Marcus Aurelius in the Appellate Division

Rosenstein v. State of New Jersey, Dep’t of Treasury, 438 N.J. Super. 491 (App. Div. 2014).  As this concise opinion by Judge Fisher today explains, in 2011, as part of larger pension reforms, legislation was passed that conferred on the State Health Benefits Plan Design Committee (“SHBPDC”), a body that has six labor members and six public employer members, exclusive authority to design state health benefit plans.  Previously, the State Health Benefits Commission (“SHBC”) had had that power.  Increases in prescription copayments for retirees were proposed before the SHBPDC for the 2013 calendar year.  The SHBPDC deadlocked on that issue.  As a result, the labor members of the SHBPDC demanded the appointment of a “super-conciliator,” the mechanism provided by the legislation to break deadlocks.  Despite that, the SHBC was presented with, and voted to approve, the proposed copayment increases, and the Division of Pensions and Benefits implemented those increases.

Appellants Hetty Rosenstein, who is the labor co-chair of the SHBPDC, and Charles Wowkanech, who is the President of the New Jersey State AFL-CIO, sued to overturn that agency action.  They contended that the SHBC had no power to increase the copayments since the 2011 legislation had transferred that authority to the SHBPDC and the SHBPDC had deadlocked, leading to the demand for super-conciliation, which the SHBC action wrongly preempted.  Because this was an appeal from administrative agency action, the case was properly filed in the Appellate Division.  The State responded that appellants lacked standing, that the super-conciliatory process should have been exhasuted before a lawsuit could be brought, and that since the SHBPDC had deadlocked, the SHBC retained the power to act.  Judge Fisher rejected each of the State’s arguments and held 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-concilatory process.”

Judge Fisher had no trouble rebuffing the State’s standing argument, noting that “our courts have historically employed a liberal rule of standing.”  The answer to the standing issue might have started and ended “with an assumption that appellants are taxpayers.”  But they were also labor representative members of the SHBPDC, and they contended that the Division had wrongly stepped on the authority of the SHBPDC.  Moreover, both appellants were high officials of the union, “and their union members undoubtedly have a keen interest in the outcome.”

In addressing the State’s argument that the super-conciliation process needed to play out before there could be litigation, Judge Fisher quoted Marcus Aurelius in saying that the panel’s first task was to “identify ‘the true nature’ of the appeal ‘and to unfold’ and ascertain ‘the true use or end of it.'”  Though there were “multiple ways of looking at what this appeal represents,” all of those views led to the conclusion that the exhaustion doctrine had no place.  “Because appellants’ intent in filing thsi appeal was not to disrupt or supplant the conciliation process but to simply restore the status quo ante until concilation 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 of allowing the Division to impose an interim remedy while precluding appellants’ pursuit of review in or a remedy from this court.”  Drawing on his Chancery background, Judge Fisher cited a number of authorities to the effect that one tribunal can act to preserve the status quo while another tribunal has a matter before it.

On the merits, Judge Fisher agreed with appellants that the 2011 legislation had transferred authority over health plan design to the SHBPDC and, “by the same stroke of a pen,” taken away the SHBC’s former authority.  He quoted N.J.S.A. 52:14-17.27(b) as saying “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].”  Thus, the SHBC “acted without authority,” and its action was reversed.

A quick LEXIS search reveals only one other reference to Marcus Aurelius in New Jersey state court cases.  That was earlier this year in a per curiam opinion in Universal Missionary Pentecostal Assembly v. New Jersey Conf. of Seventh Day Adventists, Inc., 2014 N.J. Super. Unpub. LEXIS 237 (App. Div. Feb. 7, 2014).  The panel that decided that appeal?  Judges Fisher and Espinosa.

On that note, happy new year to all!