E.G. v. STATE HEALTH BENEFITS COMMISSION

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3865-09T4

E.G.,

Appellant,

v.

STATE HEALTH BENEFITS

COMMISSION,

Respondent.

__________________________

May 5, 2011

Argued April 11, 2011 Decided

Before JudgesA. A.Rodr guez and LeWinn.

On appeal from the State Health Benefits Commission,Division of Pension and Benefits, Department of Treasury.

E.G., appellant, argued the cause pro se.

Don E. Catinello, Deputy Attorney General, argued the cause for respondent (Paula T. Dow, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Mr. Catinello, on the brief).

PER CURIAM

Appellant, E.G.1, appeals from the March 10, 2010 final administrative determination of the State Health Benefits Commission (Commission), denying him reimbursement for a frozen embryo transfer procedure performed on his spouse, N.W., on February 26, 2009. We reverse and remand for a hearing before the Office of Administrative Law (OAL).

On January 23, 2007, N.W. underwent procedures to prepare and deposit donor oocytes2 and frozen embryos at the New York University Fertility Center, for future use. At that time E.G. had health benefits covering himself and N.W. under the State Health Benefits Program (SHBP) Traditional Plan, administered by Horizon/Blue Cross-Blue Shield of New Jersey (Horizon BCBSNJ). On April 8, 2007, N.W. underwent her first frozen embryo transfer, which resulted in a successful pregnancy. Horizon BCBSNJ provided coverage for the procedure; the Traditional Plan had no age limit with respect to eligibility for coverage.

N.W. underwent three more transfer procedures on November 28, 2008, February 26, 2009 and April 6, 2009. Effective April 1, 2008, E.G.'s health benefits coverage changed to NJ Direct 15. Under this plan, reimbursement for this procedure is restricted to women over the age of forty-five; N.W. was born in March 1961. When E.G. sought payment for the February 2009 procedure3, Horizon BCBSNJ denied coverage.

E.G. appealed the denial of coverage for the February 26, 2009 procedure to Horizon BCBSNJ. He contended that (1) prior authorization for this procedure is not required according to the NJ Direct Member Handbook (Handbook); and (2) because the embryos were produced under Traditional Plan coverage and "there was no lifetime limit on frozen embryo transfers[,]" coverage should be provided.

Horizon BCBSNJ denied the appeal, noting that (1) E.G. had not sought precertification for the procedure as required by the Handbook; and (2) the Handbook stated that coverage for this type of procedure is available only if the patient is "[forty-five] years old or younger." Because N.W. was over the age of forty-five at the time of the February 2009 procedure, she was declared ineligible for coverage.

E.G. appealed to the Commission. A hearing was held on October 14, 2009; Commission Chairwoman Susanne Culliton, four Commissioners, representatives of the SHBP and Horizon BCBSNJ, and E.G. were among those present.

E.G. argued that there had been no age limit for coverage under the Traditional Plan and because these procedures had been initiated under that Plan, he should be "grandfathered" into coverage under NJ Direct 15 as this was ongoing treatment and "[p]rior commitments under the Traditional Plan should be honored . . . ." He also argued, for the first time, that the age limitation in the Handbook violated the federal Older Workers Benefit Protection Act, 29 U.S.C.A. 621 - 634.

When Chairwoman Culliton called for a vote, Commissioner Burdge stated that he "was waiting for some discussion on it[,]" adding:

I think there's some important points, and I think we're going against our previous practice by denying this because we have, on several occasions, upheld appeals for folks who were in the process prior to the changeover. And . . . that was the understanding we had in terms of the challenge that the union's brought that it was a change of benefits that was not negotiated. And the understanding from the Office of Employee Relations was that anyone who was already in the process, they could continue, and that's obviously the situation here.

Culliton asked Burdge if he was saying that "once those embryos were frozen, [N.W.]'s guaranteed to use every single one of them up forever with no age limit?" Burdge replied: "Ye[s], I think so, in this situation."

Commissioner Nowlan commented:

I guess that was my question about what we invested in this process for this particular member and his wife. And to not sort of fill that promise or that commitment that they had under the Traditional Plan seems to me, and then the question about the change in benefits without negotiation with the collective representatives just disturbs me that we re not allowing this process to play itself out.

Burdge commented that he "would also like to seek the advice of counsel" regarding E.G.'s claim under the OWBPA. Nowlan moved that the Commission go into executive session; his motion was defeated. The Commission then voted three-to-two to deny E.G.'s appeal, Burdge and Nowlan dissenting.

On November 10, 2009, E.G. requested that the matter be transferred to the OAL for a hearing as a contested case. On December 9, 2009, the Commission "determined that no issue of material fact exists" and denied the request.

In its March 10, 2010 final decision, the Commission determined that N.W. "was over [forty-five] years old at the time of the frozen embryo transfer, and was therefore ineligible to receive benefits for such transfer. . . . [T]he requested services are not covered under . . . NJ Direct 15." The Commission also rejected E.G.'s argument under the OWBPA on the basis that

an age limit on infertility treatment is not unlawful where it is based on reasonable factors other than age. In this case, the age limitation for infertility treatment is based on medical reasons (i.e., success rates for assisted reproductive technology are particularly low for women over the age of [forty-five]). Therefore, the Plan's limitation is not unlawful under [the] OWBPA.

[(Citation omitted.)]

Finally, the Commission stated that it was "able to reach its findings of fact and conclusion of law, based on the foregoing undisputed facts and the foregoing conclusions of law, without the need for an administrative hearing."

On appeal, E.G. contends: (1) the Commission's policy provides coverage for procedures covered under the Traditional Plan that constitute "treatments in progress"; and (2) the age limitation in the Handbook violates the OWBPA.

Our scope of review of final agency actions is narrow. "In light of the executive function of administrative agencies, judicial capacity to review administrative actions is severely limited." George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 27 (1994) (citing Gloucester Cty. Welfare Bd. v. N.J. Civil Serv. Comm'n, 93 N.J. 384, 390 (1983)).

Particularly "in our review of an agency's interpretation of statutes within its scope of authority and its adoption of rules implementing its enabling statutes, we afford the agency great deference." NJSPCA v. Dep't of Agric., 196 N.J. 366, 385 (2008) (citing In re Freshwater Wetlands Prot. Act Rules, 180 N.J. 478, 489 (2004)). "[W]e begin with a presumption that an agency's regulations are both valid and reasonable and we place on the challenging party the burden of proving that the regulation violates the statute." Ibid.

N.J.S.A. 52:14-17.27 vests the Commission with the authority to administer and regulate the SHBP. N.J.S.A. 52:14-17.29(D) governs the manner in which the SHBP provides health insurance benefits:

Benefits under the contract or contracts purchased as authorized by this act may be subject to such limitations, exclusions, or waiting periods as the commission finds to be necessary or desirable to avoid inequity, unnecessary utilization, duplication of services or benefits otherwise available . . . . No benefits shall be provided beyond those stipulated in the contracts held by the . . . Commission.

At the October 14, 2009 hearing, two members of the Commission noted that the change in coverage that took effect on April 1, 2008, was achieved legislatively and not through negotiations with the collective bargaining units representing employees covered by the then-existing contracts. This led both commissioners to express the view that, in light of the challenges raised by those collective bargaining units, there was an "understanding from the Office of Employee Relations . . . that anyone who was already in the process . . . could continue," and, as Commissioner Burdge opined, "that's obviously the situation here."

The Commission did not address this issue in its final decision. Moreover, where, as here, two voting members of the Commission opposed the motion to deny E.G.'s appeal for the reasons stated, we are reluctant to "afford the agency great deference[,]" NJSPCA, supra, 196 N.J. at 385, to a degree that dictates affirming its decision. Where two governing members of the agency whose decision we review expressed such disparate views from the three-member majority, we are not "satisfied after [our] review that the evidence and the inferences to be drawn therefrom support the agency head's decision." Campbell v. N.J. Racing Comm'n, 169 N.J. 579, 587 (2001).

The Commission denied E.G.'s request for a hearing before the OAL because it "determined that no issue of material fact exist[ed]." We are satisfied, however, that a "material fact" does exist with respect to the issue framed by commissioners Burdge and Nowlan, namely: should E.G. be entitled to coverage because N.W. was "in the process prior to the changeover[?]"

We conclude that E.G. is entitled to a hearing before the OAL to address this issue. N.J.S.A. 52:14B-9(a). Furthermore, because E.G. did not have a full opportunity to present his claims under the OWBPA before the Commission, we deem it proper to permit him to address that argument at the hearing before the OAL. The Commission briefly alluded to this issue in its decision and addressed it in its brief on appeal; E.G. addressed it in his reply brief. However, the fact remains that E.G. did not have a meaningful opportunity to brief and argue his position in the proceedings before the Commission.

The parties shall also address the question of whether precertification was required when E.G. sought coverage for the embryo transfer procedure. As noted, E.G. argued that the section of the Handbook that described infertility treatments did not "mention . . . prior authorization anywhere in th[e] section." It is clear, however, that the Handbook contains a separate section entitled "NJ Direct Services Requiring Precertification," and "in vitro[]fertilization" is included in that section. It is unclear from this record whether precertification for such procedures was required under the Traditional Plan. If it was not, this issue must be addressed as well.

Reversed and remanded for further proceedings in conformance with this opinion. We do not retain jurisdiction.

1 Because of the sensitive nature of the medical procedure at issue, we refer to appellant as E.G. and E.G.'s spouse by her initials; she uses a different last name than E.G.

2 "Oocytes are cells from which an egg or ovum develops." J.B. v. M.B., 170 N.J. 9, 12 n.2 (2001) (citing The American Heritage Stedman's Medical Dictionary 578 (1995)).

3 The November 2008 and February 2009 transfers were unsuccessful. E.G. apparently did not seek reimbursement for the November 2008 procedure. At the Commission hearing on October 14, 2009, which we discuss below, E.G. represented that he had not yet sought reimbursement for the April 2009 procedure (which was successful) because he was awaiting resolution of this appeal.