Irvin B. Beaver v. Magellan Health Services, Inc.

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1311-12T3

IRVIN B. BEAVER,

Plaintiff-Appellant, APPROVED FOR PUBLICATION

v. December 11, 2013

APPELLATE DIVISION
MAGELLAN HEALTH SERVICES,
INC., MAGELLAN BEHAVIORAL
HEALTH, INC., and HORIZON
BLUE CROSS BLUE SHIELD OF
NEW JERSEY,

Defendants-Respondents.
_______________________________

Argued October 21, 2013 – Decided December 11, 2013

Before Judges Parrillo, Kennedy and
Guadagno.

On appeal from Superior Court of New Jersey,
Law Division, Middlesex County, Docket No.
L-3465-12.

Justin Lee Klein argued the cause for the
appellant (Wilentz Goldman & Spitzer, and
Hobbie, Corrigan & Bertucio, attorneys;
Angelo J. Cifaldi and Jacqueline DeCarlo, of
counsel and on the brief; Mr. Klein, on the
brief).

Thomas F. Quinn argued the cause for
respondents (Wilson, Elser, Moskowitz,
Edelman & Dicker, LLP, attorneys; Mr. Quinn
and Joanna Piorek, on the brief).
 The opinion of the court was delivered by

KENNEDY, J.A.D.

Under what circumstances may a litigant pursue common law

and statutory causes of action in the Law Division, rather than

appeal from State final agency determination, where the merits

of the agency determination are at issue? This is the question

we address in deciding this appeal.

Plaintiff appeals from an October 12, 2012 order of the Law

Division dismissing his complaint against defendants Magellan

Health Services, Inc., Magellan Behavioral, Inc., and Horizon

Blue Cross/Blue Shield of New Jersey ("defendants" when

referenced collectively, "Magellan" or "Horizon" when referenced

individually). Plaintiff argues, among other things, that the

motion judge erred in applying the standards governing a motion

to dismiss under Rule 4:6-2, and in determining that the Law

Division lacked subject matter jurisdiction over the matter.

We have considered plaintiff's arguments in light of the

record and applicable law. For reasons stated hereinafter, we

affirm.

I.

We derive the facts from the record developed in the Law

Division and the administrative proceedings which preceded the

filing of plaintiff's complaint in the Law Division.

2 A-1311-12T3
 Plaintiff is a former public employee and received health

insurance coverage for himself and his family through the NJ

Plus and, later, the NJ Direct health benefits programs, which

at all times relevant to this matter were administered by

Horizon on behalf of the State Health Benefits Program

(Program). The Program, and its governing body, the State

Health Benefits Commission (SHBC), were established by the New

Jersey Health Benefits Program Act (the Act), N.J.S.A. 52:14-

17.24 to -45. The purpose of the Program is "to provide

comprehensive health benefits for eligible public employees and

their families . . . . It establishes a plan for state funding

and private administration of a health benefits program[.]"

Heaton v. State Health Benefits Comm'n, 264 N.J. Super. 141, 151

(App. Div. 1993). "The SHBC contracts with health insurers to

provide various benefits plans to program participants." Green

v. State Health Benefits Comm'n, 373 N.J. Super. 408, 413 (App.

Div. 2004)(citing N.J.S.A. 52:14-17.28). "The State Health

Benefits Program is, in effect, the State of New Jersey acting

as a self-insurer." Burley v. Prudential Ins. Co. of Am., 251

N.J. Super. 493, 495 (App. Div. 1991). In essence, the State

pays the benefits and Horizon administers the claims.

Although the State contracts with health insurers to

administer various benefit plans for program participants, the

3 A-1311-12T3
SHBC alone has the authority and responsibility to make payments

on claims and to limit or exclude benefits. N.J.S.A. 52:14-

17.29(B). Additionally, the SHBC has final authority to

adjudicate disputes between plan members and State-contracted

claims administrators, and may refer such disputes to the Office

of Administrative Law (OAL) for an evidentiary hearing. Green,

supra, 373 N.J. Super. at 414; Burley, supra, 251 N.J. Super. at

500.

Horizon hired Magellan to manage mental health and

substance abuse benefits for eligible NJ Plus members. Magellan

would conduct "utilization management reviews" of claims

submitted by members, and would decide if the treatment was

medically needed, and, if so, the level and length of treatment.

As noted, however, the SHBC itself had the final authority and

responsibility to adjudicate any claim disputes.

On February 10, 2008, plaintiff's son, a minor, was

admitted for inpatient, residential care at the Caron

Foundation, a residential treatment facility for substance

abuse. Initially, Caron prescribed thirty-one days of inpatient

care, but later revised its recommendation to include an

additional ninety days of inpatient, residential treatment.

Plaintiff submitted a claim for coverage and on February

26, 2008, Magellan advised that it would not authorize

4 A-1311-12T3
residential substance abuse treatment "as of" February 25,

because plaintiff's son "no longer shows evidence" that he needs

residential treatment. Plaintiff challenged the denial and

Magellan undertook a "Level 1 appeal review." On February 28,

Magellan advised that its prior denial was proper, and cited a

telephone conversation between one of the son's doctors at Caron

and its own physician advisor in which the son's doctor

allegedly agreed that outpatient care was the appropriate level

of treatment.

Plaintiff shortly learned that Magellan's physician advisor

had, in fact, not spoken to the particular Caron physician

identified in Magellan's notification of February 28, but to

another of the son's doctors who alleged he never stated that

the son required only outpatient treatment. Accordingly,

plaintiff sought further review, and on March 11, 2008,

presented a "second level appeal" for coverage to Horizon's

Member Appeals Subcommittee.

On March 14, Horizon overturned the denial of coverage for

residential treatment for the period of February 26 to March 4,

but denied coverage after that date, finding that plaintiff's

son "did not show any evidence" of needing residential treatment

thereafter. Plaintiff next appealed to the SHBC, which, by

5 A-1311-12T3
letter dated February 17, 2009, upheld the denial of benefits

after March 4, 2008. The letter stated, in part:

The denial is based on your presentation at
the meeting as well as the documents you
provided during and prior to the meeting.
Magellan's medical director gave a
background summary of the appeal and
indicated that he reviewed the additional
medical notes received from the Caron
Foundation. He indicated that [your son]
did not meet the ASAM [American Society of
Addiction Medicine] criteria after March 5,
2008 for inpatient residential treatment.

Your written request for appeal of the
initial administrative decision must specify
the exact reason or reasons that you are
using as the basis for the request. It must
also include any evidence or material that
can be used to support your basis of appeal.

The Commission will decide whether to grant
your request for a hearing in the Office of
Administrative Law upon receipt of your
request and the supporting documentation.

The letter also advised that if the appeal were forwarded to the

OAL, an administrative law judge (ALJ) would consider evidence

presented and render a decision, which the SHBC could accept,

modify or reject. The SHBC would then issue a final

administrative decision "which may then be appealed to the

Superior Court of New Jersey, Appellate Division."

Plaintiff elected to pursue a further appeal and the matter

was transferred to the OAL, where an evidentiary hearing was

held. On October 11, 2011, the ALJ issued her initial decision

6 A-1311-12T3
recommending denial of plaintiff's appeal. She explained, in

part, as follows:

Under the NJ Plus plan in place at the
time of the claim at issue in this matter,
Horizon contracted with Magellan to manage
its mental health and substance abuse
treatment claims. Initially, [plaintiff]
takes issue with Magellan's role in managing
these claims, in general and specifically as
to his son's treatment. While Magellan's
actions are under review here as to his
son's claim, the issue of Magellan's
"gatekeeper" role for the state plan is
beyond the scope of this matter. At issue
in this matter is whether respondent SHBC
properly determined that the criteria for
medical necessity to continue inpatient
treatment at Caron for [the son] was no
longer met. [Plaintiff] has the burden of
proof in this matter and must prove his case
by a preponderance of the credible evidence.
Atkinson v. Parsekian, 37 N.J. 143 (1962).

A review of the record in this matter
shows that [plaintiff] has failed to meet
that burden of proof. Although he has
raised substantive issues regarding the
manner in which Magellan handled this claim,
he did not submit a sufficient quantum of
evidence to prove by a preponderance of the
credible evidence that the SHBC erred in its
decision.

[Plaintiff] did show that Magellan was
incorrect when it cited [the son's] treating
physician as the Caron staff member with
whom it initially discussed his treatment.
The record also supports his contention that
Magellan's records were further incorrect in
citing Caron staff as supporting his
transfer to intensive outpatient treatment.
Given the seriousness of the treatment at
issue, it is of concern that Magellan denied
further inpatient treatment on the basis of

7 A-1311-12T3
 faulty information in its records. That
initial denial however was corrected during
the first and second level appeal process
and residential treatment was approved
through March 4, 2008. The issue therefore
is whether [plaintiff] has proven that the
SHBC erred in its decision that the
residential level of treatment was not
medically necessary after that time.

In support of his contention that
continued residential treatment was
necessary, [plaintiff] presented treatment
notes from Magellan's records and
correspondence from Caron staff directors.
The correspondence from the treating staff
at Caron supports continued residential
treatment, citing relevant ASAM [American
Society of Addiction Medicine] criteria.
Balanced against that however, is the expert
medical testimony and report of Dr.
O'Donnell presented on behalf of respondent.
His testimony also addressed the relevant
criteria for medical necessity, reaching a
different conclusion than that of the Caron
doctors. Dr. O'Donnell's interpretation of
the ASAM criteria was more conservative than
that of the Caron physicians as set forth in
their correspondence. In weighing the
evidence, however, greater weight is on the
side of respondent. While the Caron
physicians were the treating doctors, only
their correspondence was presented in
evidence. [Plaintiff] presented neither
their curriculum vitae nor their testimony
in support of his case. As such neither
their credentials nor their testimony was
subject to the scrutiny and cross
examination undergone by Dr. O'Donnell.

As [plaintiff] has not met his burden
of proof, his appeal is denied.

On November 14, 2011, the SHBC adopted the ALJ's findings and

conclusions.

8 A-1311-12T3
 On December 28, 2011, plaintiff filed a notice of appeal

from the SHBC's final decision. Plaintiff later voluntarily

withdrew his appeal and the appeal was dismissed on May 18,

2012.

On May 14, 2012, plaintiff filed a complaint in the Law

Division seeking "relief for [d]efendants' denial of substance

abuse treatment as a violation of plaintiff's health plan" and

named only Horizon and Magellan as defendants. The complaint

recited the history of plaintiff's efforts to secure coverage

for his son's inpatient, residential substance abuse treatment

and asserted four causes of action: (1) breach of contract; (2)

breach of fiduciary duty; (3) violation of the New Jersey

Consumer Fraud Act, N.J.S.A. 56:8-1 to —184 (CFA); and (4)

unjust enrichment.

In support of the first count alleging breach of contract,

plaintiff asserted that "under the terms of defendants' contract

with [] plaintiff, defendants are required to provide coverage

for all inpatient treatment for mental health and substance

abuse disorders" and breached that contract by their denial of

coverage for inpatient treatment. In the second count,

plaintiff asserted that defendants violated the duty of care

they owed as fiduciaries by "setting limitations on payments and

denying or reducing coverage" for substance abuse treatment.

9 A-1311-12T3
 The third count alleged that defendants'

"wrongful decision to deny payment for" the continued inpatient

treatment for plaintiff's son constituted an unconscionable

commercial practice under the CFA. The last count stated that

defendants have been "unjustly enriched" through their use of

funds that should have been used to pay for the inpatient

treatment of plaintiff's son.

Defendants moved to dismiss plaintiff's complaint under

Rule 4:6-2(a) (lack of jurisdiction) and Rule 4:6-2(e) (failure

to state a claim). In a lengthy opinion from the bench

delivered on October 12, 2012, the motion judge considered the

history of plaintiff's claim as recited in the pleadings, and

held that "plaintiff should have instituted this action in the

Appellate Division" and that a transfer of the matter to the

Appellate Division under Rule 1:13-4(a) at that point was time-

barred.

The motion judge then entered an order of dismissal and

this appeal followed.

II.

Plaintiff argues that his complaint does not constitute

"one of the 'rare instances' in which a complaint should be

dismissed as a matter of law, prior to the exchange of any

discovery." Further, he asserts that his complaint does not

10 A-1311-12T3
challenge the SHBC's final administrative action, but rather is

a separate action at law alleging statutory and common law

causes of action against Magellan and Horizon. Plaintiff relies

upon Rinaldo v. RLR Inv., LLC, 387 N.J. Super. 387 (App. Div.

2006), and Burley, supra, 251 N.J. Super. 493, in support of the

latter argument.

Initially, we observe that despite the reference to Rule

4:6-2(e) in defendants' brief in the Law Division, the motion

judge held that the case must be dismissed on jurisdictional

grounds, thereby embracing defendants' arguments under Rule 4:6-

2(a). "Whether subject matter jurisdiction exists presents a

purely legal issue . . . which we review de novo." Santiago v.

N.Y. & N.J. Port Auth., 429 N.J. Super. 150, 156 (App. Div.

2012), certif. denied, 214 N.J. 175 (2013); see Manalapan

Realty, L.P. v. Twp. of Manalapan, 140 N.J. 366, 378 (1995).

Accordingly, the issue before us is not whether the four causes

of action alleged in plaintiff's complaint are sufficiently pled

under Rule 4:6-2(e), but rather whether plaintiff can assert

those causes of action in the Law Division under the

circumstances presented. As noted, this is an issue of law

which we review de novo.

Pursuant to the Act, the SHBC "shall establish a health

benefits program for the employees of the State," together with

11 A-1311-12T3
the "rules and regulations as may be deemed reasonable and

necessary for the administration of" the program. N.J.S.A.

52:14-17.27. Pursuant to the enabling legislation's grant, the

SHBC adopted a comprehensive regulatory appeals process:

(a) Any member of the [Plan] who disagrees
with the decision of the claims
administrator and has exhausted all appeals
within the plan, may request that the matter
be considered by the Commission. . . . It
shall be the responsibility of the member to
provide the Commission with any medical or
other information that the Commission may
require in order to make a decision.

(b) . . . .

(c) Notification of all Commission decisions
will be made in writing to the member and
the following statement shall be
incorporated in every written notice setting
forth the Commission's determination in a
matter where such determination is contrary
to the claim made by the claimant or his or
her legal representative:

"If you disagree with the
determination of the Commission in
this matter, you may appeal by
sending a written statement to the
Commission within 45 days from the
date of this letter informing the
Commission of your disagreement
and all of the reasons therefor.
If no such written statement is
received within the 45-day period,
this determination shall be
considered final."

(d) Any member who disagrees with the
Commission's decision and submits the
written statement as set forth in (c) above
within 45 calendar days shall be notified of

12 A-1311-12T3
 the disposition of the appeal in one of two
ways:

1. The Commission shall determine
whether to grant an administrative
hearing on the basis of whether
the matter involves contested facts
or is solely a question of law.
If the appeal involves solely a
question of law, the Commission
shall likely deny an administrative
hearing request. If the request
for an administrative hearing is
denied, the Commission shall issue
detailed findings of fact and
conclusions of law. These findings
and conclusions shall become the
Commission's final administrative
determination that may be appealed
to the Superior Court, Appellate
Division.

2. If the appeal involves disputed
facts, the Commission shall approve
an administrative hearing request
and transmit the matter to the
Office of Administrative Law. Upon
completion of this hearing, the
Administrative Law Judge will
submit to the Commission an initial
decision that the Commission may
adopt, reject or modify. If the
Commission rejects or modifies the
initial decision, it shall issue
detailed findings of fact and
conclusions of law that will become
the Commission's final administra-
tive determination that may then
be appealed to the Superior Court,
Appellate Division.

[N.J.A.C. 17:9-1.3.]

The language in Horizon's handbook tracks the regulatory

language adopted by the SHBC. Further, as already noted, we

13 A-1311-12T3
have consistently recognized the statutory and regulatory scheme

that requires disputes over eligibility and benefits to be

submitted first to the SHBC, and, only thereafter, to this court

for resolution. See Burley, supra, 251 N.J. Super. 493; Green,

supra, 373 N.J. Super. 408; Murray v. State Health Benefits

Comm'n., 337 N.J. Super. 435, 439-40 (App. Div. 2001)

(explaining the statutory and regulatory scheme).

Plaintiff contends he is not challenging the SHBC

determination in his present complaint, but rather is asserting

contract and tort claims against the Program administrators.

Plaintiff essentially argues that the SHBC final agency action

is irrelevant to his asserted causes of action. Defendants

argue that the language in plaintiff's complaint shows plainly

that, irrespective of the causes of action asserted, plaintiff

is simply seeking coverage for his son's inpatient substance

abuse treatment, and that a reversal of the SHBC determination

is essential to plaintiff's complaint. Our examination of the

causes of action set forth in plaintiff's complaint is therefore

pivotal to our determination of jurisdiction.

We begin with an examination of the authority cited by

plaintiff and thereafter we shall examine the language of the

complaint.

14 A-1311-12T3
 In Rinaldo, plaintiffs brought an action against a

neighboring landowner who had obtained a freshwater wetlands

permit from the Department of Environmental Protection (DEP) to

construct an access road over protected wetlands. Rinaldo,

supra, 387 N.J. Super. at 392-93. Plaintiffs had not received

notice of the permit application and brought an action to enjoin

the construction of the road and a corresponding "mitigation

project" required by the DEP. Ibid. Plaintiffs also sought

money damages for injury to their farm, and asserted claims

against the landowner and its contractors for negligence,

trespass, conversion and intentional interference with property

rights. Id. at 393-94.

On motion, the Chancery Division transferred the entire

case to the Appellate Division as, in effect, an appeal from a

final decision of the DEP. Id. at 394. We held that the

Chancery Division erred in concluding that plaintiffs' tort

claims against the landowner and other private parties should

have been transferred to the Appellate Division. Id. at 399-

400. We stated, in part,

Plaintiffs could have filed a notice of
appeal to this court from the DEP's wetlands
permit and mitigation project approvals and
filed a separate action in the Chancery
Division asserting their tort claims against
the private defendants. The fact that
plaintiffs elected to challenge state
administrative agency decisions and assert

15 A-1311-12T3
 tort claims against private parties in a
single complaint does not vest this court
with jurisdiction over claims that the Court
Rules allocate to the jurisdiction of the
Chancery or Law Division. See Maisonet v.
N.J. Dep't of Human Servs., 140 N.J. 214,
226-28 (1995).

[Id. at 400.]

We added that even if plaintiffs were unsuccessful in

challenging the DEP wetlands permit in the Appellate Division,

this would "not foreclose them from pursuing their tort claims

against the private defendants." Ibid.

In Burley, plaintiff, a State employee with health

insurance under the Program, brought suit in the Law Division

against Prudential, the State's claims administrator, for bad

faith in declining to pay the full amount sought by her

physician for a procedure he had performed, and in its refusal

to advise in advance of the "customary fee" it would approve for

her son's prescribed tonsillectomy. Burley, supra, 251 N.J.

Super. at 494-96. The suit was dismissed in the Law Division

based upon plaintiff's failure to exhaust her administrative

remedies. Id. at 494-95.

On appeal, we affirmed, but modified, the ruling in the Law

Division. We observed that

plaintiff must first seek recourse by
administrative appeal to the SHBC. Both
sound principles of administrative law and
the relevant contract provisions require the

16 A-1311-12T3
 plaintiff to seek administrative relief
before attempting to sue for damages. All
available and appropriate administrative
remedies generally should be fully explored
"before judicial action is sanctioned."
Abbott v. Burke, 100 N.J. 269, 296 (1985).
The "exhaustion" principle ensures that
claims will be heard as a preliminary matter
by a body with expertise, a factual record
may be created for appellate review, and
there is a chance that the agency decision
may satisfy the parties and keep them out of
court. Atlantic City v. Laezza, 80 N.J.
255, 265 (1979).

[Id. at 498.]

We transferred the matter to the SHBC for a hearing on the

merits of plaintiff's claim under the Program, and added that

"[o]ur action, is of course, without prejudice to any claim

plaintiff may wish to assert administratively or at law against

either Prudential or the SHBC." Id. at 500.

Here, by contrast, plaintiff has explicitly stated that his

complaint is brought to recover "unpaid benefits" under the

Program. Accordingly, to recover, plaintiff must necessarily

secure a reversal of the SHBC final agency action upholding the

denial of those same benefits. Plaintiff cannot avoid this

obvious conclusion by cloaking his claims under the mantle

of contract and tort.

The New Jersey Constitution of 1947 provides that "persons

aggrieved by action or inaction of state or local administrative

agencies could seek review . . . in the Superior Court '. . . on

17 A-1311-12T3
terms and in the manner provided by rules of the Supreme Court

. . . .'" Pascucci v. Vagott, 71 N.J. 40, 51-52 (1971) (quoting

N.J. Const. art. VI, § 5, ¶ 4). Pursuant to that authority, the

Court adopted Rules 2:2-3 and 2:2-4, with the intention that

"every proceeding to review the action or inaction of a state

administrative agency would be by appeal to the Appellate

Division." Cent. R.R. Co. v. Neeld, 26 N.J. 172, 185, cert.

denied, 357 U.S. 928, 78 S. Ct. 1373, 2 L. Ed. 2d 1371 (1958).

Specifically, Rule 2:2-3 states that "appeals may be taken to

the Appellate Division as of right . . . to review final

decisions or actions of any state administrative agency or

officer." R. 2:2-3(a)(2). So too, "the Appellate Division may

grant leave to appeal, in the interest of justice, . . . from an

interlocutory decision or action of a state administrative

agency or officer, if the final judgment, decision or action

thereof is appealable as of right pursuant to R. 2:2-3(a) . . . ."

R. 2:2-4.

To be sure, "some actions or inactions of State agencies

and officers do not constitute 'administrative' agency action or

inaction that is subject to review by the Appellate Division

under Rule 2:2-3(a)(2)." D.J. Miller & Assocs., Inc. v. State,

Dep't of Treasury, 356 N.J. Super. 187, 191 (App. Div. 2002).

One obvious example is tortious conduct that subjects a State

18 A-1311-12T3
agency or officer to liability under the Tort Claims Act (TCA),

N.J.S.A. 59:1-1 to 12-3. Ibid. Another example is an action

for breach of contract under the Contractual Liability Act

(CLA), N.J.S.A. 59:13-1 to -10, "which does not constitute State

administrative agency action within the intent of Rule 2:2-

3(a)(2) and thus jurisdiction over such a claim resides in the

appropriate trial court rather than the Appellate Division."

Id. at 192.

In a thinly disguised effort to fit within the Law

Division's jurisdiction and divest this court of ours, plaintiff

framed his claims as those alleging breach of contract, breach

of fiduciary duty, consumer fraud under the CFA, and unjust

enrichment. Ordinarily, if properly pled and substantively

based, these claims might be sufficient to vest the Law Division

with jurisdiction. However, our "exclusive jurisdiction does

not turn on the theory of the challenging party's claim or the

nature of the relief sought." Mutschler v. N.J. Dep't of Envtl.

Prot., 337 N.J. Super. 1, 8 (App. Div.) (citing Neeld, supra, 26

N.J. at 184-85), certif. denied, 168 N.J. 292 (2001)). Here,

stripped to their barest essentials, plaintiff's claims,

sounding in tort and contract, amount to no more than a

collateral challenge to the November 14, 2011 SHBC final agency

action upholding the limitation of coverage for plaintiff's

19 A-1311-12T3
health benefit claims. Indeed, absent an attack on that final

agency action, plaintiff's tort and contract claims are patently

without basis in fact or law.

As we stated in Mutschler:

The Appellate Division has been vested with
exclusive jurisdiction to review any action
or inaction of a state administrative
agency. Pascucci v. Vagott, 71 N.J. 40, 51-
54 (1976); Equitable Life Mortgage & Realty
Investors v. New Jersey Div. of Taxation,
151 N.J. Super. 232, 237-38, (App. Div.),
certif. denied, 75 N.J. 535 (1977). The
Appellate Division's exclusive jurisdiction
does not turn on the theory of the
challenging party's claim or the nature of
the relief sought. Central R.R. Co. v.
Neeld, 26 N.J. 172, 184-85, cert. denied,
357 U.S. 928, 78 S. Ct. 1373, 2 L. Ed. 2d
1371 (1958). Thus, this court's exclusive
jurisdiction extends to claims of state
agency inaction, Hospital Ctr. at Orange v.
Guhl, 331 N.J. Super. 322, 329-30 (App. Div.
2000), and to claims that are essentially
declaratory in nature. Equitable Life
Mortgage & Realty Investors v. New Jersey
Div. of Taxation, supra, 151 N.J. Super. at
238. It also extends to claims that are
joined with claims within the jurisdiction
of another court or division of this court.
Pascucci v. Vagott, supra, 71 N.J. at 52-54.

[Mutschler, supra, 337 N.J. Super. at 9].

Plaintiff's arguments which seek to avoid the application of

this well-recognized principle are unpersuasive.

In our view, neither Rinaldo nor Burley stand for the

proposition that, in circumstances like those before us,

plaintiff may pursue a private cause of action against the

20 A-1311-12T3
SHBC's claims administrators that is necessarily dependent upon

the merits of his challenge to the SHBC's final agency action

rejecting his claim for health care coverage. Notwithstanding

plaintiff's energetic arguments to the contrary, plaintiff's

complaint in the Law Division is squarely predicated upon the

contention that defendants "wrongfully den[ied]" coverage for

the health care claims advanced, and plaintiff in his complaint

explicitly averred that "[t]his is an action for unpaid benefits

and injunctive relief."1

In Rinaldo, for example, we explained that plaintiffs were

entitled to pursue their claims against the holder of the

wetlands permit and its contractors because the issuance of the

1
We observe that plaintiff's complaint may be subject to other
procedural and substantive infirmities. For example, plaintiff
asserts that defendants "breached their contract" with him, yet
it is clear that defendants were merely contractually bound to
the SHBC - not to plaintiff. Further, while the CFA
"encompass[es] the sale of insurance policies as goods and
services that are marketed to consumers," "the payment of
insurance benefits is not subject to the CFA." Lemelledo v.
Benefit Mgmt. Corp., 150 N.J. 255, 265 (1997) (citing Nikiper v.
Motor Club of Am., 232 N.J. Super. 393, 401 (App. Div.), certif.
denied, 117 N.J. 139 (1989)); Pierzga v. Ohio Cas. Grp. of Ins.
Cos., 208 N.J. Super. 40, 47 (App. Div.), certif. denied, 104
N.J. 399 (1986); see also In re Van Holt, 163 F.3d 161, 168 (3d
Cir. 1998)("The mere denial of insurance benefits to which
. . . plaintiffs believe[] they [are] entitled does not comprise
an unconscionable commercial practice."). Also, it is apparent
that plaintiff failed to allege a claim of breach of duty of
good faith with the required specificity. See R. 4:5-8(a).
However, because such issues were not presented to the motion
court, we do not address them here. Nieder v. Royal Indem. Ins.
Co., 62 N.J. 229, 234-35 (1973).

21 A-1311-12T3
wetlands permit did not insulate the permittee from liability

for damaging its neighbor's property in undertaking its work.

Rinaldo, supra, 387 N.J. Super. at 400. Here, by contrast,

plaintiff's claim is that he was damaged by the denial of

benefits – a claim fully adjudicated on the administrative

level, and for which plaintiff has abandoned his right to

appellate review.

Plaintiff's focus at oral argument upon the errant claim of

Magellan's physician advisor that a Caron physician had agreed

that the son needed only outpatient treatment is unavailing.

That claim was addressed and corrected at the second level

appeal by Horizon's Member Appeals Subcommittee, and plaintiff's

coverage was extended to March 4 – after the date of the alleged

telephone conversation with the Caron doctor. Plaintiff thus

challenged that claim on the administrative level, and

succeeded.

Our conclusion in Burley, that a plaintiff must first

pursue an administrative appeal from a denial of coverage under

the program, before pursuing an action at law, and that the

dismissal of a premature suit must be "without prejudice" to a

later action at law is not authority for the proposition

plaintiff advances here. Burley, supra, 251 N.J. Super. at 500.

As noted, plaintiff's claims in the Law Division are dependent

22 A-1311-12T3
upon the resolution of an issue contrary to the final agency

action of the SHBC - an issue fully adjudicated on the

administrative appeal before the SHBC - as to which plaintiff

has abandoned his appeal. Accordingly, plaintiff's complaint in

the Law Division must be dismissed for lack of jurisdiction. To

hold otherwise would permit plaintiff to collaterally attack a

State administrative determination in the Law Division. The Law

Division is without jurisdiction to adjudicate such claims. R.

2:2-3(a).2

The remainder of plaintiff's arguments on appeal are

without sufficient merit to warrant discussion in a written

opinion. R. 2:11-3(e)(1)(E).

Affirmed.

2
Cf. R. 2:5-5(b)(authorizing the Appellate Division, but only in
"exceptional instances," to order the record on appeal of a
state agency decision to be supplemented by a specially-
designated trial court judge).

23 A-1311-12T3