New Jersey Guild of Hearing Aid Dispensers v. Long

Decision Date09 March 1978
Citation384 A.2d 795,75 N.J. 544
Parties, 1979-2 Trade Cases P 62,842 NEW JERSEY GUILD OF HEARING AID DISPENSERS, a non-profit corporation of the State of New Jersey; Joseph Iacono and Robert P. Ahrens, Appellants, v. Virginia LONG, Director of the Division of Consumer Affairs; the Division of Consumer Affairs, an Agency of the State of New Jersey; the Hearing Aid Dispensers Examining Committee and the State Board of Medical Examiners, Agencies of the State of New Jersey under the jurisdiction of the Division of Consumer Affairs, Respondents.
CourtNew Jersey Supreme Court

Jack B. Kirsten and Elmer J. Bennett, Newark, for appellants (Freidin, Kirsten, Friedman & Cherin, attorneys; Carpenter, Bennett & Morrissey, Newark, of counsel; Elmer J. Bennett, Jack B. Kirsten and Deborah W. Babcox, Newark, on the brief).

Steven I. Kern, Deputy Atty. Gen., for respondents (William F. Hyland, Atty. Gen., attorney; Erminie L. Conley, Deputy Atty. Gen., of counsel).

The opinion of the court was delivered by

PASHMAN, J.

Concern over allegations of consumer abuses in the sale of hearing aids prompted the Legislature to pass the Hearing Aid Dispensers Act, L.1973, c. 19, N.J.S.A. 45:9A-1 et seq. ("the Act"), which became law on January 31, 1973. This enactment created a Hearing Aid Dispensers Examining Committee ("the Committee") under the State Board of Medical Examiners in the Division of Consumer Affairs of the Department of Law and Public Safety. N.J.S.A. 45:9A-1, 3. The Committee's statutory mandate was to

* * * ascertain the facts concerning the dispensing and sale of hearing aids, for the purpose of determining the need for, and desirability of, rules and regulations to promote the health, safety and welfare of the public and to effectuate the purposes of this act and to aid the committee in the performance of its powers and duties hereunder, and (to) make and promulgate, with the approval of the board (i. e., the State Board of Medical Examiners) rules and regulations for said purposes * * * . (N.J.S.A. 45:9A-7)

On April 9, 1976, the Committee1 filed its proposed rules and regulations governing the practice of hearing aid dispensing in New Jersey, which were then unanimously approved by the State Board of Medical Examiners prior to their publication in the New Jersey Register.

The Committee conducted a public hearing on May 21, 1976 in Newark, at which time 19 witnesses, including the Director of the Division of Consumer Affairs ("the Director"), testified and numerous documentary exhibits were received. The Director testified that the "major problem areas perceived by the Committee" as requiring remedial regulatory action included

inappropriate fitting because of lack of proper supervision of the dispenser and the trainee; false advertising calculated to mislead the public into the belief that hearing aid dispensers have a medical degree or background; secrecy by the dispenser as to exactly what the consumer is paying for and exactly what he is getting, with the result that the consumer is unable to ascertain by independent means the viability of his aid; unscrupulous activity by the door-to-door salesman of hearing aids, especially with respect to the elderly; and unconscionable pricing of hearing aids. (Testimony of Virginia Long, Director, Division of Consumer Affairs, before the Hearing Aid Dispensers Examining Committee, May 21, 1976.)

The regulations as originally proposed were modified prior to their unanimous adoption by the Committee. The regulations as amended were unanimously approved by the State Board of Medical Examiners, as required by N.J.S.A. 45:9A-7, in July 1976 and thereafter filed with the Secretary of State. The final regulations appear in the New Jersey Administrative Code at N.J.A.C. 13:35-8.1 et seq.

In August 1976 enforcement of the Committee regulations was stayed by a single judge of the Appellate Division on the petition of the New Jersey Guild of Hearing Aid Dispensers ("the Guild"), and two of the Guild's officers in their individual capacities as hearing aid dispensers. The appeal sought review of the validity of the Committee regulations pursuant to R. 2:2-3. Consideration of the Guild's application for a stay pending appeal was consolidated with the appeal on the merits by the Appellate Division.

On December 15, 1976, Judge Botter, writing for the Appellate Division, upheld the validity of the Committee rules and regulations and denied the Guild's request that their enforcement be enjoined. 145 N.J.Super. 580, 368 A.2d 929 (App.Div.1976). On December 22, 1976, the Guild filed a Petition for Rehearing and Stay of Judgment with the Appellate Division which was summarily denied on January 4, 1977. The basis for that petition was the imminent promulgation of regulations affecting the practice of hearing aid dispensing by the United States Food and Drug Administration ("FDA") and the consequent possibility of federal preemption of the Committee regulations.

On January 21, 1977 the Guild filed a petition for certification together with a notice of appeal alleging constitutional questions and a motion for a stay of the Appellate Division's judgment and enforcement of the Committee regulations pending disposition of the matter by this Court. On February 15, 1977, the Guild supplied us with advance copies of the proposed FDA regulations whose preemptive effect it had asserted below. Upon review of same, we granted the requested stay on February 15, 1977 and subsequently granted the Guild's petition for certification. 74 N.J. 247, 377 A.2d 653 (1977).

I The Regulatory Background

The Act defines the activity it seeks to regulate, the "practice of dispensing and fitting hearing aids," as "the evaluation or measurement * * * of human hearing * * * and the consequent selection of (sic) adaptation or sale of hearing aids intended to compensate for hearing loss * * *." N.J.S.A 45:9A-2(d). A hearing aid dispenser is defined as "a person engaged in the fitting and selling of hearing aids to a person with impaired hearing." N.J.S.A. 45:9A-2(e). The Committee created for this purpose is empowered to set educational and licensing requirements for practitioners, N.J.S.A. 45:9A-8 to 15, and to grant temporary licenses in certain circumstances. N.J.S.A. 45:9A-16. The Director of Consumer Affairs is authorized to discipline licensees for enumerated types of misconduct, the most expansive category of which is "unethical conduct," defined to include, inter alia, the "obtaining of any fee or the making of any sale by fraud or misrepresentation," N.J.S.A. 45:9A-17(c)(1), the use of misleading or false advertising or other representations, N.J.S.A. 45:9A-17(c)(3), the use of bait and switch sales tactics, N.J.S.A. 45:9A-17(c)(4), and the use of representations connoting medical expertise, N.J.S.A. 45:9A-17(c)(5), as well as for violations of the Act or the Committee rules and regulations. N.J.S.A. 45:9A-17(f). In addition, violations of the Act are subject to penalties and, where appropriate, restitution. N.J.S.A. 45:9A-19. They are also enjoinable at the suit of the Director of Consumer Affairs. N.J.S.A. 45:9A-20. Specifically exempted from the coverage of the Act are hearing aid dispensers whose practices are affiliated with academic institutions, public programs, or charitable organizations, unless such dispensers sell hearing aids; also exempted are licensed physicians. N.J.S.A. 45:9A-22.

Licensed dispensers are required to advise prospective purchasers at the outset of a hearing aid dispenser's lack of medical or audiological expertise and to provide all purchasers with a detailed written receipt which includes a statement that the purchaser has been so advised. N.J.S.A. 45:9A-23. Whenever a licensee learns that a prospective purchaser has certain ascertainable medical conditions, he must, prior to fitting and selling a hearing aid to that person, recommend in writing that the person consult a hearing specialist or other physician (providing the names and addresses of at least three such physicians) and receive a receipt from the prospective purchaser acknowledging that the recommendation has been given. N.J.S.A. 45:9A-24.

The Guild's challenge to the Committee's regulatory action is directed at certain portions of the comprehensive substantive regulation, N.J.A.C. 13:35-8.24, entitled "General Rules and Regulations." It specifically objects to the provision of N.J.A.C. 13:24-8.24(c) which exempts from the coverage of the Act the activities of certified audiologists unless such persons engage in the dispensing of hearing aids. N.J.A.C. 13:35-8.24(c)(3). The Guild contends that this exemption for nondispensing audiologists is not authorized by the Act and in fact is internally inconsistent with another regulation in the same subsection, N.J.A.C. 13:35-8.24(c)(7), which includes certain activities preliminary to a sale within the definition of "fitting and selling hearing aids," activities in which the Guild claims certified audiologists engage.

Also contested by the Guild is the Committee's prohibition of the use of the term "certified hearing aid audiologists" by hearing aid dispensers in any advertising because of its potential misleading effect on prospective purchasers. N.J.A.C. 13:35-8.24(f)(3). The Guild disputes the legitimacy of that conclusion and contends that such a prohibition was not contemplated by the Act. As its source of authority for the promulgation of this rule, the Committee cites N.J.S.A. 45:9A-17(c)(3) and (5) and 23(b)(7).

The subjects of the Guild's most vehement protest are the regulatory provisions mandating advance disclosure and itemization in pricing, requiring the posting of a retail price list of all hearing aids offered for sale, and setting a price guideline for charges made for dispensing services and equipment. N.J.A.C. 13:35-8.24(g)(1) (prescribing a receipt form); (k)(1) and (2); (h)(4); and (k)(4),...

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