Irvin B. Beaver v. Magellan Health Services, Inc. , 433 N.J. Super. 430 ( 2013 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1311-12T3
IRVIN B. BEAVER,
Plaintiff-Appellant, APPROVED FOR PUBLICATION
v. December 11, 2013
APPELLATE DIVISION
MAGELLAN HEALTH SERVICES,
INC., MAGELLAN BEHAVIORAL
HEALTH, INC., and HORIZON
BLUE CROSS BLUE SHIELD OF
NEW JERSEY,
Defendants-Respondents.
_______________________________
Argued October 21, 2013 – Decided December 11, 2013
Before Judges Parrillo, Kennedy and
Guadagno.
On appeal from Superior Court of New Jersey,
Law Division, Middlesex County, Docket No.
L-3465-12.
Justin Lee Klein argued the cause for the
appellant (Wilentz Goldman & Spitzer, and
Hobbie, Corrigan & Bertucio, attorneys;
Angelo J. Cifaldi and Jacqueline DeCarlo, of
counsel and on the brief; Mr. Klein, on the
brief).
Thomas F. Quinn argued the cause for
respondents (Wilson, Elser, Moskowitz,
Edelman & Dicker, LLP, attorneys; Mr. Quinn
and Joanna Piorek, on the brief).
The opinion of the court was delivered by
KENNEDY, J.A.D.
Under what circumstances may a litigant pursue common law
and statutory causes of action in the Law Division, rather than
appeal from State final agency determination, where the merits
of the agency determination are at issue? This is the question
we address in deciding this appeal.
Plaintiff appeals from an October 12, 2012 order of the Law
Division dismissing his complaint against defendants Magellan
Health Services, Inc., Magellan Behavioral, Inc., and Horizon
Blue Cross/Blue Shield of New Jersey ("defendants" when
referenced collectively, "Magellan" or "Horizon" when referenced
individually). Plaintiff argues, among other things, that the
motion judge erred in applying the standards governing a motion
to dismiss under Rule 4:6-2, and in determining that the Law
Division lacked subject matter jurisdiction over the matter.
We have considered plaintiff's arguments in light of the
record and applicable law. For reasons stated hereinafter, we
affirm.
I.
We derive the facts from the record developed in the Law
Division and the administrative proceedings which preceded the
filing of plaintiff's complaint in the Law Division.
2 A-1311-12T3
Plaintiff is a former public employee and received health
insurance coverage for himself and his family through the NJ
Plus and, later, the NJ Direct health benefits programs, which
at all times relevant to this matter were administered by
Horizon on behalf of the State Health Benefits Program
(Program). The Program, and its governing body, the State
Health Benefits Commission (SHBC), were established by the New
Jersey Health Benefits Program Act (the Act), N.J.S.A. 52:14-
17.24 to -45. The purpose of the Program is "to provide
comprehensive health benefits for eligible public employees and
their families . . . . It establishes a plan for state funding
and private administration of a health benefits program[.]"
Heaton v. State Health Benefits Comm'n, 264 N.J. Super. 141, 151
(App. Div. 1993). "The SHBC contracts with health insurers to
provide various benefits plans to program participants." Green
v. State Health Benefits Comm'n, 373 N.J. Super. 408, 413 (App.
Div. 2004)(citing N.J.S.A. 52:14-17.28). "The State Health
Benefits Program is, in effect, the State of New Jersey acting
as a self-insurer." Burley v. Prudential Ins. Co. of Am., 251
N.J. Super. 493, 495 (App. Div. 1991). In essence, the State
pays the benefits and Horizon administers the claims.
Although the State contracts with health insurers to
administer various benefit plans for program participants, the
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SHBC alone has the authority and responsibility to make payments
on claims and to limit or exclude benefits. N.J.S.A. 52:14-
17.29(B). Additionally, the SHBC has final authority to
adjudicate disputes between plan members and State-contracted
claims administrators, and may refer such disputes to the Office
of Administrative Law (OAL) for an evidentiary hearing. Green,
supra, 373 N.J. Super. at 414; Burley, supra, 251 N.J. Super. at
500.
Horizon hired Magellan to manage mental health and
substance abuse benefits for eligible NJ Plus members. Magellan
would conduct "utilization management reviews" of claims
submitted by members, and would decide if the treatment was
medically needed, and, if so, the level and length of treatment.
As noted, however, the SHBC itself had the final authority and
responsibility to adjudicate any claim disputes.
On February 10, 2008, plaintiff's son, a minor, was
admitted for inpatient, residential care at the Caron
Foundation, a residential treatment facility for substance
abuse. Initially, Caron prescribed thirty-one days of inpatient
care, but later revised its recommendation to include an
additional ninety days of inpatient, residential treatment.
Plaintiff submitted a claim for coverage and on February
26, 2008, Magellan advised that it would not authorize
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residential substance abuse treatment "as of" February 25,
because plaintiff's son "no longer shows evidence" that he needs
residential treatment. Plaintiff challenged the denial and
Magellan undertook a "Level 1 appeal review." On February 28,
Magellan advised that its prior denial was proper, and cited a
telephone conversation between one of the son's doctors at Caron
and its own physician advisor in which the son's doctor
allegedly agreed that outpatient care was the appropriate level
of treatment.
Plaintiff shortly learned that Magellan's physician advisor
had, in fact, not spoken to the particular Caron physician
identified in Magellan's notification of February 28, but to
another of the son's doctors who alleged he never stated that
the son required only outpatient treatment. Accordingly,
plaintiff sought further review, and on March 11, 2008,
presented a "second level appeal" for coverage to Horizon's
Member Appeals Subcommittee.
On March 14, Horizon overturned the denial of coverage for
residential treatment for the period of February 26 to March 4,
but denied coverage after that date, finding that plaintiff's
son "did not show any evidence" of needing residential treatment
thereafter. Plaintiff next appealed to the SHBC, which, by
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letter dated February 17, 2009, upheld the denial of benefits
after March 4, 2008. The letter stated, in part:
The denial is based on your presentation at
the meeting as well as the documents you
provided during and prior to the meeting.
Magellan's medical director gave a
background summary of the appeal and
indicated that he reviewed the additional
medical notes received from the Caron
Foundation. He indicated that [your son]
did not meet the ASAM [American Society of
Addiction Medicine] criteria after March 5,
2008 for inpatient residential treatment.
Your written request for appeal of the
initial administrative decision must specify
the exact reason or reasons that you are
using as the basis for the request. It must
also include any evidence or material that
can be used to support your basis of appeal.
The Commission will decide whether to grant
your request for a hearing in the Office of
Administrative Law upon receipt of your
request and the supporting documentation.
The letter also advised that if the appeal were forwarded to the
OAL, an administrative law judge (ALJ) would consider evidence
presented and render a decision, which the SHBC could accept,
modify or reject. The SHBC would then issue a final
administrative decision "which may then be appealed to the
Superior Court of New Jersey, Appellate Division."
Plaintiff elected to pursue a further appeal and the matter
was transferred to the OAL, where an evidentiary hearing was
held. On October 11, 2011, the ALJ issued her initial decision
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recommending denial of plaintiff's appeal. She explained, in
part, as follows:
Under the NJ Plus plan in place at the
time of the claim at issue in this matter,
Horizon contracted with Magellan to manage
its mental health and substance abuse
treatment claims. Initially, [plaintiff]
takes issue with Magellan's role in managing
these claims, in general and specifically as
to his son's treatment. While Magellan's
actions are under review here as to his
son's claim, the issue of Magellan's
"gatekeeper" role for the state plan is
beyond the scope of this matter. At issue
in this matter is whether respondent SHBC
properly determined that the criteria for
medical necessity to continue inpatient
treatment at Caron for [the son] was no
longer met. [Plaintiff] has the burden of
proof in this matter and must prove his case
by a preponderance of the credible evidence.
Atkinson v. Parsekian, 37 N.J. 143 (1962).
A review of the record in this matter
shows that [plaintiff] has failed to meet
that burden of proof. Although he has
raised substantive issues regarding the
manner in which Magellan handled this claim,
he did not submit a sufficient quantum of
evidence to prove by a preponderance of the
credible evidence that the SHBC erred in its
decision.
[Plaintiff] did show that Magellan was
incorrect when it cited [the son's] treating
physician as the Caron staff member with
whom it initially discussed his treatment.
The record also supports his contention that
Magellan's records were further incorrect in
citing Caron staff as supporting his
transfer to intensive outpatient treatment.
Given the seriousness of the treatment at
issue, it is of concern that Magellan denied
further inpatient treatment on the basis of
7 A-1311-12T3
faulty information in its records. That
initial denial however was corrected during
the first and second level appeal process
and residential treatment was approved
through March 4, 2008. The issue therefore
is whether [plaintiff] has proven that the
SHBC erred in its decision that the
residential level of treatment was not
medically necessary after that time.
In support of his contention that
continued residential treatment was
necessary, [plaintiff] presented treatment
notes from Magellan's records and
correspondence from Caron staff directors.
The correspondence from the treating staff
at Caron supports continued residential
treatment, citing relevant ASAM [American
Society of Addiction Medicine] criteria.
Balanced against that however, is the expert
medical testimony and report of Dr.
O'Donnell presented on behalf of respondent.
His testimony also addressed the relevant
criteria for medical necessity, reaching a
different conclusion than that of the Caron
doctors. Dr. O'Donnell's interpretation of
the ASAM criteria was more conservative than
that of the Caron physicians as set forth in
their correspondence. In weighing the
evidence, however, greater weight is on the
side of respondent. While the Caron
physicians were the treating doctors, only
their correspondence was presented in
evidence. [Plaintiff] presented neither
their curriculum vitae nor their testimony
in support of his case. As such neither
their credentials nor their testimony was
subject to the scrutiny and cross
examination undergone by Dr. O'Donnell.
As [plaintiff] has not met his burden
of proof, his appeal is denied.
On November 14, 2011, the SHBC adopted the ALJ's findings and
conclusions.
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On December 28, 2011, plaintiff filed a notice of appeal
from the SHBC's final decision. Plaintiff later voluntarily
withdrew his appeal and the appeal was dismissed on May 18,
2012.
On May 14, 2012, plaintiff filed a complaint in the Law
Division seeking "relief for [d]efendants' denial of substance
abuse treatment as a violation of plaintiff's health plan" and
named only Horizon and Magellan as defendants. The complaint
recited the history of plaintiff's efforts to secure coverage
for his son's inpatient, residential substance abuse treatment
and asserted four causes of action: (1) breach of contract; (2)
breach of fiduciary duty; (3) violation of the New Jersey
Consumer Fraud Act, N.J.S.A. 56:8-1 to —184 (CFA); and (4)
unjust enrichment.
In support of the first count alleging breach of contract,
plaintiff asserted that "under the terms of defendants' contract
with [] plaintiff, defendants are required to provide coverage
for all inpatient treatment for mental health and substance
abuse disorders" and breached that contract by their denial of
coverage for inpatient treatment. In the second count,
plaintiff asserted that defendants violated the duty of care
they owed as fiduciaries by "setting limitations on payments and
denying or reducing coverage" for substance abuse treatment.
9 A-1311-12T3
The third count alleged that defendants'
"wrongful decision to deny payment for" the continued inpatient
treatment for plaintiff's son constituted an unconscionable
commercial practice under the CFA. The last count stated that
defendants have been "unjustly enriched" through their use of
funds that should have been used to pay for the inpatient
treatment of plaintiff's son.
Defendants moved to dismiss plaintiff's complaint under
Rule 4:6-2(a) (lack of jurisdiction) and Rule 4:6-2(e) (failure
to state a claim). In a lengthy opinion from the bench
delivered on October 12, 2012, the motion judge considered the
history of plaintiff's claim as recited in the pleadings, and
held that "plaintiff should have instituted this action in the
Appellate Division" and that a transfer of the matter to the
Appellate Division under Rule 1:13-4(a) at that point was time-
barred.
The motion judge then entered an order of dismissal and
this appeal followed.
II.
Plaintiff argues that his complaint does not constitute
"one of the 'rare instances' in which a complaint should be
dismissed as a matter of law, prior to the exchange of any
discovery." Further, he asserts that his complaint does not
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challenge the SHBC's final administrative action, but rather is
a separate action at law alleging statutory and common law
causes of action against Magellan and Horizon. Plaintiff relies
upon Rinaldo v. RLR Inv., LLC, 387 N.J. Super. 387 (App. Div.
2006), and Burley, supra, 251 N.J. Super. 493, in support of the
latter argument.
Initially, we observe that despite the reference to Rule
4:6-2(e) in defendants' brief in the Law Division, the motion
judge held that the case must be dismissed on jurisdictional
grounds, thereby embracing defendants' arguments under Rule 4:6-
2(a). "Whether subject matter jurisdiction exists presents a
purely legal issue . . . which we review de novo." Santiago v.
N.Y. & N.J. Port Auth., 429 N.J. Super. 150, 156 (App. Div.
2012), certif. denied, 214 N.J. 175 (2013); see Manalapan
Realty, L.P. v. Twp. of Manalapan, 140 N.J. 366, 378 (1995).
Accordingly, the issue before us is not whether the four causes
of action alleged in plaintiff's complaint are sufficiently pled
under Rule 4:6-2(e), but rather whether plaintiff can assert
those causes of action in the Law Division under the
circumstances presented. As noted, this is an issue of law
which we review de novo.
Pursuant to the Act, the SHBC "shall establish a health
benefits program for the employees of the State," together with
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the "rules and regulations as may be deemed reasonable and
necessary for the administration of" the program. N.J.S.A.
52:14-17.27. Pursuant to the enabling legislation's grant, the
SHBC adopted a comprehensive regulatory appeals process:
(a) Any member of the [Plan] who disagrees
with the decision of the claims
administrator and has exhausted all appeals
within the plan, may request that the matter
be considered by the Commission. . . . It
shall be the responsibility of the member to
provide the Commission with any medical or
other information that the Commission may
require in order to make a decision.
(b) . . . .
(c) Notification of all Commission decisions
will be made in writing to the member and
the following statement shall be
incorporated in every written notice setting
forth the Commission's determination in a
matter where such determination is contrary
to the claim made by the claimant or his or
her legal representative:
"If you disagree with the
determination of the Commission in
this matter, you may appeal by
sending a written statement to the
Commission within 45 days from the
date of this letter informing the
Commission of your disagreement
and all of the reasons therefor.
If no such written statement is
received within the 45-day period,
this determination shall be
considered final."
(d) Any member who disagrees with the
Commission's decision and submits the
written statement as set forth in (c) above
within 45 calendar days shall be notified of
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the disposition of the appeal in one of two
ways:
1. The Commission shall determine
whether to grant an administrative
hearing on the basis of whether
the matter involves contested facts
or is solely a question of law.
If the appeal involves solely a
question of law, the Commission
shall likely deny an administrative
hearing request. If the request
for an administrative hearing is
denied, the Commission shall issue
detailed findings of fact and
conclusions of law. These findings
and conclusions shall become the
Commission's final administrative
determination that may be appealed
to the Superior Court, Appellate
Division.
2. If the appeal involves disputed
facts, the Commission shall approve
an administrative hearing request
and transmit the matter to the
Office of Administrative Law. Upon
completion of this hearing, the
Administrative Law Judge will
submit to the Commission an initial
decision that the Commission may
adopt, reject or modify. If the
Commission rejects or modifies the
initial decision, it shall issue
detailed findings of fact and
conclusions of law that will become
the Commission's final administra-
tive determination that may then
be appealed to the Superior Court,
Appellate Division.
[N.J.A.C. 17:9-1.3.]
The language in Horizon's handbook tracks the regulatory
language adopted by the SHBC. Further, as already noted, we
13 A-1311-12T3
have consistently recognized the statutory and regulatory scheme
that requires disputes over eligibility and benefits to be
submitted first to the SHBC, and, only thereafter, to this court
for resolution. See Burley, supra, 251 N.J. Super. 493; Green,
supra, 373 N.J. Super. 408; Murray v. State Health Benefits
Comm'n., 337 N.J. Super. 435, 439-40 (App. Div. 2001)
(explaining the statutory and regulatory scheme).
Plaintiff contends he is not challenging the SHBC
determination in his present complaint, but rather is asserting
contract and tort claims against the Program administrators.
Plaintiff essentially argues that the SHBC final agency action
is irrelevant to his asserted causes of action. Defendants
argue that the language in plaintiff's complaint shows plainly
that, irrespective of the causes of action asserted, plaintiff
is simply seeking coverage for his son's inpatient substance
abuse treatment, and that a reversal of the SHBC determination
is essential to plaintiff's complaint. Our examination of the
causes of action set forth in plaintiff's complaint is therefore
pivotal to our determination of jurisdiction.
We begin with an examination of the authority cited by
plaintiff and thereafter we shall examine the language of the
complaint.
14 A-1311-12T3
In Rinaldo, plaintiffs brought an action against a
neighboring landowner who had obtained a freshwater wetlands
permit from the Department of Environmental Protection (DEP) to
construct an access road over protected wetlands. Rinaldo,
supra, 387 N.J. Super. at 392-93. Plaintiffs had not received
notice of the permit application and brought an action to enjoin
the construction of the road and a corresponding "mitigation
project" required by the DEP. Ibid. Plaintiffs also sought
money damages for injury to their farm, and asserted claims
against the landowner and its contractors for negligence,
trespass, conversion and intentional interference with property
rights. Id. at 393-94.
On motion, the Chancery Division transferred the entire
case to the Appellate Division as, in effect, an appeal from a
final decision of the DEP. Id. at 394. We held that the
Chancery Division erred in concluding that plaintiffs' tort
claims against the landowner and other private parties should
have been transferred to the Appellate Division. Id. at 399-
400. We stated, in part,
Plaintiffs could have filed a notice of
appeal to this court from the DEP's wetlands
permit and mitigation project approvals and
filed a separate action in the Chancery
Division asserting their tort claims against
the private defendants. The fact that
plaintiffs elected to challenge state
administrative agency decisions and assert
15 A-1311-12T3
tort claims against private parties in a
single complaint does not vest this court
with jurisdiction over claims that the Court
Rules allocate to the jurisdiction of the
Chancery or Law Division. See Maisonet v.
N.J. Dep't of Human Servs., 140 N.J. 214,
226-28 (1995).
[Id. at 400.]
We added that even if plaintiffs were unsuccessful in
challenging the DEP wetlands permit in the Appellate Division,
this would "not foreclose them from pursuing their tort claims
against the private defendants." Ibid.In Burley, plaintiff, a State employee with health
insurance under the Program, brought suit in the Law Division
against Prudential, the State's claims administrator, for bad
faith in declining to pay the full amount sought by her
physician for a procedure he had performed, and in its refusal
to advise in advance of the "customary fee" it would approve for
her son's prescribed tonsillectomy. Burley, supra, 251 N.J.
Super. at 494-96. The suit was dismissed in the Law Division
based upon plaintiff's failure to exhaust her administrative
remedies. Id. at 494-95.
On appeal, we affirmed, but modified, the ruling in the Law
Division. We observed that
plaintiff must first seek recourse by
administrative appeal to the SHBC. Both
sound principles of administrative law and
the relevant contract provisions require the
16 A-1311-12T3
plaintiff to seek administrative relief
before attempting to sue for damages. All
available and appropriate administrative
remedies generally should be fully explored
"before judicial action is sanctioned."
Abbott v. Burke, 100 N.J. 269, 296 (1985).
The "exhaustion" principle ensures that
claims will be heard as a preliminary matter
by a body with expertise, a factual record
may be created for appellate review, and
there is a chance that the agency decision
may satisfy the parties and keep them out of
court. Atlantic City v. Laezza, 80 N.J.
255, 265 (1979).
[Id. at 498.]
We transferred the matter to the SHBC for a hearing on the
merits of plaintiff's claim under the Program, and added that
"[o]ur action, is of course, without prejudice to any claim
plaintiff may wish to assert administratively or at law against
either Prudential or the SHBC." Id. at 500.
Here, by contrast, plaintiff has explicitly stated that his
complaint is brought to recover "unpaid benefits" under the
Program. Accordingly, to recover, plaintiff must necessarily
secure a reversal of the SHBC final agency action upholding the
denial of those same benefits. Plaintiff cannot avoid this
obvious conclusion by cloaking his claims under the mantle
of contract and tort.
The New Jersey Constitution of 1947 provides that "persons
aggrieved by action or inaction of state or local administrative
agencies could seek review . . . in the Superior Court '. . . on
17 A-1311-12T3
terms and in the manner provided by rules of the Supreme Court
. . . .'" Pascucci v. Vagott, 71 N.J. 40, 51-52 (1971) (quoting
N.J. Const. art. VI, § 5, ¶ 4). Pursuant to that authority, the
Court adopted Rules 2:2-3 and 2:2-4, with the intention that
"every proceeding to review the action or inaction of a state
administrative agency would be by appeal to the Appellate
Division." Cent. R.R. Co. v. Neeld, 26 N.J. 172, 185, cert.
denied, 357 U.S. 928, 78 S. Ct. 1373, 2 L. Ed. 2d 1371 (1958).
Specifically, Rule 2:2-3 states that "appeals may be taken to
the Appellate Division as of right . . . to review final
decisions or actions of any state administrative agency or
officer." R. 2:2-3(a)(2). So too, "the Appellate Division may
grant leave to appeal, in the interest of justice, . . . from an
interlocutory decision or action of a state administrative
agency or officer, if the final judgment, decision or action
thereof is appealable as of right pursuant to R. 2:2-3(a) . . . ."
R. 2:2-4.
To be sure, "some actions or inactions of State agencies
and officers do not constitute 'administrative' agency action or
inaction that is subject to review by the Appellate Division
under Rule 2:2-3(a)(2)." D.J. Miller & Assocs., Inc. v. State,
Dep't of Treasury, 356 N.J. Super. 187, 191 (App. Div. 2002).
One obvious example is tortious conduct that subjects a State
18 A-1311-12T3
agency or officer to liability under the Tort Claims Act (TCA),
N.J.S.A. 59:1-1 to 12-3. Ibid. Another example is an action
for breach of contract under the Contractual Liability Act
(CLA), N.J.S.A. 59:13-1 to -10, "which does not constitute State
administrative agency action within the intent of Rule 2:2-
3(a)(2) and thus jurisdiction over such a claim resides in the
appropriate trial court rather than the Appellate Division."
Id. at 192.
In a thinly disguised effort to fit within the Law
Division's jurisdiction and divest this court of ours, plaintiff
framed his claims as those alleging breach of contract, breach
of fiduciary duty, consumer fraud under the CFA, and unjust
enrichment. Ordinarily, if properly pled and substantively
based, these claims might be sufficient to vest the Law Division
with jurisdiction. However, our "exclusive jurisdiction does
not turn on the theory of the challenging party's claim or the
nature of the relief sought." Mutschler v. N.J. Dep't of Envtl.
Prot., 337 N.J. Super. 1, 8 (App. Div.) (citing Neeld, supra, 26
N.J. at 184-85), certif. denied, 168 N.J. 292 (2001)). Here,
stripped to their barest essentials, plaintiff's claims,
sounding in tort and contract, amount to no more than a
collateral challenge to the November 14, 2011 SHBC final agency
action upholding the limitation of coverage for plaintiff's
19 A-1311-12T3
health benefit claims. Indeed, absent an attack on that final
agency action, plaintiff's tort and contract claims are patently
without basis in fact or law.
As we stated in Mutschler:
The Appellate Division has been vested with
exclusive jurisdiction to review any action
or inaction of a state administrative
agency. Pascucci v. Vagott, 71 N.J. 40, 51-
54 (1976); Equitable Life Mortgage & Realty
Investors v. New Jersey Div. of Taxation,
151 N.J. Super. 232, 237-38, (App. Div.),
certif. denied, 75 N.J. 535 (1977). The
Appellate Division's exclusive jurisdiction
does not turn on the theory of the
challenging party's claim or the nature of
the relief sought. Central R.R. Co. v.
Neeld, 26 N.J. 172, 184-85, cert. denied,
357 U.S. 928, 78 S. Ct. 1373, 2 L. Ed. 2d
1371 (1958). Thus, this court's exclusive
jurisdiction extends to claims of state
agency inaction, Hospital Ctr. at Orange v.
Guhl, 331 N.J. Super. 322, 329-30 (App. Div.
2000), and to claims that are essentially
declaratory in nature. Equitable Life
Mortgage & Realty Investors v. New Jersey
Div. of Taxation, supra, 151 N.J. Super. at
238. It also extends to claims that are
joined with claims within the jurisdiction
of another court or division of this court.
Pascucci v. Vagott, supra, 71 N.J. at 52-54.
[Mutschler, supra, 337 N.J. Super. at 9].
Plaintiff's arguments which seek to avoid the application of
this well-recognized principle are unpersuasive.
In our view, neither Rinaldo nor Burley stand for the
proposition that, in circumstances like those before us,
plaintiff may pursue a private cause of action against the
20 A-1311-12T3
SHBC's claims administrators that is necessarily dependent upon
the merits of his challenge to the SHBC's final agency action
rejecting his claim for health care coverage. Notwithstanding
plaintiff's energetic arguments to the contrary, plaintiff's
complaint in the Law Division is squarely predicated upon the
contention that defendants "wrongfully den[ied]" coverage for
the health care claims advanced, and plaintiff in his complaint
explicitly averred that "[t]his is an action for unpaid benefits
and injunctive relief."1
In Rinaldo, for example, we explained that plaintiffs were
entitled to pursue their claims against the holder of the
wetlands permit and its contractors because the issuance of the
1
We observe that plaintiff's complaint may be subject to other
procedural and substantive infirmities. For example, plaintiff
asserts that defendants "breached their contract" with him, yet
it is clear that defendants were merely contractually bound to
the SHBC - not to plaintiff. Further, while the CFA
"encompass[es] the sale of insurance policies as goods and
services that are marketed to consumers," "the payment of
insurance benefits is not subject to the CFA." Lemelledo v.
Benefit Mgmt. Corp., 150 N.J. 255, 265 (1997) (citing Nikiper v.
Motor Club of Am., 232 N.J. Super. 393, 401 (App. Div.), certif.
denied, 117 N.J. 139 (1989)); Pierzga v. Ohio Cas. Grp. of Ins.
Cos., 208 N.J. Super. 40, 47 (App. Div.), certif. denied, 104
N.J. 399 (1986); see also In re Van Holt, 163 F.3d 161, 168 (3d
Cir. 1998)("The mere denial of insurance benefits to which
. . . plaintiffs believe[] they [are] entitled does not comprise
an unconscionable commercial practice."). Also, it is apparent
that plaintiff failed to allege a claim of breach of duty of
good faith with the required specificity. See R. 4:5-8(a).
However, because such issues were not presented to the motion
court, we do not address them here. Nieder v. Royal Indem. Ins.
Co., 62 N.J. 229, 234-35 (1973).
21 A-1311-12T3
wetlands permit did not insulate the permittee from liability
for damaging its neighbor's property in undertaking its work.
Rinaldo, supra, 387 N.J. Super. at 400. Here, by contrast,
plaintiff's claim is that he was damaged by the denial of
benefits – a claim fully adjudicated on the administrative
level, and for which plaintiff has abandoned his right to
appellate review.
Plaintiff's focus at oral argument upon the errant claim of
Magellan's physician advisor that a Caron physician had agreed
that the son needed only outpatient treatment is unavailing.
That claim was addressed and corrected at the second level
appeal by Horizon's Member Appeals Subcommittee, and plaintiff's
coverage was extended to March 4 – after the date of the alleged
telephone conversation with the Caron doctor. Plaintiff thus
challenged that claim on the administrative level, and
succeeded.
Our conclusion in Burley, that a plaintiff must first
pursue an administrative appeal from a denial of coverage under
the program, before pursuing an action at law, and that the
dismissal of a premature suit must be "without prejudice" to a
later action at law is not authority for the proposition
plaintiff advances here. Burley, supra, 251 N.J. Super. at 500.
As noted, plaintiff's claims in the Law Division are dependent
22 A-1311-12T3
upon the resolution of an issue contrary to the final agency
action of the SHBC - an issue fully adjudicated on the
administrative appeal before the SHBC - as to which plaintiff
has abandoned his appeal. Accordingly, plaintiff's complaint in
the Law Division must be dismissed for lack of jurisdiction. To
hold otherwise would permit plaintiff to collaterally attack a
State administrative determination in the Law Division. The Law
Division is without jurisdiction to adjudicate such claims. R.
2:2-3(a).2
The remainder of plaintiff's arguments on appeal are
without sufficient merit to warrant discussion in a written
opinion. R. 2:11-3(e)(1)(E).
Affirmed.
2
Cf. R. 2:5-5(b)(authorizing the Appellate Division, but only in
"exceptional instances," to order the record on appeal of a
state agency decision to be supplemented by a specially-
designated trial court judge).
23 A-1311-12T3