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New Jersey Manufacturers Insurance Co. v. University Physician Associates

January 30, 2008

NEW JERSEY MANUFACTURERS INSURANCE COMPANY, PLAINTIFF-RESPONDENT,
v.
UNIVERSITY PHYSICIAN ASSOCIATES, A/S/O CHRISTINA MONTAGANO, DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Essex County, L-5004-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: November 5, 2007

Before Judges Rodríguez and C.L. Miniman.

Defendant University Physicians Associates (UPA) appeals from a judgment vacating an arbitration award made under the Alternative Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23A-1 to -30, in its favor requiring plaintiff New Jersey Manufacturers Insurance Company (NJM) to pay UPA Personal Injury Protection (PIP) benefits to which NJM's insured, Christina Montagano, was entitled. Because we have no jurisdiction under APDRA to review the merits of a Law Division judgment affirming, modifying or vacating an APDRA award, we dismiss this appeal.

Montagano was injured in an automobile accident on January 14, 2004. She was admitted to the University of Medicine and Dentistry of New Jersey (UMDNJ) Hospital for emergency medical care by physicians employed by UPA. Montagano executed an assignment of benefits in favor of UMDNJ but not UPA. However, UPA submitted its medical bills for Montagano's emergency medical treatment to NJM, which paid UPA the amount that it considered "usual, customary and reasonable." This amount was less than the total that UPA had billed. UPA then issued a demand for arbitration to NJM purporting to act on Montagano's behalf in order to recover the difference.

During arbitration proceedings, NJM learned that UPA had no executed assignment designating it as Montagano's assignee and argued that UPA had no authority to present a claim on her behalf. UPA countered that its arbitration demand included insurance claim forms, signed by Montagano, authorizing the doctors to receive payment. Further, UPA argued, NJM was equitably estopped from raising this defense because it had already made partial payments. The Dispute Resolution Professional (DRP) suggested that UPA simply get Montagano to sign an Assignment of Benefits form but she refused. NJM then claimed that her refusal demonstrated that she disapproved UPA's actions. The DRP was not persuaded by this defense, believing instead that it was in the best interests of the parties to have the matter resolved in arbitration. He awarded UPA $1722.15 in unpaid medical bills, $2475.00 in fees and $231.00 in costs.

NJM then brought the matter before the Superior Court, Law Division, with a summary complaint seeking to vacate the arbitration award pursuant to N.J.S.A. 2A:23A-13.*fn1 UPA answered and both parties filed summary judgment motions. The Law Division judge heard argument on the motions on September 22, 2006, and on October 30, 2006, she concluded that the lack of an assignment was fatal to UPA's claim and vacated the award. She held that emergency physicians are merely incidental beneficiaries of agreements between insurer and insured and, thus, have no standing to assert claims on the insured's behalf without explicit authorization. UPA cannot claim to have detrimentally relied on NJM's partial payments, she explained, because emergency physicians have a duty to provide services to all injured patients. She concluded that the DRP committed legal error in making an award in favor of UPA because there was no privity of contract between the parties and there were no equitable grounds for relief. Accordingly, she entered judgment for NJM.

UPA argues on appeal that the judge committed legal error in ruling that UPA lacked standing to make a claim for PIP benefits because it had no assignment from the insured. It contends that the Commissioner of Banking and Insurance exceeded his authority in promulgating N.J.A.C. 11.3-5.6(a) limiting PIP arbitration to "a provider who is an assignee of PIP benefits" because the regulation is inconsistent with the statute, N.J.S.A. 39:6A-5.1(a), which provides that "[a]ny dispute regarding the recovery of medical expense benefits . . . may be submitted to dispute resolution on the initiative of any party to the dispute." UPA also urges that the judge erred in refusing to consider one of our unpublished opinions, Allstate Insurance Company v. CentraState Medical Center, No. A-6967-95T2 (App. Div. Mar. 24, 1997) (slip op.), in which we concluded that the lack of an assignment was not a bar to a provider's demand for arbitration respecting emergency medical treatment. UPA argues that the DRP was correct in concluding that an executed assignment was not required.

Procedurally, NJM argues that we cannot review the judgment on appeal because N.J.S.A. 2A:23A-18(b) bars any appeal of an order from the Superior Court affirming, modifying or vacating an arbitration award determining PIP benefits. NJM argues that in Coalition for Quality Health Care v. N.J. Department of Banking & Insurance, 348 N.J. Super. 272, 312-13 (App. Div.), certif. denied, 174 N.J. 194 (2002), we approved PIP arbitration rules promulgated by the Commissioner of Banking and Insurance. Specifically, the Commissioner determined that arbitrations are governed by the APDRA, which prevents any appeal beyond the Law Division, except for rare instances that invoke our general supervisory power. N.J.S.A. 2A:23A-18(b); Weinstock v. Weinstock, 377 N.J. Super. 182, 189 (App. Div. 2005). By seeking arbitration, NJM claims, the parties have waived the right both to a jury trial and an appeal. UPA argues that we have the power to review a Law Division judgment predicated on an error of law as that type of review comes within our exclusive, non-delegable supervisory powers as described in Allstate Insurance Company v. Sabato, 380 N.J. Super. 463, 472 (App. Div. 2005). This threshold issue is determinative.

The Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-1.1 to -35, permitted a claimant, and only a claimant, to compel an insurer to resolve a PIP dispute through alternate dispute resolution (ADR). N.J.S.A. 39:6A-5.1. It did not change the standard of review imposed by the Arbitration Act. The 2003 Arbitration Act, N.J.S.A. 2A:23B-1 to -32, which applies to arbitration agreements, does not eliminate appellate review but it establishes a very limited scope of review. N.J.S.A. 2A:23B-23. An award may be modified or corrected if "there was an evident mathematical miscalculation or an evident mistake in the description of a person, thing, or property referred to in the award." N.J.S.A. 2A:23B-24(a)(1). It may also be modified or corrected if "the arbitrator made an award on a claim not submitted to the arbitrator and the award may be corrected without affecting the merits of the decision upon the claims submitted." N.J.S.A. 2A:23B-24(a)(2). Finally an award may be modified or corrected if "the award is imperfect in a matter of form not affecting the merits of the decision on the claims submitted." N.J.S.A. 2A:23B-24(a)(3). Under the Arbitration Act, an award may be vacated only in very limited circumstances, as where it "was procured by corruption, fraud or other undue means," there was evident partiality, corruption or misconduct by the arbitrator, a refusal to postpone a hearing, an award exceeding the arbitrator's powers, there was no agreement to arbitrate or "the arbitration was conducted without proper notice of the initiation of an arbitration." N.J.S.A. 2A:23B-23(a); see also Habick v. Liberty Mut. Fire Ins., 320 N.J. Super. 244, 249 (App. Div.), certif. denied, 161 N.J. 149 (1999).

APDRA, which applies to resolution of civil disputes, on the other hand, provides for a broader scope of review:

In considering an application for vacation, modification or correction, a decision of the umpire on the facts shall be final if there is substantial evidence to support that decision; provided, however, that when the application to the court is to vacate the award pursuant to paragraph (1), (2), (3), or (4) of subsection c., the court shall make an independent determination of any facts relevant thereto de novo, upon such record as may exist or as it may determine in a summary expedited proceeding as provided for by rules adopted by the Supreme Court for the purpose of acting on such applications. [N.J.S.A. 2A:23A-13(b).]

The grounds on which a party may seek to vacate an award are also broader than the grounds to vacate an ...


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