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Seaview Orthopaedics v. National Healthcare Resources

February 13, 2004


On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Special Civil Part, Docket No. DC-010307-01.

Before Judges Skillman, Coburn and Fisher.

The opinion of the court was delivered by: Fisher, J.A.D.


Argued November 12, 2003

Plaintiffs are medical service providers who, in the forty cases before us,*fn1 claim defendants Allstate Indemnity Company (Allstate) and National Healthcare Resources (NHR) wrongfully"under-reimbursed" for treatment plaintiffs rendered to various auto accident victims. Allstate and NHC (Allstate's claims administrator) reimbursed pursuant to rates set forth in plaintiffs' contract with defendant Consumer Health Network (CHN) and not pursuant to the maximum rate allowed by the PIP medical fee schedule set forth in N.J.A.C. 11:3-29.1. Plaintiffs sought damages for the difference in the two rates.

The cross-motions for summary judgment, which led to the dismissal of the complaints in these matters, required a determination as to whether the CHN contract is enforceable. Plaintiffs claim that the CHN contract should not be enforced because it lacked consideration, is inequitable or unfair, and violates our no-fault laws (N.J.S.A. 39:6A-1 to -35). We agree with the motion judge that plaintiffs' arguments are without merit and affirm the entry of summary judgment in these cases.

Because these matters were adjudicated by way of summary judgment, our review is based upon the same standard which bound the motion judge. In the absence of any genuine issues of material fact, we must determine whether the judge's legal conclusions are correct. Prudential Prop. Ins. v. Boylan, 307 N.J. Super. 162, 167 (App. Div. 1998); Kopin v. Orange Prods., Inc., 297 N.J. Super. 353, 366 (App. Div.), certif. denied, 149 N.J. 409 (1997). The parties conceded in the trial court that the matter was ripe for summary judgment, the motion judge agreed, and we are likewise satisfied that there were presented no material factual disputes and that the questions raised on appeal require an application of well-established legal concepts to the unambiguous terms of the CHN contract.

We initially observe that the parties have raised various procedural irregularities in the record both in the trial court and in this court. For example, the motion judge originally indicated that these forty cases would be consolidated and collectively transferred to the Law Division. Later, the judge decided otherwise. Plaintiffs also question whether their amended complaint, which joined CHN, was actually considered by the trial judge. (Plaintiffs did not originally name CHN as a party despite the fact that their claim that the CHN contract is unenforceable constituted the pivotal point in these actions.) We need not review these unnecessarily convoluted circumstances because we find that no prejudice has inured to any party. The motion judge had all necessary parties, including CHN, before him when the cross-motions for summary judgment were considered and each party had a full and fair opportunity to raise all their factual and legal contentions prior to the motion judge's ruling.

In addition, defendants correctly contend that certain issues raised by plaintiffs on appeal were not raised in the trial court. As a result, defendants seek a foreclosure of our consideration of those new issues. However, because we understand that there are many other similar lawsuits currently pending in the trial courts, we deem it important to decide all the questions of law presented regarding the enforceability of the CHN contract, whether or not they were adequately raised in the trial court. See Alan J. Cornblatt, P.A. v. Barow, 153 N.J. 218, 230 (1998).

We lastly note one other procedural peculiarity which warrants consideration. After plaintiffs filed their brief in chief they filed not one, but two,"corrected" briefs, each supplanting its predecessor. In the first of these two"corrected" briefs, plaintiffs argued that Allstate and NHR should be barred from reimbursing pursuant to the CHN fee schedule because they failed to make payments within thirty days as required by section 2.8 of the payor agreement between CHN and NHR. However, when plaintiffs filed their second (and last)"corrected" brief, this argument was absent. We have taken an expanded view of the issues of law before us, due to the importance of providing guidance for the numerous other similar suits now pending, but decline to consider this issue about the timing of the earlier payments because it comes before us on"an insufficient factual basis." Ibid.; In re Bd. of Educ. of Boonton, 99 N.J. 523, 536 (1985). Accordingly, with the exception of the issue regarding the timeliness of reimbursement, we turn to all the other issues raised on appeal.

The undisputed factual record reveals that plaintiffs are medical providers who rendered services to various auto accident victims. Each of these victims was insured by Allstate which, through its claims administrator, NHR, reimbursed plaintiffs pursuant to the CHN contract and fee schedule. Because the CHN fee schedule imposes lower rates than the PIP fee schedule set forth in N.J.A.C. 11:3-29.1, plaintiffs filed these forty lawsuits, seeking to recover damages -- in the above-captioned case, plaintiffs claimed $1713.05 -- representing the monetary difference between the two schedules.

CHN claims to be the largest preferred provider organization (PPO) in New Jersey. According to CHN's unrefuted certification, its network includes over 11,000 physicians, nearly 14,000 medical services providers (which includes not only physicians but also laboratories and hospitals) and has 950,000 enrollees. CHN provides its clients with a PPO network in three distinct areas: workers' compensation, group health benefits and auto insurance. By entering into a contract with CHN, plaintiffs gained potential access to the numerous enrollees in exchange for accepting reimbursement at lesser rates.

We reject plaintiffs' initial claim that the contract does not encompass treatment and services rendered for patients who are auto accident victims. The CHN contract states in unambiguous terms that it covers policies of automobile insurance.*fn2 The contract also contains plaintiffs' agreement to be reimbursed, in such circumstances, only when rendering appropriate and necessary treatment,*fn3 and at rates no greater than those set forth in the CHN fee schedule.*fn4 Accordingly, on its face, when treating auto accident victims, the CHN contract limits plaintiffs to payments no greater than those permitted by the CHN fee schedule.

Plaintiffs also argue that their agreement to be bound to the CHN rates for auto accident victims is not supported by consideration. It is well-settled that contracts are not enforceable in the absence of consideration, i.e.,"both sides must'get something' out of the exchange." Continental Bank of Pa. v. Barclay Riding Acad., 93 N.J. 153, 170 (1983). Consideration may take many forms and may be based upon either"a detriment incurred by the promisee or a benefit received by the promisor." Ibid. Courts, however, do not inquire into the adequacy of consideration in determining whether to enforce a contract. American Handkerchief Corp. v. Frannat Realty Co., 17 N.J. 12, 18 (1954). Any inquiry into the presence of consideration does not depend upon the comparative value of the"things" exchanged. Tumarkin v. Goldstein, 33 N.J. Super. 46, 50 (App. Div. 1954). Instead, when we speak of the need for an exchange of valuable consideration what is ...

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