Court Opinion

ID: 8405116
Source: CourtListenerOpinion
Date Created: 2022-10-25 14:06:16.968436+00
Date Added: 2024-06-11T16:46:48.722653
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
              APPROVAL OF THE APPELLATE DIVISION

                                   SUPERIOR COURT OF NEW JERSEY
                                   APPELLATE DIVISION
                                   DOCKET NO. A-0312-21

JAMES MEYERS,
                                     APPROVED FOR PUBLICATION
     Petitioner-Appellant,                  October 25, 2022
                                         APPELLATE DIVISION
v.

STATE HEALTH BENEFITS
COMMISSION,

     Respondent-Respondent.
__________________________

           Argued October 3, 2022 – Decided October 25, 2022

           Before Judges Whipple, Smith, and Marczyk.

           On appeal from the State Health                     Benefits
           Commission, Department of the Treasury.

           Richard M. Pescatore argued the cause for appellant
           (Richard M. Pescatore, PC, attorneys; Richard M.
           Pescatore, of counsel and on the briefs).

           Alison Keating, Deputy Attorney General, argued the
           cause for respondent (Matthew J. Platkin, Attorney
           General, attorney for respondent; Melissa H. Raksa,
           Assistant Attorney General, of counsel; Alison
           Keating, on the brief).

           The opinion of the court was delivered by

     SMITH, J.A.D.
       Petitioner James Meyers appeals from the final decision of the State

Health Benefits Commission (SHBC), which ordered health care insurance

premiums to be deducted from his monthly retirement payment pursuant to

Chapter 78, the State Health Benefits Program. 1 Petitioner appeals, contending

that the SHBC's decision was arbitrary, capricious, and unreasonable, as well

as procedurally deficient. We affirm.

                                        I.

       Petitioner James Meyers was employed by the State Police from 1994

through September 30, 2015. He retired as a captain. In 1995, petitioner

unsuccessfully attempted to purchase his military service time and transfer it

into his State Police Retirement System (SPRS) account, but he was not

permitted to do so under the laws existing at that time.

       On June 28, 2011, the Legislature adopted N.J.S.A. 52:14-17.28d(b)(1),

which requires retired public employees to contribute towards the cost of their

health care benefits coverage through the withholding of a premium

contribution from their monthly retirement allowance. Another section of that

legislation, N.J.S.A. 52:14-17.28d(b)(3), exempted public employees who had

twenty or more years of creditable service in a state or local public retirement

1
    N.J.S.A. 52:14-17.25 to -17.46a.

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system as of June 28, 2011 from the obligation to pay the health insurance

premiums imposed under section (b)(1).

      On June 28, 2011, the record shows petitioner had earned seventeen

years and nine months creditable service time as an employee of the New

Jersey State Police.     The record further shows petitioner had no other

creditable public service time.

      In 2013, the Legislature passed N.J.S.A. 53:5A-6, which made public

employees eligible to purchase military service credit and apply such credit

towards their New Jersey public service time. Petitioner, who had previously

served in the United States Marine Corps, purchased forty-eight months

credit.2

      In 2015, petitioner applied for early retirement.      As a result of his

military service credit purchase, petitioner accumulated over twenty-five (25)

years' worth of creditable service time toward his SPRS benefits at the time of

retirement.

       In response to his application for early retirement, on July 27, 2015, the

New Jersey Division of Pensions and Benefits (Division) sent petitioner a

letter regarding his retirement health care benefits coverage.        The letter

2
  Plaintiff made a lump sum purchase of his military service credits in the
amount of $94,734.13.

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                                                                      3
informed petitioner that there was "no premium cost to [him]"             for his

retirement health care benefits. The Division approved petitioner's applicat ion

for early retirement, effective September 30, 2015. Plaintiff began receiving

monthly retirement payments from the Division the next month, however, the

Division did not deduct health insurance premiums from those monthly

retirement payments. As a result, petitioner received full health care benefits

coverage for himself and his family, at no cost, from October 2015 through

May 2017.

      On June 2, 2017, the Division discontinued his fully paid health care

insurance coverage, stating the change was necessary because of an error. 4 As

it turned out, the Division's July 2015 letter to petitioner stating he had free

health insurance during retirement was incorrect.         The Division began

3
   The last paragraph of page one of the Division's July 27, 2015 letter states,
"[i]f you select NJ Direct10 or Aetna Freedom10, you are required to pay a
portion of the premium based on the terms of the labor contract agreement that
apply to you. For all other plan choices, there is no premium cost to you."
Petitioner did not select either NJDirect10 or Aetna Freedom10.
4
   The record shows that the Audit Section of the State Health Benefits
Program sent a letter to petitioner dated June 2, 2017, which read in part:
"[d]uring a recent audit, an error was found regarding your benefits
contribution. [N.J.S.A. 52:14-17.28d] requires you to pay a contribution from
your monthly retirement allowance for your retired health benefits coverage."

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deducting $792.51 from plaintiff's monthly pension for health benefits,

effective July 1, 2017. 5

      Petitioner appealed the newly imposed deduction to the State Health

Benefits Commission (SHBC). The SHBC referred the matter to the Office of

Administrative Law for fact-finding in a letter dated October 18, 2018. In the

letter, the SHBC identified the sole issue at the hearing to be: "equitable

estoppel . . . specifically, to determine if the member, [petitioner],

detrimentally relied on incorrect information provided by the Division."

      On April 16, 2021, after a hearing at which petitioner and a Division

representative testified, the ALJ issued its initial decision barring the SHBC

from deducting health insurance premiums from petitioner's retirement

payments.    The ALJ made findings, including:      that petitioner was "quite

clear" that his health benefits would be free upon his retirement, based on his

review of Division and State Police retirement literature, Division

correspondence, and conversations with State Police HR and Division staff;

that the SHBC intentionally misinformed petitioner about free health benefits

at "every step of the way during [petitioner's] retirement planning"; and that

petitioner detrimentally relied upon the SHBC's misinformation, without which

5
  The deduction gradually increased over the next two years, culminating in
$863.16 per month being removed from petitioner's monthly retirement
payment in 2020.

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he would not have purchased his military service time at a significant cost, nor

applied for early retirement.

      Concluding an injustice had taken place, the ALJ invoked the doctrine of

equitable estoppel and barred the SHBC from deducting contributions to

petitioner's retirement health benefits as mandated by state law.

      On September 24, 2021 the SHBC made findings and rejected the ALJ's

initial decision. The SHBC noted the ALJ had overlooked facts in the record,

specifically Division and State Police pension literature that explicitly warned

public employees, including petitioner, that service time purchases made after

June 28, 2011, were subject to the provisions of N.J.S.A. 52:14-17.28d(b)(3).

The SHBC next found that the erroneous July 27, 2015 letter and any oral

misrepresentations by Division staff to petitioner about his eligibility for free

health care benefits in retirement were "mistake[s]," but did not rise to the

level of intentional misrepresentation, an element of equitable estoppel. The

SHBC also found the record did not support the ALJ's finding that petitioner

detrimentally    relied   on    the    Division's   erroneous   written   and      oral

representations in retiring early. 6

6
  The SHBC noted that petitioner took early retirement to accept an executive
position with a firearms manufacturer.

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       Concluding its equitable estoppel analysis, the SHBC found that

requiring petitioner to contribute to his health care premium as per state law

was not manifestly unjust.     Quoting Teamsters Local 97 v. State of New

Jersey,7 the SHBC found that the state's "legitimate interest in controlling the

cost of health care benefits, ensuring consistency in health benefit coverage,

and further ensuring that the programs that make health care coverage

available to public employees remain viable for current and future employees"

took precedence over any equitable interest demonstrated by petitioner.

       The SHBC also considered petitioner's statutory eligibility for

contribution-free health insurance benefits in retirement under N.J.S.A. 52:14-

17.28d(b)(3). It found that "no amount of continued service with the NJSP

beyond [petitioner's] retirement date of October 1, 2015 would change the

amount of creditable service [petitioner] had on [the statute's] effective date,"

June 28, 2011.

       Petitioner appeals, arguing the SHBC was arbitrary, capricious, and

unreasonable in its rejection of the ALJ's initial decision.        Secondarily,

petitioner also seeks dismissal of the SHBC's final decision on procedural

grounds.

7
    Teamsters Local 97 v. State, 434 N.J. Super. 393, 493 (App. Div. 2014).

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                                       II.

      "[We] have 'a limited role' in the review of [agency] decisions." In re

Stallworth, 208 N.J. 182, 194 (2011) (quoting Henry v. Rahway State Prison,

81 N.J. 571, 579 (1980)). "[A] 'strong presumption of reasonableness attaches

to [an agency decision].'" Parsells v. Bd. of Educ. of Borough of Somerville,

472 N.J. Super. 369, 375 (App. Div. 2022) (citing In re Carroll, 339 N.J.

Super. 429, 437 (App. Div.        2001)).    "Board decisions are afforded a

deferential standard of review and will be reversed only if 'there is a clear

showing that [the decision] is arbitrary, capricious, or unreasonable, or that it

lacks fair support in the record.'" S.L.W. v. N.J. Div. Pensions & Benefits,

238 N.J. 385, 393 (2019) (alterations in original) (citing Mount v. Police &

Firemen's Ret. Sys., 233 N.J. 402, 418 (2018)).

      We "may not substitute [our] own judgment for the agency's, even

though [we] might have reached a different result." Stallworth, 208 N.J. at 194

(quoting In re Carter, 191 N.J. 474, 483 (2007)). "This is particularly true

when the issue under review is directed to the agency's special 'expertise and

superior knowledge of a particular field.'" Id. at 195 (quoting In re Herrmann,

192 N.J. 19, 28 (2007)).          "Furthermore, 'an administrative agency's

interpretation of statutes and regulations within its implementing and enforcing

responsibility is ordinarily entitled to our deference.'"    Parsells, 472 N.J.

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Super. at 376 (quoting In re Appeal by Progressive Cas. Ins. Co., 307 N.J.

Super. 93, 102 (App. Div. 1997)).

                                      III.

      Petitioner argues that we should reverse the SHBC's final decision

because it was arbitrary, capricious, and unreasonable. Petitioner contends the

voluminous hearing record detailing the actions he took, allegedly in reliance

on the Division's written and oral representations, supports a finding that the

SHBC should be estopped from deducting health insurance premiums from

petitioner's monthly retirement payments.

      We are not persuaded by this argument. Instead, we find that a plain

reading of the applicable statutes compels deduction of health insurance

premiums from petitioner's retirement payment. There is no need to scrutinize

the record through the lens of equitable estoppel.

      N.J.S.A. 52:14-17.28d(b)(1) states in pertinent part:

            [P]ublic employees of the State . . . shall contribute,
            through the withholding of the contribution from the
            monthly retirement allowance, toward the cost of
            health care benefits coverage for the employee in
            retirement and any dependent provided under the State
            Health Benefits Program . . . in an amount that shall
            be determined in accordance with [N.J.S.A. 52:14-
            17.28c].

      N.J.S.A. 52:14-17.28d(b)(3) states, "[e]mployees . . . who have 20 or

more years of creditable service in one or more State or locally-administered

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retirement systems on [June 28, 2011] shall not be subject to the provisions of

this subsection."

      Petitioner had a little over seventeen years creditable service time as a n

employee of the State Police as of June 28, 2011. By the plain language of

section (b)(3), only public employees with twenty or more years of creditable

service time as of that date were exempt from the provisions of section (b)(1).

The Legislature clearly intended to create a finite class of public employees,

eligible for retirement, that would not have health care premium contributions

withheld from their monthly retirement allowance. The petitioner was never a

part of that class.

      Petitioner purchased his military service time in 2013, which, when

applied to his State Police service time, gave him just over twenty-five years to

credit towards his state pension at retirement. He argues that the added service

time should be applied retroactively to reflect the chronological order his

service took place. We disagree. The class of public employees who receive

free benefits under the State Health Benefits Plan in their retirement years was

fixed as of the date section (b)(3) was enacted by the Legislature in 2011.

Simultaneously, the class of public employees who must pay health care

premium contributions out of their monthly retirement allowance in order to

receive their health benefit was also fixed.

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      Petitioner was not only statutorily ineligible for free retirement health

care in 2011, he had no means whatsoever to become eligible at that time.

N.J.S.A. 53:5A-6, the statute authorizing petitioner's military service time

purchase, was not adopted by the Legislature until 2013. The Legislature

could have added to the class of exempt retirees it created in 2011 when it

subsequently adopted N.J.S.A. 53:5A-6, but it did not do so.

      We briefly comment on the application of equitable estoppel to these

facts. "Consideration of whether equitable estoppel should be applied against

an agency is a fact-sensitive inquiry." In re Johnson, 215 N.J. 366, 386 (2013).

Petitioner and the SHBC created an exhaustive record on the issues of

misrepresentation and detrimental reliance, but we find that the sole question

we need to consider is whether petitioner was statutorily eligible for free

retirement health care benefits as of June 28, 2011. The record shows he

wasn't eligible. Given the circumstances presented here, an equitable estoppel

analysis is not required.

      Petitioner also contends that the SHBC's decision was untimely, and

therefore the ALJ's decision should be deemed final.       We disagree.      The

SHBC's decision was timely under Executive Order 127, which extended the

deadline for the issuance of agency decisions, and which remained in effect

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until January 1, 2022. 8 The executive order remedied any delay in issuance of

the SHBC's final decision.

      We conclude that the SBHC's final decision was not arbitrary,

capricious, or unreasonable, and find no reason to disturb its decision.

      Affirmed.

8
  See P.L. 2021, c.103, section 1, which extended the effective date of
Executive Order 127 to January 1, 2022.

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