The status of this decision is unpublished
Original Wordprocessor VersionNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3635-06T33635-06T3
IN THE MATTER OF THE CHALLENGE
AND REQUEST FOR HEARING BY
GUARDIAN LIFE INSURANCE COMPANY
OF AMERICA REGARDING THE NEW JERSEY
INDIVIDUAL HEALTH COVERAGE PROGRAM
BOARD OF DIRECTORS' ISSUANCE OF THE
DECEMBER 18, 2006, INTERIM RECONCILIATIONS
OF THE 1997/1 998 AND 1999/2000 LOSS
ASSESSMENTS AND THE 2001/2002
LOSS ASSESSMENT.
________________________________________________________________
Argued March 4, 2009 - Decided
Before Judges Stern, Rodríguez and Payne.
On appeal from the New Jersey Individual Health Coverage Program Board of Directors.
Ross A. Lewin argued the cause for appellant Guardian Life Insurance Company of America (Drinker Biddle & Reath LLP, attorneys; Mr. Lewin, of counsel and on the brief; Timothy J. O'Driscoll, on the brief).
Eleanor Heck, Deputy Attorney General, argued the cause for respondent New Jersey Individual Health Coverage Program Board of Directors (Anne Milgram, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Ms. Heck, on the brief).
PER CURIAM
Guardian Life Insurance Company of America appeals from the February 13, 2007 order of the Board of Directors of the New Jersey Individual Health Coverage Program ("IHCP") rejecting challenges to the December 18, 2006 invoices embodying interim reconciliations of the 1997-1998 and 1999-2000 loss assessments, and the amended regulations on which they are based, and denying its request for a hearing and payment into escrow. It challenges the Board's December 2006 refusal "to provide similar treatment for the 1993 to 1996 assessment years" as applied retroactively to the years 1997 to 2000, and also contends that "if this [c]ourt upholds the IHCP Board's refusal to recalculate the assessments for 1993 to 1996 . . . the IHCP Board must act similarly with respect to the 1997 to 2000 period."
As we stated in In re Challenges by Chubb Colonial Life Ins. Co., decided today, L. 1997, c. 146 and its repeal of 179 N.J. 570 (2004) should apply retroactively. We therefore upheld the Board's second-tier methodology for 1993-1996 in In re Chubb Colonial.
In response to the Supreme Court opinion, on October 17, 2006, the Board adopted a new IHCP loss-assessment methodology (the adjusted net earned premium or "ANEP" methodology), effective on December 18, 2006, to apply to the 1997-1998 loss assessment calculation and to the calculation for all periods thereafter. Guardian asserts that the ANEP methodology should have been applied to the 1993-1996 loss assessments as well. It attacks retroactivity in 2006 to 1997-1998 and 1999-2000 and the $1,468,216.33 added interim assessment for 1997-1998 and $313,057.21 for 1999-2000, and claims that, if that application is sustainable there is no "rational basis" for treating 1993-1996 assessments differently than 1997-2000. It notes both sets of assessments are "not yet final." In other words, Guardian asserts the Board must either recalculate the 1993-1996 loss assessments under the new methodology or apply a similar methodology for all years and recalculate the interim reconciliations for the 1997-1998 and 1999-2000 loss assessments.
Guardian is correct that in our 2002 opinion, we declined to address retroactivity and to invalidate application of the second-tier methodology "to the assessments made prior to [1998] or its 'two year calculation period.'" See In re N.J. Indiv. Health Coverage Program's Readoption of N.J.A.C. 11:20-1 et seq., 353 N.J. Super. 494, 526 (App. Div. 2002), aff'd in part, rev'd in part, 179 N.J. 570 (2004). We expressly declined to address 1996 loss assessments, and the Supreme Court affirmed our "invalidation of N.J.A.C. 11:20-2.17 as amended effective August 7, 1998." See In re IHCP's Readoption, supra, 179 N.J. at 582. Hence, the Board could continue to use the second-tier methodology for years prior to the 1997 amendment and make the new ANEP methodology applicable only to the calculation periods commencing in 1997.
Our opinions in In re Chubb Colonial underscore the basis for a rational distinction between the years 1993-1996 and the 1997-2000 calculation periods. In addition to raising the retroactivity challenge, Guardian argues, however, that there are additional reasons the same calculations should apply to it for all eight years. It asserts that only a few carriers initially challenged the 1997-2000 assessments, and it is now fundamentally unfair to assess it to provide relief to those that did not challenge the assessments prior to the Supreme Court's decision. It also asserts that as no other carrier is making the argument it now advances, there is a basis for treating it differently than other carriers by granting it the relief it seeks. The Board contends that no equal protection problem arises from treating different years and calculation periods dissimilarly, and that the carriers cannot be treated dissimilarly by applying the rules differently for the same periods of time. The Board further notes that the ongoing litigation and the Supreme Court's opinion affecting methodology therefore had to affect all carriers and their expectations.
We reject the equal protection attack based on the use of different loss assessment methodology for 1993-1996 and post-1996 for the reasons stated in our In re Chubb Colonial opinion decided today.
We are told the payments were subsequently transferred to an interest bearing account.
See also In re Challenges by Chubb Colonial Life Ins. Co., No. A-6116-05 (App. Div. Aug. 28, 2007).
Guardian was not a participant in those appeals. See In re N.J. Indiv. Health Coverage Program's Readoption of N.J.A.C. 11:20-1 et seq., 353 N.J. Super. 494, 494 (App. Div. 2002), aff'd in part, rev'd in part, 179 N.J. at 540, 572-73 (2004).
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A-3635-06T3
April 3, 2009
