Aetna, Blue Cross Insurance Brawl Tests NJ Contracting Laws

New Jersey Transit found itself caught in a pickle between a debilitating walk-out and the loss of millions of dollars in public health care cost savings when it reversed an insurance bid awarded to Aetna.

Whether its response—appeasing its unionized workers threatening litigation over the changes to keep Horizon Blue Cross Blue Shield part of the plan—was legal was the question before state Superior Court Appellate Division Tuesday, as it considered the power of agencies to avoid contract bidding laws by taking labor unrest into account.

“Does your client effectively have a lock on providing these services so long as ...