Gauer v. Essex County Div. of Welfare

• Court: United States State Supreme Court (New Jersey)
• Writing for the Court: HANDLER; CLIFFORD
• Citation: 528 A.2d 1,108 N.J. 140
• Decision Date: 27 July 1987
• Parties: Frank GAUER, Individually and as Class Representative of the Essex County Welfare Board and Division Retirees, Plaintiff-Appellant, v. ESSEX COUNTY DIVISION OF WELFARE, Defendant-Respondent.

Page 140

108 N.J. 140 528 A.2d 1 Frank GAUER, Individually and as Class Representative of the
Essex County Welfare Board and Division Retirees,
Plaintiff-Appellant,
v.
ESSEX COUNTY DIVISION OF WELFARE, Defendant-Respondent. Supreme Court of New Jersey. Argued March 30, 1987.
Decided July 27, 1987.

Page 142

Ronald Reichstein, Montclair, for appellant (Beck, Reichstein & Guidone, attorneys).

Norman Schulaner, Asst. Co. Counsel, Newark, for respondent (David H. Ben-Asher, Essex County Counsel, attorney).

[528 A.2d 2] The opinion of the Court was delivered by

HANDLER, J.

The Division of Welfare of the County of Essex discontinued certain benefits that it had been paying to certain retired employees. As a result, plaintiff, a retired employee aggrieved by this decision, brought suit on behalf of other similarly

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situated retired employees challenging its validity. The narrow issue raised by this litigation is the statutory authority of Essex County to terminate the retirement benefits previously granted to the subject employees on the basis that N.J.S.A. 40A:10-23 mandates that all retirees of the county receive uniform treatment.

I.

The benefits that are the subject of this litigation were provided for more than ten years prior to the decision to discontinue them. On December 3, 1974, the Essex County Welfare Board, the predecessor of the defendant, Division of Welfare, adopted Resolution No. 74-12-3, pursuant to regulations promulgated by the State Health Benefits Commission under N.J.S.A. 52:14-17.38. This Resolution authorized the Board, which was at the time an autonomous agency expressly designated as a corporate entity by N.J.S.A. 44:7-7, to reimburse those employees who retire with twenty-five or more years of service for their health insurance and Medicare Part B premiums upon retirement. The Board notified its employees of the Resolution. Plaintiff Gauer was an employee of the Board when these benefits were authorized.

On May 1, 1979, pursuant to the Optional County Charter Law, N.J.S.A. 40:41A-1 to -147, Essex County reorganized its form of government. The Welfare Board was abolished as an autonomous body and its functions were assumed by the Essex County Division of Welfare. Pursuant to its reorganization, the County promulgated an Administrative Code that spelled out the abolition of various autonomous boards and specified which county agencies would assume the functions of the abolished boards. The Administrative Code also delineated the rights of employees of the boards who were transferred to county employment. Section 14.6 provided specifically that "Pension Fund membership and rights of any officer or employee shall not ... be adversely affected by any transfer pursuant

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to the Code." The County, through the Division of Welfare, continued to reimburse health insurance costs for retirees of the Welfare Board who had been receiving such retirement benefits from the Board. It also began to reimburse such health insurance and Medicare premium costs to Division of Welfare employees who retired from County employment with twenty-five years or more service in a state or locally administered retirement system in accordance with the earlier Resolution.

In 1981, plaintiff, then a County employee in the Division of Welfare, retired from County employment. He received reimbursed premium costs for health insurance and Part B Medicare as part of his retirement benefits. In 1984, specifically by a letter dated December 3, 1984, the County decided to discontinue its reimbursement of health insurance and medicare costs of retired welfare employees effective January 1, 1985. Its decision was in reliance upon legal opinion of the Essex County counsel stating the County could not, under N.J.S.A. 40A:10-23, discriminate among retired County employees in the provision of health insurance benefits.

Plaintiff brought suit against the County, and the County moved for summary judgment, which was granted. Gauer v. Essex County Div. of Welfare, 205 N.J.Super. 592, 501 A.2d 601 (Law Div.1985). ¹ Plaintiff then moved for relief from the adverse summary judgment in order to have the court consider the impact of Woolley v. Hoffman-La Roche, Inc., 99 N.J. 284, 491 A.2d 1257, modified, 101 N.J. 10, 499 A.[528 A.2d 3] 2d 515 (1985). The court denied the motion.

Plaintiff appealed to the Appellate Division. In a per curiam decision, the Appellate Division affirmed the summary judgment for defendant and the denial of plaintiff's post-judgment motion. Gauer v. Essex County Div. of Welfare, 211 N.J.Super.

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706, 512 A.2d 587 (App.Div.1986). Plaintiff filed a petition for certification, which was granted. 105 N.J. 545, 523 A.2d 183 (1986). We now reverse.

II.

We approach this case initially by focusing upon whether the rights and obligations of the respective parties are governed by operative statutory provisions. Plaintiff claims that the County, as the successor of the Essex County Welfare Board, is still liable for the amount of health insurance premiums paid by retired welfare employees and that its liability is unaffected by the reorganization of the County and the abolition of the Board under the Optional County Charter Law, N.J.S.A. 40:41A-1 to -147. Defendant, on the other hand, claims that continuing to pay the benefits in question would run afoul of the statutory requirement of N.J.S.A. 40A:10-23 that benefits be distributed uniformly among retirees. Defendant claims, in effect, that (1) reorganization was authorized under the Optional County Charter Law; (2) the Optional County Charter Law empowered it to abolish the Welfare Board; and (3) once the County had assumed the functions of the Welfare Board, the requirement of N.J.S.A. 40A:10-23 that retirement benefits be distributed uniformly among retirees was necessarily implicated, thus requiring the County either to rescind the benefits adopted by the Welfare Board or to extend them to all County employees.

Counties have been granted broad power under the Optional County Charter Law, State v. County of Hudson, 161 N.J.Super. 29, 43, 390 A.2d 720 (Ch.Div.1978), aff'd, 171 N.J.Super. 453, 409 A.2d 1164 (App.Div.1979). This includes the power to restructure county governments, N.J.S.A. 40:41A-30; Shapiro v. Essex County, 177 N.J.Super. 87, 99, 424 A.2d 1203 (Law Div.1980), aff'd, 183 N.J.Super. 24, 443 A.2d 219 (App.Div.), aff'd, 91 N.J. 430, 453 A.2d 158 (1982); Board of Trustees v. Sypek, 151 N.J.Super. 1, 10, 376 A.2d 240 (Law Div.1977), rev'd on other grounds, 160 N.J.Super. 452, ...