Court Opinion

ID: 2765849
Source: CourtListenerOpinion
Date Created: 2014-12-31 15:05:55.137316+00
Date Added: 2024-06-11T11:27:25.785726
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                    SUPERIOR COURT OF NEW JERSEY
                                    APPELLATE DIVISION
                                    DOCKET NO. A-0945-12T1

HETTY ROSENSTEIN, LABOR CO-
CHAIRPERSON OF THE STATE HEALTH
BENEFITS PLAN DESIGN COMMITTEE
and CHARLES WOWKANECH, PRESIDENT,
NEW JERSEY STATE AFL-CIO,              APPROVED FOR PUBLICATION

         Appellants,                      December 31, 2014

    v.                                   APPELLATE DIVISION

STATE OF NEW JERSEY, DEPARTMENT
OF TREASURY, DIVISION OF PENSIONS
AND BENEFITS,

         Respondent.

_____________________________________________________

         Argued November 12, 2014 – Decided December 31, 2014

         Before Judges Fisher, Nugent and Manahan.

         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).

    The opinion of the court was delivered by

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    (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 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             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

1
Lans. Ch. 2011, c. 78.

                                                2                                         A-0945-12T1
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

                                             3                                  A-0945-12T1
exhausted.        And we conclude, on the merits, that the Division

lacked the authority to increase retiree prescription copayments

because the SHBC lacked the authority to change the state health

benefits    plan        absent    a   final       determination     from     SHBPDC    or

through the super-conciliatory process.

                                              I

      In rejecting the Division's first argument, we observe that

our   courts       have     historically          employed     a   liberal    rule    of

standing.        Crescent Park Tenants Ass'n v. Realty Equities Corp.

of N.Y., 58 N.J. 98, 101 (1971); see also Jen Elec., Inc. v.

Cnty. of Essex, 197 N.J. 627, 645 (2009); N.J. Builders Ass'n v.

Bernards Twp., 219 N.J. Super. 539, 539 (App. Div. 1986), aff’d,

108 N.J. 223 (1987).             Although our courts will not "function in

the abstract" or entertain proceedings commenced "by plaintiffs

who are 'mere intermeddlers,' . . . interlopers or strangers to

the dispute," we will entertain and adjudicate suits, claims and

appeals when "the litigant's concern with the subject matter

evidence[s] a sufficient stake and real adverseness."                         Crescent

Park, supra, 58 N.J. at 107 (internal citations omitted).

      Here, the question of standing might begin and end with an

assumption       that     appellants    are       taxpayers.       Jen    Elec.,   Inc.,

supra,     197    N.J.     at    644.     But       appellants      are    also    union

representative members of the SHBPDC, and they contend that the

                                              4                                A-0945-12T1
SHBPDC's     authority     has    been      wrongfully        overstepped      by    the

disputed    action    taken      by   the       Division.         We   conclude     these

circumstances     alone     are   sufficient           to   imbue      appellants   with

standing here.       In addition, we note that Rosenstein is the area

director of CWA AFL-CIO District 1, and Wowkanech is president

of the state AFL-CIO, and their union members undoubtedly have a

keen interest in the outcome.

                                           II

    We     also   find     no   merit      in    the   Division's        argument   that

appellants    have    no    right     to    be    heard      in   this    court     until

exhaustion of the conciliation process.                       The answer to this

argument requires consideration of what is presently before us.

In most instances, the nature of an appeal is obvious.                                In

others, such as the present matter, we must first identify "the

true nature" of the appeal "and to unfold" and ascertain "the

true use or end of it."           Marcus Aurelius, Meditations, Book XII,

paragraph xiv.       There are multiple ways of looking at what this

appeal represents.

    In one sense, this appeal may be viewed as seeking review

of the Division's final action in increasing retiree copayments

in the absence of SHBPDC approval – a contention that does not

invite application of the exhaustion doctrine because, in that

limited sense, there would be no further action to be taken by

                                            5                                  A-0945-12T1
the Division.        If we were to so view this appeal, the exhaustion

doctrine would have no application.

    In a second sense, the appeal may be viewed as seeking our

restoration of the status quo ante pending completion of the

super-conciliatory          process.      The       parties       seem       to    adopt      this

latter    description,         since    even        the       Division's          argument      in

support     of      dismissal        recognizes          that    it      is       the    super-

conciliatory process which will determine whether there should

be an increase in the retiree prescription copayment for the

period    in   question.2          Because        the    parties      agree       the   retiree

copayment dispute must be subjected to the super-conciliatory

process, and in viewing the appeal in this manner, the issue

before us is limited to whether this court has the power to

intervene      to   restore      the    status          quo    until     the       impasse      is

resolved.

    Although        sound      judicial   principles            may    at     times     counsel

otherwise,       there    is    no    doubt       that    courts       are     empowered        to

intervene      in   a    dispute     pending       in    some    other       forum      for    the

purposes of preserving the thing in dispute in that other forum.

2
 That is, the Division argues – in seeking dismissal of this
appeal – that appellants "cannot bypass or negate [the super-
conciliatory] mechanism by seeking relief here." By making that
argument, the Division must a fortiori agree that the action it
took, and of which appellants complain, is also subject to a
final resolution yet to be reached through the conciliation
process.

                                              6                                         A-0945-12T1
See, e.g., Fischer v. Fischer, 375 N.J. Super. 278, 286-87 (App.

Div.) (recognizing the authority of courts to preserve the res

to be allocated in a different forum), certif. denied, 183 N.J.
590 (2005); Steiger v. Armellino, 315 N.J. Super. 176, 183-84

(Ch.    Div.    1998)      (ordering        a     preservation           of    a     fund    pending

completion of rule-based fee arbitration); see also Ortho Pharm.

Corp.    v.     Amgen,      Inc.,      882 F.2d 806,    812     (3d    Cir.       1989)

(recognizing a court's authority to enter injunctive relief to

preserve the status quo pending institution and completion of

arbitration proceedings); In re Mossavi, 334 N.J. Super. 112,

116-22 (Ch. Div. 2000) (holding that courts are authorized to

arm litigants with the subpoena power for purposes of compelling

the     appearance         of      witnesses              at     a     hospital's           internal

administrative           hearing      as    the       means      of    enforcing       a     party's

contractual rights).

       Moreover, the exercise of the court's inherent equitable

power    to    preserve         the   res       of    a    controversy          which       will    be

resolved       in   another        forum     does         not     violate       the    principles

underlying      the      exhaustion        doctrine.                 Indeed,    the    exhaustion

doctrine invoked by the Division as a means of avoiding our

examination         of    the    controversy              is    not     an     absolute      –     its

application is discretionary, turning on the presence and weight

of certain considerations.                   Hawk v. N.J. Inst. of Tech., 428

                                                  7                                         A-0945-12T1
N.J. Super. 562, 570-71 (App. Div. 2012), certif. denied, 214
N.J. 175 (2013); Alliance for Disabled in Action, Inc. v. Cont'l

Props., 371 N.J. Super. 398, 408 (App. Div. 2004), aff’d, 185
N.J. 331 (2005).         The doctrine is applied when it will ensure a

claim will initially be heard by a body possessing expertise,

when it allows for the creation of a factual record that will

promote for meaningful appellate review, or when it fosters a

potential       for   terminating      the       controversy,     since     an     agency

decision might satisfy the parties and obviate resort to the

courts.     See City of Atlantic City v. Laezza, 80 N.J. 255, 265

(1979).      Courts      should      also    consider       whether    requiring       the

further     pursuit      of    administrative         remedies        before     seeking

judicial    intervention        will    be       "futile"    or   might     result      in

irreparable      harm,    or   whether       "an    overriding     public      interest

calls for a prompt judicial decision."                  Garrow v. Elizabeth Gen.

Hosp. & Dispensary, 79 N.J. 549, 561 (1979); Hawk, supra, 428

N.J. Super. at 571.

    Because appellants' intent in filing this appeal was not to

disrupt    or    supplant      the   conciliation       process       but   to    simply

restore the status quo ante until conciliation may be completed,

we conclude that the exhaustion doctrine has no application.

And, to the extent it could be argued that the doctrine has some

bearing, we conclude that it cannot be perverted into the means

                                             8                                   A-0945-12T1
of   allowing   the   Division   to   impose   an   interim   remedy   while

precluding appellants' pursuit of review in or a remedy from

this court.

      The interests of justice preclude the exhaustion doctrine's

use as a bar to the relief sought by appellants here, no matter

how the scope and intent of the appeal may be described.3

3
 We have already identified two ways of viewing the matter before
us. Yet a third way of looking at this appeal, which is neither
argued nor implicated by the arguments, is to view it as seeking
and enforcing a declaratory judgment about the propriety of the
actions taken by the SHBC and the Division.           Declaratory
judgment actions are normally commenced in the trial court, but,
even if mistakenly lodged in the wrong division, the Appellate
Division possesses the power to exercise original jurisdiction
when "necessary to the complete determination of any cause on
review."   N.J. Const. art. VI, § 5, ¶ 3; see also R. 2:10-5;
N.J.S.A. 2A:16-52 (declaring that "[a]ll courts of record in
this state shall, within their respective jurisdictions, have
power to declare rights, status and other legal relations,
whether or not further relief is or could be claimed").
Moreover, invocation of original jurisdiction is particularly
appropriate when no fact-finding is necessary, see Price v.
Himeji, L.L.C., 214 N.J. 263, 294 (2013), or when the matter
implicates the public interest, see Karins v. City of Atlantic
City, 152 N.J. 532, 540-41 (1998). Here, the appeal presents a
purely legal question concerning whether the authority of the
SHBPDC was usurped by the SHBC, and the outcome of that issue is
undoubtedly of great public importance.     Accordingly, even if
this appeal is more accurately recognized as a request for a
declaratory judgment concerning the actions of the SHBC, the
Division, or both, this court is empowered to exercise original
jurisdiction.    Indeed, although our courts lack authority to
"act independently" from, or "substitute [their] judgment" for,
an agency which is empowered to make the decision, the court is
certainly empowered "to bring [an] agency's action into
conformity with its delegated authority."     In re Polk License
Revocation, 90 N.J. 550, 578 (1982).          That is precisely
appellants' argument here.

                                      9                            A-0945-12T1
                                     III

       With that, we turn to whether the Division's view of its

authority, or its view of SHBC's authority, should be vindicated

or     rejected    pending    completion     of   the    super-conciliatory

process.

       Appellants correctly argue that the adoption of Chapter 78

transferred authority over the plan design of the state health

benefits program to the newly-created SHBPDC, which has the:

               [r]esponsibility for and authority over the
               various plans and components of those plans,
               including for medical benefits, prescription
               benefits, dental vision, and any other
               health    care    benefits,   offered    and
               administered by the program.    The [SHBPDC]
               shall have the authority to create, modify,
               or terminate any plan or component, at its
               sole discretion.

               [N.J.S.A. 52:14-17.27(b) (emphasis added).]

And, by the same stroke of a pen, the Legislature eliminated the

SHBC's former authority in this regard or the force of any other

regulation once applicable:

               Any reference in law to the [SHBC] in the
               context of the creation, modification, or
               termination of a plan or plan component
               shall be deemed to apply to the [SHBPDC].

               [Ibid.]

With     the     adoption    of   these    provisions,    the   Legislature

eliminated the efficacy of SHBC's reliance on or ability to act

                                      10                           A-0945-12T1
pursuant to N.J.A.C. 17:9-6.10 – upon which the determinations

in question here were based – absent the affirmative action of

the SHBPDC.

     The broad language of N.J.S.A. 52:14-17.27(b) unmistakably

gave SHBPDC the authority to set, among other things, retiree

prescription    copayment       levels    as   part   of   its     plan-design

authority.     Because those levels have not been set due to the

SHBPDC impasse, and cannot be resolved – as both appellants and

the Division agree – until the impasse is broken through the

conciliatory    process    or    otherwise,     the    SHBC   acted      without

authority    when   it   unilaterally      decided    to   increase      retiree

copayments for the calendar year 2013.                In short, Chapter 78

transferred the authority to design all aspects of the state

health plan to the SHBPDC.4        Only the SHBPDC may "create, modify,

or terminate" the "various plans and components of those plans."

N.J.S.A.    52:14-17.27(b).       Until    seven   members    of   the    SHBPDC

approve, or until the SHBPDC's impasse is resolved in super-

conciliation, the status quo ante should have been maintained

and the retiree copayment levels should not have been altered.

4
 We would add that one clear legislative intent revealed by
N.J.S.A. 52:47-17.27(b) was the leveling of the balance of power
between labor and the public employer by giving six votes to
each side, rather than the three-to-two edge previously
possessed by the administration when the SHBC had the authority
to create, modify and terminate components of the state health
plan. See N.J.S.A. 52:47-17.27(a).

                                     11                                  A-0945-12T1
    The actions of the SHBC and the Division were ultra vires

and are hereby vacated.

                             12                       A-0945-12T1