IN THE MATTER OF STATE AND SCHOOL EMPLOYEES HEALTHBENEFITS COMMISSIONS' IMPLEMENTATION OF I/M/O PHILIP YUCHT(NEW JERSEY DEPARTMENT OF TREASURY, DIVISION OF PENSIONSAND BENEFITS) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5550-14T1
IN THE MATTER OF STATE AND SCHOOL
EMPLOYEES HEALTH BENEFITS COMMISSIONS'
IMPLEMENTATION OF I/M/O PHILIP YUCHT.
Argued telephonically July 13, 2017 – Decided July 31, 2017
Before Judges Simonelli and Carroll.
On appeal from New Jersey Department of
Treasury, Division of Pensions and Benefits.
Ira W. Mintz argued the cause for appellants
CWA and Clinical Social Work Guild 49
(Weissman & Mintz LLC, attorneys; Mr. Mintz,
on the briefs).
Danielle P. Schimmel, Deputy Attorney General,
argued the cause for respondents State
Health Benefits Commission and School
Employees' Health Benefits Commission
(Christopher S. Porrino, Attorney General,
attorney; Melissa H. Raksa, Assistant Attorney
General, of counsel; Ms. Schimmel, on the
brief).
PER CURIAM
The background underlying the present appeal is set forth in
our prior unpublished opinion in In re Yucht, No. A-6298-10 (App.
Div. Sept. 3, 2013). Briefly summarizing, effective January 1,
2009, the State Health Benefits Commission (SHBC) and the School
Employees' Health Benefits Commission (SEHBC) (collectively, the
Commissions) both voted to implement a tiered system for the
payment of out-of-network behavioral services provided to
participating members based on the providers' professional level.
Id. (slip op. at 5). Before this change was effected, claims
for such services were paid at the same rate regardless of whether
the provider was a psychiatrist (M.D.), psychologist (Ph.D.),
licensed clinical social worker (LCSW), licensed marriage family
therapist (LMFT), licensed professional counselor (LPC), or
clinical nurse specialist (CNS), even though the typical charges
of these various professionals varied. Id. (slip op. at 3-4).
Following the change, all out-of-network behavioral health
services provided by a M.D. continued to be paid at 100% of the
usual, customary and reasonable (UCR) rate. Id. (slip op. at 5).
However, members who received these services from a Ph.D. saw
their reimbursement reduced by 15%, from a CNC by 30%, and from a
LCSW, LMFT, and LPC by 35%. Ibid. We held that this tiered
reimbursement system violated N.J.S.A. 52:14-17.46.7, which
requires that participating members be reimbursed 80% of the
"reasonable and customary charges" for out-of–network services,
based on the 90th percentile of the Prevailing Healthcare Charges
System UCR fee schedule "or a similar nationally recognized
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database of prevailing health care charges." Id. (slip op. at
10).
The Commissions thereafter approved resolutions to implement
our decision in Yucht, retroactive to 2009. As a result, claims
submitted under the prior tiered payment system would be reimbursed
if a participating member provided proof that he or she paid the
difference between the provider's full charge and the amount that
was previously reimbursed.
The Division of Pensions and Benefits (Division) posted
notice of the Commissions' reimbursement procedure on its website,
accompanied by a link to the claim form. Also, on July 22, 2014,
the Division sent a letter to "[a]ll Certifying Officers, Human
Resource Directors, and Benefits Administrators participating in
the State Health Benefits Program and School Employees' Health
Benefits Program." The letter advised that "[e]mployees who
received reimbursement for behavioral health claims for services
provided by an out-of-network provider between May 4, 2009 and
March 23, 2014, may be entitled to a reconsideration of their
claims." It enclosed the claim form to be provided to employees,
and also provided a link to access the claim form on-line. The
notice specified that the deadline for filing claims was December
31, 2014. Finally, it contained a section entitled "EMPLOYER
RESPONSIBILITIES," directing that the employers "make this
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information available to your location's employees and forward
this letter and attachment to your human resources staff, benefit
administrators, and any other staff members responsible for the
administration of health benefits for your location's employees."
On December 3, 2014, the Communications Workers of America,
AFL-CIO and Clinical Social Work Guild 49, an affiliate of the
Office and Professional Employees International Union
(collectively, the Unions) filed a petition with the Commissions
challenging the implementation of our holding in Yucht.
Specifically, the Unions asserted that the Division's "website
post does not constitute adequate, meaningful notice of the
members' right to recompense." The Unions requested two remedies:
(1) that the December 31, 2014 deadline for filing reconsideration
requests be extended; and (2) that all potentially affected members
be mailed a written explanation of the Yucht decision and
directions on how to apply for additional reimbursement.
Alternatively, if a list of the potentially affected members was
not readily available, the Union requested that the information
be mailed to all members.
On June 9, 2015, the Commissions denied the Unions' petition.
The Secretary to the Commissions explained:
Your [December 3, 2014] letter was provided
to the [SHBC] on March 11, 2015. At that
meeting, the SHBC requested that its review
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of the request be tabled and that the Division
provide information regarding the number of
claims received by Horizon during the initial
time period and each of the extensions.
Your letter was provided to the [SEHBC] on
March 25, 2015. In reviewing your request,
the SEHBC also considered the following:
 Notification was posted on the Division's
website;
 Letters were sent via mail and email to
all Certifying Officers at State agencies
as well as local employers participating
in the SHBP/SEHBP (copy enclosed); and
 857 claims were received by Horizon
within the required timeframe. Of these,
481 (56%) were determined to be
ineligible for additional reimbursement.
On May 13, 2015, the above information was
presented to the SHBC along with the
following:
 211 requests were received prior to the
initial deadline of September 30, 2014;
 520 requests were received between
September 30, 2014 and December 31, 2014;
 115 requests were received between
December 31, 2014 and January 9, 2015
(these claims were accepted as they were
postmarked prior to December 31); and
 41 requests were received after January
9, 2015 and were denied because the
deadline had passed.
The above figures were current as of May
11, 2015. The SHBC also noted that
approximately 56% of claims were deemed
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ineligible for additional reimbursement for
one of the following reasons:
 The member was unable to provide proof
of payment to the provider above
Horizon's initial reimbursement (i.e.,
the member was not "balance-billed");
 The services were provided by a Medical
Doctor and therefore the payments were
not reduced as a result of tiering;
 The provider's charges were less than the
tiered allowed amounts and therefore the
payments were not reduced; or
 The member was not covered under the
SHBP/SEHBP at the time of service.
After being presented with the foregoing
information, the SHBC and SEHBC did not elect
to take any action regarding this matter.
Therefore, the deadline for reimbursement
requests will remain at December 31, 2014 and
no further notification will be distributed
to members.
The Unions appeal from the Commissions' June 9, 2015 decision.
They argue that the form of notice approved by the Commissions to
advise members who might be entitled to additional reimbursement
as a result of our decision in Yucht is inadequate. For the first
time on appeal, they contend that the Commissions should reprocess
all member claims and issue "refunds" without members filing a
request for reimbursement, even when the member may have incurred
no additional out-of-pocket expenses. Alternatively, the Unions
assert that the Commissions should be required to provide
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"meaningful notice" to members of their right to seek additional
reimbursement.
In response, the Commissions argue that they provided
reasonable notice of the availability of reimbursement following
Yucht. They further assert that the issue of mandatory
reimbursement was not raised before either Commission and
therefore should not be addressed on appeal.
Established precedents guide our task on appeal. Appellate
review of an administrative agency decision is limited. See In
re Herrmann, 192 N.J. 19, 27 (2007). A "strong presumption of
reasonableness attaches to the Division's decision." In re
Carroll, 339 N.J. Super. 429, 437 (App. Div.) (quoting In re Vey,
272 N.J. Super. 199, 205 (App. Div. 1993) aff'd, 135 N.J. 306(1994)), certif. denied, 170 N.J. 85 (2001). The burden is on the
appellant to demonstrate grounds for reversal. McGowan v. N.J.
State Parole Bd., 347 N.J. Super. 544, 563 (App. Div. 2002); see
also Bowden v. Bayside State Prison, 268 N.J. Super. 301, 304
(App. Div. 1993) (holding that "[t]he burden of showing the
agency's action was arbitrary, unreasonable, or capricious rests
upon the appellant"), certif. denied, 135 N.J. 469 (1994).
"Appellate courts ordinarily accord deference to final agency
actions, reversing those actions if they are 'arbitrary,
capricious or unreasonable or [if the action] is not supported by
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substantial credible evidence in the record as a whole.'" N.J.
Soc'y for the Prev. of Cruelty to Animals v. N.J. Dep't of Agric.,
196 N.J. 366, 384-85 (2008) (alteration in original) (quoting
Henry v. Rahway State Prison, 81 N.J. 571, 579-80 (1980)). Under
the arbitrary, capricious, and unreasonable standard, our scope
of review is guided by three major inquiries: (l) whether the
agency's decision conforms with relevant law; (2) whether the
decision is supported by substantial credible evidence in the
record; and (3) whether in applying the law to the facts, the
administrative agency clearly erred in reaching its conclusion.
In re Stallworth, 208 N.J. 182, 194 (2011) (citations omitted).
When an agency decision satisfies such criteria, we accord
substantial deference to the agency's fact-finding and legal
conclusions, while acknowledging the agency's "expertise and
superior knowledge of a particular field." Circus Liquors, Inc.
v. Governing Body of Middletown Twp., 199 N.J. 1, 10 (2009)
(quoting Greenwood v. State Police Training Ctr., 127 N.J. 500,
513 (1992)). We will not substitute our own judgment for the
agency's even though we might have reached a different conclusion.
Stallworth, supra, 208 N.J. at 194; see also In re Taylor, 158
N.J. 644, 656 (1999) (discussing the narrow appellate standard of
review for administrative matters).
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Applying our highly deferential standard of review, we are
satisfied that the record sufficiently supports the Commissions'
decision that members were provided with adequate notice and
instructions for submitting a request for claims reconsideration
prior to the December 31, 2014 deadline. As the Commissions point
out, notice was posted together with a direct link on the
Division's website. Additionally, letters were sent to all
Certifying Officers1 at State agencies as well as local employers
participating in the SHBP and SEHBP, directing them to make the
reimbursement protocol available to employees. We note, as did
the Commissions, the significant number of claims that were
presented after these notices were provided. While perhaps not
the most effective form of notice, we cannot conclude that the
notification procedure implemented by the Commissions was not
reasonably calculated to advise eligible members of their right
to seek supplemental reimbursement. Absent a finding that the
Commissions' action was arbitrary, capricious, or unreasonable,
1
Pursuant to N.J.S.A. 52:14-17.43, "[t]he certifying agent of
each participating employer shall submit to the Division of
Pensions such information and shall cause to be performed in
respect to each of the employees of such employer such duties as
would be performed by the State in connection with the program."
By regulation, "[t]he certifying officer shall be responsible for
the duties described by N.J.S.A. 53:14-17.43, including providing
documentation requested by the Commission or the Division in a
timely manner. . . . [and] for all other duties relating to
matters concerning the SHBP." N.J.A.C. 17:9-1.9(b),(c).
9 A-5550-14T1
we are thus constrained to affirm the Commissions' notification
procedures.
In their December 3, 2014 petition, the Unions requested two
specific remedies, neither of which sought automatic reimbursement
without the need to either apply or provide proof of loss. In
conformity with general principles of appellate practice, we
decline to address the Union's requests for such reliefs that were
not presented to the Commissions. See Nieder v. Royal Indem. Ins.
Co., 62 N.J. 229, 234 (1973) (discussing the limited circumstances
in which an appellate court will consider an argument first raised
on appeal).
Affirmed.
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