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State Farm Mutual Automobile Insurance Co. v. Dalton

Decided: May 3, 1989.


On appeal from Superior Court, Law Division, Bergen County.

Petrella, Shebell and Landau. The opinion of the court was delivered by Landau, J.A.D.


[234 NJSuper Page 129] This matter came to us on appeal originally from that part of an order of the Law Division which required defendant-appellant

Chiropractor Daniel J. Dalton (Daniel) "to submit a Verification/Certification of his treatment of the defendant, Virginia Dalton, pursuant to N.J.S.A. 17:33A-1 et seq. and N.J.A.C. 11:16-1.1 et seq.," failing which, the plaintiff-respondent State Farm Mutual Automobile Insurance Company (State Farm) was excused from its obligation to pay Personal Injury Protection (PIP) benefits to defendant-appellant Virginia Dalton (Virginia).

Virginia was injured in an automobile accident on February 24, 1987. She allegedly received from her husband, Daniel, "straight chiropractic" treatment (i.e. non-medical and non-technologically implemented or diagnosed) consistent with their religious beliefs as Essene Christians and members of the Congregation of Universal Wisdom. Virginia says that by check dated May 18, 1987, she paid Daniel $4,490 for the chiropractic care he provided, evidenced by paid receipts which detailed the services rendered.

After Virginia submitted a PIP benefit claim for that chiropractic care to her automobile insurance carrier,*fn1 State Farm demanded that Daniel submit to it a verification/certification of care pursuant to N.J.S.A. 17:33A-1 et seq. and that he permit inspection of his records. State Farm also requested that Virginia submit to a physical examination.

When the insurance carrier made these requests for certification, inspection of records and examination, N.J.S.A. 17:33A-1 et seq. was in effect, as were regulations adopted by the Department of Insurance in aid of the legislative effort to curb fraudulent insurance claims.

When Daniel and Virginia refused to comply, State Farm commenced this action in the Law Division in January 1988 by a verified complaint and order to show cause. N.J.S.A. 17:33A-6 had just been amended effective December 24, 1987, to delete subsection b. The suit also invoked, however, the policy and provisions of N.J.S.A. 39:6A-13, part of the PIP statute.

Following hearing on affidavits, the trial judge ordered Daniel to permit inspection and copying of his records respecting Virginia's treatment and ordered Virginia to submit to physical examination. He also ordered Daniel to submit the requested verification/certification of treatment. Daniel asked for reconsideration of the verification/certification portion of the order, and when that was declined, this appeal, initially limited to that issue, was taken.

State Farm moved for summary disposition, contending that the single issue involved only interpretation of N.J.S.A. 17:33A-6(b). We declined to rule summarily under R. 2:8-3(b).

The Notice of Appeal has since been amended to add an assertion that N.J.S.A. 39:6A-13(d) is unconstitutional because it requires Virginia to be examined by a medical physician contrary to her religious beliefs. Appellants also now contend that the trial judge should have been limited by the legislative deletion of N.J.S.A. 17:33A-6(b). Although it occurred subsequent to the accident, treatments, and State Farm's demands for examination and record verification, the deletion was effective prior to the entry of the order in this case.

The subsection deleted was directed generally at discouraging insurance fraud. It required the Commissioner of Insurance to "promulgate rules and regulations requiring any or all persons or practitioners seeking payment for services or materials which will be reimbursed by an insurer to verify, under oath, that the services and materials furnished were necessary and were, in fact, furnished." N.J.S.A. 17:33A-6(b) (deleted by amendment 1987). It also provided that such verification was "a condition precedent to payment by the insurer or recourse against the insured." Regulations pursuant to that statute were promulgated as N.J.A.C. 11:16-1.2(a) and 11:16-1.3, but these were repealed effective July 18, 1988, consistent with the legislative deletion. 20 N.J.R. 1720 (b) (July 18, 1988). The statement appended to the amending statute says:

The provision of law which this bill eliminates was originally enacted as a means of controlling fraud by making providers attest that services for which reimbursement was being sought had actually been performed. In practice however, the procedure was deemed by the Department of Insurance to be cumbersome and unworkable. Thus, the department has asked that the requirement for verification be deleted. [ Senate Labor, ...

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