Krupa et al v. Richard J. Badolato

MOTION to Dismiss for Lack of Jurisdiction

D.N.J.September 19, 2016

CHRISTOPHER S. PORRINO ATTORNEY GENERAL OF NEW JERSEY By: Jeffrey S. Posta, DAG R.J. Hughes Justice Complex 25 Market Street, P.O. Box 117 Trenton, New Jersey 08625-0117 (609) 292-9246 Attorney for Defendant, Richard J. Badolato UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ERIN KRUPA, MARIANNE KRUPA, SOL MEJIAS, and SARAH MILLS, Plaintiffs, v. RICHARD J. BADOLATO, in both his individual capacity and his official capacity as Commissioner of the New Jersey Department of Banking and Insurance, Defendant. Case No: 2:16-cv-04637 (SDW)(LDW) NOTICE OF DEFENDANT’S MOTION TO DISMISS COMPLAINT IN LIEU OF ANSWER PURSUANT TO FED. R. CIV. P. 12 (b)(1) and 12 (b)(6) Hearing Date: October 17, 2016 Document Electronically Filed To: John A. Beranbaum, Esq. BERANBAUM MENKEN LLP 80 Pine Street, 33 rd Floor New York, New York 10005 Attorney for Plaintiffs PLEASE TAKE NOTICE that on Monday, October 17, 2016, the undersigned, Christopher S. Porrino, Attorney General of New Jersey, by Jeffrey S. Posta, Deputy Attorney General, appearing on behalf of Defendant, Richard J. Badolato, shall move before the Hon. Susan D. Wigenton, U.S.D.J., in the Martin Luther King Building & U.S. Courthouse, 50 Walnut Street, Newark, New Jersey Case 2:16-cv-04637-SDW-LDW Document 14 Filed 09/19/16 Page 1 of 2 PageID: 156 2 07101, for an Order dismissing Plaintiffs’ Complaint with prejudice pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6)(the “Motion”). PLEASE TAKE FURTHER NOTICE that in support of the Motion, Defendant shall rely on the Certification and Brief filed simultaneously herewith. PLEASE TAKE FURTHER NOTICE that pursuant to Local Civil Rule 7.1, opposition to the Motion must be filed and served at least 14 days prior to the hearing date. A proposed form of Order is attached hereto. CHRISTOPHER S. PORRINO ATTORNEY GENERAL OF NEW JERSEY By:/s/ Jeffrey S. Posta Jeffrey S. Posta Deputy Attorney General DATED: September 19, 2016 Case 2:16-cv-04637-SDW-LDW Document 14 Filed 09/19/16 Page 2 of 2 PageID: 157 UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ______________________________ : Honorable Susan D. Wigenton, ERIN KRUPA, MARIANNE KRUPA, : U.S.D.J. SOL MEJIAS, and SARAH MILLS, : : Civil Action No.: 2:16-cv- Plaintiffs, : 04637(SDW)(LDW) : v. : : RICHARD J. BADOLATO, in both : his individual capacity and : Hearing Dates: October 3, 2016 his official capacity as : October 17, 2016 Commissioner of the New : Jersey Department of Banking : and Insurance, : Document Electronically Filed : Defendant. : ______________________________: BRIEF IN OPPOSITION TO PLAINTIFFS’ MOTION FOR A PRELIMINARY INJUNCTION AND IN SUPPORT OF DEFENDANT’S MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(b)(1) AND 12(b)(6) CHRISTOPHER S. PORRINO ATTORNEY GENERAL OF NEW JERSEY Richard J. Hughes Justice Complex 25 Market Street P.O. Box 117 Trenton, New Jersey 08625-0117 (609) 292-9246 Jeffrey.Posta@dol.lps.state.nj.us Attorney for Defendant, Richard J. Badolato Jeffrey S. Posta Deputy Attorney General On the Brief Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 1 of 51 PageID: 158 i TABLE OF CONTENTS PAGE PRELIMINARY STATEMENT.......................................... 1 STATEMENT OF FACTS............................................. 2 STANDARD OF REVIEW............................................. 8 a. Motion To Dismiss, Pursuant To Fed. R. Civ. P. 12(b)(1) ..................................8 b. Motion To Dismiss, Pursuant To Fed. R. Civ. P. 12(b)(6) ..................................9 c. Motion For Preliminary Injunction..................9 LEGAL ARGUMENT POINT I BECAUSE N.J.S.A. 17B:27-46.1x DOES NOT APPLY TO THE SHBP OR SEHBP AND BECAUSE THOSE ENTITIES ARE NOT WITHIN THE COMMISSIONER OF BANKING AND INSURANCE’S JURISDICTION, PLAINTIFFS’ COMPLAINT FAILS TO STATE A CLAIM ON WHICH RELIEF CAN BE GRANTED...................... 11 POINT II PLAINTIFFS’ COMPLAINT SHOULD BE DISMISSED BECAUSE THE CLAIMS ARE NOT RIPE BEFORE PLAINTIFFS HAVE SOUGHT REVIEW THROUGH THE COMMISSION PROCESS.................................. 14 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 2 of 51 PageID: 159 ii POINT III N.J.S.A. 17B:27-46.1x DOES NOT VIOLATE FEDERAL EQUAL PROTECTION GUARANTEES................. 19 a. N.J.S.A. 17B:27-46.1x, On Its Face, Does Not Differentiate Between Opposite- Sex and Same-Sex Relationships Because The Statute Provides Equal Ability to Obtain a Medical Diagnosis of Infertility ....... 20 b. Even If the Court Finds that the Statute Differentiates Between Two Groups, the Department Has Never Interpreted the Statute In a Manner that Discriminates Against Same-Sex Couples. ......... 22 c. Even If the Court Finds that the Statute Differentiates Between Two Groups, the Eligibility Requirements for Coverage Under N.J.S.A. 17B:27-46.1x Are Rationally Related to Legitimate State Interests ....................................... 24 POINT IV PLAINTIFFS' SUBSTANTIVE DUE PROCESS CLAIM FAILS BECAUSE IT DOES NOT SURVIVE RATIONAL BASIS SCRUTINY...................................... 27 POINT V PLAINTIFFS’ CLAIMS AGAINST DEFENDANT IN HIS OFFICIAL CAPACITY ARE BARRED BY THE ELEVENTH AMENDMENT........................................... 30 POINT VI PLAINTIFFS’ CLAIMS AGAINST DEFENDANT IN HIS INDIVIDUAL CAPACITY SHOULD BE DISMISSED BECAUSE THEY HAVE FAILED TO SET FORTH ANY FACTS THAT WOULD EVEN SUPPORT A CAUSE OF ACTION, MUCH LESS SHOW A VIOLATION OF CLEARLY ESTABLISHED LAW............................. 34 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 3 of 51 PageID: 160 iii POINT VII PLAINTIFFS HAVE NOT MET THE ELEMENTS REQUIRED FOR THIS COURT TO IMPOSE A PRELIMINARY INJUNCTION FOR THEIR SUBSTANTIVE DUE PROCESS CLAIM................................... 37 CONCLUSION.................................................... 40 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 4 of 51 PageID: 161 iv TABLE OF AUTHORITIES FEDERAL CASES PAGE(S) Abbott Labs v. Gardner, 387 U.S. 136 (1967) ......................................... 18 Armour v. City of Indianapolis, 132 S. Ct. 2073 (2012) ...................................... 25 Anspach v. City of Philadelphia, 503 F.3d 256 (3d Cir. 2007) .................................. 9 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................. 9, 34, 37 Atascadero State Hosp. v. Scanlon, 473 U.S. 234 (1985) ......................................... 30 Barone v. Dep’t of Human Services, 107 N.J. 355 (1987) ..................................... 26, 29 Board of Trustees of Univ. of Ala. v. Garrett, 531 U.S. 356 (2001) ......................................... 26 Bradley v. U.S., 299 F.3d 197 (3d Cir. 2002) ................................. 20 Carpet Grp. Int’l v. Oriental Rug Imps., 227 F.3d 62 (3d Cir. 2000) ................................... 8 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) ......................................... 24 Christ the King Manor, Inc. v. Sec’y United States HHS, 730 F.3d 291 (3d Cir. 2013) ................................. 33 City of San Francisco v. Sheehan, U.S., 135 S. Ct. 1765 (2015) ...................................... 36 Comite’ de Apoyo a Los Trabajadores Agricolas v. Perez, 774 F.3d 173 (3d Cir. 2014) ................................. 18 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 5 of 51 PageID: 162 v PAGE(S) Eccles v. Peoples Bank of Lakewood Vill., 333 U.S. 426 (1948) ......................................... 39 Edelman v. Jordan, 415 U.S. 651 (1974) ......................................... 31 Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208 (2009) ......................................... 24 Evancho v. Fisher, 423 F.3d 347 (3d Cir. 2005) ................................. 35 Ex parte Young, 209 U.S. 123 (1908) ................................... 31,32,33 Fitzpatrick v. Bitzer, 427 U.S. 445 (1976) ......................................... 31 Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) .................................. 9 Gittlemacker v. Prasse, 428 F.2d 1(3d Cir. 1970) .................................... 34 Gould Elecs., Inc. v. United States, 220 F.3d 169 (3d Cir. 2000) .................................. 8 Greenberg v. Kimmelman, 99 N.J. 552 (1985) .......................................... 27 Hamilton Amusement Ctr. v. Verniero, 156 N.J. 254 (1998), cert. denied, 527 U.S. 1021 (1999) .......................... 28 Hans v. Louisiana, 134 U.S. 1 (1890) ........................................... 30 Harlow v. Fitzgerald, 457 U.S. 800 (1982) ......................................... 35 Heffner v. Murphy, 745 F.3d 56, 79 (3d Cir.), cert. denied, 135 S. Ct. 220 (2014) ......................... 25 Heller v. Doe, 509 U.S. 312 (1993) ......................................... 25 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 6 of 51 PageID: 163 vi PAGE(S) Hill v. Borough of Kutztown, 455 F.3d 225 (3d Cir. 2006 .................................. 20 Hutton Park Gardens v. Town Council of W. Orange, 68 N.J. 543 (1975) .......................................... 27 In re Burlington Coat Factory Sec. Litig, 114 F.3d 1410 (3d Cir. 1997) ................................ 10 Ins. Bd. Under Social Ins. Plan of Bethlehem Steel Corp. v. Muir, 819 F.2d 408 (3d Cir. 1987) ............................. 12, 13 Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700 (3d Cir. 2004) ................................. 38 Lewis v. Harris, 188 N.J. 415 (2006) ......................................... 28 Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 562 F.3d 553 (3d Cir. 2009) ............................. 38, 39 Lindsley v. National Carbonic Gas Co., 220 U.S. 61 (1911) .......................................... 29 Luckey v. Martin, 2012 U.S. Dist. LEXIS 26457, 21 (D.N.J. 2012) ............... 20 Lum v. Bank of Am., 361 F.3d 217 (3d Cir. 2004) ................................. 10 Markiewicz v. State Health Benefits Comm'n, 390 N.J. Super. 289 (App. Div. 2007) ........................ 13 McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178 (1936) .......................................... 8 Metropolis Theatre Co. v. City of Chicago, 228 U.S. 61 (1913) .......................................... 29 Micheletti v. State Health Benefits Comm'n, 389 N.J. Super. 510 (App. Div. 2007) .................... 12, 13 Morse v. Lower Merion School Dist., 132 F.3d 902 (3d Cir. 1997) .................................. 9 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 7 of 51 PageID: 164 vii PAGE(S) Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884 (3d Cir. 1977) .................................. 9 Nebbia v. New York, 291 U.S. 502 (1934)........................................... 27 N.J. Sports & Exposition Auth. v. McCrane, 61 N.J. 1, appeal dismissed sub nom., Borough of E. Rutherford v. N.J. Sports & Exposition Auth., 409 U.S. 943 (1972) ......................................... 28 Norlinger v. Hahn, 505 U.S. 1 (1992) ........................................... 20 Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578 (3d Cir. 2002) ................................. 10 NutraSweet Co. v. Vit-Mar Enters., Inc., 176 F.3d 151 (3d Cir. 1999) ................................. 11 Opticians Ass’n of Am. v. Indep. Opticians of Am., 920 F.2d 187 (3d Cir. 1990) ................................. 11 Oran v. Stafford, 34 F. Supp. 2d 906 (D.N.J. 1999), aff’d, 226 F.3d 275 (3d Cir. 2000) .......................... 10 P.C. Yonkers, Inc. v. Celebrations the Party Seasonal Superstore, LLC, 428 F.3d 504 (3d Cir. 2005) ................................. 38 Plumhoff v. Rickard, U.S., 134 S. Ct. 2012(2014) ................................. 37 Quern v. Jordan, 440 U.S. 332 (1979) ......................................... 32 Rizzo v. Goode, 423 U.S. 362 (1976) ......................................... 39 Rode v. Dellarciprete, 845 F.2d 1195 (3d Cir. 1988) ................................ 35 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 8 of 51 PageID: 165 viii PAGE(S) Sammon v. N.J. Bd. Of Med. Exam’rs, 66 F.3d 639 (3d Cir. 1995) .................................. 24 Seminole Tribe v. Florida, 517 U.S. 44 (1996) .......................................... 30 SmithKline Beecham Corp. v. Abbott Labs, 740 F.3d 471 (9th Cir. 2014) ................................ 20 Smolow v. Hafer, 353 F. Supp. 2d 561 (E.D. Pa. 2005) .......................... 8 Turicentro, S.A. v. Am. Airlines, Inc., 303 F.3d 293 (3d Cir. 2002) ................................. 8 United States v. Windsor, 133 S. Ct. 2675 (2013) ...................................... 21 Va. Office for Prot. & Advocacy v. Stewart, 131 S. Ct. 1632 (2011) ...................................... 32 White Consol. Industries v. Lin, 372 N.J. Super. 480 (App. Div. 2004) ........................ 12 Williamson v. Lee Optical of Oklahoma, 348 U.S. 483 (1955) ......................................... 27 Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) ........................................... 11 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 9 of 51 PageID: 166 ix PAGE(S) FEDERAL STATUTES 28 U.S.C. § 2201............................................... 2 42 U.S.C. § 1983................................ 1, 2, 11, 34, 35 FEDERAL RULES Fed. R. Civ. P. 12(b)(1)................................... 7, 40 Fed. R. Civ. P. 12(b)(6)................................... 9, 40 STATE STATUTES N.J.S.A. 17:48-6x............................................. 15 N.J.S.A. 17:48A-7w............................................ 15 N.J.S.A. 17:48E-35.22......................................... 15 N.J.S.A. 17B:27-1............................................. 16 N.J.S.A. 17B:27-46.1x..................................... passim N.J.S.A. 17B:27-51.1.......................................... 16 N.J.S.A. 52:14-17.25........................................... 4 N.J.S.A. 52:14-17.25 to -17.45................................ 13 N.J.S.A. 52:14-17.27(b)....................................... 14 N.J.S.A. 52:14-17.30........................................... 5 N.J.S.A. 52:14-17.46........................................... 5 N.J.S.A. 52:14-17.46.1 to -17.46.11........................... 13 N.J.S.A. 52:14-17.46.3(e)..................................... 14 N.J.S.A. 52:14-17.46.9......................................... 5 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 10 of 51 PageID: 167 x PAGE(S) STATE REGULATIONS N.J.A.C. 11:4-54.2............................................ 23 N.J.A.C. 17:9-1.1........................................... 4, 5 N.J.A.C. 17:9-1.3.......................................... 6, 17 N.J.A.C. 17:9-1.3(a)........................................... 7 N.J.A.C. 17:9-1.3(b)........................................... 6 CONSTITUTION CITED U.S. Const. amend. XIV, Sec. 1................................ 20 OTHER AUTHORITIES CITED 34 N.J.R. 2521(a)............................................. 22 35 N.J.R. 1692(b)............................................. 23 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 11 of 51 PageID: 168 PRELIMINARY STATEMENT Plaintiffs’ 42 U.S.C. § 1983 suit seeking the Commissioner of the Department of Banking and Insurance to “extend the protections of its infertility insurance mandate to women in same-sex relationships” should be dismissed for failure to state a claim for several, independent reasons. 1) The health benefit plans in which Plaintiffs are enrolled are not regulated by or subject to the jurisdiction of the Commissioner, nor did he have any role in the coverage denials alleged by Plaintiffs. The Plaintiffs’ health benefit plans are part of the State’s self- funded, privately administered health benefits program and not policies of insurance and thus not subject to the statute claimed to be unconstitutional. Moreover, the Department does not have the power to regulate the coverage decisions made by the contracted administrator of the plans, none of which Plaintiffs appealed, as permitted under the terms of their health benefit plans. Further, the Complaint should be dismissed because: 2) Plaintiffs’ claims are not ripe because they chose to file this federal action instead of seeking relief through the various administrative remedies available to them, including a binding external appeal; 3) even if the challenged statute applied to Plaintiffs, it would not discriminate in the manner alleged because it provides equal access to insurance coverage for Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 12 of 51 PageID: 169 2 medical services to treat a diagnosis of infertility and thus does not violate the Equal Protection Clause of the United States Constitution; 4) for the same reason, the statute does not violate the Due Process Clause of the United States Constitution; 5) Defendant is immune under the Eleventh Amendment for all claims against him in his official capacity; and 6) Plaintiffs have failed to set forth any facts that support a cause of action against Defendant in his individual capacity or that are sufficient to overcome Defendant’s qualified immunity. Because the Complaint fails to state a claim and should be dismissed, the Plaintiffs’ request for injunctive relief should also be denied. Plaintiffs’ Complaint therefore should be dismissed with prejudice in its entirety. PROCEDURAL HISTORY On August 1, 2016, Plaintiffs, four female New Jersey residents in same-sex relationships, filed suit in the United States District Court, District of New Jersey, against Defendant, Richard J. Badolato, Commissioner of the New Jersey Department of Banking and Insurance (“Commissioner” or “Defendant”). (Pl. Comp. ¶¶6-9). Plaintiffs’ federal law claims against the Defendant are brought pursuant to 28 U.S.C. § 2201 and 42 U.S.C. § 1983 based upon alleged violations of Equal Protection and Due Process. Id. at ¶¶69-93. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 13 of 51 PageID: 170 3 The Complaint seeks: 1) a declaratory judgment; 2) a preliminary and permanent injunction; and 3) compensatory and punitive damages. Defendant is sued in both his official and individual capacity. Plaintiffs also filed a Motion for a Preliminary Injunction (“Motion”) on August 1, 2016. By Consent Order entered on September 7, 2016, the hearing date of the Motion was adjourned until October 3, 2016. STATEMENT OF FACTS Plaintiffs are four public employees who allege that they were wrongfully denied insurance coverage for infertility treatments on the basis of their gender and sexual orientation. Their claim is that N.J.S.A. 17B:27-46.1x, which is alleged to control each of the coverage decisions that Horizon Blue Cross Blue Shield of New Jersey (“Horizon”) made for each plaintiff, is unconstitutional in allowing their insurer to deny or delay treatment for infertility. Plaintiffs contend that the statute thus violates their rights under the Due Process and Equal Protection Clauses of the United States Constitution. Plaintiffs in this case are all educators and public employees. Erin Krupa is a professor of mathematics education and Marianne Krupa is second-grade teacher in Bergen County. (Document No. 3-1, ¶ 4-5). Sol Mejias is a special education teacher in Jersey City. (Document No. 3-2, ¶ 4). Sarah Mills is Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 14 of 51 PageID: 171 4 also a New Jersey public school teacher. (Document No. 3-3, ¶ 4). The health benefits enrollment records of the Plaintiffs reveal that Erin Krupa is a qualified employee of a State or local government employer, and as such is enrolled in the State Health Benefits Program (“SHBP”). Marianne Krupa, Sol Mejias and Sarah Mills are qualified local education public employees and as such are enrolled in the School Employees’ Health Benefits Program (“SEHBP”). See Certification of David J. Pointer (Pointer Cert.), ¶ 6. Each of the Plaintiffs are enrolled in NJ DIRECT (10 or 15), a Preferred Provider Organization (“PPO”) health plan. NJ DIRECT is administered by Horizon for the Division of Pensions and Benefits. See Pointer Cert., ¶ 7. The SHBP was established in 1961. It offers medical and prescription drug coverage to qualified State and local government public employees, retirees, and eligible dependents; and dental coverage to qualified State and local government/education public employees, retirees, and their eligible dependents. See Pointer Cert., ¶ 8. The State Health Benefits Commission (“SHBC”) is the State agency, located in the Department of the Treasury, Division of Pensions and Benefits, responsible for administering the SHBP. See Pointer Cert., ¶ 9. The State Health Benefits Program Act, N.J.S.A. 52:14-17.25 et seq., and its implementing rules, N.J.A.C. 17:9-1.1, et seq., Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 15 of 51 PageID: 172 5 govern the operation and administration of the program, along with the Member Handbook for the Plan and the policies of the contracted third-party administrator. See Pointer Cert., ¶ 10. The SEHBP was established in 2007. It offers medical and prescription drug coverage to qualified local education public employees, retirees, and eligible dependents. See Pointer Cert., ¶ 11. The School Employees' Health Benefits Commission (“SEHBC”) is the State agency, located in the Department of the Treasury, Division of Pensions and Benefits, responsible for administering the SEHBP. See Pointer Cert., ¶ 12. The School Employees’ Health Benefits Program Act, N.J.S.A. 52:14-17.46 et seq., and the rules at N.J.A.C. 17:9-1.1, et seq., govern the operation and administration of the program along with the Member Handbook for the Plan and the policies of the contracted third-party administrator. See Pointer Cert., ¶ 13. The SHBP and the SEHBP self-fund the coverage offered to the Plaintiffs under the Horizon NJ Direct plans in which they are enrolled. The two State Health Benefits programs each have a fund of money comprised of employee and employer contributions, which is used to pay claims. N.J.S.A. 52:14- 17.30; N.J.S.A. 52:14-17.46.9. The State Health Benefits Plan Design Committee and the School Employees Health Benefit Design Committee have exclusive control over the design of the plans. An administrator, in this case Horizon, is contracted to Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 16 of 51 PageID: 173 6 administer the claims and pays claims using the funds of the SHBP and SEHBP. There is no transfer of risk of loss or benefit to Horizon, and therefore Horizon does not act as an insurer in this arrangement. Horizon is merely paid for its provision of its services in administering the plan. Both the SHBP and the SEHBP have a process for appealing claims decisions that is governed by regulations promulgated by the State Health Benefits Commission. N.J.A.C. 17:9-1.3. Despite this avenue for reviewing denials of coverage, none of the Plaintiffs in this suit pursued an appeal of any denial of coverage to the State Health Benefits Commission or the School Employees Health Benefits Commission so that a Final Administrative Determination could be made concerning the treatments they sought. Both State Health Benefits Programs provide for an internal appeal process to the third-party administrator, in this case Horizon, under its grievance procedures. N.J.A.C. 17:9-1.3(b). Members also are able to pursue an appeal of any adverse determination involving medical judgment made by the third-party administrator, Horizon. See Pointer Cert., ¶ 14. The NJ DIRECT Member Handbook defines an adverse benefit determination involving medical judgment broadly, and explains that such determinations may be appealed through three levels of review. See Pointer Cert., ¶ 15-16. The third such level of review, per Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 17 of 51 PageID: 174 7 the Handbook, is a review by an Independent Review Organization (“IRO”) that may be requested within four months from a final adverse determination of an appeal. The IRO reviews claims de novo and is not bound by any decisions or conclusions reached during the plan’s internal claims and appeal processes. See Pointer Cert., ¶ 17. The IRO’s decision is binding on the plan. If Plaintiffs utilized these review procedures available through the third-party administrator (Horizon) and did not achieve the desired result, they would be entitled to appeal to the relevant Commission (either the SHBC or SEHBC). N.J.A.C. 17:9-1.3(a); see Pointer Cert., ¶ 18. As noted already, the records of the Division of Pensions/State Health Benefits Program do not contain any appeal from Erin Krupa, Marianne Krupa, Sol Mejias or Sarah Mills to the SHBC or the SEHBC. 1 See Pointer Cert., ¶ 19. STANDARD OF REVIEW a. Motion To Dismiss, Pursuant To Fed. R. Civ. P. 12(b)(1) When considering a motion to dismiss under Fed. R. Civ. P. 12(b)(1), a district court must distinguish between facial and 1 Plaintiffs reveal that Erin Krupa submitted an appeal to Horizon, and after a peer to peer meeting involving Erin Krupa’s physician, Horizon’s initial benefit determination was reversed and Horizon extended coverage for the specific proposed treatment. (Document No. 3-1, ¶ 33). None of the Plaintiffs ever filed an appeal to the State Health Benefits Commission or School Employees Health Benefits Commission regarding any other adverse claim determinations. See Pointer Cert., ¶ 19. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 18 of 51 PageID: 175 8 factual challenges to its subject matter jurisdiction. Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). For either a facial or factual attack, the burden is on the plaintiff to prove jurisdiction. McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936). “In a facial attack a defendant argues that the plaintiff did not properly plead jurisdiction ... [whereas] a 'factual’ attack asserts that jurisdiction is lacking on the basis of facts outside of the pleadings.” Smolow v. Hafer, 353 F. Supp. 2d 561, 566 (E.D. Pa. 2005). In doing so, the court should “consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the Plaintiff.” Gould Elecs., Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). On the other hand, if the Court is considering a “‘factual attack,’ where a challenge is based on the sufficiency of jurisdictional fact, “the Court is free to weigh the evidence and satisfy itself whether it has power to hear the case.” Carpet Grp. Int’l v. Oriental Rug Imps., 227 F.3d 62, 69 (3d Cir. 2000). Additionally, in a “factual attack” the reviewing court “accords plaintiff’s allegations no presumption of truth,” Turicentro, S.A. v. Am. Airlines, Inc., 303 F.3d 293, 300 n.4 (3d Cir. 2002); and “the existence of disputed material facts will not preclude the trial court from evaluating for itself the Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 19 of 51 PageID: 176 9 merits of jurisdictional claims.” Mortensen v. First Federal Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977). b. Motion to Dismiss, Pursuant To Fed. R. Civ. P. 12(b)(6) When considering a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), a reviewing court must accept the plaintiff’s factual allegations as true. However, the plaintiff’s conclusory allegations and legal conclusions are not entitled to the same assumption of truth. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also Anspach v. City of Philadelphia, 503 F.3d 256, 260 (3d Cir. 2007) (quoting Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir. 1997) (conclusory allegations or legal conclusions masquerading as factual allegations will not suffice to prevent dismissal). “[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss.” Iqbal, supra, 556 U.S. at 679. The “plausibility” standard is satisfied "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678. The determination of plausibility will be "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009) (quoting Iqbal, supra, 556 U.S. at 679). Where the claims asserted are fatally defective and the plaintiff cannot plead Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 20 of 51 PageID: 177 10 any facts to support his claims, it is appropriate for the court to dismiss a complaint without permitting the plaintiff to make a curative amendment of his pleading. Oran v. Stafford, 34 F. Supp. 2d 906, 913-14 (D.N.J. 1999), aff’d, 226 F.3d 275 (3d Cir. 2000). When evaluating motions to dismiss, “courts generally consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim.” Lum v. Bank of Am., 361 F.3d 217, 222 n.3 (3d Cir. 2004). A document is found to form the basis of a claim where it is “integral to or explicitly relied upon in the complaint.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997). “The purpose of this rule is to avoid the situation where a plaintiff with a legally deficient claim that is based on a particular document can avoid dismissal of that claim by failing to attach the relied upon document.” Lum, supra, 361 F.3d at 222 n.3. c. Motion for a Preliminary Injunction Preliminary injunctive relief is an “extraordinary remedy, which should be granted only in limited circumstances.” Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 586 (3d Cir. 2002). “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 21 of 51 PageID: 178 11 harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). The “failure to establish any element . . . renders a preliminary injunction inappropriate.” NutraSweet Co. v. Vit-Mar Enters., Inc., 176 F.3d 151, 153 (3d Cir. 1999). The movant bears the burden of showing that these four factors weigh in favor of granting the injunction. Opticians Ass’n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 192 (3d Cir. 1990). For the same reasons that require dismissal of their Complaint, Plaintiffs cannot succeed on the merits of their claims and their request for a preliminary injunction should be denied. LEGAL ARGUMENT POINT I BECAUSE N.J.S.A. 17B:27-46.1x DOES NOT APPLY TO THE SHBP OR SEHBP AND BECAUSE THOSE PLANS ARE NOT WITHIN THE COMMISSIONER OF BANKING AND INSURANCE’S JURISDICTION, PLAINTIFFS’ COMPLAINT FAILS TO STATE A CLAIM ON WHICH RELIEF CAN BE GRANTED. Plaintiffs’ claims under § 1983 fail because N.J.S.A. 17B:27-46.1x neither regulates nor applies to the SHBP or SEHBP. Therefore, the statute does not control the coverage decisions made in regard to any of the Plaintiffs. Moreover, the Commissioner does not have jurisdiction over those plans. The Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 22 of 51 PageID: 179 12 SHBP and the SEHBP (collectively, the “State Benefit Plans”) offer the New Jersey Direct 10 and 15 plans through Horizon which are separate, self-funded, privately administered health benefits programs for public employees, not commercial health insurance subject to the Defendant’s purview. For the reasons set forth below, that means that Plaintiffs have not pled, and cannot plead, any facts to support a claim for relief against the only Defendant they have named in this action. First, the SHBP and the SEHBP are “not subject to the statutes and regulations of the DOBI [Department of Banking and Insurance].” Micheletti v. State Health Benefits Comm'n, 389 N.J. Super. 510, 516 (App. Div. 2007). Indeed, DOBI does not regulate self-funded plans, like the Horizon NJ Direct plans offered by the SHBP and the SEHBP. A self-funded insurance plan is one that “does not purchase an insurance policy from any insurance company in order to satisfy its obligations to its participants." White Consol. Industries v. Lin, 372 N.J. Super. 480, 486 (App. Div. 2004). The plan itself bears the risk and responsibility to pay for the health care costs of its members. Even when a self-funded plan contracts with an insurance company to provide administrative services, the plan remains self-funded as long as the administrator has no financial risk relating to the benefit claims. Ibid. (citing Ins. Bd. Under Social Ins. Plan of Bethlehem Steel Corp. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 23 of 51 PageID: 180 13 v. Muir, 819 F.2d 408, 411-13 (3d Cir. 1987)). This is the case with the Horizon NJ Direct Plans self-funded by the State Benefit Plans that provide coverage to Plaintiffs. Therefore, because “the State Health Benefits Program is not a carrier, the SHBC, not the DOBI, has the responsibility to administer the Program.” Micheletti, supra, 389 N.J. Super. at 517. Rather, the State Benefit Plans are governed by a separate and distinct statutory scheme, N.J.S.A. 52:14-17.25 to -17.45 (“SHBP Act”), and N.J.S.A. 52:14-17.46.1 to -17.46.11 (“SEHBP Act”). See Markiewicz v. State Health Benefits Comm'n, 390 N.J. Super. 289, 300 (App. Div. 2007). The SHBC and SEHBC have entered contracts with carriers for the administration of the State Benefit Plans. 2 Under the plans in which the Plaintiffs are enrolled, the administrator, in this case Horizon, pays claims made under the plan from funds from the SHBC and SEHBC and bears no risk for claim payments. Historically, both the SHBC and the SEHBC offered more than one plan of health coverage. The designs of the plans that were offered by each Commission were exclusively determined by the specific Commission, Micheletti, supra, 389 N.J. Super. at 520, until the passage of Chapter 78 in 2011. Chapter 78, among 2 The Plaintiffs are all enrolled in NJ DIRECT (10 or 15), a Preferred Provider Organization (“PPO”) self-funded, privately administered health benefits plan. See Pointer Cert., ¶7. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 24 of 51 PageID: 181 14 other things, established the State Health Benefits Plan Design Committee and the School Employees Health Benefits Design Committee and gave each committee the exclusive authority to determine the specific benefits to be offered by each of the various health benefit plans offered by each program. L. 2011, c. 78, codified at N.J.S.A. 52:14-17.27(b), N.J.S.A. 52:14- 17.46.3(e). As a matter of law and in fact, the SHBP and SEHBP are not insurance companies. The State Benefit Plans that Plaintiffs are enrolled in are not within the scope of N.J.S.A. 17B:27- 46.1x, a statute that only applies to entities within DOBI’s regulatory purview and when those entities are acting as insurance companies. See L. 1971, c. 144, Art. 1 (a)(3) (Title 17B, Chapter 27 applies to “insurance compan[ies]” in “the business of health insurance” that are “licensed” by DOBI). Because N.J.S.A. 17B:27-46.1x does not apply to the State Benefit Plans, the statute does not control the coverage decisions made in regard to Plaintiffs’ claims for benefits. As such, the Defendant did not have the regulatory power to control the acts of Horizon as the administrator of the plans. N.J.S.A. 17B:27-46.1x applies only to certain group health insurance policies, and does not expressly apply to the SHBP or SEHBP. In crafting the statute, the Legislature deliberately and expressly specified the types of health-coverage entities to Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 25 of 51 PageID: 182 15 which the infertility mandate applied. The statute was enacted in 2001. L. 2001, c. 236 (“Chapter 236”). 3 Like most statutes that mandate the treatment of certain disease states and/or direct the manner in which coverage is to be provided, Chapter 236 sets forth the mandate separately for each type of carrier to which it applies. Section 1 of Chapter 236 (codified at N.J.S.A. 17:48-6x) applies to hospital service corporations. Section 2 (N.J.S.A. 17:48A-7w) applies to medical service corporations, Section 3 (N.J.S.A. 17:48E-35.22) to health service corporations, Section 4 (N.J.S.A. 17B:27-46.1x) to group health insurers, and Section 5 (N.J.S.A. 26:2J-4.23) to health maintenance organizations (“HMOs”). The statutory scheme does not expressly apply the infertility mandate to the State Benefit Plans. When the Legislature enacts a law that it intends to apply to both commercial health coverage carriers and the State Benefit Plans, the Legislature specifically amends the statutes 3 Identical bills that would amend the definition of “infertility” are pending in both houses of the New Jersey Legislature (Senate Bill No. 1398 and Assembly Bill No. 1447). The bills would delete from the definition of infertility, “after two years of unprotected intercourse if the female partner is under 35 years of age, or one year of unprotected intercourse if the female partner is 35 years of age or older or one of the partners is considered medically sterile” and add the following criterion: “a determination of infertility by a physician licensed to practice medicine and surgery in this State pursuant to the provision of R.S. 45:9-1 et seq.” Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 26 of 51 PageID: 183 16 applicable to each type of affected carrier. If it intends for a benefit to apply to the State Benefit Plans, it amends their enabling statutes. See, e.g., L. 2011, c. 188, § 5 (mandating coverage for oral anti-cancer medications and amending N.J.S.A. 17B:27-1 et seq.) and §§ 9 and 10 (mandating coverage for oral anti-cancer medications and amending State Health Benefits Act and School Employees Health Benefits Act); L. 2008, c. 126, § 6 (mandating coverage for hearing aids and amending N.J.S.A. 17B:27-1 et seq.) and § 10 (mandating coverage for hearing aids and amending State Health Benefits Act). By contrast to Chapter 236, other statutes with coverage mandates do explicitly apply to both insured plans and the State Benefit Plans. See, e.g., L. 1975, c. 125 (amending N.J.S.A. 17B:27-51.1 to provide consumers with commercial policies reimbursement for chiropractic costs, but providing no corresponding amendment to State Health Benefits Act). In enacting Chapter 236 in 2001, the Legislature amended five separate provisions, but it did not amend the State Health Benefits Act and it did not include the infertility mandate when enacting the School Employees Health Benefits Act in 2007. That unambiguously shows that this specific legislative mandate – infertility coverage – is not a mandatory requirement for the State Benefit Plans. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 27 of 51 PageID: 184 17 Thus, the Plaintiffs’ claim that N.J.S.A. 17B:27-46.1x violates their rights must fail because the statute does not apply to the coverage decisions made by Horizon with respect to the Plaintiffs under the SHBP and SEHBP. Nor can Plaintiffs maintain suit against Defendant, because neither DOBI nor its Commissioner have jurisdiction over the State Benefit Plans or the coverage decisions challenged by Plaintiffs. For this reason alone, the Complaint should be dismissed POINT II PLAINTIFFS’ COMPLAINT SHOULD BE DISMISSED BECAUSE THE CLAIMS ARE NOT RIPE BEFORE PLAINTIFFS HAVE SOUGHT REVIEW THROUGH THE COMMISSION PROCESS Plaintiffs chose to file this federal action instead of exhausting the various administrative remedies available to them under N.J.A.C. 17:9-1.3. As such, no final agency determination has been issued with respect to their alleged lack of coverage. Because the State agencies tasked with overseeing Horizon’s administration of the State Benefits Plans have not had the full opportunity to consider and review Horizon’s decision-making, it is premature for Plaintiffs to claim that any State actor has violated their rights. As such, Plaintiffs’ claims are not ripe. The ripeness doctrine is intended to “prevent the courts, through avoidance of premature adjudication, from entangling Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 28 of 51 PageID: 185 18 themselves in abstract disagreements” and “also to protect the agencies from judicial interference until an administrative decision has been formalized.” Abbott Labs v. Gardner, 387 U.S. 136, 148 (1967). In considering whether a claim is ripe for review, a court must consider the “fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.” Ibid. The determination of whether a matter is fit for review must “consider[] whether the issues presented are purely legal, and the degree to which the challenged action is final. A court must consider whether the claims involve uncertain and contingent events that may not occur as anticipated or may not occur at all.” Comite’ de Apoyo a Los Trabajadores Agricolas v. Perez, 774 F.3d 173, 183 (3d Cir. 2014) (citation omitted). In this case, Plaintiffs’ claims are not ripe for two central reasons. First, Plaintiffs appear to assume that they will not prevail in administrative appeals available to them but that they have apparently not yet attempted. Plaintiffs’ speculation cannot circumvent the need to exhaust these remedies. Without Plaintiffs engaging in that process, there has been no final denial of coverage. Accordingly, the coverage decisions made by Horizon are simply not yet final and not susceptible to judicial review. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 29 of 51 PageID: 186 19 Second, a challenge at this early stage denies the School Employees’ Health Benefits Program Commission and/or the State Health Benefits Commission a chance to weigh in on the coverage decisions made by Horizon. Allowing judicial review now would deny the State agencies the opportunity to carry out their statutory mandate to oversee administration of the plans in accordance with their expertise in such matters. Therefore, Plaintiffs’ claims are not ripe and should be dismissed because they have not pursued them through the administrative channels allowed by law and designed to allow the appropriate State agencies the chance to weigh in. POINT III N.J.S.A. 17B:27-46.1x DOES NOT VIOLATE FEDERAL EQUAL PROTECTION GUARANTEES To the extent that Plaintiffs can avoid dismissal of their claims even though the Defendant does not regulate their health benefits plans and because their claims have not ripened, the Complaint should still be dismissed. N.J.S.A. 17B:27-46.1x is consistent with the Equal Protection Clause of the Fourteenth Amendment. Thus, even if the Plaintiffs were covered under insured health benefits plans sold by insurance carriers subject to the Commissioner’s jurisdiction, their constitutional claims would fail and the Complaint should be dismissed. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 30 of 51 PageID: 187 20 a. N.J.S.A. 17B:27-46.1x, On Its Face, Does Not Differentiate Between Opposite-Sex and Same-Sex Relationships Because The Statute Provides Equal Ability to Obtain a Medical Diagnosis of Infertility. The United States Constitution provides that no State shall “deny to any person within its jurisdiction the equal protection of the laws.” U.S. Const. amend XIV, Sec. 1. In order to state a claim based on the Equal Protection Clause, Plaintiffs must demonstrate that they were members of a protected class that was treated differently from members of a similarly situated class, Bradley v. U.S., 299 F.3d 197, 206 (3d Cir. 2002), or if they do not claim membership in a protected class, that “1) the defendant[s] treated [them] differently from others similarly situated; (2) the defendant[s] did so intentionally, and (3) there was no rational basis for the difference in treatment.” Luckey v. Martin, 2012 U.S. Dist. LEXIS 26457, 21 (D.N.J. 2012). Persons are similarly situated when they are alike “in all relevant aspects.” Norlinger v. Hahn, 505 U.S. 1, 10 (1992). The Supreme Court has not held that sexual orientation should be considered a suspect class, nor has the Third Circuit. Luckey, supra, 2012 U.S. Dist. LEXIS 26457, 17 (quoting Hill v. Borough of Kutztown, 455 F.3d 225, 239 (3d Cir. 2006)). Notwithstanding Plaintiffs’ reliance on SmithKline Beecham Corp. v. Abbott Labs, 740 F.3d 471 (9th Cir. 2014) for the proposition that heightened scrutiny is applied to equal protection claims Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 31 of 51 PageID: 188 21 involving sexual orientation, the Supreme Court did not hold in United States v. Windsor, 133 S. Ct. 2675 (2013), and has not held, that heightened scrutiny applies to such cases. Given that the Supreme Court and Third Circuit have not found that sexual orientation is a protected class, the Plaintiffs must show that N.J.S.A. 17B:27-46.1x treats them differently than others who are similarly situated. The Plaintiffs must show they are being treated differently regardless of the level of scrutiny applied. In other words, because the statute does not treat opposite-sex and same-sex couples differently, the statute must be upheld if it passes review under the rational basis test. The statute requires insured health benefits plans to provide coverage for the treatment of the disease state of infertility. On its face, it does not require a woman to have sexual intercourse with a man in order to prove she is infertile and entitled to coverage for treatment. The statutory definition of infertility, in its entirety, contains several triggers for infertility treatment coverage. Coverage is provided if a person has a “disease or condition that results in the abnormal function of the reproductive system;” or “one of the partners is considered medically sterile;” or one of the partners is not able to “carry a pregnancy to live birth.” N.J.S.A. 17B:27-46.1x. While the Plaintiffs focus on the two Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 32 of 51 PageID: 189 22 triggers that contain the term “intercourse,” the fact is that the statute provides other means for a person to demonstrate that she is infertile that apply equally to heterosexual and homosexual women. b. Even If the Court Finds that the Statute Differentiates Between Two Groups, the Department Has Never Interpreted the Statute In a Manner that Discriminates Against Same-Sex Couples. The Department of Banking and Insurance has never interpreted N.J.S.A. 17B:27-46.1x in a way that discriminates against same-sex couples, or any person. In 2002, DOBI published a Notice of Proposal in the New Jersey Register setting forth proposed rules implementing the fertility mandate. 34 N.J.R. 2521(a). The proposal included a definition of infertility based on the language of the statute: "Infertility" means a disease or condition that results in the abnormal function of the reproductive system such that: 1. A male is unable to impregnate a female; 2. A female under 35 years of age is unable to conceive after two years of unprotected sexual intercourse; 3. A female 35 years of age and over is unable to conceive after one year of unprotected sexual intercourse; 4. The male or female is medically sterile; or 5. The female is unable to carry a pregnancy to live birth. Infertility shall not mean a person who has been voluntarily sterilized regardless of whether the person has attempted to reverse the sterilization. Ibid. Subsequently, in April 2003, DOBI adopted the rules as proposed with minor revisions, but with no revisions to the Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 33 of 51 PageID: 190 23 definition of infertility. 4 35 N.J.R. 1692(b). In the Notice of Adoption, the Department specifically responded to a commenter who raised the issue of the treatment of same sex couples by the adopted regulation: COMMENT: One commenter stated that the definition of "infertility" should be revised because the proposed definition, which describes infertility as "a male [who] is unable to impregnate a female," will require coverage only for heterosexual couples. According to the commenter, the definition should be gender neutral and conform to the language of the law (that is, "a person is not able to impregnate another person[.] . . .") As an example, the commenter states that a female in a homosexual relationship who is diagnosed with infertility ought to be covered under the proposed definition without regard to whether she had unprotected sexual intercourse for one or two years. RESPONSE: The Department does not believe it is necessary to revise the proposed definition of "infertility." A female in a homosexual relationship would not necessarily be excluded from coverage under this definition, but to obtain coverage she would be required to establish infertility pursuant to this subchapter's definition of that term. Ibid. The Department’s comment response makes clear that the statute and the rule provide ways to demonstrate infertility that are equally available to both homosexual and heterosexual 4 This definition of infertility remains codified in DOBI regulations at N.J.A.C. 11:4-54.2. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 34 of 51 PageID: 191 24 couples. DOBI provided an interpretation of the statute that did not discriminate against persons based on their sexual orientation. Here, the statute was interpreted by the Department in regulations implementing the statute in a way that applies the statute equally to same-sex and heterosexual couples. This Court should defer to the State agency with expertise in this area. See Sammon v. N.J. Bd. Of Med. Exam’rs, 66 F.3d 639, 645 (3d Cir. 1995) (stating that “[a] court engaging in a rational basis review is not entitled to second guess the [State agency] on the factual assumptions or policy considerations underlying the statute.”). 5 c. Even If the Court Finds that the Statute Differentiates Between Two Groups, the Eligibility Requirements for Coverage Under N.J.S.A. 17B:27-46.1x Are Rationally Related to Legitimate State Interests. Even assuming the statute applied here and that the Plaintiffs were being treated differently under the statute, the eligibility requirements for coverage under N.J.S.A. 17B:27- 46.1x are rationally related to legitimate state interests. A 5 Under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), courts generally give deference to the interpretation of a statute by an agency charged with enforcing that statute. The agency's interpretation will prevail so long as "it is a reasonable interpretation of the statute — not necessarily the only possible interpretation, nor even the interpretation deemed most reasonable by the courts." Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 218 (2009). Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 35 of 51 PageID: 192 25 classification must be upheld against an equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification. Heller v. Doe, 509 U.S. 312, 320 (1993). Under a rational basis review, statutes are presumed to be constitutional. Heffner v. Murphy, 745 F.3d 56, 79 (3d Cir.), cert. denied, 135 S. Ct. 220, (2014). The challenger bears the burden of demonstrating that the enactment violates a constitutional provision and negating “every conceivable basis” that might support it. Armour v. City of Indianapolis, 132 S. Ct. 2073, 2081 (2012) (citations omitted). Plaintiffs have not met that burden. The State has legitimate interests in promoting access to health benefits coverage for infertility treatment to all citizens. Cost containment and protection against waste and abuse provide a rational and reasonable basis for the requirement that persons must demonstrate that they are infertile in order to obtain coverage for that specific disease state. In doing so, the Legislature framed this mandate in terms of treatment of the disease state of infertility and rationally limited the nature of the assisted reproductive therapies that would be covered. This ensures that such treatments will receive coverage when medically necessary while continuing to contain the cost of insured health benefits plans. Courts have repeatedly found that conservation of scarce Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 36 of 51 PageID: 193 26 financial resources is a legitimate state interest. Board of Trustees of Univ. of Ala. v. Garrett, 531 U.S. 356, 372 (2001) (“it would be entirely rational (and therefore constitutional) for a state employer to conserve scarce financial resources by hiring employees who are able to use existing facilities…”). State courts in New Jersey have recognized that cost containment is a legitimate government interest. For example, in Barone v. Dep’t of Human Services, 107 N.J. 355, 370 (1987), the New Jersey Supreme Court explained: “State funds available for public assistance programs are limited. It is the Legislature that has the duty to allocate the resources of the State. As long as the classification chosen by the Legislature rationally advances a legitimate governmental objective, it need not be the wisest, the fairest, or the one we would choose. It is not for the courts to determine if there is a better way to allocate resources under these programs.” For these reasons, the statute is rationally related to the legitimate state interests of ensuring access to insurance coverage for medical services to treat the disease state of infertility, while at the same time conserving scarce financial resources. Accordingly, the Plaintiffs have failed to state a valid equal protection claim. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 37 of 51 PageID: 194 27 POINT IV PLAINTIFFS’ SUBSTANTIVE DUE PROCESS CLAIM FAILS BECAUSE IT DOES NOT SURVIVE RATIONAL BASIS SCRUTINY The challenged provisions of N.J.S.A. 17B:27-46.1x comport with substantive due process because they are rationally related to a legitimate legislative purpose. The parameters of a substantive due process inquiry are well-established. The State is “free to adopt whatever economic policy may reasonably be deemed to promote public welfare.” Hutton Park Gardens v. Town Council of W. Orange, 68 N.J. 543, 562 (1975). Courts are “both incompetent and unauthorized” to question “the wisdom of the policy adopted” or “the practicality of the law enacted to forward it.” Ibid. (citing Nebbia v. New York, 291 U.S. 502, 537 (1934)). “If a statute is supported by a conceivable rational basis, it will withstand a substantive due process attack.” Greenberg v. Kimmelman, 99 N.J. 552, 563 (1985) (citing Williamson v. Lee Optical of Oklahoma, 348 U.S. 483, 488 (1955)). Here, there is a rational basis for the provisions of Chapter 236 that Plaintiffs challenge. As set forth above in Point III, the eligibility requirements for coverage under N.J.S.A. 17B:27-46.1x are rationally related to legitimate state interests. The State has a legitimate interest in providing access to coverage for infertility treatment while balancing Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 38 of 51 PageID: 195 28 that access with the containment of costs and protection against waste and abuse. A party seeking to invalidate an act of the Legislature must overcome the highest presumption of constitutional validity. “[J]udicial decisions from the time of Chief Justice Marshall reveal an unswerving acceptance of the principle that every possible presumption favors the validity of an act of the Legislature.” N.J. Sports & Exposition Auth. v. McCrane, 61 N.J. 1, 8, appeal dismissed sub nom., Borough of E. Rutherford v. N.J. Sports & Exposition Auth., 409 U.S. 943 (1972). Plaintiffs can rebut this presumptive constitutionality “only upon a showing that the statute’s repugnancy to the Constitution is clear beyond a reasonable doubt.” Hamilton Amusement Ctr. v. Verniero, 156 N.J. 254, 285 (1998), cert. denied, 527 U.S. 1021 (1999); see also, Lewis v. Harris, 188 N.J. 415, 459 (2006) (stating courts give deference to legislative enactment unless it is “unmistakably shown to run afoul of the Constitution”). Finally, a court undertaking the “most delicate task” of adjudicating the constitutionality of a statute must do so “with extreme self-restraint, and with a deep awareness that the challenged enactment represents the considered action of a body composed of popularly elected representatives.” N.J. Sports & Exposition Auth., supra, 61 N.J. at 8. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 39 of 51 PageID: 196 29 As long as the statute has some “‘reasonable basis,’” line drawing “‘does not offend the Constitution’” simply because it is “‘not made with mathematical nicety or because in practice it results in some inequality.’” Barone, supra, 107 N.J. at 367 (quoting Lindsley v. National Carbonic Gas Co., 220 U.S. 61, 78 (1911)); see also Barone, supra, 107 N.J. at 367 (“‘problems of government are practical ones and may justify, if they do not require, rough accommodations —- illogical, it may be, and unscientific’”) (quoting Metropolis Theatre Co. v. City of Chicago, 228 U.S. 61, 69-70 (1913)). There is no constitutional right to coverage for health insurance costs. By implication, there is also no right to health insurance benefits for coverage for infertility treatment. Even if there were such a right, N.J.S.A. 17B:27- 46.1x does not impose a burden on same-sex couples seeking to obtain coverage for infertility treatment. As explained above in Point III, the statutory definition of infertility defines several ways for a person to demonstrate that he or she is infertile and entitled to coverage. And even if the Court were to find that the statute places a burden on same-sex couples seeking coverage, there is a rational basis for the eligibility requirements in the statute. The statute and the eligibility requirements are rationally related to the legitimate state interest of controlling costs Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 40 of 51 PageID: 197 30 and protection against waste and abuse. Accordingly, the Plaintiffs have failed to state a valid substantive due process claim. POINT V PLAINTIFFS’ CLAIMS AGAINST DEFENDANT IN HIS OFFICIAL CAPACITY ARE BARRED BY THE ELEVENTH AMENDMENT The Eleventh Amendment to the U.S. Constitution provides: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” Under the Supreme Court’s long-standing interpretation, the Amendment confirms that States are immune from suit in federal court. See, e.g., Seminole Tribe v. Florida, 517 U.S. 44, 54 (1996); Hans v. Louisiana, 134 U.S. 1 (1890). Here, Plaintiffs’ claims for monetary damages against Defendant in his official capacity are barred because they do not fall into any of the recognized exceptions to sovereign immunity. And Plaintiffs’ claims for prospective injunctive relief are barred because they have not alleged any ongoing violation of law by the official who they have sued. There are three limited exceptions to the general rule of sovereign immunity. A State may voluntarily waive its immunity. Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 238 (1985). In Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 41 of 51 PageID: 198 31 limited circumstances, the United States Congress can abrogate a State’s Eleventh Amendment immunity. See Fitzpatrick v. Bitzer, 427 U.S. 445, 456 (1976). And a plaintiff can avoid the Eleventh Amendment bar under the doctrine of Ex parte Young, 209 U.S. 123 (1908), whereby a federal court can hear an action brought against a State official, for prospective relief, when the official is violating federal law. None of the three exceptions applies to allow claims for monetary damages against Defendant in his official capacity. First, the State has not voluntarily waived its immunity. To overcome the Eleventh Amendment, courts have required “an unequivocal indication that the State intends to consent to federal jurisdiction that otherwise would be barred.” Atascadero, supra, 473 U.S. at 238 n.1. “Constructive consent” will not suffice to overcome that bar. Edelman v. Jordan, 415 U.S. 651, 673 (1974). Nothing resembling a waiver exists in this case. Second, the United States Congress can abrogate a State’s immunity from suit, but only when it legislates pursuant to a constitutional provision that grants it authority to pierce the Eleventh Amendment. See Fitzpatrick, supra, 427 U.S. at 456 (legislation passed under section 5 of the Fourteenth Amendment can circumvent Eleventh Amendment and pierce immunity). There Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 42 of 51 PageID: 199 32 is no statute in this matter alleged to abrogate the State’s sovereign immunity. Third, under the doctrine of Ex parte Young, a federal court “may enjoin state officials to conform their future conduct to the requirements of federal law.” Quern v. Jordan, 440 U.S. 332, 337 (1979). Such an action is based on the principle, sometimes referred to as a “fiction” that “when a federal court commands a state official to do nothing more than refrain from violating federal law, he is not the State for sovereign-immunity purposes.” Va. Office for Prot. & Advocacy v. Stewart, 563 U.S. 247, 255 (2011). Importantly, a suit that seeks “to impose a liability which must be paid from public funds in the state treasury is barred by the Eleventh Amendment,” and cannot qualify for the Ex parte Young exception. Edelman, supra, 415 U.S. at 663. In other words, an Ex parte Young plaintiff may not pursue relief that is retroactive and monetary, but may only seek relief that is prospective and injunctive. See ibid. Here, to the extent that Plaintiffs’ claims for compensatory damages and for attorneys’ fees are against Defendant in his official capacity, they are an attempt to receive monetary awards from the State Treasury based on alleged past actions of State officials. This is precisely the type of relief – “accrued monetary liability that must be met from the Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 43 of 51 PageID: 200 33 general revenues of a State” – that is impermissible under an Ex parte Young action. Id. at 664. Therefore, to the extent that Plaintiffs seek monetary relief against Defendant in his official capacity, those claims must be dismissed for lack of jurisdiction. Moreover, Plaintiffs’ claims for prospective injunctive relief against Defendant are also barred by sovereign immunity because Plaintiffs have failed to establish that the official they have sued is engaged in any ongoing violation of Federal law. The entire premise of Ex parte Young is preventing a “state officer [who] lacks the authority to enforce an unconstitutional state enactment” from enforcing that law. Christ the King Manor, Inc. v. Sec’y United States HHS, 730 F.3d 291, 318 (3d Cir. 2013). Here, Plaintiffs cannot sustain the allegation that the State officer named as Defendant has violated Federal law because, for all of the reasons articulated in Point I, supra, DOBI lacks jurisdiction over the SHBP and SEHBP. Thus, even if some State officer has violated their rights (though it does not appear from the Complaint that any State agency at all has had the chance to weigh in on their alleged initial denials of coverage), they have neither identified such officer nor named such official in their Complaint. Any injunction issued against Defendant would be inappropriate because he has neither committed, nor has Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 44 of 51 PageID: 201 34 authority over, the allegedly unconstitutional denials of Plaintiffs’ rights. In sum, this Court lacks subject-matter jurisdiction to hear the case because all of the claims are barred by sovereign immunity. POINT VI PLAINTIFFS’ CLAIMS AGAINST DEFENDANT IN HIS INDIVIDUAL CAPACITY SHOULD BE DISMISSED BECAUSE THEY HAVE FAILED TO SET FORTH ANY FACTS THAT WOULD EVEN SUPPORT A CAUSE OF ACTION, MUCH LESS SHOW A VIOLATION OF CLEARLY ESTABLISHED LAW One of the most striking facts about the Complaint and the brief in Support of a Preliminary Injunction is that Plaintiffs fail to allege any specific facts that would establish a plausible claim for relief based upon Defendant’s personal involvement in the alleged constitutional violations. In order to maintain a cause of action under 42 U.S.C. § 1983, a plaintiff must allege actual specific conduct by a defendant that violates a plaintiff’s clearly established constitutional rights. Iqbal, supra, 556 U.S. at 675-676 (“a plaintiff must plead that each Government-official defendant, through the official's own individual actions, has violated the Constitution”); see Gittlemacker v. Prasse, 428 F.2d 1, 3 (3d Cir. 1970). Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 45 of 51 PageID: 202 35 Moreover, public officials are protected by qualified immunity, under which they may be held liable only for violating clearly established rights of which a reasonable person would have known. Harlow v. Fitzgerald, 457 U.S. 800 (1982). Given that Plaintiffs have merely alleged that the Legislature passed an unconstitutional statute and that Defendant has some responsibility for overseeing that statute, they are not close to meeting their burden of showing actual conduct that violated a specific and clearly established right. Because there is no respondeat superior liability under 42 U.S.C. § 1983, claims against individual public officials must fail in the absence of their personal involvement in the alleged constitutional violation. Evancho v. Fisher, 423 F.3d 347, 353 (3d Cir. 2005)(quoting Rode v. Dellarciprete, 845 F.2d 1195, 1207 (3d Cir. 1988)). "’A[n individual government] defendant in a civil rights action must have personal involvement in the alleged wrongdoing; liability cannot be predicated solely on the operation of respondeat superior.’" Evancho v. Fisher, supra, 423 F.3d at 353. In Evancho, the Third Circuit upheld dismissal of a complaint against the Pennsylvania Attorney General, in his individual capacity, because even under the liberal notice pleading standard of Rule 8(a), the complaint failed to allege facts that would show the Attorney General had any personal involvement in plaintiff’s complained-of transfer. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 46 of 51 PageID: 203 36 Here, the Complaint fails to allege any individual action taken by Defendant with regard to the Plaintiffs or N.J.S.A. 17B:27-46.1x. The only allegation made by Plaintiffs against Defendant in his individual capacity is that he allegedly “violated the right to equal protection under the laws secured to Plaintiffs by the Fourteenth Amendment to the United States Constitution”. (Complaint, p. 15, ¶70; p. 17, ¶85). The Complaint further alleges that Defendant “acted with malice toward or reckless disregard for Plaintiffs’ rights.” (Complaint, p. 15, ¶80). These bare allegations, lacking a single fact or allegation about conduct actually taken by Defendant, are wholly insufficient to impose personal liability on a public officer. Furthermore, Defendant is protected by qualified immunity and can be held liable in his individual capacity only for violating a clearly established right. A right is “clearly established” if its “contours were sufficiently definite that any reasonable official . . . would have understood that he was violating it, meaning that existing precedent . . . placed the statutory or constitutional question beyond debate.” City of San Francisco v. Sheehan, __ U.S. __, 135 S. Ct. 1765, 1774 (2015). A question is beyond debate only if there is “controlling authority” in the jurisdiction or a “robust consensus” of persuasive authority that the conduct was illegal. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 47 of 51 PageID: 204 37 Ashcroft, supra, 131 S. Ct. at 2084. And courts should “not define clearly established law at a high level of generality”; rather, existing precedent must specifically correspond with the acts and circumstances at a detailed level. Plumhoff v. Rickard, __ U.S. __, 134 S. Ct. 2012, 2023 (2014). Here, the lack of any specific factual allegations against Defendant is dispositive. Merely asserting that an unconstitutional law was passed by the Legislature and that an official’s duties had some relation to that law is insufficient to strip Defendant of his qualified immunity. No further conduct by Defendant is alleged. In sum, none of these allegations plausibly suggest any wrongdoing by Defendant in his individual capacity. Therefore, the Complaint fails to state a claim against Defendant in his individual capacity and fails to meet the bar necessary to overcome Defendant’s qualified immunity. As such, the claims should be dismissed. POINT VII PLAINTIFFS HAVE NOT MET THE ELEMENTS REQUIRED FOR THIS COURT TO IMPOSE A PRELIMINARY INJUNCTION FOR THEIR SUBSTANTIVE DUE PROCESS CLAIM The Third Circuit requires a party seeking the “extraordinary remedy” of a preliminary injunction to show the following elements: Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 48 of 51 PageID: 205 38 (1) a likelihood of success on the merits; (2) that it will suffer irreparable harm if the injunction is denied; (3) that granting preliminary relief will not result in even greater harm to the nonmoving party; and (4) that the public interest favors such relief. Kos Pharms., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004); P.C. Yonkers, Inc. v. Celebrations the Party Seasonal Superstore, LLC, 428 F.3d 504, 508 (3d Cir. 2005) (litigant must “establish every element in its favor”). First, Plaintiffs bear the burden of proving that they would likely win at a trial in this matter. As explained more fully above, Plaintiffs have not made the required showing that they will succeed on the merits. For instance, Plaintiffs’ Affidavits submitted with the Motion state bare conclusions concerning the reasons for the denial of their medical claims, and rely on those insufficient conclusions to support their contentions that these denials implicate constitutional issues. Accordingly, Plaintiffs’ Motion for a Preliminary Injunction should be denied for this reason alone. Second, Plaintiffs cannot establish that they will suffer irreparable harm. They have not demonstrated a constitutional violation and harm is not considered irreparable if it can be redressed adequately by monetary damages. Liberty Lincoln- Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 49 of 51 PageID: 206 39 Mercury, Inc. v. Ford Motor Co., 562 F.3d 553, 557 (3d Cir. 2009). Again, Plaintiffs’ Motion should be denied for this reason alone. Third, both a balancing of the hardships and the public interest require that the Plaintiffs’ Motion be denied. The Supreme Court has cautioned that when reviewing an exercise of state authority, federal courts “must be constantly mindful of the special delicacy of the adjustment to be preserved between federal equitable power and State administration of its own law.” Rizzo v. Goode, 423 U.S. 362, 378 (1976); Eccles v. Peoples Bank of Lakewood Vill., 333 U.S. 426, 431 (1948) (advising “where governmental action is involved, courts should not intervene unless the need for equitable relief is clear, not remote or speculative”). Here, Plaintiffs have not met their burden of demonstrating that their constitutional rights are implicated by the denial of their medical claims or that the challenged provisions of Chapter 236 offend the Constitution. It is in the public interest for the statute to be applied equally to same-sex and heterosexual couples. Accordingly, the Court should deny Plaintiffs’ Motion for a Preliminary Injunction. Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 50 of 51 PageID: 207 40 CONCLUSION For all of the foregoing reasons, it is respectfully requested that Plaintiffs’ request for a preliminary injunction be denied, that the Defendant’s Motion to Dismiss pursuant to Fed. R. Civ. P. 12 (b)(1) and (b)(6) be granted, and that all claims against the Defendant be dismissed with prejudice. Respectfully submitted, CHRISTOPHER S. PORRINO ATTORNEY GENERAL OF NEW JERSEY By: /s/ Jeffrey S. Posta Jeffrey S. Posta Deputy Attorney General Dated: September 19, 2016 Case 2:16-cv-04637-SDW-LDW Document 14-1 Filed 09/19/16 Page 51 of 51 PageID: 208 CHRISTOPHER S. PORRINO ATTORNEY GENERAL OF NEW JERSEY By: Jeffrey S. Posta, DAG R.J. Hughes Justice Complex 25 Market Street, P.O. Box 117 Trenton, New Jersey 08625-0117 (609) 292-9246 Attorney for Defendant, Richard J. Badolato UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ERIN KRUPA, MARIANNE KRUPA, SOL MEJIAS, and SARAH MILLS, Plaintiffs, RICHARD J. BADOLATO, in both his individual capacity and his official capacity as Commissioner of the New Jersey Department of Banking and Insurance, ;Case No: 2:16-cv-04637 (SDW)(LDW) CERTIFICATION OF DAVID J. POINTER IN OPPOSITION TO PLAINTIFFS' MOTION FOR A PRELIMINARY INJUNCTION AND IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS COMPLAINT IN LIEU OF ANSWER PURSUANT TO FED. R. CIV. P. 12 (b) (1) and 12 (b) (6) Hearing Dates: October 3, 2016 October 17, 2016 Defendant Document Electronically Filed DAVID J. POINTER, of full age, hereby certifies as follows: 1. I am employed by the State of New Jersey Division of Pensions and Benefits (the "Division") as the Deputy Director of Benefit Operations & Client Services. I have been employed by the Division of Pensions and Benefits for 32 years and have served as Deputy Director for one year. Prior to my promotion to Deputy Director, I served as Assistant Director of Health Benefits. Case 2:16-cv-04637-SDW-LDW Document 14-2 Filed 09/19/16 Page 1 of 7 PageID: 209 2. In my capacity as a Deputy Director, I am responsible for assisting the Director in the administration of public employee pension and health benefit programs, including policy formulation and operational performance to ensure effectiveness and increased productivity. I am fully familiar with the State Health Benefits Program and School Employees' Health Benefits Program, having served as the supervisor for the State Health Benefits Program for the past 10 years, and with School Employees' Health Benefits Program since its inception in 2007. 3. The Division is the agency responsible for maintaining the records and information regarding participation of public employees and retirees of the various state pension systems in the State Health Benefits Program ("SHBP") and the School Employees' Health Benefit Program ("SEHBP"). I am familiar with the procedures and systems used by the Division to maintain such information and records. 4. The Division maintains records of the enrollment for individual participants in the SHBP and the SEHBP. 5. I have personally reviewed the health benefits enrollment records of the Plaintiffs, Erin Krupa, Marianne Krupa, Sol Mejias and Sarah Mills. 6. My review revealed that Erin Krupa is a qualified employee of a State or local government employer, and as such is enrolled in the SHBP. Marianne Krupa, Sol Mejias and Sarah Mills 2 Case 2:16-cv-04637-SDW-LDW Document 14-2 Filed 09/19/16 Page 2 of 7 PageID: 210 are qualified local education public employees and as such are enrolled in the SEHBP. 7. My review further revealed that Erin Krupa, Marianne Krupa, Sol Mejias and Sarah Mills are enrolled in NJ DIRECT (10 or 15), a Preferred Provider Organization ("PPO") health plan. NJ DIRECT is administered for the Division of Pensions and Benefits by Horizon Blue Cross Blue Shield of New Jersey ("Horizon"). 8. The SHBP was established in 1961. It offers medical and prescription drug coverage to qualified State and local government public employees, retirees, and eligible dependents; and dental coverage to qualified State and local government/education public employees, retirees, and their eligible dependents. 9. The State Health Benefits Commission ("SHBC") is the State agency, located within the Executive Branch of the State of New Jersey in the Department of the Treasury, Division of Pensions and Benefits, responsible for administering the SHBP. 10. The State Health Benefits Program Act is found in the New Jersey Statutes Annotated, Title 52, codified as N.J.S.A. 52:14-17.25 et seq. Rules governing the operation and administration of the program are found in Title 17, Chapter 9, of the New Jersey Administrative Code, the Member Handbook for 3 Case 2:16-cv-04637-SDW-LDW Document 14-2 Filed 09/19/16 Page 3 of 7 PageID: 211 the Plan, and the policies of the contracted third-party administrator. 11. The SEHBP was established in 2007. It offers medical and prescription drug coverage to qualified local education public employees, retirees, and eligible dependents. 12. The School Employees' Health Benefits Commission ("SEHBC") is the State agency, located within the Executive Branch of the State of New Jersey in the Department of the Treasury, Division of Pensions and Benefits, responsible for administering the SEHBP. 13. The School Employees' Health Benefits Program Act is found in the New Jersey Statutes Annotated, Title 52, codified at N.J.S.A. 52:14-17.46 et seq. Rules governing the operation and administration of the program are found in Title 17, Chapter 9, of the New Jersey Administrative Code, the Member Handbook for the Plan, and the policies of the contracted third-party administrator. 14. The appeal process for SHBP and SEHBP claims decisions is governed by regulations promulgated by the State Health Benefits Commission. N.J.A.C. 17:9-1.3. The SHBP regulations also govern the SEHBP. The appeal process for HMO and PPO disputed claims starts with an internal appeal process to the third-party administrator, in this case Horizon, under its grievance procedures. N.J.A.C. 17:9-1.3(b) The regulations 4 Case 2:16-cv-04637-SDW-LDW Document 14-2 Filed 09/19/16 Page 4 of 7 PageID: 212 provide that members may pursue an appeal of any adverse determination involving medical judgment made by the third-party administrator, Horizon. 15. Member appeals that involve medical judgment made by Horizon are considered medical appeals. The NJ DIRECT Member Handbook explains that an adverse benefit determination involving medical judgment is: (a) a denial; or {b) a reduction from the application of clinical or medical necessity criteria; or (c) a failure to cover an item or service for which benefits are otherwise provided because Horizon determines the item or service to be experimental or investigational, cosmetic, or dental, rather than medical. 16. The NJ DIRECT Member Handbook further explains that adverse benefit determinations involving medical judgment may usually be appealed up to three times as outlined below: (a) First Level Medical Appeal - The First Level Medical Appeal of an adverse benefit determination. (b) Second Level Medical Appeal - The Second Level Medical Appeal of an adverse benefit determination available to members after completing a First Level Medical Appeal. (c) External Appeal - The Third Level Medical Appeal of an adverse benefit determination, which, at the member's request, would generally follow a Second Level Medical Appeal and may be pursued on a standard or expedited basis. An External Appeal provides members with the right to appeal to an Independent Review Organization. 17. According to the NJ DIRECT Member Handbook, a review by an Independent Review Organization ("IRO") may be requested Case 2:16-cv-04637-SDW-LDW Document 14-2 Filed 09/19/16 Page 5 of 7 PageID: 213 within four months from a final adverse determination of an appeal. The IRO reviews all relevant information and documents timely received. In reaching a decision, the IRO reviews claims de novo and is not bound by any decisions or conclusions reached during the plan's internal claims and appeal processes. The decision also includes the date the IRO received the request, references to the documentation relied on for its decision (including specific coverage provisions and evidence-based standards considered in reaching the decision), a statement that the determination is binding except to the extent that other remedies may be available under state or federal law to either you or the group health plan, and a statement that judicial review may be available to you. 18. N.J.A.C. 17:9-1.3(a) provides that once all appeal options have been exhausted through the third-party administrator (Horizon), the member may appeal to the State Health Benefits Commission/School Employees' Health Benefits Commission ("Commission") If dissatisfied with a final Horizon decision on an administrative appeal, the member has one year following receipt of the initial adverse benefit determination letter to request a Commission appeal. 19. I have personally reviewed the records of the Division of Pensions/State Health Benefits Program and did not find any appeal from Erin Krupa, Marianne Krupa, Sol Mejias and Sarah 6 Case 2:16-cv-04637-SDW-LDW Document 14-2 Filed 09/19/16 Page 6 of 7 PageID: 214 Mi11s to the ~HBG ar the SEHBC of any adverse ben~~it determinations made by the third party administratax {Horizon}, as outlined above. 20. Given the failure to appeal any denial to the appropriate Commission, zoo final agency detexm~nation has been issued. Accoxdi~gly, based on the information available to me, the Plaintiffs have nat exhausted the various administrative remedies availably to them as provided in N.J.A.C. 17:9-i.3, or within the State Health Benefits Commission process or the School Employees' Health Benefits Commission process. I cexti~y under penalty of perjury that the forgoing statements made by me are txue. z am aware that if any of the foregoing statements made by me are ~ill~ully false, Z am r,~ r subject to punishment. ;~'~'' !%,~ DAV~~~S :~J . POINTER Dated: September. 13, 2016 7 Case 2:16-cv-04637-SDW-LDW Document 14-2 Filed 09/19/16 Page 7 of 7 PageID: 215 CHRISTOPHER S. PORRINO ATTORNEY GENERAL OF NEW JERSEY By: Jeffrey S. Posta, DAG R.J. Hughes Justice Complex 25 Market Street, P.O. Box 117 Trenton, New Jersey 08625-0117 (609) 292-9246 Attorney for Defendant, Richard J. Badolato UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ERIN KRUPA, MARIANNE KRUPA, SOL MEJIAS, and SARAH MILLS, Plaintiffs, v. RICHARD J. BADOLATO, in both his individual capacity and his official capacity as Commissioner of the New Jersey Department of Banking and Insurance, Defendant. Case No: 2:16-cv-04637 (SDW)(LDW) ORDER DISMISSING PLAINTIFFS’ COMPLAINT PURSUANT TO FED. R. CIV. P. 12(b)(1) and 12 (b)(6) Document Electronically Filed This matter having come before the Court on the motion of Christopher S. Porrino, Attorney General of New Jersey, by Jeffrey S. Posta, Deputy Attorney General, appearing on behalf of Defendant, Richard J. Badolato, for an Order dismissing Plaintiffs’ Complaint with prejudice pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6)(the “Motion”), and the Court having considered the papers submitted herein; and for good cause shown; IT IS on this day of , 2016; Case 2:16-cv-04637-SDW-LDW Document 14-3 Filed 09/19/16 Page 1 of 2 PageID: 216 2 ORDERED that the Motion be and is hereby GRANTED, and it is further; ORDERED that the Plaintiffs’ Complaint be and is hereby DISMISSED WITH PREJUDICE. ______________________________________ Hon. Susan D. Wigenton, U.S.D.J. Case 2:16-cv-04637-SDW-LDW Document 14-3 Filed 09/19/16 Page 2 of 2 PageID: 217 CHRISTOPHER S. PORRINO ATTORNEY GENERAL OF NEW JERSEY By: Jeffrey S. Posta, DAG R.J. Hughes Justice Complex 25 Market Street, P.O. Box 117 Trenton, New Jersey 08625-0117 (609) 292-9246 Attorney for Defendant, Richard J. Badolato UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ERIN KRUPA, MARIANNE KRUPA, SOL MEJIAS, and SARAH MILLS, Plaintiffs, v. RICHARD J. BADOLATO, in both his individual capacity and his official capacity as Commissioner of the New Jersey Department of Banking and Insurance, Defendant. Case No: 2:16-cv-04637 (SDW)(LDW) CERTIFICATION OF SERVICE OF DEFENDANT’S MOTION TO DISMISS COMPLAINT IN LIEU OF ANSWER PURSUANT TO FED. R. CIV. P. 12 (b)(1) and 12 (b)(6) Hearing Date: October 17, 2016 Document Electronically Filed To: John A. Beranbaum, Esq. BERANBAUM MENKEN LLP 80 Pine Street, 33 rd Floor New York, New York 10005 Attorney for Plaintiffs JEFFREY S. POSTA, of full age, hereby certifies as follows: 1. I am a Deputy Attorney General of the State of New Jersey, attorney for Defendant, Richard J. Badolato. 2. On September 19, 2016, a true and correct copy of the Defendant’s Motion to Dismiss the Complaint of the Plaintiffs, Case 2:16-cv-04637-SDW-LDW Document 14-4 Filed 09/19/16 Page 1 of 2 PageID: 218 2 supporting Certification, Brief and a proposed form of Order, were served by electronic mail upon the following: John A. Beranbaum, Esq. BERANBAUM MENKEN LLP 80 Pine Street, 33 rd Floor New York, New York 10005 Attorney for Plaintiffs I certify under penalty of perjury that the foregoing is true and correct. /s/ Jeffrey S. Posta JEFFREY S. POSTA Dated: September 19, 2016 Case 2:16-cv-04637-SDW-LDW Document 14-4 Filed 09/19/16 Page 2 of 2 PageID: 219