ESSEX COUNTY SHERIFF'S OFFICERS PBA LOCAL 183 VS. DEPARTMENT OF THE TREASURY (STATE HEALTH BENEFITS COMMISSION)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1228-17T2

ESSEX COUNTY SHERIFF'S
OFFICERS PBA LOCAL 183
and ESSEX COUNTY SUPERIOR
OFFICERS FOR LODGE 106,

Petitioners-Appellants,

v.

DEPARTMENT OF THE
TREASURY, DIVISION OF
PENSIONS AND BENEFITS,
STATE HEALTH BENEFITS
COMMISSION,

Respondent-Respondent.
_______________________________

ESSEX COUNTY SUPERIOR
OFFICERS PBA LOCAL 183A,
ESSEX COUNTY SUPERIOR
OFFICERS FOR LODGE
138, and ESSEX COUNTY PBA
LOCAL 382,

Intervenors-Appellants.
_______________________________

Argued May 6, 2019 – Decided June 14, 2019
 Before Judges Sabatino, Haas and Sumners.

On appeal from the State Health Benefits Commission,
Department of the Treasury, Declaratory Ruling 2017-
001.

Valerie Palma DeLuisi, Cathlene Y. Banker, and
Joseph P. Slawinski argued the cause for appellants
(Law Office of Nicholas J. Palma, attorneys for
appellant PBA Local 183 and intervenor PBA Local
183A; C. Elston & Associates, LLC, attorneys for
appellant FOP Lodge 106 and intervenor FOP Lodge
138; and Law Offices of Steven A. Varano, PC,
attorneys for intervenor PBA Local 382; Valerie Palma
DeLuisi, Cathlene Y. Banker, Joseph P. Slawinski, and
Albert J. Seibert, of counsel and on the joint briefs).

Angelo J. Genova argued the cause for respondent
County of Essex (Genova Burns LLC, attorneys;
Angelo J. Genova, of counsel and on the briefs; Joseph
M. Hannon and Diane M. Camacho, on the brief).

Christopher R. Meyer, Deputy Attorney General,
argued the cause for respondent State Health Benefits
Commission (Gurbir S. Grewal, Attorney General,
attorney; Melissa H. Raksa, Assistant Attorney
General, of counsel; Danielle P. Schimmel, Deputy
Attorney General and Christopher R. Meyer, on the
briefs).

PER CURIAM

This administrative appeal involves a narrow jurisdictional issue. The

issue comes to this court after the State Health Benefits Commission ("the SHB

A-1228-17T2
2
Commission") issued a declaratory ruling arising from a dispute between the

labor union appellants and Essex County regarding health insurance benefits.

The unions maintain that the County unilaterally reduced the levels of

their members' bargained-for contractual health benefits without engaging in

prior good faith negotiations. In particular, the unions claim their members were

transitioned by the County from the coverage under their previous plan to the

State Health Benefits Program ("SHBP") under duress. The unions accordingly

have filed a separate unfair practice charge against the County, a claim which is

pending before the Public Employment Relations Committee ("PERC").

With the unfair practice proceeding before PERC pending, the unions filed

a request for declaratory ruling from the SHB Commission on four issues related

to the SHBP. According to the unions, the ruling was requested for the purposes

of facilitating labor negotiations and the fashioning of an adequate remedy

before PERC, assuming the County's unfair practice were proven. The SHB

Commission subsequently issued the declaratory ruling, answering all four of

the questions posed by the unions.

The unions now contest the SHB Commission's statutory authority and

jurisdiction to issue its declaratory ruling concerning what is known as

A-1228-17T2
3
"Question 3" of the issues they had presented. For the reasons that follow, we

affirm the SHB Commission's declaratory ruling.

I.

This appeal was brought by Essex County Sheriff’s Officers PBA Local

183 and Essex County Superior Officers FOP Lodge 106, and joined by

intervenors, Essex County Superior Officers Association (Sheriff) FOP Lodge

138, New Jersey State PBA Local 382, and Essex County Sheriff’s Superior

Officers Association PBA Local 183A (collectively, "the Unions"). Together,

the Unions represent all the sheriff's officers and corrections officers employed

by Essex County.

On September 27, 2016, Essex County adopted a resolution approving its

participation for its employees in the SHBP, effective January 1, 2017.

According to the resolution, "if Essex County moves into the SHBP in 2017, the

savings will be over $9.7 million dollars versus the last and best 2017 offer of

Aetna [Insurance Company], our current provider."

In response to this change of health benefits, the Unions brought unfair

labor practice proceedings against the County before PERC. The Unions assert

in the PERC case that the County did not engage in good faith negotiations in

A-1228-17T2
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advance of the change in health care benefits, and were transitioned into the

SHBP under duress. 1

On January 23, 2017, the Unions sought declaratory rulings from the SHB

Commission on an expedited basis, seeking to have such rulings assist in

resolving the labor disputes pending in PERC. 2 Specifically, the Unions

requested the SHB Commission's declaratory ruling on these four specific

questions:

(1) Whether Essex County is required to enroll all
employees and retirees who meet the eligibility
requirements of the SHBP;

(2) Whether Essex County, as an SHBP participating
employer in the SHBP can supplement the medical
plans it offers to employees and retirees with the non-
SHBP plans;

(3) Whether Essex County, as an SHBP-participating
employer, can reimburse employees for incremental
costs arising from changes in negotiated levels of
health benefits; and

1
According to the Unions' brief, the unfair practice charges are being held in
abeyance by PERC pending this appeal.
2
The Unions' brief details the torturous procedural history of the matters
pending before PERC. However, that complicated procedural history of the
PERC matters – which involves several emergent applications to both this court
and the Supreme Court – is not relevant to the narrow jurisdictional issue now
before us. The events in the PERC matter only provide context as to why the
Unions sought a declaratory ruling from the SHB Commission in the first place.
A-1228-17T2
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 (4) If the relief requested is not permissible under the
SHBP Act, which provisions of the Act will the [SHB]
Commission waive to facilitate a remedy to the change
in the negotiated level of benefits?

The Unions' request for declaratory rulings was not heard at the SHB

Commission's March or May 2017 regularly scheduled meetings. Consequently,

the Unions appealed the SHB Commission's inaction to this court. On July 5,

2017, a panel of this court granted the SHB Commission's cross-motion to

remand the case, and ordered the SHB Commission to issue a ruling on the four

questions at its "July or September 2017 meeting."

In accordance with this court's remand, on September 13, 2017, the

Unions and the County presented arguments before the SHB Commission

concerning the four listed questions.3

On September 28, 2017, the SHB Commission met in public session to

vote on the four presented issues. The day before the vote, six labor

representatives of the twelve-member State Health Benefits Plan Design

Committee ("Plan Design Committee") sent a letter to the SHB Commission,

asserting the Plan Design Committee was the appropriate state entity with

3
A transcript of the September 13, 2017 session is not included in the appellate
record and the parties do no rely on it.
A-1228-17T2
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jurisdiction over Question 3. That letter was read into the record at the SHB

Commission's public meeting. The letter states:

Dear Chairwoman Culliton: We the undersigned union
representatives of the Plan Design Committee of the
State Health Benefits Program request that you hold off
on the declaratory ruling on your agenda for September
28th until such time as the [Plan Design Committee]
has met and fully considered the implications on plan
design raised by question 3. The SHB Commission no
longer has any authority to make plan design decisions.
Respectfully, Patrick Nolan, Robert Little, Kevin
Lyons, Hetty Rosenstein, Abdur Yasin and Michael
Sandur.

Although the Unions' counsel was not present at the September 28 public

meeting, Kevin Lyons, a union-designated member of the Plan Design

Committee, appeared before the SHB Commission. Amplifying the September

27 letter he co-signed, Lyons maintained that the SHB Commission did not have

the authority to rule on Question 3. Lyons argued that the Plan Design

Committee has the sole authority to design state health benefit plans, and that

because Question 3 involves copay and reimbursements under the plan, the Plan

Design Committee is the correct venue to determine that issue. Lyons also

A-1228-17T2
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clarified that the Plan Design Committee was only asserting jurisdiction over

Question 3, and not Questions 1, 2, and 4. 4

After hearing from Lyons, and seeking legal advice in executive session,

the SHB Commission issued a detailed written declaratory ruling on September

28, 2017. The relevant part of the ruling as to Question 3 states:

RULING REQUEST #3:

Pursuant to the [SHBP], is it permissible for the
County, as a participant in the SHBP, to reimburse its
employees for incremental costs arising from changes
in negotiated levels of health benefits?

No, a local employer may not reimburse any out-of-
pocket costs that are part of the design of an SHBP plan.
With the enactment of Chapter 78 and the Legislature's
creation of the [Plan Design Committee], that body was
vested with "the sole discretion to set the amounts for
maximums, co-pays, deductibles, and other such
participant costs for all plans in the program." N.J.S.A.
52:14-17.27(b).

....

As previously stated, reimbursing incremental costs
alters the participant's out of pocket costs in the SHBP,
and these costs are established plan by plan by the [Plan
Design Committee]. The [Plan Design Committee] has
exercised its jurisdiction and established co-payments,
which are a plan component, for each plan offered.
Thus[,] the [SHB] Commission has no authority to

4
On appeal, the Unions likewise only challenge the SHB Commission's
jurisdiction over Question 3.
A-1228-17T2
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 modify these plan components and cannot permit a
participating employer to do so either. The [Plan
Design Committee] has the sole authority to modify
these plan components and the [SHB] Commission is
bound by the plan components created by the [Plan
Design Committee].

[(Emphasis added).]

The Unions thereafter filed a motion with this court seeking an order to

refer jurisdiction over Question 3 to the Plan Design Committee. Another panel

of this court denied that motion.

Additionally, in August 2018, this court denied the Unions' application to

compel joinder of the Plan Design Committee as a party to this appeal. Notably,

the Plan Design Committee itself has not sought to intervene.

The Unions appeal the SHB Commission's exercise of jurisdiction over

Question 3. They also disagree with the substance of the SHB Commission's

answer to that Question. The County and the SHB Commission oppose the

appeal, and argue the Commission properly exercised its jurisdiction.

II.

This court's review of administrative agency decisions is generally

limited. In re Stallworth, 208 N.J. 182, 194 (2011). "We will ordinarily defer

to the decision of a State administrative agency unless the appellant establishes

that the agency's decision was arbitrary, capricious, or unreasonable, or that it

A-1228-17T2
9
was unsupported by sufficient credible, competent evidence in the record."

Green v. State Health Benefits Comm'n, 373 N.J. Super. 408, 414 (App. Div.

2004).

It is also well established that "[c]ourts afford an agency great deference

in reviewing its interpretation of statutes within its scope of authority." N.J.

Ass'n of Sch. Adm'rs v. Schundler, 211 N.J. 535, 549 (2012) (citations omitted).

For example, "'[d]eference to an agency decision is particularly appropriate

where interpretation of the [a]gency's own regulation is in issue.'" R.S. v. Div.

of Med. Assistance & Health Servs., 434 N.J. Super. 250, 261 (App. Div. 2014)

(quoting I.L. v. N.J. Dep't of Human Servs., 389 N.J. Super. 354, 364 (App. Div.

2006)).

Nonetheless, "when an agency's decision is based on the 'agency's

interpretation of a statute or its determination of a strictly legal issue,' we are

not bound by the agency's interpretation. Statutory interpretation involves the

examination of legal issues and is, therefore, a question of law subject to de

novo review." Saccone v. Bd. of Trs. of Police & Firemen's Ret. Sys., 219 N.J.

369, 380 (2014) (quoting Russo v. Bd. of Trs. of Police & Firemen's Ret. Sys.,

206 N.J. 14, 27 (2011)).

A-1228-17T2
10
 With these review standards in mind, we proceed to the substance of this

jurisdictional appeal. We begin with an overview of the pertinent statutory and

regulatory scheme.

A.

The State Health Benefits Program Act

Through the authority granted by the State Health Benefits Program Act

("SHBP Act"), the SHBP offers medical, prescription drug, and dental coverage

to qualified State and local employees, retirees, and eligible dependents.

N.J.S.A. 52:14-17.25 to -17.46a. The SHBP is not itself an insurance carrier,

but rather a program that offers health benefit coverage through contracts

negotiated between the SHB Commission and insurance carriers. N.J.S.A.

52:14-17.28. Once a local government employer has elected to participate in

the SHBP, it is "a participating employer under the program, subject to and in

accordance with the rules and regulations of the [SHB] [C]omission related

thereto." N.J.S.A. 52:14-17.37(a).

B.

Chapter 78 and Creation of the Plan Design Committee

"In 2011, the Legislature enacted Chapter 78, making numerous

significant changes to public employee pension and health care benefits."

A-1228-17T2
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Rosenstein v. State, 438 N.J. Super. 491, 494 (App. Div. 2014). See also L.

2011, c. 78, § 45(b) (codified at N.J.S.A. 52:14-17.27). Perhaps the most

significant change to the SHBP was Chapter 78's creation of the Plan Design

Committee, which the Legislature vested with "the exclusive authority to design

state health benefits plans – a power previously possessed by the [SHB

Commission]." Ibid.

The Plan Design Committee consists of twelve members: six members

appointed by the Governor and six members from various state labor unions.5

N.J.S.A 52:14-17.27(b). The SHB Commission, meanwhile, consists of five

members: "the State Treasurer; the Commissioner of Banking and Insurance; the

Chairperson of the Civil Service Commission; a State employees' representative

chosen by the Public Employee Committee of the AFL-CIO; and . . . a local

employees' representative chosen by the Public Employee Committee of the

AFL-CIO." N.J.S.A 52:14-17.27(a). As this court has previously observed:

5
Specifically, the six union members are: "three members . . . appointed by the
Public Employee Committee of the AFL-CIO; one member . . . appointed by the
head of the union . . . that represents the greatest number of police officers in
this State; one member appointed by the head of the union . . . that represents
the greatest number of firefighters in this State; and one member . . . appointed
by the head of the State Troopers Fraternal Association." N.J.S.A 52:14-
17.27(b).

A-1228-17T2
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 [O]ne clear legislative intent revealed by [the creation
of the Plan Design Committee] . . . was the leveling of
the balance of power between labor and the public
employer by giving six votes to each side, rather than
the three-to-two edge previously possessed by the
administration when the [SHB Commission] had the
authority to create, modify and terminate components
of the state health plan.

[Rosenstein, 438 N.J. Super. at 501 n.4.]

The Plan Design Committee establishes the components of the SHBP's

overall plan designs, while the SHB Commission authorizes the plan's contracts

with various insurance carriers. See N.J.S.A. 52:14-17.28; see also Beaver v.

Magellan Health Servs., Inc., 433 N.J. Super. 430, 433 (App. Div. 2013)

("Although the State contracts with health insurers to administer various benefit

plans for program participants, the [SHB Commission] alone has the authority

and responsibility to make payments on claims and to limit or exclude

benefits.").

Accordingly, the SHBP Act provides:

The [Plan Design Committee] shall have the
responsibility for and authority over the various plans
and components of those plans, including for medical
benefits, prescription benefits, dental, vision, and any
other health care benefits, offered and administered by
the program. The [Plan Design Committee] shall have
the authority to create, modify, or terminate any plan or
component, at its sole discretion. Any reference in law
to the [SHB Commission] in the context of the creation,

A-1228-17T2
13
 modification, or termination of a plan or plan
component shall be deemed to apply to the [Plan Design
Committee].

[N.J.S.A 52:14-17.27(b) (emphasis added).]

See also Rosenstein, 438 N.J. Super. at 500 ("[T]he adoption of Chapter 78

transferred authority over the plan design of the state health benefits program to

the newly-created [Plan Design Committee]"); Teamsters Local 97 v. State, 434

N.J. Super. 393, 416 (App. Div. 2014) ("With the enactment of Chapter 78, the

Legislature has vested the [Plan] Design Committee with the sole discretion to

create, modify, or terminate any plan or component, as well as to set amounts

for maximums, co-pays, deductibles, and other participant costs for all plans

offered.").

C.

SHBP Contract Procurement and Coverage Terms

N.J.S.A. 52:14-17.29 mandates the types of coverage the SHB

Commission must provide for when procuring contracts with insurers, and also

contains several subsections discussing the administration of contract

coverages. For example, N.J.S.A. 52:14-17.29(A)(1)-(2) details the required

coverage for "basic benefits" (e.g., hospital benefits, surgical benefits, inpatient

A-1228-17T2
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benefits) and "major medical expense benefits," which provides benefit

coverage for "reasonable and necessary eligible medical expenses."

Subsection (D) of this portion of the statute, an administrative provision,

provides in pertinent part:

Benefits under the contract or contracts purchased as
authorized by this act may be subject to such
limitations, exclusions, or waiting periods as the [SHB
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 [SHB Commission].

[N.J.S.A. 52:14-17.29(D) (emphasis added).]

Subsection (J), the last portion of N.J.S.A. 52:14-17.29, was included in

the Chapter 78 amendments enacted in 2011. Subsection (J) instructs:

[T]he . . . Plan Design Committee shall provide to
employees the option to select one of at least three
levels of coverage each for family, individual,
individual and spouse, and individual and dependent, or
equivalent categories, for each plan offered by the
program differentiated by out of pocket costs to
employees including co-payments and deductibles.
Notwithstanding any other provision of law to the
contrary, the [Plan Design Committee] shall have the
sole discretion to set the amounts for maximums, co-
pays, deductibles, and other such participant costs for
all plans in the program.

[N.J.S.A. 52:14-17.29(J) (emphasis added).]

A-1228-17T2
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See also Teamsters Local 97, 434 N.J. Super. at 417 ("In view of the

Legislature's vesting in the [Plan] Design Committee the sole discretion to make

changes in the . . . healthcare plans, such changes are no longer effectuated

through collective negotiations between the State and its employees.").

D.

Administration of the SHBP

The provision creating the SHB Commission and the Plan Design

Committee, N.J.S.A. 52:14-17.27, states in pertinent part: "The [SHB]

[C]ommission, in consultation with the [Plan Design Committee], shall establish

rules and regulations as may be deemed reasonable and necessary for the

administration of [the SHBP Act]."

Pursuant to that delegated authority, the SHB Commission promulgated

N.J.A.C. 17:9-1.3, a regulation which governs hearings before the SHB

Commission. That regulation provides, in pertinent part, that "any member of

the SHBP who disagrees with a decision of the carrier and has exhausted all

appeals with the plan . . . may request that the matter be considered by the [SHB]

Commission." N.J.A.C. 17:9-1.3(a).

The Division of Pensions and Benefits ("the Division"), in turn,

administers the SHBP. N.J.A.C. 17:1-1.1(d). The SHB Commission is one of

A-1228-17T2
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thirteen "boards and commissions" that provides "oversight and direction to the

[Division's] benefits programs." N.J.A.C. 17:1-1.1(f)(8).

The Attorney General serves as the legal advisor to both the SHB

Commission and the Plan Design Committee. N.J.S.A. 52:14-17.27(a).

With this backdrop in mind, we turn to the substance of the appeal.

III.

A.

As a threshold matter, the County argues that the Unions are judicially

estopped from contesting the authority of the SHB Commission to issue a ruling

on Question 3 because the Unions specifically requested the SHB Commission

to issue the declaratory ruling. The Attorney General does not join in this

argument.

Although it is understandable from a practical perspective why the County

would raise this argument, judicial estoppel is considered "an 'extraordinary

remedy,' which should be invoked only 'when a party's inconsistent behavior

will otherwise result in a miscarriage of justice.'" Ali v. Rutgers, 166 N.J. 280,

288 (2000) (quoting Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81

F.3d 355, 365 (3d Cir. 1996)).

A-1228-17T2
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 The essence of the Unions' argument – that the SHB Commission does not

have jurisdiction to issue a declaratory ruling on Question 3 – is essentially an

issue of subject matter jurisdiction, a fundamental concern which can be raised

at any time. See, e.g., Macysyn v. Hensler, 329 N.J. Super. 476, 481 (App. Div.

2000); see also Murray v. Comcast Corp., 457 N.J. Super. 464, 470 (App. Div.

2019) ("Subject matter jurisdiction cannot be waived by the parties' failure to

object, nor conferred upon the court by the parties' agreement"); Lall v. Shivani,

448 N.J. Super. 38, 48 (App. Div. 2016) ("Challenges to subject matter

jurisdiction may be raised at any time.").

Consequently, although we are puzzled as to why the Unions presented

Question 3 to the SHB Commission in the first place, they are not barred by

principles of judicial estoppel from raising on appeal a jurisdictional challenge

to the SHB Commission's authority to answer Question 3.

B.

Having dispensed with the estoppel argument, we turn to the crux of this

appeal: Whether the SHB Commission properly exercised jurisdiction over the

issue raised by Question 3.

The Unions contend that the Plan Design Committee has the sole

jurisdiction over this issue, and therefore the declaratory ruling by the SHB

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Commission was ultra vires. To support this position, the Unions cite to

N.J.S.A. 52:14-17.29(J), which provides: "the [Plan Design Committee] shall

have the sole discretion to set the amounts for maximums, co-pays, deductibles,

and other such participant costs for all plans in the program." (Emphasis added).

Therefore, because Question 3 essentially asks whether plan participants (i.e.,

union members) can be reimbursed for increased costs, and because the Unions

interpret reimbursements and "participant costs" as "one and the same," the

Unions maintain that the Plan Design Committee alone has the authority to

adjudicate Question 3.

It is undisputed that the Plan Design Committee has the sole authority to

design and modify components of statewide health plans. See, e.g., Rosenstein,

438 N.J. Super. at 500; see also N.J.S.A. 52:14-17.27(b). Indeed, the SHB

Commission recognized this principle in its declaratory ruling, stating: "The

[Plan Design Committee] has the sole authority to modify these plan

components and the [SHB] Commission is bound by the plan components

created by the [Plan Design Committee]." The Plan Design Committee also has

the authority to modify a plan, plan component, or to terminate a plan. It does

not, however, have any authority over labor relations.

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 The Plan Design Committee is not an adjudicatory body. The Unions do

not point to any regulatory or statutory authority under which the Plan Design

Committee would have the jurisdiction to issue an adjudicatory decision on

Question 3. Even if Question 3 were brought before the Plan Design Committee,

and it decided that the County could reimburse participants dollar-for-dollar for

increased costs, it is unclear how the Committee could enforce that decision. In

fact, the Plan Design Committee notably is not mentioned at all in the SHBP

regulations.

By contrast, the SHBP regulations vest certain adjudicatory authority to

the SHB Commission, albeit mainly for the adjudication of benefits and

coverage disputes between participants and insurance carriers. That mechanism

enables disputes to be brought before the SHB Commission, which in turn can

refer contested factual disputes to the Office of Administrative Law. See, e.g.,

N.J.A.C. 17:9-1.3(d). 6 In that same vein, the regulations of the Division

6
In issuing the declaratory ruling in the present case, the SHB Commission
cited N.J.S.A. 52:14B-8 as its authority to issue such a ruling. That provision
generally covering New Jersey administrative agencies states:

[A]n agency upon the request of any interested person
may in its discretion make a declaratory ruling with
respect to the applicability to any person, property or
state of facts of any statute or rule enforced or
administered by that agency. A declaratory ruling shall
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20
recognize the SHB Commission as one of the "boards and commissions"

providing oversight and direction to the benefit programs administered by the

Division. N.J.A.C. 17:1-1.1(f)(8).

In addition to these regulatory provisions, the terms of the SHBP Act

reflect that the SHB Commission has the authority to enforce and administer the

bounds of the existing plan. Two statutory provisions are particularly instructive

on this point.

The first statutory provision is N.J.S.A. 52:14-17.27, which details the

structure and overlap between the SHB Commission and the Plan Design

Committee. As we have already noted, N.J.S.A. 52:14-17.27 provides, in

pertinent part: "The [SHB] Commission, in consultation with the [Plan Design

Committee], shall establish rules and regulations as may be deemed reasonable

bind the agency and all parties to the proceedings on
the state of facts alleged. Full opportunity for hearing
shall be afforded to the interested parties. Such ruling
shall be deemed a final decision or action subject to
review in the Appellate Division of the Superior Court.
Nothing herein shall affect the right or practice of every
agency in its sole discretion to render advisory
opinions.

[(Emphasis added).]

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21
and necessary for the administration of [the SHBP Act]." (Emphasis added).

This provision shows that the SHB Commission does in fact have the authority

– after consulting with the Plan Design Committee – to create rules and

regulations that would aid in the administration of the SHBP Act.

Another instructive statutory provision is N.J.S.A. 52:14-17.29(D), which

as we have noted, is in the section establishing the SHB Commission's authority

to purchase contracts for health coverage, and to make adjustments to avoid

inequity. This provision indicates that the SHB Commission has the authority

to consider equitable factors in administering the contracts.

The Attorney General asserts that the SHB Commission's declaratory

ruling on Question 3 with respect to these specific Essex County unions avoids

inequity in administering the statewide program, because "[a]ltering the

participants costs[,] alters the entire plan created by the [Plan Design

Committee] and the [SHB] Commission and impacts the costs for everyone.

Neither the [SHB] Commission nor participating employer[s] [are] authorized

to modify the plan."

We agree with that interpretation of the statutory and regulatory scheme.

The Unions have not identified any language in the statutes or regulations that

A-1228-17T2
22
empowers the Plan Design Committee to revise plan components for a county

participant in the SHBP on an employer-specific or union-specific basis.

The Attorney General, who, as previously mentioned, serves as the legal

advisor to both the SHB Commission and the Plan Design Committee (although

not a party to this appeal), asserts the Plan Design Committee can set participant

costs, but that body cannot "retroactively change an existing design on an ad hoc

basis." As the Attorney General puts it: "the [Plan Design Committee] designed

the plan. The SHB Commission enforced the bounds of the plan in issuing its

ruling."

In a supplemental brief filed at our request following oral argument, the

Attorney General amplified this interpretation of the statutory scheme. As that

supplemental brief explains:

Employees of an employer other than the State
are not automatically included in the State Health
Benefits Program. A local employer [7] must elect to
participate in the SHBP for its employees to be eligible.
N.J.S.A. 52:14-17.37(a). Once a local employer elects
to participate, the plans available to the local employer
are the same as those available to the State, because "all
provisions of [the SHBP Act] will . . . be construed as
to participating employers . . . the same as for the
State." N.J.S.A. 52:14-17.36 (a); see also N.J. Sch.

7
An employer is defined to include, among other things, "a county" such as
Essex County, but does not include individual bargaining units, such as the
Unions. N.J.S.A. 52:17.35(a).
A-1228-17T2
23
 Bds. Ass'n v. State Health Benefits Comm'n, 183 N.J.
Super. 215, 220 (App. Div. 1982) ("The legislative
intention was to maintain uniformity in benefits
afforded state and local employees."). The local
employer may then determine which plans to make
available to its employees: "the availability of plans
within the program may be limited for employees . . .
pursuant to a binding collective negotiations
agreement." N.J.S.A. 52:14-17.37(b).

In short, when a local employer elects to
participate in the SHBP, it elects to participate in the
program itself, not any one plan. The [Plan Design
Committee] creates plans for the program, which plans
become available to all local employers to offer to its
employees. If it so chooses, a participating local
employer may select a subset of plans, but it must select
from the plans available in the program. Thus, the
[Plan Design Committee] has no authority to create a
plan that applies only to Essex County employees or the
individual bargaining units of the Union.

[(Emphasis added)].

Although we are not obliged to adopt the Attorney General's

interpretation 8 of the SHBP Act, we accord the Attorney General a degree of

deference because the Attorney General is the legal advisor to the Division as a

whole and its sub-agencies. See N.J.S.A. 52:17A-4(e); see also Quarto v.

Adams, 395 N.J. Super. 502, 513 (App. Div. 2007) (recognizing that the

8
The County has submitted a supplemental letter joining in the Attorney
General's legal position.
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Attorney General's interpretation of a statute or law is entitled "to a degree of

deference" because of its "special role as the sole legal adviser to most agencies

of State Government"); Clark v. Degnan, 163 N.J. Super. 344, 371 (Law Div.

1978) (finding the Attorney General's statutory interpretation, as the legal

advisor to most state agencies, is considered "strongly persuasive" but ultimately

not binding on courts).

We reject the Unions' contention that the Attorney General, as the legal

advisor to both the SHB Commission and the Plan Design Committee, has an

untenable conflict of interest in asserting a single legal position on behalf of the

State contrary to the wishes of six of the twelve Plan Design Committee

members. The "wide scope of function" of the Attorney General justifies the

Attorney General in having the discretion to overrule the preferences of client

agencies in interpreting the law and litigating cases. See Gormely v. Lan, 88

N.J. 26, 43-44 (1981).

In their own post-argument submission, the Unions assert the Attorney

General's interpretation of the statute is too narrow and not reflective of actual

practice. The Unions inform us that the Plan Design Committee recently

exercised authority in altering plans available to members of a union of State

workers. Although we appreciate the Unions calling the development to our

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attention, it does not analytically refute the soundness of the Attorney General's

statutory analysis in this case. In addition, the situation identified by the Unions

involved a union of State workers, not local or county employees participating

in the SHBP.

In sum, we agree with the Attorney General that the Plan Design

Committee has no statutory authority to alter the statewide plan components at

the county level, on a county-specific or union-specific basis. Such alterations

would affect utilization of health benefits and, in turn, upset the economic

balance of the overall statewide plan. The SHB Commission properly exercised

jurisdiction over Question 3 and provided a legally sound answer.

C.

Lastly, the Unions argue that the SHB Commission's ruling on Question

3 unfairly deprives them of a possible "make-whole" remedy in the PERC

proceedings. The Unions allege the SHB Commission's conclusion that

reimbursement funds are impermissible undermines PERC's ability to provide

an award of monetary damages. We disagree.

The declaratory ruling addressed this concern by expressly stating that,

"[t]he Commission is confident that in cases where violations of the New Jerse y

Employer-Employee Relation Act are found, the PERC can fashion an

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appropriate remedy that does not infringe on the SHBP plan design or offend

the public policies underlying the State Health Benefits program." (Emphasis

added).

As the County notes, there has been no harm yet established by the union

members whose grievance is pending before PERC. The County argues the

Unions are improperly seeking from this court an advisory opinion on remedial

options before PERC. We agree.

The SHB Commission did not rule that PERC cannot issue an appropriate

remedy if an unfair labor practice is found by PERC. It expressed confidence

PERC can fashion a fair remedy that would not infringe on the overall SHBP

plan design.

In essence, the Unions are seeking from this court an advisory opinion

about whether any fair remedies – other than dollar-for-dollar reimbursements

to individual employees – could be issued in the future by PERC in this matter.

We respectfully decline to do so.

The questions of remedy must be decided in the first instance by PERC.

See De Vesa v. Dorsey, 134 N.J. 420, 428 (1993) (noting that our courts

"refrain[] from rendering advisory opinions or exercising [their] jurisdiction in

the abstract."). See also G.H. v. Twp. of Galloway, 199 N.J. 135, 136 (2009)

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(instructing that courts should not "answer abstract questions or give advisory

opinions."). If any party is aggrieved by PERC's ultimate decision, including as

to the terms of any remedy, it may appropriately seek appellate review of that

ruling in a separate appeal.

IV.

Affirmed, without prejudice to findings and any appropriate remedies that

PERC may choose to issue in the pending unfair labor practice case.

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