Litigants unhappy with New Jersey agency decisions can’t get around the normal process of judicial review by filing collateral lawsuits, a state appeals court held Wednesday.
The Appellate Division, in Beaver v. Magellan Health Services Inc., said the Superior Court Law Division was without power to adjudicate a state employee’s claims against health-care providers for denial of coverage.
After the State Health Benefits Commission ruled against the employee, his sole remedy was an appeal, the court said, calling the suit a “thinly disguised effort to fit within the Law Division’s jurisdiction and divest this court of ours.”
The State Health Benefits Plan that insured Irvin Beaver and his family is run by Horizon Blue Cross Blue Shield of New Jersey, which uses Magellan Health Services Inc. to administer mental-health and substance-abuse programs.
On Feb. 10, 2008, Beaver’s minor son entered a residential facility for substance abuse treatment, initially for 31 days. At some point, the facility said he should remain another 90 days.
Magellan told Beaver it would not pay for any in-house treatment after Feb. 25. A Magellan physician adviser said he had spoken with one of the son’s doctors who advised that residential treatment wasn’t necessary.
Beaver later learned that the Magellan adviser had not spoken with his son’s doctor but to another doctor, who denied ever making the statement.
On Beaver’s challenge, Magellan’s appeals committee agreed to pay for residential treatment through March 4. He then appealed to the SHBC.
An administrative law judge agreed with Magellan and the SHBC approved the ALJ’s decision.
Instead of seeking Appellate Division review, Beaver sued Magellan and Horizon in the Law Division, alleging breach of contract, breach of fiduciary duty, violation of the Consumer Fraud Act and unjust enrichment.
Middlesex County Superior Court Judge Jamie Happas dismissed the suit for lack of jurisdiction.
Appellate Division Judges John Kennedy, Anthony Parrillo and Michael Guadagno unanimously affirmed, saying “we have consistently recognized the statutory and regulatory scheme that requires disputes over eligibility and benefits to be submitted first to the SHBC, and, only thereafter, to this court for resolution.”
The judges were not persuaded by Beaver’s argument that he was bringing new contractual and tort claims, not seeking review of the agency ruling.
The SHBC decision on the availability of coverage stands unless overturned, Kennedy wrote, adding, “Plaintiff cannot avoid this obvious conclusion by cloaking his claims under the mantle of contract and tort. Indeed, absent an attack on that final agency action, plaintiff’s tort and contract claims are patently without basis in fact or law.”
Neither Beaver’s lawyer, Justin Klein, of Eatontown’s Hobbie Corrigan & Bertucio, nor HSBC’s lawyer, Thomas Quinn, of the Newark office of Wilson, Elser, Moskowitz, Edelman & Dicker, returned a reporter’s calls.