Retiree Prescription Copay Lawsuit

Yesterday, the Superior Court of New Jersey Appellate Division issued a unanimous decision with regards to the retiree prescription copay lawsuit that was filed by members of the State Health Benefits Design Committee, Hetty Rosenstein, Chair and Charlie Wowkanech President of the AFL-CIO on behalf of the Committee.

I am ecstatic to report that the court has vacated the implementation of the indexing of retiree co-pays going back to 2013, which will roll back co-pays to the levels agreed upon by the committee for the 2012 plan year.
A short history on the issue is as follows:
When Chapter 78 was adopted, the legislature gave express authority to the State Health Benefits Design Committee to develop health and prescription plans.
This Committee is comprised of 12 members, six from labor and six Governor’s appointees. The law required that in order to implement a plan or make changes changes to an existing one, a majority of the committee (seven) was required to vote in the affirmative.
Early on, the Committee was presented with an alternate source of funding for medicare retirees  that would net the State Health Benefits Plans almost $100 Million dollars a year in additional funding. As an incentive and compromise, in turn, the Committee voted to freeze retiree prescription co-pays at the 2011 rates and lower generic mail order to $5 for up to a 90 day supply. This was done with the original plan designs under Chapter 78.
When creating plan designs in late 2012 for 2013, when the Committee did not pass a motion presented by management to index co-pays. The Division of Pensions and Benefits unilaterally invoked a regulation under the State Health Benefits Code that would automatically index co-pays based on medical inflation for retirees. This indexing would have tripled some co-pays by 2015 and increase them all substantially.
The Court ruled that the actions by the Division were not authorized by law and that the power to adjust co-pays is vested in the Design Committee. Outside of an affirmative action of the committee, status quo should have been maintained.
We do not know if the State will appeal the decision at this time but we will keep you advised through all of our communication outlets.
Please read the January issue of NJ COPS for a complete update and have a Safe, Happy and Healthy New Year!