Court Opinion

ID: 7321690
Source: CourtListenerOpinion
Date Created: 2022-07-25 21:19:50.327124+00
Date Added: 2024-06-11T09:03:07.152348
License: Public Domain

WECKER, J.S.C.
(temporarily assigned) concurring.
I concur in the result reached by the majority affirming the State Board’s decision denying permission for the Keyport Board *657of Education to continue its contractual arrangements to provide health insurance benefits to its employees. However, I reach that result on narrower grounds than does the majority.
The Keyport Board’s plan combines self-insurance, administered under contract with a private insurance agency, with a policy for excess coverage provided by a commercial insurance carrier. In response to our request at oral argument, the Keyport Board provided additional information regarding the caps on Board exposure under the excess policy purchased during the contract year 1992-93. As I understand the response, our concerns are not fully satisfied. Keyport is responsible for the first $20,000 of each individual’s claim in the contract year. The excess carrier is responsible above the first $20,000, up to $1 million. However, while Keyport’s aggregate liability for all claims was capped at $773,548 for the contract year vis-a-vis the carrier, the Board’s response states:
the total of all claims beyond the $773,548 threshold are covered by the aggregate excess insurance in the amount of one million. There are therefore two, independent levels of excess coverage protecting Keyport.
[emphasis added.]
It is thus apparent that if aggregate health benefits owed to Keyport Board employees exceed $1 million, the Keyport Board will be liable for the balance. Whereas excess coverage of $1 million for any one claim may appear generous, if two or more employees have separate catastrophic medical expenses in one year, the excess insurance could be grossly inadequate.
Moreover, Keyport has not compared its exposure for employee health benefits under its plan with the exposure it would face under the State Health Benefits Plan (SHBP). N.J.S.A. 52:14-17.25 et seq. My understanding is that under SHBP, the local school board is able to budget for a set expense per employee per year. Each employee and participating family member is promised lifetime benefits up to $1,000,000,1 N.J.S.A. 52:14-17.29, and *658the employer is not responsible to the employee beyond that maximum benefit amount.
Keyport relies in part upon the express statutory authorization for private self-insurance plans, N.J.S.A 18A:18B-2, which are subject to regulation under N.J.S.A 18A:18B-4, 18A:18B-7, and rules and regulations promulgated by the Commissioner of Insurance thereunder. Chapter 18B clearly contemplates the Commissioner’s power and authority to disapprove plans that do not adequately protect the financial integrity of the school board or, by inference, the medical insurance protection afforded its employees. As the Commissioner of Education found,
... no analogy can be made between the SHBP and local board self-insurance in terms of the former serving as tacit authorization for the latter, in that the SHBP is protected by a hugh risk-sharing pool and the full backing of State resources while local board plans must gamble on the loss experience and fiscal stability of a single, relatively small entity. [287a].
The relevant inquiry is not the savings realized by the Keyport Board in claims and premiums paid in any past contract year, but its exposure in any future year.
Because the Keyport Board has not shown adequate financial protection, the State Board’s decision disallowing its plan must be affirmed.

 After a deductible per person per year.