NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

PER CURIAM.

By leave granted by the Supreme Court, defendants Horizon Healthcare Services, Inc. (Horizon) and Magellan Health Services, Inc. (Magellan), appeal the November 18, 2011 order of the Chancery Division, Essex County denying defendants' motion to dismiss the complaint filed by the New Jersey Psychological Association (NJPA) and two patients covered by the New Jersey State Health Benefits Program (SHBP). Because the Essex court failed to grant preclusive effect to a determination made by a court of concurrent jurisdiction that NJPA lacked standing in an action that raised the same substantive claims, and because the patient plaintiffs failed to exhaust their administrative remedies, we reverse and remand for dismissal of the complaint.

I.

NJPA is a private, non-profit, professional association representing approximately 2100 active and retired psychologists located throughout New Jersey. On October 29, 2010, NJPA and a member psychologist, Barry L. Helfmann, filed a declaratory judgment complaint in the Chancery Division, Mercer County (NJPA I), naming Horizon, Magellan and the State Health Benefits Commission (Commission) as defendants. Plaintiffs in NJPA I sought a declaration that Horizon and Magellan violated the New Jersey Practicing Psychology Licensing Act (PPLA), N.J.S.A. 45:14B-1 to-46, by engaging in a practice "requiring psychologists to disclose confidential patient treatment information in connection with the initial precertification process and/or the process for authorizing continuing treatment or approving payment for mental health benefits." N.J.S.A. 45:14B-28. The complaint also alleged that defendants' conduct breached the Commission's policy requiring only minimum necessary disclosures when making treatment and payment decisions. Plaintiffs claimed that they were bringing the action as parties in interest, pursuant to N.J.S.A. 2A:16-53. Defendants filed a motion to dismiss, claiming plaintiffs lacked standing.

On January 31, 2011, after hearing oral argument, the Mercer judge found that NJPA had not "shown any actual injury, certainly to itself as an association" and that "third party standing should not be accorded to parties in a breach of contract situation where the parties are not . . . parties to the contract." The court entered an order dismissing plaintiffs' complaint finding that "neither the [NJPA] nor Dr. Helfmann has standing to bring the claims that were set forth in [the] complaint."

Plaintiffs filed notice of appeal on March 9, 2011, then apparently reconsidered this course of action. On June 13, 2011, plaintiffs withdrew their appeal and on July 19, 2011, NJPA filed a second declaratory judgment complaint, this time in the Chancery Division, Essex County (NJPA II). The complaint in NJPA II added two patients as plaintiffs, Steven Sargese and Maryanne Krenz, but named only Horizon and Magellan as defendants, not the Commission. Dr. Helfmann was not a party to NJPA II.

Sargese was a member of the SHBP, which provides health insurance to state employees. He claims that he was denied treatment because he refused to provide confidential information protected under N.J.S.A. 45:14B-28. In March 2009, Sargese sought mental health treatment. His treating psychologist completed the forms required by defendant, Magellan, and requested authorization for a treatment plan consisting of two sessions per week of seventy-five minutes each. Magellan did not immediately approve the treatment plan and requested that Sargese's treating psychologist submit to a clinical review by a psychiatrist. During this review, Magellan sought additional treatment records pertaining to the underlying cause of Sargese's mental health issues and whether Sargese was taking medication. Sargese did not consent to the release of this information and his treating psychologist would not disclose it. Magellan ultimately denied the psychologist's treatment request and approved only one session per week.

After Sargese filed an internal appeal,1 Magellan amended its authorization to allow two therapy sessions per week of forty-five to fifty minutes each for four weeks and then one forty-five to fifty minute therapy session per week for the next eight weeks. Sargese underwent the treatment plan recommended by his psychologist and paid for the additional sessions himself.

Maryanne Krenz was also a member of the SHBP and participated in the NJ Direct plan. Krenz claims she was denied treatment based on her refusal to provide confidential information. Specifically, Krenz had been receiving ongoing care from a psychologist for a mental health condition. Initially, Krenz attended two individual therapy sessions per week authorized by Magellan, based on treatment request forms submitted by Krenz's treating psychologist. In 2010, the authorization was reduced to one session per week. Krenz's psychologist was asked to submit to clinical reviews and additional information was sought. Krenz's psychologist refused to provide the information, and Magellan denied the request to reimburse for the additional visits. Krenz and her treating psychologist submitted Level 1 and Level 2 internal appeals. Magellan requested additional information but Krenz felt the information sought was confidential and refused to disclose it. Magellan then denied Krenz's appeals as well as her request for additional therapy sessions. Krenz failed to exercise her right to appeal the Level 1 and Level 2 denials to the Commission.

The NJPA II complaint sought identical relief as the complaint in NJPA I. However, the PPLA claim was brought on behalf of all plaintiffs, while the breach of contract claim was brought on behalf of only the patient plaintiffs.

On September 8, 2011, defendants filed a motion to dismiss, claiming lack of standing, collateral estoppel, failure to exhaust administrative remedies, failure to state a claim and failure to join the Commission as an indispensable party. The Essex court heard oral argument on November 18, 2011, and denied defendants' motion.

After we denied defendants' motion for leave to appeal, defendants sought leave to appeal with the Supreme Court, which was granted on April 3, 2012. The matter was summarily remanded to us. After oral argument, we extended an invitation to the Commission to appear as amicus curie.

On appeal, defendants raise the following points:

The Commission submitted a brief arguing that the individual plaintiffs should be required to exhaust their administrative remedies.

II.

We first address defendants' claim that NJPA is precluded from relitigating the issue of standing in NJPA II, after it was afforded a full and fair opportunity to contest the issue in NJPA I. The Essex judge found that collateral estoppel did not bar her from deciding the issue of standing even though the Mercer judge had previously ruled on the same matter. The Essex judge even acknowledged that she was being asked to reconsider the decision of the Mercer judge, stating, "It's a closer question as to whether [plaintiffs] should be allowed to have some reconsideration by this Court as to their standing to bring this case." The Essex judge noted that while she was "very impressed" with how the Mercer judge ruled, she was not bound by that ruling and had "the right to see it differently." The judge then reasoned that the Mercer judge's decision was "colored" by the fact that there were no individual plaintiffs in NJPA I, and that by adding the two patients as plaintiffs, NJPA attempted to "cure the deficiency" which resulted in the Mercer court finding that NJPA lacked standing. Relying on our decision in NAACP of Camden County East v. Foulke Management Corp., 421 N.J.Super. 404 (App. Div. 2011), the Essex judge found that NJPA had standing to bring this action "because they are an organization that has interest in its own right to protect . . . and lobby for, essentially, the interest of its members, to afford them training, continuing education, counseling."

The doctrines of collateral estoppel and res judicata serve the important policy goals of "finality and repose; prevention of needless litigation; avoidance of duplication; reduction of unnecessary burdens of time and expenses; elimination of conflicts, confusion and uncertainty; and basic fairness[.]" Hackensack v. Winner, 82 N.J. 1, 32-33 (1980). "If an issue between the parties was fairly litigated and determined, it should not be relitigated." First Union Nat. Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 352 (2007). "Issue preclusion requires a similar, yet less demanding, analysis than res judicata." Ibid. "[U]nlike claim preclusion, issue preclusion can result from a judgment even if that judgment was not rendered on the merits." Bondi v. Citigroup, Inc., 423 N.J.Super. 377, 423 (App. Div. 2011) (quoting Watkins v. Resorts Int'l Hotel & Casino, Inc., 124 N.J. 398, 422 (1991)), certif. denied, 210 N.J. 478 (2012). "`When an issue of fact or law is actually litigated and determined by a valid and final judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.'" Hernandez v. Region Nine Hous. Corp., 146 N.J. 645, 659 (1996) (quoting Restatement (Second) of Judgments § 27 (1982)).

In Hennessey v. Winslow Township, 183 N.J. 593, 599 (2005), our Supreme Court outlined the requirements to foreclose relitigation of an issue explaining that "the party asserting the bar" must show that:

Applying these principles, we find the standing issue raised in NJPA I is identical to the issue in NJPA II. The harm alleged in the two complaints is also identical. In both complaints, the NJPA claims its members and their patients have been harmed by:

The Mercer judge determined that the NJPA had not demonstrated that it suffered actual injury and entered a final judgment of dismissal. Where, as here, the issue in NJPA II is identical to the one fully and fairly litigated and resolved in NJPA I, a subsequent proceeding on the same issue is barred unless application of the equitable bar would be unfair. Pace v. Kuchinsky, 347 N.J.Super. 202, 215 (App. Div. 2002). The dismissal here is a final order, from which plaintiffs could have appealed. See R. 2:2-3(a)(1). After filing a notice of appeal, the NJPA I plaintiffs withdrew the appeal and instead filed a second complaint seeking the same relief, alleging the same damage, in a different vicinage, before a different judge. Plaintiffs in NJPA II raise no new issues and present no new material facts that should change the decision made by the Mercer judge. Based on our review of the above factors, we conclude that the requirements for the application of issue preclusion are satisfied and the Essex judge was precluded from reconsidering the decision of the Mercer judge in NJPA I, that plaintiffs lacked standing.

We do not decide whether NJPA has standing to challenge defendants' denial of payments or seek a declaratory ruling under the Administrative Procedure Act, N.J.S.A. 52:14B-1 to -25, as that matter is not before us.

III.

We next turn to defendants' claim that the complaint must be dismissed as to the individual plaintiffs as they have failed to exhaust their administrative remedies. The individual plaintiffs contend that they are not required to exhaust their administrative remedies as the issue involves only a matter of law. Amicus Commission argues that plaintiffs' actions "seek to bind the Commission without providing it the opportunity to rule on the interpretation of its enabling statutes and regulations, the language in its Member Handbook, or the contractual obligations of its third-party administrators when making medical necessity determinations." We agree.

The SHBP was created by the State Health Benefits Program Act of 1961, N.J.S.A. 52:14-17.25 to.45 (Act), which also created the Commission. The Commission was tasked with negotiating and purchasing medical, surgical, hospital, and major medical benefits for participating public employees and their families, "in the best interests of the State and its employees." N.J.S.A. 52:14-17.27 to.28. The Commission was also given exclusive jurisdiction to determine disputed matters under the plan. Ibid.

The Act grants the Commission sole authority to determine "what types of services and supplies shall be included as `eligible medical services' under the major medical expense benefits coverage as well as those which shall be excluded from or limited under such coverage." N.J.S.A. 52:14-17.29(A)(2). The Commission is authorized to impose limitations and exclusions "as the [C]ommission finds to be necessary or desirable to avoid inequity, unnecessary utilization, duplication of services or benefits otherwise available . . . [and] [n]o benefits shall be provided beyond those stipulated in the contracts held by the [Commission]." N.J.S.A. 52:14-17.29(D).

The Commission contracted with Horizon to administer the SHBP and a Magellan subsidiary has subcontracted with Horizon to administer the mental health claims under the SHBP. The NJ Direct Member Handbook informs members of the eligible services and supplies that are covered by the plan. Under the contract adopted by the Commission, Horizon is required to determine whether a service or supply is "medically needed at the appropriate level of care." The Handbook provides that "[w]hen there is a question as to medical need, the decision on whether the treatment is eligible for coverage will be made by Horizon.. . ." The Commission relies on the expertise of Horizon and Magellan to make initial coverage determinations. The Handbook outlines the procedure for first and second level appeals for members who are not satisfied with any utilization review decision. If a member is dissatisfied with the results of Horizon's internal appeal process, the member may appeal to the Commission.

The Commission is responsible for interpretation of the SHBP. See Murray v. State Health Benefits Comm'n, 337 N.J.Super. 435, 439 (App. Div. 2001) ("[t]he Commission retains final authority and financial responsibility for the State Plan"). The Commission has authority to decide questions regarding individual benefit determinations as well as any matter involving interpretation of the Act.

The determination of the Essex judge, that the individual plaintiffs were not required to exhaust administrative remedies, was based on her reasoning that the Commission traditionally deals with benefits claims and this case involved privilege, an area the Commission did not have experience in:

Amicus Commission responds that if individual plaintiffs had pursued their administrative remedies, the Commission would have been in a position to develop a record to determine whether the information requested by Magellan and Horizon is in accord with the regulations, contracts and plan documents. We agree.

The exhaustion requirement serves the following three goals:

"The first goal is `particularly important where the ultimate decision rests upon the factual determinations lying within the expertise of the agency or where agency interpretation of the relevant statutes or regulations is desirable.'" Triano v. Div. of State Lottery, 306 N.J.Super. 114, 121 (App. Div. 1997) (quoting Magliochetti v. State, 276 N.J.Super. 361, 374 (Law Div. 1994)). The Commission is authorized by statute to determine what types of services are "eligible medical services." We find nothing in the record to support the Essex judge's conclusion that the Commission does not have the expertise to resolve the question presented. "The expertise of an administrative agency may not be exercised or known until it renders its final decision and usually due deference is accorded such expertise upon judicial review." Magliochetti, supra, 276 N.J. Super. at 375.

"The second goal is significant, as we are not a court of record and must depend on a record developed [at the trial level]." Triano, supra, 306 N.J. Super. at 121. The third goal

The exhaustion doctrine "is a rule of practice designed to allow administrative bodies to perform their statutory functions in an orderly manner without preliminary interference from the courts. Therefore, . . . there is . . . a strong presumption favoring the requirement of exhaustion of remedies." Brunetti v. New Milford, 68 N.J. 576, 588 (1975) (internal citation omitted). We acknowledge that the doctrine is discretionary rather than jurisdictional, Abbott v. Burke, 100 N.J. 269, 297 (1985), and that it is generally not applied "when only a question of law exists," or "administrative remedies would be futile." Triano, supra, 306 N.J. Super. at 121-22. However, "where the court perceives the agency to be in a special position to interpret its enabling legislation," a court may still require administrative remedies to be exhausted, despite a question of law being the only dispute. Abbott, supra, 100 N.J. at 298.

The Commission is uniquely suited to resolve the issue presented by plaintiffs. See N.J.S.A. 52:14-17.29(A)(2) ("[T]he commission may, by regulation, determine what types of services and supplies shall be included as `eligible medical services' under the major medical expense benefits coverage as well as those which shall be excluded from or limited under such coverage."). Accordingly, the complaint fails to state a claim upon which relief can be granted as patient plaintiffs have failed to exhaust their administrative remedies.

Reversed and remanded with instruction to dismiss plaintiffs' complaint.