In re Yucht

• Citation: 184 A.3d 475,233 N.J. 267
• Decision Date: 08 May 2018
• Docket Number: 079966,A–21 September Term 2017
• Parties: In the MATTER OF STATE AND SCHOOL EMPLOYEES' HEALTH BENEFITS COMMISSIONS' IMPLEMENTATION OF I/M/O Philip YUCHT.
• Court: New Jersey Supreme Court

233 N.J. 267
184 A.3d 475

In the MATTER OF STATE AND SCHOOL EMPLOYEES' HEALTH BENEFITS COMMISSIONS' IMPLEMENTATION OF I/M/O Philip YUCHT.

A–21 September Term 2017
079966

Supreme Court of New Jersey.

Argued February 26, 2018
Decided May 8, 2018

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, Trenton, 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, Newark, on the brief).

JUSTICE LaVECCHIA delivered the opinion of the Court.

184 A.3d 477

233 N.J. 270

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 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

233 N.J. 271

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 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

233 N.J. 272

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 doctors. A range of lower reimbursement-rate percentages

184 A.3d 478

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 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

233 N.J. 273

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.

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

184 A.3d 479

payment of behavioral health claims incurred since that date using the Reasonable and Customary allowance set forth in the

233 N.J. 274

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 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...