On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket Nos. L-6633-06; L-9186-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: March 12, 2008
Before Judges Cuff, Lihotz, and Simonelli.
Defendants Brunswick Surgical Center, PC, Pain Control Center of New Jersey, Brunswick Anestesin Service, and Acupuncture and Integrative Medicine, LLC, provided medical services to persons injured in automobile accidents and eligible for personal injury protection (PIP) benefits. Plaintiff Liberty Mutual Insurance Company (Liberty Mutual), the insurer of injured persons treated by defendants, filed two complaints seeking declaratory judgments that certain medical services were not compensable because defendants improperly referred Liberty Mutual's insureds to medical providers in which the principals of defendant health care providers held beneficial interests contrary to N.J.S.A. 45:9-22.5 (the Codey Statute). Judge Mathias Rodriguez dismissed the complaints against Acupuncture and Integrative Medicine, LLC and Elena Levin, MS LAC, C.A. (collectively the AIM defendants) on December 1, 2006. By order dated March 9, 2007, Judge Longhi dismissed the complaints against the remaining defendants.*fn1 We hold that these declaratory judgment actions impermissibly sought to evade the arbitration process specifically applicable to PIP benefit disputes which was invoked by Liberty Mutual. We also hold that the judge properly granted summary judgment to the AIM defendants.
Plaintiff Liberty Mutual provides automobile insurance coverage. Defendants Brunswick Surgical Center, PC, Brunswick Surgical Ambulatory Center, LLP, and Brunswick Surgical Center (collectively Brunswick Surgical) are owned by defendant Alexander Levin, M.D. Defendant Pain Control Center of New Jersey a/k/a Pain Control Center & Rehabilitation of N.J. and N.Y., L.L.P. (Pain Control) is the private medical practice of Alexander Levin and defendant Sofia Lam, M.D., sister of Alexander Levin. Defendant Brunswick Anestesin Service a/k/a Brunswick Anesthesia Service (BAS) is a medical practice owned by Alexander Levin. (Collectively these defendants are referred to as the Brunswick defendants). Defendant Acupuncture and Integrative Medicine, LLC (AIM) is owned by Alexander Levin's wife, defendant Elena Levin (collectively the AIM defendants). Brunswick Surgical, Pain Control, BAS, and AIM are located at the same facility.
Liberty Mutual refused to pay a number of claims for medical treatment submitted by defendants as assignees of Liberty Mutual insureds. It asserted that Alexander Levin had made illegal self-referrals. Each claim was submitted to dispute resolution through the National Arbitration Forum (NAF), the dispute resolution organization designated to resolve PIP disputes. Liberty Mutual lost the first round of PIP benefit arbitrations and utilized the appellate dispute resolution panel established by NAF to challenge some decisions. It did not seek judicial review of any NAF final decisions.
On August 28, 2006, Liberty Mutual filed a declaratory judgment complaint with a proposed order to show cause with temporary restraints pursuant to Rule 4:52. Liberty Mutual filed affidavits and certifications in support of its complaint and its request for legal fees. Liberty Mutual requested the stay of all pending*fn2 and future PIP arbitrations and/or lawsuits involving defendants pending the outcome of its declaratory judgment action. In Count Two, Liberty Mutual alleged that Alexander Levin, Lam, and Elena Levin made illegal referrals under the Codey Statute, and as a result, Liberty Mutual should not be responsible for the corresponding charges. In Count Three, Liberty Mutual alleged that the services provided by defendants were not appropriate and were of questionable reasonableness and necessity. In Count Four, it alleged that defendants violated the New Jersey Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to -30, because defendants submitted bills to Liberty Mutual that contained material misrepresentations based upon the illegal referrals.
On November 21, 2006, Liberty Mutual filed a second declaratory judgment action, and a proposed order to show cause requesting that the PIP arbitration award rendered against Liberty Mutual in Brunswick Surgical Center a/s/o A.B. be stayed pending the outcome of its declaratory judgment action filed in August 2006. On November 29, 2006, Liberty Mutual filed an amended complaint adding BAS and Pain Control as defendants and requesting the stay of three additional PIP arbitration awards.*fn3
Meanwhile, the AIM defendants filed a motion to dismiss plaintiff's complaint for failure to state a claim upon which relief can be granted and supporting brief on or about October 30, 2006. Judge Rodriguez granted the AIM defendants' motion.
On December 12, 2006, Judge Longhi issued a written opinion on Liberty Mutual's August 2006 declaratory judgment action as to the Brunswick defendants. Judge Longhi emphasized that the action commenced by Liberty Mutual was not an action to confirm, vacate or modify an arbitration award as allowed by N.J.S.A. 2A:23A-13.*fn4 Rather, Liberty Mutual sought to relitigate the identical issues with the same parties as it had in the arbitrations, i.e., whether the physicians had referred patients for treatments at facilities in which they held a proprietary interest contrary to the Codey Statute. Finding that all issues were fairly litigated in the dispute resolution forum, Judge Longhi held that Liberty Mutual was collaterally estopped from seeking a judicial ruling on the central issue in the previously litigated matters. He also rejected Liberty Mutual's attempt to relitigate in the declaratory judgment format the issue of the reasonableness and necessity of the medical services provided. He found that this issue had also been fully and fairly litigated in the prior dispute resolution forum. Liberty Mutual's motion for reconsideration was denied.
In the November 2006 declaratory judgment action, the Brunswick defendants filed a motion to confirm the PIP arbitration awards. Judge Longhi denied all relief requested by Liberty Mutual, including its motion to stay all proceedings to enforce future judgments, and confirmed the arbitration awards.
Under the Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6a-1.1 to -35, every standard automobile liability insurance policy issued or renewed in this State must provide PIP benefits for the payment of benefits to the named insured and members of the insured's family residing in the insured's household without regard to negligence, liability or fault. N.J.S.A. 39:6A-4. Any dispute regarding the recovery of medical expense benefits provided under PIP coverage arising out of the operation, ownership, maintenance or use of an automobile may be submitted to dispute resolution at the request of any party to the dispute. N.J.S.A. 39:6A-5.1a. The Commissioner of Banking and Insurance is authorized to designate an organization for the purpose of administering dispute resolution proceedings regarding medical expense benefits under PIP coverage. N.J.S.A. 39:6A-5.1b. Regulations codified at N.J.A.C. 11:3-5.1 to -5.12 implement this authority. All decisions of the dispute resolution professional are binding, N.J.S.A. 39:6A-5.1c, but are reviewable by the Superior Court in an action filed pursuant to N.J.S.A. 2A:23A-13 for review of the award. N.J.A.C. 11:3-5.6(f).
N.J.S.A. 2A:23A-13 is a constituent part of the New Jersey Alternative Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23A-1 to 30. Effective February 25, 1987, the purpose of APDRA is to provide a new procedure for dispute resolution to serve as an alternative to the present civil justice system and the existing arbitration system for settling civil disputes. Mt. Hope Dev. Assocs. v. Mt. Hope Waterpower Project, L.P., 154 N.J. 141, 145 (1998) (citing Governor's Reconsideration and Recommendation Statement to A. 296, at 1 (Jan. 7, 1987)). It is a voluntary procedure that ...