NJ Appeals Court Disability Retirees Exempted from Health Insurance Premium Contributions

In Brick Township PBA Local 230 v. Township of Brick, the Appellate Division of the New Jersey Superior Court held that that N.J.S.A. 40A:10-21.1, L. 2011, c. 78, § 42 (“Chapter 78”) does not require ordinary or accidental disability retirees to make premium payments for health insurance benefits. In reaching its decision, the appeals court concluded that the express language of the statute exempts disability retirees from health insurance premium contributions.

The Facts of the Case

In January 2011, Michael Spallina, a police officer employed by the Township of Brick, sustained injuries in the line of duty. He applied for accidental disability retirement, which was approved by the New Jersey Division of Pensions.

NJ Appeals Court Disability Retirees Exempted from Health Insurance Premium Contributions

The Township advised Spallina he must continue making health insurance premium contributions to maintain his retiree health benefits coverage, based on Chapter 78. The Township’s position is that obligations imposed by Chapter 78 extended to individuals who retired, whether because of years of service or disability.

Brick Township PBA Local 230 (“PBA Local 230”) and Spallina (collectively “plaintiffs”) filed a declaratory judgment action seeking a declaration from the court that Chapter 78 and the terms of the applicable collective bargaining agreement (“CBA”) do not require Spallina to continue making health insurance premium contributions to the Township because he was receiving a disability retirement. The judge concluded otherwise.

On appeal, the plaintiffs argued that Chapter 78 does not require Spallina to make contributions towards the cost of his health insurance premiums because his retirement was due solely to a disability. The Township maintained that Chapter 78 excludes from the obligation to contribute to the cost of health care benefits, only those employees completing twenty or more years of public service by the effective date of Chapter 78.

The Court’s Decision

The Appellate Division reversed the lower court’s decision in holding that Chapter 78 does not require ordinary or accidental disability retirees to make premium payments for health insurance benefits.

According to the panel, the “language in Chapter 78 plainly identifies which employees are subject to its requirements.” It concluded that the statute “does not include employees who retire based on disability; instead, it offers a circumscribed definition of the employees intended to be affected by the implementation of the statute, namely those who retire based on meeting the service requirements.”

In reaching its decision, the Appellate Court further noted that “extrinsic evidence bolsters our conclusion that the Legislature did not intend for disability retirees to contribute to their health insurance premiums pursuant to Chapter 78.” The panel specifically highlighted that disability retirees are accorded separate statutory treatment, citing that “ordinary retirement is linked to a member’s age or years of service, whereas disability retirement is awarded because of an employee’s disability.”

For more information about the court’s decision or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

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