NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0945-12T1
HETTY ROSENSTEIN, LABOR CO-
CHAIRPERSON OF THE STATE HEALTH
BENEFITS PLAN DESIGN COMMITTEE
and CHARLES WOWKANECH, PRESIDENT,
NEW JERSEY STATE AFL-CIO, APPROVED FOR PUBLICATION
Appellants, December 31, 2014
v. APPELLATE DIVISION
STATE OF NEW JERSEY, DEPARTMENT
OF TREASURY, DIVISION OF PENSIONS
AND BENEFITS,
Respondent.
_____________________________________________________
Argued November 12, 2014 – Decided December 31, 2014
Before Judges Fisher, Nugent and Manahan.
On appeal from the Division of Pensions and
Benefits.
Ira W. Mintz argued the cause for appellants
(Weissman & Mintz, LLC, attorneys; Mr.
Mintz, on the brief).
Eileen Schlindwein Den Bleyker, Senior
Deputy Attorney General, argued the cause
for respondent (John J. Hoffman, Acting
Attorney General, attorney; Robert T. Lougy,
Assistant Attorney General, of counsel; Ms.
Den Bleyker, on the brief).
The opinion of the court was delivered by
FISHER, P.J.A.D.
In 2011, the Legislature enacted Chapter 78,1 making
numerous and significant changes to public employee pension and
health care benefits. See Berg v. Christie, 436 N.J. Super.
220, 240 (App. Div. 2014). As part of this overhaul, the
Legislature provided the State Health Benefits Plan Design
Committee (SHBPDC) with the exclusive authority to design state
health benefits plans – a power previously possessed by the
State Health Benefits Commission (SHBC). The SHBPDC consists of
six labor and six public employer representatives. N.J.S.A.
52:14-17.27(b). It cannot pass any measures without seven
affirmative votes; consequently, neither the governor's
appointees nor the union appointees can act alone in designing
the state health benefit plan or any of its components. Ibid.
When a six-to-six impasse occurs, a super-conciliator is
randomly selected from a list developed by the Public Employment
Relations Commission. N.J.S.A. 52:14-17.27b.
Motions in the SHBPDC regarding retiree prescription
copayments for the calendar year 2013 failed to garner more than
six votes, resulting in an impasse. As a result, SHBPDC union
members sought conciliation. Notwithstanding the impasse and a
demand for the appointment of a super-conciliator, the SHBC was
1
Lans. Ch. 2011, c. 78.
2 A-0945-12T1
presented in September 2012 with – and its three administration
members voted to approve – revised premium rates in which
retiree copayments were adjusted in accordance with the plan
that failed to obtain seven votes in the SHBPDC process.
Accordingly, even though the SHBPDC was ineffectual in
determining the level of retiree copayments for the calendar
year 2013, and even though SHBPDC members had demanded super-
conciliation to resolve the impasse, the Division of Pensions
and Benefits (the Division) increased retiree copayments
effective January 1, 2013.
Two members of the SHBPDC – Hetty Rosenstein and Charles
Wowkanech – appeal to this court, arguing the Division exceeded
its authority by raising retiree copayments pursuant to a
regulation whose statutory authority had been abrogated by
Chapter 78. The Division argues in response that the appeal
should be dismissed, claiming appellants lack standing and the
super-conciliatory process should be exhausted before there can
be a resort to the courts. As for the merits, the Division
argues that when the SHBPDC fails to act, "existing statutes,
rules, regulations, policies and procedures of the State Health
Benefits Program continue in effect." We reject the Division's
argument that appellants lack standing as well as its
alternative argument that administrative rights must first be
3 A-0945-12T1
exhausted. And we conclude, on the merits, 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-conciliatory process.
I
In rejecting the Division's first argument, we observe that
our courts have historically employed a liberal rule of
standing. Crescent Park Tenants Ass'n v. Realty Equities Corp.
of N.Y., 58 N.J. 98, 101 (1971); see also Jen Elec., Inc. v.
Cnty. of Essex, 197 N.J. 627, 645 (2009); N.J. Builders Ass'n v.
Bernards Twp., 219 N.J. Super. 539, 539 (App. Div. 1986), aff’d,
108 N.J. 223 (1987). Although our courts will not "function in
the abstract" or entertain proceedings commenced "by plaintiffs
who are 'mere intermeddlers,' . . . interlopers or strangers to
the dispute," we will entertain and adjudicate suits, claims and
appeals when "the litigant's concern with the subject matter
evidence[s] a sufficient stake and real adverseness." Crescent
Park, supra, 58 N.J. at 107 (internal citations omitted).
Here, the question of standing might begin and end with an
assumption that appellants are taxpayers. Jen Elec., Inc.,
supra, 197 N.J. at 644. But appellants are also union
representative members of the SHBPDC, and they contend that the
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SHBPDC's authority has been wrongfully overstepped by the
disputed action taken by the Division. We conclude these
circumstances alone are sufficient to imbue appellants with
standing here. In addition, we note that Rosenstein is the area
director of CWA AFL-CIO District 1, and Wowkanech is president
of the state AFL-CIO, and their union members undoubtedly have a
keen interest in the outcome.
II
We also find no merit in the Division's argument that
appellants have no right to be heard in this court until
exhaustion of the conciliation process. The answer to this
argument requires consideration of what is presently before us.
In most instances, the nature of an appeal is obvious. In
others, such as the present matter, we must first identify "the
true nature" of the appeal "and to unfold" and ascertain "the
true use or end of it." Marcus Aurelius, Meditations, Book XII,
paragraph xiv. There are multiple ways of looking at what this
appeal represents.
In one sense, this appeal may be viewed as seeking review
of the Division's final action in increasing retiree copayments
in the absence of SHBPDC approval – a contention that does not
invite application of the exhaustion doctrine because, in that
limited sense, there would be no further action to be taken by
5 A-0945-12T1
the Division. If we were to so view this appeal, the exhaustion
doctrine would have no application.
In a second sense, the appeal may be viewed as seeking our
restoration of the status quo ante pending completion of the
super-conciliatory process. The parties seem to adopt this
latter description, since even the Division's argument in
support of dismissal recognizes that it is the super-
conciliatory process which will determine whether there should
be an increase in the retiree prescription copayment for the
period in question.2 Because the parties agree the retiree
copayment dispute must be subjected to the super-conciliatory
process, and in viewing the appeal in this manner, the issue
before us is limited to whether this court has the power to
intervene to restore the status quo until the impasse is
resolved.
Although sound judicial principles may at times counsel
otherwise, there is no doubt that courts are empowered to
intervene in a dispute pending in some other forum for the
purposes of preserving the thing in dispute in that other forum.
2
That is, the Division argues – in seeking dismissal of this
appeal – that appellants "cannot bypass or negate [the super-
conciliatory] mechanism by seeking relief here." By making that
argument, the Division must a fortiori agree that the action it
took, and of which appellants complain, is also subject to a
final resolution yet to be reached through the conciliation
process.
6 A-0945-12T1
See, e.g., Fischer v. Fischer, 375 N.J. Super. 278, 286-87 (App.
Div.) (recognizing the authority of courts to preserve the res
to be allocated in a different forum), certif. denied, 183 N.J.
590 (2005); Steiger v. Armellino, 315 N.J. Super. 176, 183-84
(Ch. Div. 1998) (ordering a preservation of a fund pending
completion of rule-based fee arbitration); see also Ortho Pharm.
Corp. v. Amgen, Inc., 882 F.2d 806, 812 (3d Cir. 1989)
(recognizing a court's authority to enter injunctive relief to
preserve the status quo pending institution and completion of
arbitration proceedings); In re Mossavi, 334 N.J. Super. 112,
116-22 (Ch. Div. 2000) (holding that courts are authorized to
arm litigants with the subpoena power for purposes of compelling
the appearance of witnesses at a hospital's internal
administrative hearing as the means of enforcing a party's
contractual rights).
Moreover, the exercise of the court's inherent equitable
power to preserve the res of a controversy which will be
resolved in another forum does not violate the principles
underlying the exhaustion doctrine. Indeed, the exhaustion
doctrine invoked by the Division as a means of avoiding our
examination of the controversy is not an absolute – its
application is discretionary, turning on the presence and weight
of certain considerations. Hawk v. N.J. Inst. of Tech., 428
7 A-0945-12T1
N.J. Super. 562, 570-71 (App. Div. 2012), certif. denied, 214
N.J. 175 (2013); Alliance for Disabled in Action, Inc. v. Cont'l
Props., 371 N.J. Super. 398, 408 (App. Div. 2004), aff’d, 185
N.J. 331 (2005). The doctrine is applied when it will ensure a
claim will initially be heard by a body possessing expertise,
when it allows for the creation of a factual record that will
promote for meaningful appellate review, or when it fosters a
potential for terminating the controversy, since an agency
decision might satisfy the parties and obviate resort to the
courts. See City of Atlantic City v. Laezza, 80 N.J. 255, 265
(1979). Courts should also consider whether requiring the
further pursuit of administrative remedies before seeking
judicial intervention will be "futile" or might result in
irreparable harm, or whether "an overriding public interest
calls for a prompt judicial decision." Garrow v. Elizabeth Gen.
Hosp. & Dispensary, 79 N.J. 549, 561 (1979); Hawk, supra, 428
N.J. Super. at 571.
Because appellants' intent in filing this appeal was not to
disrupt or supplant the conciliation process but to simply
restore the status quo ante until conciliation 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
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of allowing the Division to impose an interim remedy while
precluding appellants' pursuit of review in or a remedy from
this court.
The interests of justice preclude the exhaustion doctrine's
use as a bar to the relief sought by appellants here, no matter
how the scope and intent of the appeal may be described.3
3
We have already identified two ways of viewing the matter before
us. Yet a third way of looking at this appeal, which is neither
argued nor implicated by the arguments, is to view it as seeking
and enforcing a declaratory judgment about the propriety of the
actions taken by the SHBC and the Division. Declaratory
judgment actions are normally commenced in the trial court, but,
even if mistakenly lodged in the wrong division, the Appellate
Division possesses the power to exercise original jurisdiction
when "necessary to the complete determination of any cause on
review." N.J. Const. art. VI, § 5, ¶ 3; see also R. 2:10-5;
N.J.S.A. 2A:16-52 (declaring that "[a]ll courts of record in
this state shall, within their respective jurisdictions, have
power to declare rights, status and other legal relations,
whether or not further relief is or could be claimed").
Moreover, invocation of original jurisdiction is particularly
appropriate when no fact-finding is necessary, see Price v.
Himeji, L.L.C., 214 N.J. 263, 294 (2013), or when the matter
implicates the public interest, see Karins v. City of Atlantic
City, 152 N.J. 532, 540-41 (1998). Here, the appeal presents a
purely legal question concerning whether the authority of the
SHBPDC was usurped by the SHBC, and the outcome of that issue is
undoubtedly of great public importance. Accordingly, even if
this appeal is more accurately recognized as a request for a
declaratory judgment concerning the actions of the SHBC, the
Division, or both, this court is empowered to exercise original
jurisdiction. Indeed, although our courts lack authority to
"act independently" from, or "substitute [their] judgment" for,
an agency which is empowered to make the decision, the court is
certainly empowered "to bring [an] agency's action into
conformity with its delegated authority." In re Polk License
Revocation, 90 N.J. 550, 578 (1982). That is precisely
appellants' argument here.
9 A-0945-12T1
III
With that, we turn to whether the Division's view of its
authority, or its view of SHBC's authority, should be vindicated
or rejected pending completion of the super-conciliatory
process.
Appellants correctly argue that the adoption of Chapter 78
transferred authority over the plan design of the state health
benefits program to the newly-created SHBPDC, which has the:
[r]esponsibility for and authority over the
various plans and components of those plans,
including for medical benefits, prescription
benefits, dental vision, and any other
health care benefits, offered and
administered by the program. The [SHBPDC]
shall have the authority to create, modify,
or terminate any plan or component, at its
sole discretion.
[N.J.S.A. 52:14-17.27(b) (emphasis added).]
And, by the same stroke of a pen, the Legislature eliminated the
SHBC's former authority in this regard or the force of any other
regulation once applicable:
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].
[Ibid.]
With the adoption of these provisions, the Legislature
eliminated the efficacy of SHBC's reliance on or ability to act
10 A-0945-12T1
pursuant to N.J.A.C. 17:9-6.10 – upon which the determinations
in question here were based – absent the affirmative action of
the SHBPDC.
The broad language of N.J.S.A. 52:14-17.27(b) unmistakably
gave SHBPDC the authority to set, among other things, retiree
prescription copayment levels as part of its plan-design
authority. Because those levels have not been set due to the
SHBPDC impasse, and cannot be resolved – as both appellants and
the Division agree – until the impasse is broken through the
conciliatory process or otherwise, the SHBC acted without
authority when it unilaterally decided to increase retiree
copayments for the calendar year 2013. In short, Chapter 78
transferred the authority to design all aspects of the state
health plan to the SHBPDC.4 Only the SHBPDC may "create, modify,
or terminate" the "various plans and components of those plans."
N.J.S.A. 52:14-17.27(b). Until seven members of the SHBPDC
approve, or until the SHBPDC's impasse is resolved in super-
conciliation, the status quo ante should have been maintained
and the retiree copayment levels should not have been altered.
4
We would add that one clear legislative intent revealed by
N.J.S.A. 52:47-17.27(b) was the leveling of the balance of power
between labor and the public employer by giving six votes to
each side, rather than the three-to-two edge previously
possessed by the administration when the SHBC had the authority
to create, modify and terminate components of the state health
plan. See N.J.S.A. 52:47-17.27(a).
11 A-0945-12T1
The actions of the SHBC and the Division were ultra vires
and are hereby vacated.
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