Court Opinion

ID: 7297272
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:42:23.983382+00
Date Added: 2024-06-11T16:19:25.629590
License: Public Domain

Coni’oed, P. J. A. D.,
Temporarily Assigned (dissenting). The Court agrees with the Appellate Division that Blue Cross and Blue Shield “are limited by their enabling statutes to the providing of essentially service benefits in the area of health care” (emphasis mine), but nevertheless holds that the proposed student accident policy, although found by the Appellate Division to be essentially a contract for indemnity rather than service, is for the most part properly susceptible of approval by the Commissioner of Insurance.
This Court in both Group Health Ins. of N. J. v. Howell, 40 N. J. 436, 451 (1963), and Group Health Ins. of N. J. v. Howell, 43 N. J. 104 (1964), recognized that the statutes under which these Plans are organized and operate contemplate that they will function basically to provide subscribers with pre-paid health care and medical services rather than money indemnification for hospital or medical expenses incurred by the subscriber. It is only because the Plans contract in advance with the providers of these services for their rendition that the Legislature has deemed it financially safe for them to be permitted to operate without substantial capital paid in, as would be required in the case of a standard insurance company contracting for indemnification for medical expenses. See 43 N. J. at 114.
*222It must be conceded that the statute governing medical service corporations, N. J. S. A. 17:48A-1 et seq., as distinguished from that as to hospital sendee corporations, N. J. S. A. 17:48-1 et seq., permits the plan to make payments directly to subscribers (as, e. g., when the physician providing the service is not a participating physician of the plan). That variation from the strict service concept in the case of medical services was undoubtedly provided for because not all physicians in any given area choose to participate in such a plan1 and the Legislature nevertheless desired subscribers to have freedom of choice in selecting physicians. But no such authority for a hospital plan to make payments directly to a subscriber can be found in the statute controlling such corporations. The opinions in the two Sowell cases, supra, were, accordingly, and still are sound in their insistence that the basic operating scheme of such corporations must be founded on rendition of service rather than money indemnity to subscribers. Erosion of -that concept by permitting such corporations to issue policies containing money indemnity benefits without express legislative authorization inevitably risks that financial insecurity of these organizations which the Legislature intended to avert by the service concept it built into the enabling legislation.
I am in full agreement with the conclusions in the perceptive opinion of the Appellate Division finding most of the benefits in the proposed student accident policy here proposed to be in the nature of indemnities rather than services. The majority opinion concedes that nine of the fifteen specified benefits are payable solely on an indemnity basis. But it would validate the contract as to four of those nine items on the ground that they may be contracted for by the subscribers “more efficiently”, etc. than by the plans *223and are “incidental to the primary purposes of the Plans.” This I submit is an example of the erosion of the legislative policy to which I referred above — in which I decline to join.
Whether or not a contract for the other six items, all related directly or indirectly to services by a physician, legally may, as here provided, be placed on an indemnification basis if rendered by a non-participating physician, or where the subscriber has already paid the physician, I need not here decide. What was before the lower courts, and what is before us, is a proposed insurance contract as an entirety. As presented, it contains numerous provisions which are incontestably contracts for indemnity not permitted by the enabling legislation. It is therefore invalid. I do not regard it as appropriate for the Court to launder this contract for impurities where there is no assurance that the Plans will want to issue a contract as revised by the Court. The contract as submitted was properly held ultra vires by the Appellate Division.2 We should affirm that judgment.
For reversal and remandment — Chief Justice Hughes and Justices Mountain, Sullivan, Pashman and Schreiber — 5.
For affirmance — Judge Conford — 1.

it is nevertheless contemplated that a substantial number of physicians in the service area must be members of a hospital plan before it will be permitted to operate. See the second Howell case, supra, 43 N. J. at 114.

I do not reach the question of equal protection which was the second ground of the decision in the Appellate Division.