Petitioner-Appellant,
v.
STATE HEALTH BENEFITS COMMISSION,
Respondent-Respondent.
_________________________________________________
Before Judges Kestin, Weissbard and Payne.
On appeal from a Final Agency Decision of
the State Health Benefits Commission,
TYP 6355-04S.
New Jersey Protection & Advocacy, Inc.
attorney for appellant (Susan W. Saidel
on the brief).
Stuart Rabner, Attorney General, attorney
for respondent (Michael J. Haas, Assistant
Attorney General, of counsel, and Jeff
Ignatowitz, Deputy Attorney General, on the
brief).
The opinion of the court was delivered by
PAYNE, J.A.D.
N.J.S.A. 52:14-17.29e, applicable to health insurance coverage offered by the respondent State Health
Benefits Commission (SHBC), requires parity in coverage for treatments for biologically-based mental illness
and for other sickness. It provides in relevant part:
The State Health Benefits Commission shall ensure that every contract purchased by the
commission on or after the effective date of this act that provides hospital
or medical expense benefits shall provide coverage for biologically-based mental illness under the
same terms and conditions as provided for any other sickness under the contract.
N.J.S.A. 52:14-17.29d defines "biologically-based mental illness" to be a "mental or nervous condition
that is caused by a biological disorder of the brain and results in
a clinically significant or [sic] psychological syndrome or pattern that substantially limits the
functioning of the person with the illness, including, but not limited to .
. . pervasive developmental disorder or autism."
Petitioner Walter Markiewicz, a public employee, is insured by the SHBC under its
NJ Plus
See footnote 1
plan. His son, T., is a covered person under that insurance
plan. T. suffers from "pervasive developmental disorder, not otherwise specified," (PDD-NOS or PDD),
a severe condition, related to autism, that has caused gross delays in his
development of motor skills and other neurological and muscular problems. The recognized treatments
for his condition consist of occupational, speech and physical therapy.
The SHBC concedes that PDD is a biologically-based mental illness, that T. suffers
from it, and that the therapeutic services provided to him are medically necessary.
Nonetheless, after paying claims for such treatment for 22 months, commencing in June
2003 it has denied coverage for the treatment as the result of an
exclusion in its health benefits contract as set forth in the NJ Plus
Member Handbook for:
Educational or developmental services or supplies. This includes services or supplies that are
rendered with the primary purpose being to provide the person with any of
the following:
. . . .
- a service or supply that is being provided to promote development beyond
any level of function previously demonstrated.
In this appeal from a final determination of the SHBC enforcing the contractual
exclusion in the circumstances presented, petitioner challenges the enforceability of the exclusion, arguing
that it is contrary to the Legislature's intent when including PDD within the
scope of its mental health parity legislation, that the exclusion is ambiguous, and
that the recognition of the exclusion in this case results in a denial
of equal protection. Because we find that the contractual exclusion as applied to
covered persons with PDD is contrary to the Legislature's intent in enacting the
parity statute applicable to the State Health Benefits Plan, we reverse.
. . . .
[T]he broad goal would be to help T. become as independent as possible.
He's unable to function in the capacity that a child of his age
should be. He's unable to do several tasks on his own without the
implementation of O.T. But by asking him to put on his socks, an
O.T. doesn't just look at that as, "Wow, you just put on your
sock," what we look at is his ability to hold his body in
flexion, to maintain both arms in front without having to keep [one] back
here for support. We're looking at whether his eyes are capable of looking
where his hands are, which is a huge problem with T.
So . . . my goal would be something like working on visual
motor tasks and using that to produce a functional outcome.
In contrast, T.'s physical therapist works on his stamina, with a goal of
getting him to sit and walk for longer periods of time, climb stairs
without falling, exit a car, and perform other similar functions. It was stated
that speech therapy is frequently utilized as a treatment for persons such as
T. who have swallowing difficulties.
Richter testified that, if physical and occupational therapy services were not provided to
T., he would regress, losing the skills that he had attained, a phenomenon
that she had observed after an absence resulting from sickness or a vacation.
Using tying shoes as an example, she testified:
It's so much work for his eyes to have to look and team
together and look at the same place where his hands are. That it's
such a struggle and such an effort to not hear the fan going
and whatever else is going on in the room. To shut all that
out and really concentrate on what he's doing and for his central nervous
system to be able to hold that trunk up and keep those hands
forward and lift that foot off the ground, it's so much effort for
him. If we don't keep up with that stuff, he will regress. There's
no doubt.
On cross-examination by the SHBC, however, Richter admitted that the occupational therapy that
she had provided had increased T.'s development beyond what existed when he was
first treated, although that development fell far short of the development appropriate to
his age level of almost eight years. Indeed, she admitted that the goal
of the therapy was to "get beyond what . . . the child
can currently perform" in order to increase the child's independence and to foster
the development that in other children would happen naturally.
When pediatrician Dr. Schlitt was asked on cross-examination where T. would stand without
the therapy that he had prescribed to treat the effects of his condition,
he responded that T. would be "[m]uch worse." In response to the ALJ's
question, the doctor testified that the therapy provided a definite benefit that was
related to the level of treatment. However, the doctor, too, conceded that the
effect of the therapy had been to permit T. to do things now
that he could not have done before, although he was of the opinion
that, with additional therapy, T. should be able to develop further skills. According
to the doctor, his immediate goal was to promote the child's development "to
the point where he's safe." Later, the doctor stated, he would be "fighting"
to make T. a well-functioning person in society. "Just to make him safe
isn't good enough, but he's not even safe yet."
The hearing also included testimony from David Perry, who was employed by Horizon,
the benefits administrator for the SHBC's NJ Plus plan, as the Director of
Account Management and Finance for the State Health Benefits Program. Perry testified that
he believed that, prior to 2001, children with PDD were being provided with
insurance coverage for occupational and physical therapy pursuant to the SHBC's presently existing
contractual language. When Horizon's medical director determined from company data that the volume
of therapy claims was "running at a certain level" and that therapy on
behalf of children with PDD was being authorized, he contacted Perry to determine
whether the SHBC wanted the developmental exclusion to be interpreted so as to
bar such claims. It was then determined that such therapeutic claims had been
"approved inappropriately." Thereafter, claims on behalf of children with PDD were flagged by
Horizon to determine whether the claims fell within the developmental treatment exclusion. If
so, they were denied.
Following the hearing, on July 7, 2005, the ALJ issued a written opinion
in which he recommended that petitioner's claim for benefits be denied. The judge
found, in relevant part, that occupational and physical therapy was being provided to
train T. in "activities of daily living" in order to "promote development beyond
any level of function previously demonstrated." The judge continued by finding:
That part of this therapy is aimed at developing the skills and abilities
not yet demonstrated that will protect T. from harm does not lessen the
fact that these are skills that he needs to develop, that some, if
not all, of these involve "activities of daily living." The contract language does
not differentiate between activities of daily living that have a safety element within
them and those that do not, and the language does not differentiate between
the promotion of development of functions not previously demonstrated that have safety elements
and those that do not.
The judge additionally rejected arguments by petitioner similar to those offered on appeal
that the contract was ambiguous, and that T., as a disabled child, had
been denied equal protection of the law. The SHBC adopted the findings of
fact and conclusions of law of the ALJ, along with his recommended disposition,
and in a final decision dated August 16, 2005, denied petitioner's claim.
[
37 N.J.R. 1523(a) (May 2, 2005).]
The Department's interpretation of the parity statute applicable to individual insurance plans is
not binding on the SHBC or us. Nonetheless, its construction of a substantially
identical statutory provision that it is authorized to interpret is "'persuasive evidence of
the Legislature's understanding of its enactment.'" St. Peter's Univ. Hosp. v. Lacy,
185 N.J. 1, 15 (2005)(quoting Cedar Cove, Inc. v. Stanzione,
122 N.J. 202, 212
(1991)).
We view the Department's regulations as reflecting a proper construction of the intent
of the Legislature in passing the private insurance parity statute as it relates
to the provision of benefits for developmentally disabled children who suffer from developmental
conditions such as PDD and autism. As the Department has noted, an exclusion
from coverage for claims based upon occupational, speech and physical therapy offered to
developmentally disabled children would render meaningless the specific inclusion of PDD and autism
within those biologically-based mental illnesses subject to the parity statute. The Legislature surely
could not have intended that the principal treatments for developmental disabilities be excluded
from coverage simply because those treatments differ in their essential nature from treatments
applicable to other biologically-based mental illnesses, such as the use of psychiatric or
psychological therapy and drugs. The fact that biologically-based mental illnesses affect development in
some and other neurological functions in others should not be the determinant of
coverage.
As we have noted, the parity statute applicable to coverage offered through the
SHBC is, in all relevant respects, identical to that applicable to private, individual
insurance policies. Statutes that share a common purpose should be harmonized, not read
in conflict, F & W Associates v. County of Somerset,
276 N.J. Super. 519, 525-26 (App. Div. 1994) a maxim that is particularly applicable when the
statues in question were passed in the same session, as these were. St.
Peter's, supra, 185 N.J. at 15 (quoting In re Adoption of a Child
by W.P. and M.P.,
163 N.J. 158, 182-83 (2000) (Poritz, C.J., dissenting).
The SHBC, espousing a literal reading of the parity statute, contends that its
contractual exclusion from coverage of educational or developmental services
See footnote 4
that promote development beyond
any level of function previously demonstrated comports with the parity statute because it
applies equally to the treatment of physical illness and biologically-based mental conditions. However,
the SHBC's interpretation of the statute renders null the inclusion of PDD and
autism within its parity provisions. A statute should not be read so literally
that the purpose of the legislation is circumvented and an anomalous result is
achieved, as has occurred here. Reisman v. Great Am. Rec., Inc.,
266 N.J.
Super. 87, 96 (App. Div.), certif. denied,
134 N.J. 560 (1993). In such
a circumstance, literal interpretation must bow to a common-sense view of the law's
intent. Wnuck v. N.J. DMV,
337 N.J. Super. 52, 57-58 (App. Div. 2001).
To read the governing statute as offering parity, but not affording coverage for
medically necessary treatment of the very conditions that are the enumerated subjects of
the parity provisions would be unreasonable.
The State Health Benefits Program Act, N.J.S.A. 52:14-17.25 to -17.45, created a state-funded,
but privately-administered, health benefits program for public employees, established the SHBC, and authorized
it to oversee the program. We have recognized that the "goal of the
State Health Benefits Program Act is to provide comprehensive health benefits for eligible
public employees and their families at tolerable cost." Heaton, supra, 264 N.J. Super.
at 151. Horizon's witness, Perry, testifying at the administrative hearing in this matter,
stated that the SHBC's decision to enforce the developmental exclusion to preclude coverage
for occupational, speech and physical therapy administered to children with PDD and autism,
occurred after a rise in such claims had been recognized by Horizon's medical
director. That interpretive decision, while conserving the public fisc, served to undermine the
purposes of the parity statute as we read it. It is well established
that an administrative agency may not exercise its delegated authority to alter the
terms of a statute or frustrate the policy underlying an enactment. N.J. State
Chamber of Commerce v. N.J. Election Law Enforcement Comm'n.,
82 N.J. 57, 82
(1980).
Unfortunately, PDD and autism, with the mental distress and treatment expenses that accompany
them, are appearing with alarmingly greater frequency among children in this country. To
public employees, coverage by the SHBC may provide their "only source of protection
from [such] catastrophic medical expenses." Heaton, supra, 264 N.J. Super. at 150. Yet,
the SHBC would interpret the parity statute in a manner that would permit
the exclusion of benefits for medically necessary treatment of children with PDD and
autism, thereby limiting state-employee coverage to a level below the statutory minimum imposed
on commercial carriers. We do not perceive either the nature of the State
Health Benefits Program nor the cost concerns of the SHBC as providing a
ground for this distinction in coverage under governing parity statutes, particularly in light
of legislative sponsor statements expressing the equivalence of coverage that was envisioned.
We offer no opinion whether the exclusion at issue can be implemented legitimately
in contexts other than those presented. However, for the reasons we have expressed,
we find its use to preclude coverage of medically necessary occupational, speech and
physical therapy provided to children with biologically-based mental illnesses manifesting as developmental disabilities
to be contrary to the mental health parity statute as set forth in
N.J.S.A. 52:14-17.29d and -17.29e. An interpretation consistent with that of the Department of
Banking and Insurance, as set forth in N.J.A.C. 11:4-57.1 through -57.4, is required.
In light of this resolution, we need not address petitioner's further arguments premised
upon ambiguity and an equal protection violation.
Reversed and remanded to the State Health Benefits Commission for further action consistent
with this opinion.
Footnote: 1
The name refers to the State's Point of Service plan.
Footnote: 2
This is the underlying chapter law codified in part at N.J.S.A. 17B:26-2.1s.
Footnote: 3
The SHBC has not promulgated regulations that specifically address treatments for PDD
and autism. The administrative code simply contains a regulation adopting by reference "all
of the policy provisions contained in the contracts between the health and dental
plans and the State Health Benefits Commission as well as any subsequent amendments
thereto. N.J.A.C. § 17:9-2.14.
Footnote: 4
Neither term is defined by statute or regulation.
A-