye v. Hoffmann-La Roche, Inc. , 238 N.J. Super. 430, 434 (App. Div. 1990). Even if we were to find pr ivity between the parties, and that Aetna owed Roche a duty of good faith and fair dealing, that duty was not breached here, as the Commission properly found def endants provided an adequate adverse benefits determination to Roche. We reject Roche's equitable estoppel and waiver ar guments as without merit. They represent variations on Roche's lack of notice argument, which we have declined to adopt. On this record, we find th at application of differing legal theories to the same facts do not alter the outcome. Finally, the Employee Retirement Income Security A ct of 1974 (ERISA) is not applicable to the SEHBP. See 29 U.S.C. §§ 1002 (32)1003(b)(1). Its related jurisprudence is not persuasive.12 A- 0076

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To the extent we have not addressed any additional arguments by Roche , it is because they lack sufficient merit discussion in a written opinion. R. 2:11

- 3(e)(1)(E). Affirmed.