Tuesday, July 5, 2016

Are members of the Hainesport Township Committee entitled to State Health Plan benefits?

Michael Dickinson
Mayor of Hainesport
Update: July 15, 2016

I have researched this question a bit more and now tend to think that:

1. Prior to May 21, 2010, an "elective officer" of a municipality was considered an "employee" for the purposes of enrollment in the State Health Benefits Program (SHBP) without regard to how many hours the officer worked or whether or not he or she was on the payroll or drew a salary.  N.J.S.A. 52:14-17.26.

2. On and after May 21, 2010, an "elective officer" was not eligible for SHBP enrollment unless he or she "appeares on a regular payroll and receives a salary or wages for an average of the number of hours per week [that is] not less than 25."  Ibid.

3. The critical question is whether an elective officer who was enrolled in the SHBP prior to May 21, 2010 and who still serves in office is "grandfathered" into the SHBP.  Stated another way, should the 2010 statutory change apply prospectively (allowing for the "grandfathering" of those who were enrolled on the statute's effective date) or should those enrolled on the effective date be required to conform to the new rules.

4. The SHBP Member Handbook states: "Any newly appointed or elected officer will be required to work a minimum of 35 hours per week to be considered “full-time” and eligible for coverage under the SHBP/SEHBP. Any employee or officer of a local employer or the State who was enrolled on or before May 21, 2010, is eligible for continued coverage based on the minimum work hour requirements in place prior to May 21, 2010, provided there is no break in the employee’s/officer’s service or reduction in work hours."

5. The Handbook's authors have determined that the 2010 statute applies prospectively.  While this is persuasive authority, it does not mean that a court, if asked, would necessarily come to the same conclusion.

6. When construing statutes, courts favor their prospective application. Lombardo v. Revlon, Inc., 328 N.J.Super. 484, 489 (App. Div. 2000).  So, the presumption is that elected officials who were enrolled in the SHBP on May 21, 2010 are "grandfathered" in.

7. But, there are three exceptions to the presumed prospective application: (1) the express or implied legislative intent required retroactive application because it was necessary to make the statute workable or give it the most sensible interpretation, (2) the statute is ameliorative or curative, or (3) the parties' expectations warrant retroactive application. Ibid.

8. The 2010 statute was widely regarded as "reform" legislation.  See, e.g. Governor Chris Christie's March 22, 2010 statement when he signed the law in which he calls the statute a "solid start" to reforming "a pension system that is rife with abuse, that promises substantial payouts with little buy-in, and that provides benefits that are wildly out of proportion with the private sector."  While Governor Christie's comments were directed at New Jersey's pension system, I believe that it is reasonable to also apply them to the health benefits system since both systems were "reformed" under the same package of bills. A reform bill such as this could be considered "ameliorative or curative" of what was a very bad deal for taxpayers.

In conclusion, I believe that given the stated purpose of the 2010 legislation, a case could be made, despite the Handbook's contrary interpretation, that the presumption of "grandfathering" should not apply to the 2010 statutory amendment and that Hainesport's elected officials should lose their health benefits unless they qualify as "employees" under the current definition in N.J.S.A. 52:14-17.26.

In order to test this conclusion, a resident in or taxpayer in Hainesport would need to file a complaint in Superior Court seeking declaratory and injunctive relief.  Since there are no facts in dispute and the court would only need to apply the law to a straightforward question, I don't believe that the legal fees would be too great and it is possible that a resident could ably present the question without need of a lawyer.

-----------------------Original Post ------------------------

Back in 2014, Clinton attorney Walter M. Luers successfully sued Hainesport Township (Burlington County) on my behalf to learn which Township officials and employees were receiving taxpayer-subsidized health insurance benefits. It turned out that all five members of the Township Committee had coverage for themselves and their families subsidized by Hainesport taxpayers.  The total 2014 cost of the coverage for the five Committee members and their families was $128,683.08 of which the five members contributed a total of $3,964.38 leaving the taxpayers to fund the other $124,718.70.

Lately, I looked into the changes made to the State Health Benefits Plan by a 2010 enactment that sought to reform it as well the state's pension system.  After reading it over, I am starting to think that none of the Hainesport Committee members are eligible for enrollment in the State Health Benefits Plan and that they haven't been since at least 2010.

The object of this posting to see if anyone who reads my blog and who has experience with the State Health Benefits Plan can look over my reasoning and advise me if I am right or point out my errors if I am wrong. This is still a work in progress and is out of my area of expertise and I freely admit that I could be wrong.

My reasoning as expressed in my e-mail today to Leo Selb, the Hainesport Administrator.  Unfortunately, Mr. Selb politely declined to correspond with me mainly because the coverage was obtained prior to his employment with the Township.
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Dear Mr. Selb:

I realize that you are under no duty to correspond with me, but perhaps discussing the eligibility requirements for the New Jersey State Health Benefits Plan may be mutually educational--or at least educational for me.

What confuses me is why the Township Committee members feel it necessary to write letters confirming that they spend more than 26 hours per week on Township business-see, for example, Committeeman Fitzpatrick's attached, October 1, 2012 letter.  Here is some background on why I find this confusing.

The law that governs the State Health Benefits Plan was amended by a reform bill (Senate Bill 3/Assembly Bill 2460) that was signed by Governor Christie on March 22, 2010 and went into effect sixty days later.

This bill amended  N.J.S.A. 52:14-17.26 to read as follows:
After [the effective date the reform bill], the term “employee” means (i) a full-time appointive or elective officer whose hours of work are fixed at 35 or more per week, a full-time employee of the State, or a full-time employee of an employer other than the State who appears on a regular payroll and receives a salary or wages for an average of the number of hours per week as prescribed by the governing body of the participating employer which number of hours worked shall be considered full-time, determined by resolution, and not less than 25 . . .  (Emphasis mine.)
So, in order to be eligible for state health benefits, a person employed by the Township must be "a full-time employee" and be "on a regular payroll."  The 25 hours per week requirement only describes how many hours a person on the "regular payroll" must work to be considered a "full time employee."  It doesn't--at least to me--suggest that a person who claims to work 26 hours per week is a "full time employee" even if he or she isn't on the Township's "regular payroll." The threshold question is whether or not Fitzpatrick et al are "on a regular payroll."  If they are not, it seems to me that they're not eligible for state health benefits no matter how many hours they claim to work on township business.

I think that the overall aim of the reform bill was to make sure that health benefits went only to regular, full time Township employees who show up for work everyday.  I'm talking about people who work for the DPW and the like.  It seems like a stretch that the Legislature intended for a Township Committeeman who, I understand makes a $5,200 a year stipend (roughly four dollars an hours based on working 26 claimed hours per week), to get these valuable benefits.  And, the idea of letters like the one attached seems ridiculous because any elected or appointed official could plausibly claim to work 26 hours a week and there would be no way for anyone to prove otherwise. 

If Fitzpatrick et al are truly on the Township's "regular payroll," there should be something in writing that shows how many hours they are required to work.  Does such a writing exist?  If not, it would seem to me that they are not on the "regular payroll" and are not eligible for the State Health Benefits Plan.

Before I go to the State with this, I wanted to get your thoughts.

Very truly yours,

John Paff