IN THE MATTER OF THE ADOPTION OF AMENDMENTS TO N.J.A.C. 11:22-1.1 (DEPARTMENT OF BANKING AND INSURANCE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2828-17T2
APPROVED FOR PUBLICATION
IN THE MATTER OF THE April 29, 2019
ADOPTION OF AMENDMENTS
TO N.J.A.C. 11:22-1.1 APPELLATE DIVISION
______________________________
Argued March 12, 2019 – Decided April 29, 2019
Before Judges Yannotti, Rothstadt and Gilson.
On appeal from the New Jersey Department of
Banking and Insurance, Agency Docket No. PRN
2017-207.
Arthur C. Meisel argued the cause for appellants New
Jersey Dental Association and Mark Vitale, D.M.D.
Jeffrey S. Posta, Deputy Attorney General, argued the
cause for respondent New Jersey Department of
Banking and Insurance (Gurbir S. Grewal, Attorney
General, attorney; Melissa H. Raksa, Assistant
Attorney General, of counsel; Jeffrey S. Posta, on the
brief).
The opinion of the court was delivered by
YANNOTTI, P.J.A.D.
Mark Vitale, D.M.D., and the New Jersey Dental Association (NJDA)
appeal from the adoption of administrative rules by the New Jersey
Department of Banking and Insurance (Department) implementing the Health
Claims Authorization, Processing and Payment Act (HCAPPA). L. 2005, c.
352 (codified as amended in various sections of titles 17, 17B, and 26 of the
New Jersey Statutes Annotated). We affirm.
I.
We begin our consideration of the appeal with a brief summary of the
history of HCAPPA. The Health Information Electronic Interchange
Technology Act (the HINT Act) was enacted in 1999. L. 1999, c. 154
(codified as amended in various sections of titles 17, 17B, 26, and 45 of the
New Jersey Statutes Annotated). The HINT Act provided for, among other
things, the electronic receipt, transmission, and prompt payment of claims for
health and dental benefits. Ibid.
HCAPPA amended certain provisions of the HINT Act, and added
substantially-identical statutes that permit health service corporations, group
health insurers, hospital service corporations, medical service corporations,
individual health insurers, health maintenance organizations, and prepaid
prescription service organizations to obtain reimbursement of overpayments of
claims, subject to certain conditions and criteria. The reimbursement
provisions state:
(10) With the exception of claims that were
submitted fraudulently or submitted by health care
providers that have a pattern of inappropriate billing
or claims that were subject to coordination of benefits,
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no payer shall seek reimbursement for overpayment of
a claim previously paid pursuant to this section later
than [eighteen] months after the date the first payment
on the claim was made. No payer shall seek more
than one reimbursement for overpayment of a
particular claim. At the time the reimbursement
request is submitted to the health care provider, the
payer shall provide written documentation that
identifies the error made by the payer in the
processing or payment of the claim that justifies the
reimbursement request.
....
(11)(a) In seeking reimbursement for the
overpayment from the health care provider, except as
provided for in subparagraph (b) of this paragraph, no
payer shall collect or attempt to collect: (i) the funds
for the reimbursement on or before the [forty-fifth]
calendar day following the submission of the
reimbursement request to the health care provider; (ii)
the funds for the reimbursement if the health care
provider disputes the request and initiates an appeal on
or before the [forty-fifth] calendar day following the
submission of the reimbursement request to the health
care provider and until the health care provider's rights
to appeal set forth under paragraphs (1) and (2) of
subsection e. of this section are exhausted; or (iii) a
monetary penalty against the reimbursement request,
including but not limited to, an interest charge or a
late fee. The payer may collect the funds for the
reimbursement request by assessing them against
payment of any future claims submitted by the health
care provider after the [forty-fifth] calendar day
following the submission of the reimbursement
request to the health care provider or after the health
care provider's rights to appeal set forth under
paragraphs (1) and (2) of subsection e. of this section
have been exhausted if the payer submits an
explanation in writing to the provider in sufficient
detail so that the provider can reconcile each covered
person's bill.
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[N.J.S.A. 17:48E-10.1(d) (health service
corporations); N.J.S.A. 17B:27-44.2(d) (group health
insurance companies); N.J.S.A. 17:48-8.4(d) (hospital
service corporations); N.J.S.A. 17:48A-7.12(d)
(medical service corporations); N.J.S.A. 17B:26-
9.1(d) (individual health insurers); N.J.S.A. 26:2J-
8.1(d) (health maintenance organizations); N.J.S.A.
17:48F-13.1(d) (prepaid prescription service
organizations).]
In 2017, the Department issued a notice stating that it intended to adopt
amendments to the rule governing the prompt payment of health and dental
claims, and adopt new rules addressing, among other things, the
reimbursement by payers of claim overpayments. See 49 N.J.R. 2729(a)
(proposed Aug. 21, 2017). One of the proposed rules stated in relevant part
that a "health carrier or its agent may offset" any overpayment "against a
provider's future insured claims," subject to certain conditions. Ibid. (later
codified at N.J.A.C. 11:22-1.8(b)(5)).
On October 17, 2017, Dr. Vitale and the NJDA submitted comments to
the rule proposal. They asserted that the reimbursement provisions of
HCAPPA only apply to health benefits plans and do not permit payers to
obtain reimbursements of overpayments of claims paid under "stand-alone" or
"dental-only" plans. Dr. Vitale and the NJDA also asserted that the
Department should confirm that the word "offset" used in the proposed
regulation has the same meaning as "setoff" under New Jersey law. They
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argued that the payer could not apply a "setoff" to a provider's future claims
for patients other than the patient for whom the overpayment was made.
The Department responded to these comments when it issued its notice
of rule adoption. See 50 N.J.R. 829(a) (Feb. 5, 2018). The Department stated
that the suggested change in the proposed rule governing reimbursement of
overpayments is not required. The Department noted that the reimbursement
provisions apply to health carriers, which as defined under HCAPPA do not
include dental service corporations or dental plan organizations.
The Department concluded, however, that health carriers could
nevertheless obtain reimbursements of any overpayments they may have made
on claims, including claims submitted under "stand-alone" or "dental-only"
plans. The Department stated that HCAPPA's reimbursement provisions "are
based on the type of carrier, not the type of insurance plan."
The Department cited as authority for its comment our unpublished
decision in N.J. Dental Ass'n v. Horizon Blue Cross Blue Shield of N.J., No.
A-1834-12 (App. Div. June 5, 2014), certif. denied, 219 N.J. 630 (2014). 1 In
Horizon, we held that HCAPPA permits health carriers who pay dental
insurance benefits to recover overpayments by offsetting the reimbursements
1
Rule 1:36-3 states that unpublished opinions do not "constitute precedent"
and are not "binding upon any court." The rule did not preclude the
Department from citing and relying upon our opinion in Horizon.
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against benefits due on the claims submitted under "stand-alone" or "dental-
only" plans. Id. (slip op. at 2). We also held that HCAPPA permitted carriers
to obtain reimbursements as offsets to future claims submitted by the provider
for unrelated patients. Ibid.In addition, the Department commented that there was no need to clarify
the term "offset" in the proposed regulation. The Department stated, " [u]pon
review, the Department has determined that no clarification is necessary as
[the words] 'offset' and 'setoff' are synonymous." The Department also stated
that it did not "believe there is any need to define these terms since their
meaning is plain and well-understood." This appeal followed.
II.
The Department argues that the NJDA is barred under principles of
collateral estoppel from raising its challenge to the rules adopted to implement
the reimbursement provisions of HCAPPA. The Department notes that NJDA
was the plaintiff in the Horizon case, and in that case, the NJDA
unsuccessfully raised the same arguments that it has raised in this appeal.
Collateral estoppel, which is also known as issue preclusion, prohibits a
party "from relitigating matters or facts which the party actually litigated and
which were determined in a prior action, involving a different claim or cause
of action, and which were directly in issue between the parties." Olivieri v.
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Y.M.F. Carpet, Inc., 186 N.J. 511, 522 (2006) (quoting Zoneraich v. Overlook
Hosp., 212 N.J. Super. 83, 93-94 (App. Div. 1986)). Collateral estoppel
precludes a party from litigating an issue when:
(1) the issue . . . is identical to the issue decided in the
prior proceeding; (2) the issue was actually litigated in
the prior proceeding; (3) the court in the prior
proceeding issued a final judgment on the merits; (4)
the determination of the issue was essential to the
prior judgment; and (5) the party against whom the
doctrine is asserted was a party to or in privity with a
party to the earlier proceeding.
[Allen v. V & A Bros., Inc., 208 N.J. 114, 137 (2011)
(quoting Olivieri, 186 N.J. at 521)].
In this appeal, the NJDA argues that the reimbursement provisions of
HCAPPA may not be applied to a carrier's overpayments of benefits under the
"stand-alone" or "dental-only" plans. The NJDA also contends that carriers
may not recover their reimbursements by offsetting such payments against a
provider's future claims for unrelated patients.
These are the identical issues that the NJDA raised in the Horizon case.
See Horizon, No. A-1834-12 (slip op. at 8, 14-15).2 Moreover, the trial court
in Horizon and this court on appeal issued final judgments, and the decisions
2
Rule 1:36-3 also provides that appellate opinions not approved for
publication may be cited to the extent required by "res judicata, collateral
estoppel, the single controversy doctrine or any other similar principle of
law[.]"
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on the issues presented were essential to the judgments. Therefore, the NJDA
is precluded from relitigating the same issues in this appeal. Allen, 208 N.J. at
137.
Principles of collateral estoppel do not, however, bar Dr. Vitale from
raising these issues in his challenge to the Department's rules. Dr. Vitale was
not a party in the Horizon case, and it is not clear on the record before us
whether he is a member of the NJDA, or in privity with the NJDA.
Accordingly, we will address the issues he has raised on appeal.
III.
Dr. Vitale argues that the Department's rules pertaining to the
reimbursement of claim overpayments are ultra vires because payers may not
obtain reimbursements for overpayments of benefits under "stand-alone" or
"dental-only" plans. We disagree.
The standard that applies to our review of agency rulemaking is well-
established. We accord "great deference" to an agency's interpretation of the
statutes within the scope of its authority, and the agency's adoption of rules
that implement those statutes. N.J. Soc'y for the Prevention of Cruelty to
Animals v. N.J. Dep't of Agric., 196 N.J. 366, 385 (2008).
Such deference is especially appropriate because administrative agencies
are often required to interpret statutes and adopt rules that address technical
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matters for which they have specialized expertise. Ibid. Nevertheless, an
administrative agency may not adopt a regulation that is "inconsistent with
[the] legislative mandate." N.J. State League of Municipalities v. Dep't of
Cmty. Affairs, 158 N.J. 211, 222-23 (1999) (citations omitted). See also N.J.
Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 561-62 (1978) (noting
that administrative regulations "must be within the fair contemplation of the
delegation of the enabling statute").
Here, Dr. Vitale argues that HCAPPA only allows the payers identified
in that legislation to obtain reimbursement for overpayments of health-benefit
claims. He therefore argues that even though the carriers may have paid
claims under "stand-alone" or "dental-only" plans, they may not obtain
reimbursement of such overpayments using the procedures set forth in
HCAPPA.
Our goal in interpreting a statute is to ascertain the intent of the
Legislature, and the best indication of the Legislature's intent is the statutory
language. DiProspero v. Penn, 183 N.J. 477, 492 (2005) (citing Frugis v.
Bracigliano, 177 N.J. 250, 280 (2003)). When interpreting a statute, we give
the words in the legislation their "ordinary meaning and significance." Ibid.(citing Lane v. Holderman, 23 N.J. 304, 313 (1957)). "If the [statute's] plain
language leads to a clear and unambiguous result, then [the] interpretative
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process is over." Spade v. Select Comfort Corp., 232 N.J. 504, 515 (2018)
(quoting Johnson v. Roselle EZ Quick LLC, 226 N.J. 370, 386 (2016)).
As noted previously, the reimbursement statutes enacted as part of
HCAPPA each provide that the "payer[s]" may recoup overpayments of claims
from "health care provider[s]." The key provisions of the reimbursement
statutes are defined in N.J.S.A. 17B:30-26, which was enacted as companion
legislation to the HINT Act. L. 1999, c. 155, §10, amended by L. 2001, c. 67,
§3. When it enacted HCAPPA, the Legislature did not amend or repeal the
definitions codified in N.J.S.A. 17B:30-26. See L. 2005, c. 352.
The term "[h]ealth care provider" is defined in N.J.S.A. 17B:30-26 to
mean any "individual or entity which, acting within the scope of it s licensure
or certification, provides a covered service defined by the health benefits or
dental plan[,]" which includes, but is not limited to "a physician, dentist and
other health care professionals[.]" Ibid. (emphases added). In addition, the
term "insured claim" is defined as "a claim by a covered person for payment of
benefits under an insured health benefits or dental plan." Ibid. (emphasis
added).
Therefore, the plain language of the reimbursement provisions in
HCAPPA, interpreted in accordance with the applicable definitions in N.J.S.A.
17B:30-26, shows that the Legislature intended to apply those provisions to
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entities that pay insured claims, and to permit reimbursement of overpayments
of all claims paid by these entities, including claims under dental plans. As the
Department observed, the Legislature intended that the reimbursement
provisions would apply based on the type of carrier, not the type of insurance
plan for which the overpayments were made.
On appeal, Dr. Vitale has not identified anything in the legislative
history of HCAPPA which shows that the Legislature intended to preclude
payers from obtaining reimbursement of overpayments claims made under
"stand-alone" or "dental-only" plans. Moreover, Dr. Vitale has provided no
explanation whatsoever for the claimed exclusion of dental claims from the
permitted reimbursements. Indeed, it would be absurd and unreasonable to
read HCAPPA as permitting the payers identified in HCAPPA to recoup
overpayments for all claims except those paid under dental plans.
We therefore conclude that HCAPPA permits the payers identified in the
reimbursement provisions to obtain recovery for any overpayment of claims
paid by these entities, including claims submitted under "stand-alone" or
"dental-only" plans.
IV.
Dr. Vitale also argues that the Department erred by failing to "clarify"
the regulation that allows carriers to obtain reimbursement of an overpayment
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by offsetting the amount of the overpayment "against a provider's future
insured claims." N.J.A.C. 11:22-1.8(b)(5). He argues the Department should
have clarified the regulations by defining the term "offset" and "setoff" to limit
the claims from which a payer can obtain reimbursement. Dr. Vitale asserts
that such a clarification is required so that the regulations are consistent with
the common law of restitution.
In support of his argument, Dr. Vitale relies upon the innocent third-
party exception to the common law right of restitution, which is set forth in
Restatement (Third) of Restitution and Unjust Enrichment § 67 (Am. Law Inst.
2011), which states that:
(1) [a] payee without notice takes payment free of a
restitution claim to which it would otherwise be
subject, but only to the extent that
(a) the payee accepts the funds in satisfaction or
reduction of the payee's valid claim as creditor of the
payor or of another person;
(b) the payee's receipt of the funds reduces the
amount of the payee's claim pursuant to an obligation
or instrument that the payee has previously acquired
for value and without notice of any infirmity; or
(c) the payee's receipt of the funds reduces the
amount of the payee's inchoate claim in restitution
against the payor or another person.
(2) [a] payee is entitled to the defense described in this
section only if payment becomes final, and the payee
learns of the payment and its ostensible application,
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before the payee has notice of the facts underlying the
restitution claim the defense would cut off. For
purposes of this subsection, a payment becomes final
when the payor is no longer entitled to countermand or
recover it without the aid of legal process.
Dr. Vitale argues that our decision in H. John Homan Co. v. Wilkes-
Barre Iron & Wire Works, Inc., 233 N.J. Super. 91 (App. Div. 1989), supports
the adoption of the Restatement (Third) of Restitution and Unjust Enrichment
§ 67. In Homan, we held that an account debtor could not recover the payment
it made by mistake if an assignee of the creditor was without notice of the
mistake when it received the payment. 233 N.J. Super. at 95-96. In doing so,
we relied upon Restatement of Restitution § 14 (Am. Law Inst. 1937), the
predecessor to Restatement (Third) of Restitution and Unjust Enrichment § 67.
Homan, 233 N.J. Super. at 97-98.
We note, however, that in Homan, we stated that if the payer "had not
made payment in full to [the payee]" under the assignment, the payer "could
have deducted" the sum necessary to recoup the overpayment. Id. at 96. We
also stated that if the payee sued the payer to recover the amount due, the
payer "would have been entitled to a setoff in the amount" of the overpayment.
Ibid.Notwithstanding Dr. Vitale's arguments to the contrary, HCAPPA's
process for recouping overpayments of claims is not inconsistent with the form
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of self-help recognized in Homan because when a payer recoups its
overpayments, the provider has not been fully paid on all claims. In these
circumstances, the payers of claims and the providers are engaged in an
ongoing relationship of claims submission and payments.
This relationship generates new claims, which a provider submits for
payment, and if all claims have not been paid, payment is not final. A
comment to the Restatement notes that "[a] payment that is not yet final is one
that may be recovered by legitimate self-help, without reference to either
claims or defenses in restitution." Restatement (Third) of Restitution and
Unjust Enrichment § 67, cmt. h.
In any event, Dr. Vitale's reliance upon the Restatement and the common
law of restitution as a basis for his challenge to the regulations is misplaced.
In obtaining reimbursement as permitted by HCAPPA, the payers are not
asserting claims for restitution under the common law. They are recouping
overpayments pursuant to the specific statutory authorization in HCAPPA.
The provisions of HCAPPA thus abrogate any principle under the
common law that would otherwise preclude payers of claims from obtaining
reimbursements for their overpayments. A statute like HCAPPA that
abrogates the common law must be construed narrowly, but if the language of
the statute is clear, the court must enforce the statute "according to its terms."
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Marshall v. Klebanov, 188 N.J. 23, 37 (2006) (quoting Hubbard ex rel.
Hubbard v. Reed, 168 N.J. 387, 392 (2001)).
Here, the reimbursement provisions of HCAPPA expressly permit payers
to obtain recovery of overpayments by offsetting the overpayments against a
provider's future claims, and those future claims may include claims related to
persons other than the person for whom the overpayments were made.
Accordingly, the Department correctly determined that there was no need to
clarify the meaning of the terms "offset" and "setoff" used in the regulations.
Affirmed.
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