Judge Robert Kugler, U.S. District Court for the District of New Jersey (Photo: Carmen Natale/ALM)

A former executive director of a local housing authority failed in his civil action against the authority over the handling of retirement benefits because only the U.S. Department of Housing and Urban Development would have standing in the case, according to the court.

U.S. District Judge Robert Kugler of the District of New Jersey granted the Pleasantville Housing Authority's and current executive director Vernon Lawrence's motion to dismiss plaintiff Charles Hargrove's case.

The case stemmed from retired PVHA director Hargrove's loss of retiree health benefits, which he discovered when Lawrence told him that the New Jersey State Health Benefits Program would not cover his benefits, according to Kugler's opinion Tuesday.

Ultimately, Hargrove and his wife had to buy private health insurance, since PVHA could only provide "medi-gap" measures, though the defendants claimed they were working on reimbursing the couple. Hargrove's lawsuit soon followed, seeking to hold PVHA responsible for the Hargroves' insurance expenses and alleging breach-of-contract claims.

In Tuesday's opinion, Kugler said the main issue in the case was "whether the PVHA can unilaterally and without HUD approval use federal funds to reimburse Plaintiffs for health insurance premiums sua sponte and without notice to HUD." To determine the Hargroves' standing, the court had to look at whether the plaintiffs suffered an injury in fact that is linked to the defendant's conduct and that can be redressed by judicial action.

"If Plaintiffs simply alleged that Defendants had unilaterally terminated their healthcare benefits, they would almost certainly meet every element of the standing inquiry. But the situation is more complicated," Kugler said.

"While the PVHA can no longer pay for Plaintiffs' coverage through the SHBP, it has consistently stated that it intends to reimburse Plaintiffs for their private insurance and Medicare Part B coverage. Plaintiffs do not contend that defendants are being insincere. Rather, plaintiffs assert that the PVHA may be barred by HUD regulations from reimbursing them for their private insurance coverage.

"The emphasis on 'may be' is deliberate—plaintiffs refuse to definitively state that such reimbursement would violate HUD regulations, instead always hedging their position in some fashion," Kugler wrote.

Ultimately, Kugler said, the authority to pursue such claims is vested in HUD.

"It is HUD's prerogative to enforce the strictures of the [Housing Choice Voucher Program] on [public housing authorities], and it is worth noting that although plaintiffs have put HUD on notice of the PVHA's reimbursement plan, the agency has taken no steps to intervene," Kugler said. "By filing this lawsuit, plaintiffs attempt to usurp HUD's prerogative by forcing defendants to comply with plaintiffs' speculation as to what HUD's regulations require. Plaintiffs are not categorically barred from pursuing this course of action, but they need to demonstrate that injury will befall them if the court does not allow it."

PVHA is represented by Yolanda Melville of Cooper Levenson in Atlantic City. The Hargroves are represented by Matthew Wieliczko of Zeller & Wieliczko in Cherry Hill. Melville did not respond to a request for comment. Wieliczko declined to comment.