In the Matter of State and School Employees' Health Benefits Commissions' Implementation of I/M/O Philip Yucht

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

                 In the Matter of State and School Employees’ Health Benefits Commissions’
                         Implementation of I/M/O Philip Yucht (A-21-17) (079966)

Argued February 26, 2018 -- Decided May 8, 2018

LaVECCHIA, J., writing for the Court.

         This appeal involves review of administrative action by the State Health Benefits Commission (SHBC) and
the School Employees’ Health Benefits Commission (SEHBC) (collectively, the Commissions). The Commissions
administer the State Health Benefits Program (SHBP) and the School Employees’ Health Benefits Program (SEHBP),
respectively. The Court considers the reasonableness of the Commissions’ notice to members who may have been
affected by the application of erroneous reimbursement rates.

         On May 4, 2009, the Commissions established adjusted reimbursement rate percentages for out-of-network
behavioral health services. Under the new reimbursement scheme, the Commissions determined a usual and
customary charge reimbursement rate (the UCR) for outpatient behavioral health services from medical doctors and
agreed to pay medical doctors one-hundred percent of that UCR. However, they determined to reimburse other
behavioral health service providers at lesser percentages of that UCR. An SEHBP member, Philip Yucht, who
received behavioral health services, challenged the reimbursement he received for his out-of-pocket expenses. The
SEHBC denied Yucht’s challenge. Yucht appealed and the Appellate Division held that the tiered rates of
reimbursement for non-medical-doctor behavioral health services were contrary to the legislative policies expressed
in 
N.J.S.A. 52:14-17.46.7.

         After the Appellate Division decision, the Commissions each determined to reimburse plan members—
those who did not receive proper reimbursement for incurred out-of-pocket expenses—retroactive to May 2009.
The Commissions attempted to notify members of the reimbursement opportunity in two ways. The Commissions
placed a link (the link) on the website of the Division of Pensions and Benefits (the Division), which was labeled
with a notice that stated simply, “Behavioral Health Services Claim Reconsideration—for SHBP and SEHBP
members.” The Commissions also sent a letter, dated July 22, 2014 (the letter), to certifying officers, human
resources directors, and benefits administrators for public employers participating in the SHBP and SEHBP. The
subject of the letter stated “Behavioral Health Claim Reimbursements Reconsidered.” The letter advised the officers
that members “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.” The letter
instructed that plan members should complete a specific form to request adjustment and submit it with supporting
documents to Horizon no later than December 31, 2014. It also stated that requests received after that date would
not be considered. The second page of the letter, under the heading “EMPLOYER RESPONSIBILITIES,” stated:
“Please make this 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.” It is undisputed in the record before us that the Commissions
themselves did not send any form of individualized notice to potentially affected members.

         In December 2014, the Communication Workers of America, AFL-CIO and the Clinical Social Work Guild
49 (the Unions) petitioned the Commissions to extend the deadline for the submission of requests for
reimbursement. The Unions asserted that the notice provided was neither adequate nor meaningful and that the
Commissions should either send individualized notice to all potentially affected members or to all SHBP and
SEHBP members. The Commissions informed the Unions that their petition was denied. The Appellate Division
affirmed the Commissions’ refusal to extend the deadline and provide further notice to affected members. In
reaching its conclusion, the panel applied a highly deferential standard of review and held that the Commissions’
notice was adequate both in form and substance. The Court granted the Unions’ petition for certification to consider
whether the Commissions’ method of implementing reimbursement for the involved out-of-network charges
“provided adequate notice to potentially affected members.” 
231 N.J. 414 (2017).
                                                         1
HELD: Because significant questions exist concerning the extent of the notice actually provided, either by the
Commissions or through their agents to active employees, former employees, and retirees, a hearing is necessary. The
hearing is to be conducted in accordance with the principles outlined in this opinion and, at the hearing, the adequacy of
the content of the notice can be raised.

1. Agency action will not be overturned unless the action is arbitrary, capricious, or unreasonable. The arbitrary,
capricious, and unreasonable standard is generally understood to involve inquiry into whether the decision conforms
with relevant law, whether there is substantial credible evidence in the record as a whole to support the agency’s
decision, and whether in applying the relevant law to the facts, the agency clearly erred in reaching its conclusion.
When the challenged agency action arises in a setting where the record is too meager to permit meaningful review,
supplementation of the record may be necessary. The Court Rules provide that a reviewing court may remand, on
its own motion, for supplementation of the record in order to permit meaningful review. R. 2:5-5(b). (pp. 14-16)

2. Whenever an administrative agency acts, be that act mandatory or strictly voluntary, it must do so reasonably and
in a manner calculated to achieve the policies expressed in the agency’s organic statute. Therefore, because the
Commissions determined to reimburse affected members, they were necessarily required to do so reasonably and in
a non-arbitrary manner. Here, that means that the Commissions were required to provide reasonable notice in order
that the retroactive benefit would fairly be made known and, thus, made available in a non-arbitrary manner to
affected members. As with most agency action, there is room for debate over what is reasonable. To be reasonable,
an agency’s choice of action for providing notice does not require adoption of a perfect practice. Here, the intended
purpose of the action challenged—the Commissions’ attempted notice—was to reach persons who might have been
affected by the wrongfully calculated reimbursement rate, to notify those persons of the availability of supplemental
reimbursement, and to inform them of the procedures for requesting supplemental reimbursement. (pp. 16-19)

3. The problem in this dispute over the adequacy of notice is that the evidence thus far produced has the capacity to
support the claim that the methods of notice—the letter and website link—were not reasonably designed to likely
reach the categories of members who may have been affected by the erroneous reimbursement rates. The Unions
have advanced some evidence on which there could be based a finding that the notice was not reasonably designed
to give notice to the proper universe of individuals affected. Against that presentation, based on the present record,
the Court cannot conclude that either the website’s ten-word, cryptically described notice and link or the letter to the
certifying officers provides sufficient evidence to support deferring to the agency’s choice of notice as reasonable.
With the thin record available, it is not known what action, if any, certifying officers generally took in response to
the Commissions’ letter. Nor does the record disclose what notice, if any, former employees and retirees received of
the potential for supplemental reimbursement in light of the Commissions’ apparent reliance on the link.
Accordingly, the Court orders a remand for the development of a proper record to permit meaningful judicial
review. In that remand hearing, both the form and substance of the notice may be examined. (pp. 19-23)

4. The Court directs that the parties bear the following burdens in the remand to take place following issuance of
this decision. Because the Unions have come forward with some evidence to support questioning the reasonableness
of the notice, the burden of moving forward with the evidence has shifted to the Commissions to respond.
Therefore, the Commissions shall be required on remand to respond with evidence of efforts made by certifying
officers, or others with responsibility to provide notice, on behalf of participating employers to publish the required
notice to members. The Court notes that the Commissions are in a superior position to produce the necessary
information for creation of a meaningful record and emphasizes that the record need not plumb the efforts of each
and every certifying officer to share the substance of the letter with members. No doubt, the Commissions have
various means at their disposal to use in order to paint a picture of employer responsiveness through their letter to
certifying officers since that is, in part, what the Commissions rely upon. Finally, although the burden of moving
forward has shifted to the Commissions for the remand proceeding, the ultimate burden of persuasion remains
squarely and solely on the Unions’ shoulders. Because the Unions brought this challenge, it is for the Unions to
demonstrate that the notice, as implemented, was not adequate for its purpose and hence unreasonable. (pp. 23-27)

        The judgment of the Appellate Division is REVERSED. The matter is REMANDED for further
proceedings consistent with this opinion.

     CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA,
SOLOMON, AND TIMPONE join in JUSTICE LaVECCHIA’s opinion.
                                                           2
                                      SUPREME COURT OF NEW JERSEY
                                        A-
21 September Term 2017
                                                 079966

IN THE MATTER OF STATE AND
SCHOOL EMPLOYEES’ HEALTH
BENEFITS COMMISSIONS’
IMPLEMENTATION OF I/M/O
PHILIP YUCHT.



         Argued February 26, 2018 – Decided May 8, 2018

         On certification to the Superior Court,
         Appellate Division.

         Ira W. Mintz argued the cause for appellants
         Communications Workers of America, AFL-CIO
         and Clinical Social Workers Guild 49
         (Weissman & Mintz, attorneys; Ira W. Mintz,
         on the briefs).

         Eileen S. Den Bleyker, Deputy Attorney
         General, argued the cause for respondents
         State Health Benefits Commission and School
         Employees’ Health Benefits Commission
         (Gurbir S. Grewal, Attorney General,
         attorney; Melissa H. Raksa, Assistant
         Attorney General, of counsel, and Danielle
         P. Schimmel, Deputy Attorney General, on the
         briefs).

         Flavio L. Komuves argued the cause for
         amicus curiae New Jersey Education
         Association (Zazzali, Fagella, Nowak,
         Kleinbaum & Friedman, attorneys; Richard A.
         Friedman, of counsel, and Flavio L. Komuves
         and Marissa A. McAleer, on the brief).


    JUSTICE LaVECCHIA delivered the opinion of the Court.

    This appeal involves review of administrative action by the

State Health Benefits Commission (SHBC) and the School

                               1
Employees’ Health Benefits Commission (SEHBC) (collectively, the

Commissions).   The Commissions administer the State Health

Benefits Program (SHBP) and the School Employees’ Health

Benefits Program (SEHBP), respectively.

    The subject matter of the appeal involves the method used

by the Commissions to correct erroneously tiered reimbursement

rates previously applied to members’ out-of-pocket expenses for

out-of-network behavioral health services.   In a separate matter

involving a single plan member, the tiered reimbursement

schedule was determined to have violated 
N.J.S.A. 52:14-17.46.7,

which addresses the calculation of reimbursement rates for out-

of-network health benefit services.   Following that decision,

the Commissions permitted members who paid for out-of-pocket

behavioral health services and did not receive a proper

reimbursement to obtain retroactive reimbursement for charges

incurred between May 2009 and March 2014.    The challenge here is

to the reasonableness of the Commissions’ notice to members who

may have been affected by the application of the erroneous

reimbursement rates.

    For the reasons that follow, we reverse the Appellate

Division’s holding and remand the matter to the Commissions for

further proceedings.   Because we determine that significant

questions exist concerning the extent of the notice actually

provided, either by the Commissions or through their agents to

                                 2
active employees, former employees, and retirees, a hearing is

necessary.   The hearing is to be conducted in accordance with

the principles outlined in this opinion and, at the hearing, the

adequacy of the content of the notice can be raised.

                                I.

    By way of background, we first address the prior decision

of the Appellate Division that was the impetus for the

Commissions’ actions under review.   The following facts, gleaned

from that unpublished opinion, provide helpful background in

this appeal, which comes to us without its own hearing record.

                                A.

    On May 4, 2009, the Commissions established adjusted

reimbursement rate percentages, calculated from a base rate for

usual and customary charges, applicable to SHBP and SEHBP

members for out-of-network behavioral health services.     Under

the new reimbursement scheme, which was made retroactive to

January 1, 2009, the Commissions determined a usual and

customary charge reimbursement rate (the UCR) for outpatient

behavioral health services from medical doctors and agreed to

pay medical doctors one-hundred percent of that UCR.     However,

they determined to reimburse other behavioral health service

providers at lesser percentages of that UCR.   For example, the

Commissions determined that a psychologist with a Ph.D. would be

reimbursed at eighty-five percent of the UCR for medical

                                 3
doctors.    A range of lower reimbursement-rate percentages were

assigned to the charges of other professionals.1

       That new tiered rate scheme resulted from a recommendation

made to the Commissions by Magellan Health Services (Magellan),

the contractor used by the Commissions’ third-party

administrator, Horizon Blue Cross Blue Shield of New Jersey

(Horizon), for health plans pertinent to this action.   Horizon

forwarded Magellan’s recommendation to the Commissions, which

approved the change for implementation.    Significantly, for

purposes of 
N.J.S.A. 52:14-17.46.7, neither Magellan nor Horizon

are nationally recognized databases for purposes of determining

UCR.   The statute requires that plan participants be reimbursed

at eighty percent of reasonable and customary charges, defined

as “charges based upon the 90th percentile of the [UCR] fee

schedule determined by the Health Insurance Association of

America [now Prevailing Healthcare Charges System] or a similar

nationally recognized database of prevailing health care

charges.”   
N.J.S.A. 52:14-17.46.7.

       An SEHBP member, Philip Yucht, who received behavioral

health services after the Commissions’ adjusted reimbursement


1  By way of further example, the rate for a clinical nurse
specialist was set at seventy percent of the UCR, a thirty
percent reduction. The rates for a licensed clinical social
worker, a licensed marriage family therapist, and a licensed
professional counselor were each set at sixty-five percent of
UCR, a thirty-five percent reduction.
                                  4
rates took effect, challenged the reimbursement he received for

his out-of-pocket expenses.   Under the new tiered reimbursement

rates, Yucht’s treatment by a licensed clinical social worker

was reimbursed at sixty-five percent of the UCR described above.

The reimbursement rate formerly was one-hundred percent for that

service.   In a final agency determination, the SEHBC denied

Yucht’s challenge to the amount of his reimbursement after the

new rates took effect.

    Yucht appealed and the Appellate Division held that the

tiered rates of reimbursement for non-medical-doctor behavioral

health services were contrary to the legislative policies

expressed in 
N.J.S.A. 52:14-17.46.7.     In declaring the adjusted

reimbursement rates arbitrary, capricious, and unreasonable, the

panel stated that “[t]he statute’s clear and unambiguous

language revealed the Legislature’s intent that a [plan]

participant be reimbursed” at a statutorily prescribed rate

determined by reference to a “nationally recognized database of

prevailing health care charges.”     Here, because the Commissions

relied on a non-nationally recognized database as the basis for

the new rates, the adopted tiered scheme -- applied in Yucht’s

case -- imposed a rate of reimbursement for out-of-network

professional behavioral health services not permitted under the

statute.

                                B.

                                 5
    Importantly for the present appeal, after the afore-

described Appellate Division decision, the Commissions each

determined by resolution to reimburse plan members -- those who

did not receive proper reimbursement for incurred out-of-pocket

expenses -- at the appropriate rate, retroactive to May 2009.

    The minutes of the meeting of the SEHBC held on March 7,

2014 state as follows:

         [Philip] Yucht vs. SEHBC -- This Appellate
         Court decision concerned the payment of out-
         of-network    behavioral    health    claims.
         Commissioner Kelleher made a motion to apply
         the court decision back to the date of the
         change of the payment structure -- May 2009 -
         - and reimburse payment of behavioral health
         claims incurred since that date using the
         Reasonable and Customary allowance set forth
         in the national database of charges; and if
         the Deputy Attorney General believes it is
         necessary, to require that the member provide
         proof of loss.

The motion passed by a vote of four to three.

    The next week, the SHBC met on March 12, 2014, and the

minutes of that meeting reveal unanimous approval of the

following action:

         Philip Yucht vs. SEHBC:          [The Acting
         Secretary] advised the Commission that the
         draft resolution before the Commission would
         achieve the same result as the resolution that
         had been passed by the SEHBC.     Commissioner
         Burdge made a motion to approve the resolution
         as drafted -- Where a member provides proof of
         payment of coinsurance and amounts above the
         reasonable and customary charge, the Division
         of Pensions and Benefits and Horizon shall
         apply the Yucht decision retroactively and

                                6
         reimburse payment of behavioral health claims
         using the reasonable and customary allowance
         set forth in the national database of charges
         to claims incurred on or after January 1,
         2009.

    The Commissions attempted to notify members of the

reimbursement opportunity in two ways.   The Commissions placed a

link (the link) on the website of the Division of Pensions and

Benefits (the Division), which was labeled with a notice that

stated simply, “Behavioral Health Services Claim Reconsideration

-- for SHBP and SEHBP members.”   The Commissions also sent a

letter, dated July 22, 2014 (the letter), to certifying

officers, human resources directors, and benefits administrators

for public employers participating in the SHBP and SEHBP.      The

subject of the letter stated “Behavioral Health Claim

Reimbursements Reconsidered.”

    In pertinent part, the letter advised the officers to whom

it was directed that the Commissions “have directed [Horizon] to

reconsider certain out-of-network claims for professional

behavioral health services, reimbursed between May 4, 2009 and

March 23, 2014.”   It stated, under the heading of “FILING A

CLAIM RECONSIDERATION,” that members

         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.     Employees
         that want to pursue adjustments of these
         claims must provide proof that they paid the

                                  7
         difference     between     Horizon     BCBSNJ
         reimbursement and the provider’s full charge.

The letter instructed that plan members should complete a

specific form to request adjustment and submit it with

supporting documents to Horizon no later than December 31, 2014.

It also stated that requests received after that date would not

be considered.   A copy of the form was enclosed with the letter

and the officers were informed that the form also was available

on the Division’s website.

    The second page of the letter, under the heading “EMPLOYER

RESPONSIBILITIES,” stated:

         Please make this 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.

It is undisputed in the record before us that the Commissions

themselves did not send any form of individualized notice to

potentially affected members.

                                C.

    In December 2014, the Communication Workers of America,

AFL-CIO and the Clinical Social Work Guild 49 (the Unions)

petitioned the Commissions to extend the deadline for the

submission of requests for reimbursement.   The Unions asserted

that the notice provided was neither adequate nor meaningful and

that the Commissions should either send individualized notice to

                                 8
all potentially affected members or, if a list of those members

was not readily available, send notice to all SHBP and SEHBP

members.

    Subsequently, the SEHBC asked Horizon for information

concerning the total amount of supplemental reimbursements made.

After a review, the Commissions informed the Unions that they

estimated that, including both SHBP and SEHBP members, there

were approximately 1.4 million out-of-network behavioral health

visits under the tiered reimbursement plan.    That number was

exclusive of services provided by a medical doctor, which did

not qualify for further reimbursement.   Combined, the

Commissions received 857 claims for reimbursement

reconsideration, of which 481 were denied for lack of proof.

All told, the Commissions reimbursed roughly $350,000.    Claims

received after the deadline were all denied.

    By letter dated June 9, 2015, the Commissions informed the

Unions that their petition was denied and the deadline for

submission of requests for reimbursement was not extended.

    The Unions appealed the Commissions’ final action to the

Appellate Division.   See R. 2:2-3(a)(2).   The Unions challenged

the adequacy of both the form and substance of the notice

provided by the Commissions concerning the opportunity for

reimbursement.   The Unions added, in their argument to the

Appellate Division, that all members who were subjected to the

                                 9
inappropriate out-of-network reimbursement schedule should

receive automatic supplemental reimbursement without having to

provide proof of reimbursement at the wrongful amount.

    During the appeal’s pendency, the Unions’ counsel submitted

a request to the Division under the Open Public Records Act

(OPRA), 
N.J.S.A. 47:1A-1 to -13.      The OPRA request sought copies

of all notices provided to retirees informing them of the

ability to file a claim for additional reimbursement, as well as

copies of all notices from certifying officers to employees

notifying them of the ability to file a claim for additional

reimbursement.   The Commissions responded by providing the web

address containing the aforementioned link on the Division’s

website as well as a web address containing the aforementioned

letter to certifying officers.

    In an unpublished opinion, the Appellate Division affirmed

the Commissions’ refusal to extend the deadline and provide

further notice to affected members.      In reaching its conclusion,

the panel applied a highly deferential standard of review.

    Concerning notice, the panel found that the Commissions had

provided two forms:   the link on the Division’s website and the

letter to certifying officers and like officials “directing them

to make the reimbursement protocol available to employees.”

Although acknowledging that those communications were “perhaps

not the most effective form of notice,” the appellate panel

                                 10
nevertheless could not “conclude that the notification procedure

implemented . . . was not reasonably calculated to advise

eligible members of their right to seek supplemental

reimbursement.”   Thus, the panel held that the Commissions’

notice was adequate both in form and substance.   Concerning the

Unions’ additional appellate argument that the Commissions

should simply provide automatic supplemental reimbursement, the

panel refused to consider the issue because it was not raised

before the Commissions.

    We granted the Unions’ petition for certification to

consider whether the Commissions’ method of implementing

reimbursement for the involved out-of-network charges “provided

adequate notice to potentially affected members.”   
231 N.J. 414

(2017).   We also granted amicus curiae status to the New Jersey

Education Association (the NJEA).

                                II.

                                A.

    The Unions argue that the Commissions failed to give

adequate notice of their determination to provide affected plan

members with supplemental reimbursement for wrongly reimbursed

out-of-network behavioral health professional services.     They

contend that the methods of providing notice were not reasonable

for the purpose to be achieved; rather, they contend that the

notice had to be reasonably calculated to reach potentially

                                11
affected members.   The Unions assert that, here, the Commissions

used means of notice not reasonably likely -- if not actually

unlikely -- to reach members, as evidenced by the fact that less

than one-tenth of one percent of visits were accounted for in

the number of claims filed as requests for reimbursement.

    The Unions argue that the Division’s website link provided

notice of the potential for such supplemental reimbursement only

if a number of things coalesced.     A plan member would have to

(1) find the link on the website, (2) decide from the cryptic

description that the link potentially applied to him or her, and

(3) proceed through a series of “clicks” to arrive at the

reimbursement form with its instructions, from which the plan

member would have to (4) decipher what the “reimbursement

reconsideration” means and requires.    According to the Unions,

that form of notice was simply unclear and ineffective.

    Likewise, in respect of the letter, the Unions argue that

the Commissions provided no evidence that certifying officers,

or any like official, actually notified plan members in

accordance with the letter.   According to the Unions, the

letter’s terms end with a request, as opposed to any mandatory

language, and therefore lack clarity concerning the imperative

of reaching plan members.   Further, there are categories of

members who may have been affected by the wrongfully calculated

reimbursement rates who are not addressed at all in the letter

                                12
directed to participating employers.    For example, the Unions

emphasize that the Commissions have provided no evidence of

notice to retirees who may have been affected by the

inappropriately tiered reimbursement rates.

    Finally, the Unions also contend that the hurdles for

reimbursement are unreasonable.    They point to the difficulty of

expecting members to remember, with specificity, the exact dates

of services received nine years ago.   They assert that it is

unreasonable to require members to provide information that the

Commissions, or Horizon, may already have concerning out-of-

network professional services and to require proof of members’

payments when, they contend, that is not required for other

reimbursements.

                                  B.

    Relying on their Appellate Division brief, the Commissions

primarily argue that notice was adequate because, aside from

providing a notification and link on the Division’s website, the

Commissions also sent a letter to participating employers’

certifying officers directing that they share information about

the supplemental reimbursement with plan members at their

location.   The Commissions argue that they were entitled to rely

on 
N.J.S.A. 52:14-17.43 and N.J.A.C. 17:9-1.9 in assuming that

their responsibility for notice was discharged by shifting that

obligation, through the letter, to certifying officers.

                                  13
    Moreover, the Commissions assert that they have a duty to

administer the SHBP and SEHBP efficiently and that

individualized notice would be too burdensome.

    Finally, the Commissions argue that the Unions’ reliance on

the number of claims for reimbursement as proof of the chosen

forms’ inadequacy for providing notice is misplaced.     They

contend that there is not a one-to-one ratio of claims for

reimbursement to visits adjusted.     Each claim for supplemental

reimbursement involves payment for at least one, or more than

one, visit.   Thus, they contend that the number of actual visits

whose rate of reimbursement may have been adjusted is likely

higher than is reflected in the record.

                                C.

    Amicus curiae the NJEA generally supports the arguments

advanced by the Unions in this appeal.     In addition, the NJEA

advances arguments peripheral to those advanced by the Unions,

including application of the “turn square corners,” “fundamental

fairness,” and “fairness and rightness” doctrines; application

of a de novo review standard based on an argument for no

deference to the agency action in these circumstances; and

application of a due process analysis.

                               III.

    Our Court Rules codify the principle that final

administrative agency action is subject to appellate review.

                                
14 See R. 2:2-3(a)(2).   In such appeals, a deferential standard of

review applies.   Henry v. Rahway State Prison, 
81 N.J. 571, 579-

80 (1980).   Agency action will not be overturned unless the

action is arbitrary, capricious, or unreasonable.   Barrick v.

State, 
218 N.J. 247, 259 (2014) (applying standard in challenge

by unsuccessful bidder to administrative award of contract for

lease of office space); N.J. SPCA v. Dep’t of Agric., 
196 N.J.
 366, 384-85 (2008) (applying standard in challenge to agency

rulemaking); In re Herrmann, 
192 N.J. 19, 27-28 (2007) (applying

standard in quasi-judicial setting).

    The arbitrary, capricious, and unreasonable standard is

generally understood to involve inquiry into whether the

decision conforms with relevant law, whether there is

substantial credible evidence in the record as a whole to

support the agency’s decision, and whether in applying the

relevant law to the facts, the agency clearly erred in reaching

its conclusion.   In re Carter, 
191 N.J. 474, 482-83 (2007)

(relying on Mazza v. Bd. of Trs., 
143 N.J. 22, 25 (1995)).

Ordinarily for quasi-judicial or rule-making final agency

action, there is a substantial body of material comprising the

record.   In appeals from final agency action outside of such

settings, there similarly must be a sufficiently developed

record to permit a reviewing court to engage in meaningful

review.   See In re Issuance of Permit by DEP, 
120 N.J. 164, 173

                                15
(1990) (relying on State v. Atley, 
157 N.J. Super. 157, 163

(App. Div. 1978)) (noting necessity of agency fact-finding to

facilitate appellate review).   When the challenged agency action

arises in a setting where the record is too meager to permit

meaningful review, supplementation of the record may be

necessary.   The Court Rules provide that a reviewing court may

remand, on its own motion, for supplementation of the record in

order to permit meaningful review.    R. 2:5-5(b).

    In this instance, we consider whether the record presented

here permits meaningful review and is therefore sufficient to

give the agency’s challenged final action the deference accorded

to it by the Appellate Division.     We conclude that it does not

and therefore are compelled to order a remand to the Commissions

in order for a hearing to be conducted.

                                IV.

                                A.

    No doubt, the Commissions acted with a sense of justice and

rightness when, after the unpublished Appellate Division

decision involving a single SEHBC member issued, they determined

to provide potentially affected SHBP and SEHBP members with the

opportunity to make claims for supplemental reimbursement at the

proper amount.

    That Appellate Division decision informed the Commissions

that the dictates of 
N.J.S.A. 52:14-17.46.7 had not been

                                16
followed in the adjustment to the rates of reimbursement for

members’ out-of-network behavioral health services.   That

rendered the adjusted rates, as applied to Yucht’s case,

inconsistent with the statute.   Although the decision in Yucht’s

case did not speak in terms of retroactivity, the Commissions’

resolutions established that the agencies would apply the

decision retroactively to members seeking to obtain the

reimbursement at the rate they should have received for out-of-

pocket expenses.   That administrative action by the Commissions

avoided the potential for future applications by other affected

individuals seeking to have the decision applied retroactively.

    However, having determined to take the corrective action to

bring their reimbursement rates for out-of-network charges

incurred by plan members in line with the statute that the

Commissions were charged to implement, the agency had to provide

the benefit of that corrective action in a reasonable and non-

arbitrary or capricious manner to those affected.   See In re

Carter, 
191 N.J. at 482-83.   Indeed, whenever an administrative

agency acts, be that act mandatory or strictly voluntary, it

must do so reasonably and in a manner calculated to achieve the

policies expressed in the agency’s organic statute.   See 37

Steven L. Lefelt et al., N.J. Practice:   Administrative Law &

Practice § 7.17 (2d ed. 2000) (“When an agency has exercised its

discretion unreasonably, a court will invalidate the action.”).

                                 17
Therefore, because the Commissions determined to reimburse

affected members, they were necessarily required to do so

reasonably and in a non-arbitrary manner.     See ibid.   Here, that

means that the Commissions were required to provide reasonable

notice in order that the retroactive benefit would fairly be

made known and, thus, made available in a non-arbitrary manner

to affected members.   See In re Pub. Hearings on Amended

Determination of Commuter Operating Agency for Fiscal Year 1975-

1976, 
142 N.J. Super. 136, 161 (App. Div. 1976) (ordering

Commuter Operating Agency to reimburse railway commuters for

overcharge resulting from procedurally defective fare raise and

further ordering Agency to provide notice of right to request

reimbursement and procedure for doing so).

    As with most agency action, there is room for debate over

what is reasonable.    To be reasonable, an agency’s choice of

action for providing notice does not require adoption of a

perfect practice.   But, like the means an agency chooses for

purposes of meeting a public need contemplated by a statute the

agency is charged with implementing, the means of notice in

fulfillment of that statutory policy similarly must be designed

to reasonably achieve its intended purpose.    Cf. N.J. Chapter,

Am. Inst. of Planners v. Bd. of Prof’l Planners, 
48 N.J. 581,

600 (1967) (noting that regulatory actions must be “reasonably

calculated to satisfy the [felt public] need”).     Here, the

                                 18
intended purpose of the action challenged -- the Commissions’

attempted notice -- was to reach persons who might have been

affected by the wrongfully calculated reimbursement rate, to

notify those persons of the availability of supplemental

reimbursement, and to inform them of the procedures for

requesting supplemental reimbursement.

    From a pure reasonableness perspective, the Unions’

preference for individualized notice by Horizon would

undoubtedly constitute a best practice under these

circumstances; but, that is not the standard by which the

Commissions’ action must be measured.    In this circumstance, we

review the agency’s action for reasonableness but must also

allow room for agency discretion in determining how to proceed

with the implementation of statutory policy now that the former

tiered reimbursement scheme has been found lacking and the

agency has undertaken corrective action to provide a remedy to a

broader group of affected individuals.

    The problem we find in this dispute over the adequacy of

notice is that the evidence thus far produced has the capacity

to support the claim that the methods of notice -- the letter

and website link -- were not reasonably designed to likely reach

the categories of members who may have been affected by the

erroneous reimbursement rates.   The Unions have advanced some

evidence on which there could be based a finding that the notice

                                 19
was not reasonably designed to give notice to the proper

universe of individuals affected.      The Unions’ presentation is

premised on problems with the website’s notice and the letter,

as well as inferences from what is known about the small number

of claims filed as compared to the universe of member claims

that might have been affected by impermissibly reduced

reimbursement rates.    Against that presentation, based on the

present record, we cannot conclude that either the website’s

ten-word, cryptically described notice and link or the letter to

the certifying officers provides sufficient evidence to support

deferring to the agency’s choice of notice as reasonable.

    Concerning the website, assuming that it is scanned by

current and former plan members in a timely fashion to respond

to its substance, the notice’s wording is brief, technical, and

lacking in detail about the essence of this reimbursement

“reconsideration.”     The notice’s wording and accompanying

reference to a link does not appear, on its face, reasonably

calculated to give a member notice that the out-of-pocket

expense for out-of-network professional services for behavioral

health counseling needs might have been underpaid, and that

there is a process for providing evidence in order to obtain an

adjusted reimbursement.

    With regard to the letter sent to certifying officers, it

too standing alone does not suffice to persuade, on this record,

                                  20
that the Commissions’ attempted notice was reasonably calculated

to provide actual notice to potentially affected members,

including former employees and retirees.   There is too much that

is unknown.

    There is no evidence demonstrating whether or how

certifying officers complied with the letter’s request.     The

record is silent on whether certifying officers sent any notice

to individuals, and if so, how it was accomplished.   Indeed, the

letter’s closing direction to the certifying officers is notably

soft in its command, unlike the earlier wording in the letter

describing the Commissions’ action in ordering the retroactive

reimbursement.   The closing language of the letter is framed as

a request, and then only asks that the newly opened avenue for

reimbursement reconsideration be made available to members at

the certifying officers’ work locations.   Further, the reference

to the “work location” in no way suggests, let alone commands or

directs, that former employees or retirees be notified of the

availability of seeking reimbursement.

    We reject the Commissions’ reliance on N.J.S.A. 52:14–

17.43, defining the duties of a certifying officer of a

participating employer in the SHBP and SEHBP, as sufficient to

assume that notice was given by those officers.   Thus, without

knowing more, we cannot conclude that the Commissions acted

reasonably in choosing to direct notice in this fashion.    We do

                                21
not find that statute to confer such clarity of purpose in the

setting we find here.   N.J.S.A. 52:14–17.43 provides:

         The 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. The division shall have the
         power and authority to make such verification
         of the employment and other records of any
         participating employer as the division may
         deem necessary in connection with the program.

See also N.J.A.C. 17:9–1.9(b), (c) (describing duties of

certifying officer, which include “providing documentation

requested by the Commission or the Division in a timely manner”

and “be[ing] responsible for all other duties relating to

matters concerning the SHBP”).   Simply put, that statute and its

implementing regulation are insufficiently specific to be

understood to command the certifying officers to provide the

notice that would be reasonably calculated to reach the broad

group of individuals involved here.

    As noted, the letter’s command is subject to debate that is

best left to a fact-finding hearing.   With the thin record

available, we do not know what action, if any, certifying

officers generally took in response to the Commissions’ letter.

Nor, for that matter, does the record disclose what notice, if

any, former employees and retirees received of the potential for

supplemental reimbursement in light of the Commissions’ apparent

                                 22
reliance on the link posted to the Division’s website.     While we

do not foreclose the possibility that there may have been

electronic follow-up with employees, past and present, or hard

copy communication, as the Commissions suggest may have

happened, the record is silent on the subject.

    In sum, we cannot conclude that the website notice and link

are sufficient to have provided notice to either present

employees or former employees -- either retired or those who

simply moved on to other employment -- that they might be

entitled to enhanced reimbursement for previous member-incurred

expenses for out-of-network mental health, or “behavioral

health,” professional services.    And, we know little to nothing

about the effectiveness of the letter sent by the Commissions in

terms of it providing a basis for reasonable notice.

Accordingly, we order a remand for the development of a proper

record to permit meaningful judicial review.    In that remand

hearing, both the form and substance of the notice may be

examined.

                                  B.

    Ordinarily, the burden of proof is on a challenger to

demonstrate that an agency’s action is arbitrary, capricious, or

unreasonable.   See, e.g., Lavezzi v. State, 
219 N.J. 163, 171

(2014) (noting that in challenge to administrative action burden

is on challenger); Worthington v. Fauver, 
88 N.J. 183, 208

                                  23
(1982) (same).   The burden of proof is often said to be composed

of two elements:   (1) the burden of moving forward with some

evidence sufficient to establish a prima facie case; and (2) the

burden of persuading the trier of fact.   McCann v. George W.

Newman Irrevocable Tr., 
458 F.3d 281, 287 (3d Cir. 2006); 9

Wigmore on Evidence § 2487(a), (b), (c) (Chadbourn rev. 1981)

(discussing placement of burdens of moving forward and

persuasion and differences between them).

    Traditionally, when a party bearing the ultimate burden of

proof submits to a trier of fact a sufficient quantum of

evidence to make out a prima facie case, that party is

considered to have satisfied the burden of moving forward with

evidence, which burden then shifts to the other party, requiring

that party to produce some evidence in rebuttal.    See, e.g.,

Ryan v. Mayor & Council of Demarest, 
64 N.J. 593, 604-05 (1974)

(holding, in challenge to Borough’s refusal to consent to

deannexation, that plaintiff’s bringing forward of sufficient

evidence to make out claim shifted burden of production to

defendant); accord 2 McCormick on Evidence § 338 (Broun ed., 7th

ed. 2013) (noting that where plaintiff presented prima facie

case, “it is frequently said that . . . the duty of going

forward has shifted to the adversary, and this is

unobjectionable if we bear in mind that the penalty for silence

is very different here from that which was applied to the

                                24
original proponent” (footnotes omitted)).     The burden shift

results in an efficient presentation of relevant proofs and

logical analysis of the parties’ positions.

    For similar efficiency motivations, we also have not shied

away from shifting the burden of moving forward to the non-

challenging party in circumstances where, because of some

disparity in access to evidence and information, fairness and a

need for a record encompassing all relevant information dictated

that such shifting was necessary to reach a correct result.      See

J.E. ex rel. G.E. v. State, 
131 N.J. 552, 570 (1993) (shifting

burden to Division of Developmental Disabilities to prove that

its transfer of developmentally disabled child was appropriate

because agency kept extensive records and had unique expertise

in area and access to information that challengers lacked).      “We

generally have imposed the burdens of persuasion and production

on the party best able to satisfy those burdens.”    Id. at 569.

    Those two considerations impel us to direct that the

parties bear the following burdens in the remand to take place

following issuance of this decision.

    Because the Unions have come forward with some evidence to

support questioning the reasonableness of the notice, we regard

the burden of moving forward with the evidence to have shifted

to the Commissions to respond.   That this matter comes before us

as a challenge to final agency action and not in the context of,

                                 25
for example, a civil damages suit does not alter the

applicability of traditional burden shifting.   As discussed, the

Unions bore the burden of bringing forward some evidence on

which it can be reasonably found that the Commissions’ attempted

notice to affected SHBP and SEHBP members was inadequate.

Although the record before us does not permit us to determine

whether notice was adequate as a matter of ultimate fact, it

nevertheless permits us to find that the Unions have brought

forth sufficient evidence of inadequacy to require the

Commissions to respond with evidence to the contrary.

Therefore, the Commissions shall be required on remand to

respond with evidence of efforts made by certifying officers, or

others with responsibility to provide notice, on behalf of

participating employers to publish the required notice to

members.

    In imposing that evidential obligation in these unusual

circumstances, we note that the Commissions are in a superior

position to produce the necessary information for creation of a

meaningful record on which to determine whether the notice given

here was reasonably calculated to inform potentially affected

members of the availability of supplemental reimbursement.     We

emphasize that the record need not plumb the efforts of each and

every certifying officer to share the substance of the letter

with members.   For example, reliance on customary practices

                                26
employed by the individuals in public positions at the time, and

whether customary practice was being followed, has been used

reliably in the creation of administrative records in other

settings.    See SSI Med. Servs., Inc. v. Dep’t of Human Servs.,


146 N.J. 614, 622-23 (1996) (discussing use of custom and

practice in administrative agency’s mailing of reimbursement

forms).    No doubt, the Commissions have various means at their

disposal to use in order to paint a picture of employer

responsiveness through their letter to certifying officers since

that is, in part, what the Commissions rely upon.

    Finally, although the burden of moving forward has shifted

to the Commissions for the remand proceeding, the ultimate

burden of persuasion remains squarely and solely on the Unions’

shoulders.   See Worthington, 
88 N.J. at 208 (noting in challenge

to Executive-branch acts that burden of persuasion rests on

attacking party).    Because the Unions brought this challenge, it

is for the Unions on remand to bear the burden of persuasion and

demonstrate that the notice, as implemented, was not adequate

for its purpose and hence was an unreasonable exercise of the

Commissions’ discretionary authority.

                                 V.

    The judgment of the Appellate Division is reversed and the

matter remanded for further proceedings consistent with this

opinion.

                                 27
     CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON,
FERNANDEZ-VINA, SOLOMON, AND TIMPONE join in JUSTICE LaVECCHIA’s
opinion.




                               28