New Jersey Dental Ass’n v. Metropolitan Life Ins. Co., 424 N.J. Super. 160 (App. Div. 2012). Many cases have rightly held that, under New Jersey’s liberal standing rules, organizations have standing to sue on behalf of their members. This opinion, written by Judge Grall, joins that list of cases. The panel was also willing to reach the merits of the challenge by appellant New Jersey Dental Association (“NJDA”) to an administrative regulation even though NJDA did not follow the correct procedure to perfect its appeal. Ultimately, however, NJDA lost on the merits.
Two insurers, defendants Metropolitan Life Insurance Company and Aetna Life Insurance Company, offered an ancillary program for dental services that were not covered by the dental plans approved by the Department of Banking and Insurance (“DOBI”) pursuant to the selective contracting law, N.J.S.A. 17B:27A-54. The ancillary program allows a subscriber to receive a service not covered by the plan, at a price to which the carriers and network dentists agree. NJDA contended that the selective contracting law does not authorize the ancillary program. NJDA sought a declaratory judgment that the clauses in its members’ contracts with the carriers that form the basis of the ancillary program were therefore invalid.
The Law Division granted summary judgment to the carriers. That court held that there was no private right of action to enforce the selective contracting law, and that, on the merits, NJDA’s claim failed because a DOBI regulation authorized the ancillary program. NJDA appealed. DOBI was granted leave to participate as an amicus curiae.
Judge Grall first observed that there did not need to be a private right of action under the selective contracting law for NJDA to challenge the contract provisions relating to the ancillary program. “One questioning the legality of a contract provision may obtain a judicial determination of the issue and injunctive relief. Such an action is not one to enforce the law, it is one to determine whether courts will enforce the contract” (citations omitted).
What became clear when the Law Division granted summary judgment, Judge Grall said, was that NJDA was challenging the DOBI regulation that allowed the ancillary program. NJDA had a constitutional right to attack that regulation, subject only to the need for standing to do so. “[A]n organization whose members are aggrieved and have interests that are sufficiently adverse has standing to challenge agency action on behalf of its members.” Thus, the Law Division’s “no private right of action” rationale was mistaken and irrelevant.
Having found, in essence, that the case was about a challenge to the DOBI regulation, the Appellate Division had to decide a procedural question. Challenges to administrative regulations are to be brought directly in the Appellate Division, under Rule 2:2-3(a)(2), not in the Law Division as NJDA did here. NJDA or the Law Division should have transferred the case directly to the Appellate Division. Nonetheless, the panel decided to overlook that wrinkle. The issue was one of public importance, and DOBI was before the Appellate Division, just as it would have been had the proper appellate procedure been followed.
The merits were actually an anticlimax. The de novo standard of review applied to the issue of whether DOBI’s regulaton exceeded the authorization of the selective contracting law. But the principle that administrative regulations are presumed valid doomed NJDA. Judge Grall stated that NJDA had not overcome that presumption. The statute conferred broad authority, but was silent about an ancillary program, and no other law forbade the ancillary program either. Dentists were left free to contract, or not, to be part of that program.