July 18, 2008
LIBERTY MUTUAL INSURANCE COMPANY, PLAINTIFF-APPELLANT,
BRUNSWICK SURGICAL CENTER, PC, A/K/A BRUNSWICK SURGICAL AMBULATORY CENTER, LLP, A/K/A BRUNSWICK SURGICAL CENTER; ALEXANDER LEVIN, M.D.; PAIN CONTROL CENTER OF NEW JERSEY A/K/A PAIN CONTROL CENTER & REHABILITATION OF N.J. & N.Y., L.L.P.; BRUNSWICK ANESTESIN SERVICE A/K/A BRUNSWICK ANESTHESIA SERVICE; ACUPUNCTURE AND INTEGRATIVE MEDICINE, LLC; ELENA LEVIN, MS LAC, C.A.; SOFIA LAM, M.D., DEFENDANTS-RESPONDENTS.
LIBERTY MUTUAL INSURANCE COMPANY, PLAINTIFF-APPELLANT,
BRUNSWICK SURGICAL CENTER, BRUNSWICK ANESTHESIA, PAIN CONTROL CENTER A/S/O A.B., DEFENDANT-RESPONDENTS.
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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 becomes operable when the parties agree to resolve their dispute in this fashion. Weinstock v. Weinstock, 377 N.J. Super. 182, 188 (App. Div. 2005).
A party to an alternative dispute resolution procedure may seek review of any award in the Superior Court. N.J.S.A. 2A:23A-13a. The statute provides broader grounds for vacation or modification of the award than the traditional arbitration model. Allstate Ins. Co. v. Sabato, 38 N.J. Super. 463, 470-71 (App. Div. 2005). Compare N.J.S.A. 2A:23A-13c to -13e with N.J.S.A. 2A:23B-23, -24. In a dispute submitted pursuant to APDRA, the party seeking review may seek vacation or modification of an award when the rights of that party were prejudiced by the umpire "erroneously applying law to the issues and facts presented for alternative resolution." N.J.S.A. 2A:23A-13c(5), -13e(4). Once an order is entered confirming, modifying, or correcting an award, there shall be no further appeal or review of the judgment. N.J.S.A. 2A:23A-18.
Here, the standard Liberty Mutual automobile policy in effect between 2001 and 2005 contained a provision that required the submission of all disputes concerning medical expense benefits due pursuant to PIP coverage to alternate dispute resolution. The policies in effect from 2001 to 2004 provided as follows:
If we and any person seeking [PIP] Coverage do not agree as to the recovery of [PIP] Coverage under this endorsement, then the matter may be submitted to dispute resolution, on the initiative of any party to the dispute, in accordance with New Jersey law or regulation.
Any request for dispute resolution may include a request for review by a medical review organization.
In policies issued in 2004 and 2005, the "may" in the phrase "then the matter may be submitted to dispute resolution" was changed to "must." Mandatory submission to alternate dispute resolution is permitted by statute. N.J.S.A. 39:6A-5.1a; N.J.A.C. 11:3-5.6(a). See Allstate Ins. Co., supra, 380 N.J. Super. 463, 469-70 (noting that insurance carriers can create a "blanket policy" to choose alternative dispute resolution in all PIP disputes). Here, it is also undisputed that a health care provider, such as any of the defendants, who is an assignee of the insured, may request submission of a payment dispute to PIP dispute resolution proceedings. N.J.A.C. 11:3-5.6(a).
In order to place our discussion of the issues in context, we focus on two arbitration proceedings. Pursuant to its policy and AICRA, Liberty Mutual filed the first of many arbitration demands with NAF in the matter of Pain Control Center a/s/o M.S. v. Liberty Mutual Insurance Co., NAF no. NJ0412000390991. The bills in dispute in this PIP arbitration were for medical services performed by Alexander Levin under his practice name, Pain Control Center, for anesthesia services performed under Brunswick Anesthesia, and for facility fees billed by Alexander Levin under the name of Brunswick Surgical Center. The issue in the case was "whether or not claimant was involved in an 'illegal self-referral' and therefore would not be entitled to payment for services which might otherwise be medically necessary."
Oral argument was conducted on November 3, 2005, before Dispute Resolution Professional (DRP), Michael Carnevale II. No witnesses were presented at the hearing. In his findings of facts and conclusions of law, the DRP summarized Liberty Mutual's argument noting that it "essentially takes the position that because claimant operates under several different names, claimant 'confuses' the issue and frustrates the statutory purpose to prevent obfuscation of the identity of the medical care provider in an effort to disguise proscribed self-referrals." In its argument, Liberty Mutual relied upon the Codey Statute, which the DRP found stood for the general proposition that a referral is improper "if a practitioner or family member of that practitioner has a significant beneficial interest in another health care service."
Claimant argued that Alexander Levin owned his own self-contained ambulatory surgical center as part of his own practice for his sole use. Citing N.J.S.A. 45:9-22.5c, the DRP found that
[a]lthough billing may have occurred under separate names, the billing was, in effect, done directly by Dr. Levin who is the sole owner of the ambulatory care center, as well as his own practice with his name. The facts in this case support the proposition that this ambulatory care center is in fact Dr. Levin's own office, and while use of different names may be an unfortunate historical anomaly, they are meant to be descriptive in nature and are not used for purposes of obfuscation.
Thus, the DRP found that Alexander Levin did not engage in improper self-referrals. He also found that the medical treatment provided by Alexander Levin was reasonable and medically necessary.
Liberty Mutual appealed the award to the NAF Dispute Resolution Professionals Panel (the Panel). The Panel noted that pursuant to the Rules for the Arbitration of No-Fault Disputes in this State, an award may be vacated or modified only if the award was incorrect as a matter of law. Liberty Mutual argued that the DRP failed to consider the language of N.J.A.C. 13:35-6.17 requiring that the bill be "issued in the practitioner's name," which was not done in this matter. Claimant argued that Alexander Levin did not make a "referral" to another health care service and that Alexander Levin performs pain management services at his facility, which contains a single operating facility for Alexander Levin's sole use. Additionally, Alexander Levin performs pain management services at Pain Control and charges a facility fee for the use of the surgery center.
The Panel found that the DRP's decision was well founded in law and that he fully analyzed the issues, explained his rationale, and supported his decision. They agreed with the DRP's conclusion that the ambulatory care center was in fact Alexander Levin's own office. The Panel commented that Liberty Mutual was challenging the factual conclusion made by the DRP and found that the DRP did not err as a matter of law and denied Liberty Mutual's appeal. All subsequent arbitrations were decided in defendants' favor except for Brunswick Surgical Center a/s/o T.S., which was decided in Liberty Mutual's favor but was remanded on appeal for insufficient fact findings. In each case, Liberty Mutual did not seek judicial review of the awards as allowed by statute. Rather, it instituted the two declaratory judgment actions, the dismissals of which we now review.
We need not decide whether the declaratory judgment actions were barred by the doctrine of collateral estoppel. It is apparent to us that the actions were commenced in an effort to evade the dispute resolution proceedings elected by Liberty Mutual and unilaterally imposed by it on its insureds and their assignees.
As permitted by statute, N.J.S.A. 39:6A-5.1, Liberty Mutual elected to submit PIP coverage disputes to a dispute resolution forum. Initially, the use of a dispute resolution forum other than the civil justice system was elective; by 2004, Liberty Mutual unilaterally imposed it on its insureds. The dispute resolution forum it elected to utilize involves a two-step procedure, including an appeal to a multi-DRP panel. Any further review is to the Superior Court. N.J.S.A. 2A:23A-13; N.J.A.C. 11:3-5.6(f).
Liberty Mutual argues that the central issue in the Brunswick PIP disputes is a legal issue and the resolution of that issue can be fully and fairly resolved in a court of law. This argument is not available because APDRA broadens the basis for judicial review of alternate dispute resolution awards. N.J.S.A. 2A:23A-13c(5) and -13e(4) specifically allow a Superior Court judge to vacate or modify an award if the DRP erroneously applied the law to the issues and the error alters the result obtained. In short, Liberty Mutual cannot argue that it has or had no opportunity to obtain a judicial ruling on a core legal issue.
Moreover, the course selected by Liberty Mutual in these declaratory judgment actions evades the legislative intent to streamline the resolution of PIP coverage disputes. N.J.S.A. 2A:23A-18b bars review of an order confirming, vacating or modifying a dispute resolution award beyond the Law or Chancery Division. Weinstock, supra, 377 N.J. Super. at 190. See Schenck v. HJI Assocs., 295 N.J. Super. 445, 449 (App. Div. 1996) (dismissal would have been appropriate but neither party questioned this court's jurisdiction), certif. denied sub nom. Schenck v. Bailey, 149 N.J. 35 (1997); Pressler, Current N.J. Court Rules, comment 2.4 on R. 2:2-3 (2008). Just as the parties cannot confer jurisdiction on this court contrary to the express terms of APDRA, as they attempted to do in Weinstock, Liberty Mutual cannot evade the appellate bar by commencing a declaratory judgment action in the trial court from which it would ordinarily have a right to appeal to this court. R. 2:2-3(a)(1).
For these reasons, we need not address whether the trial judge should have granted a stay of pending and future PIP arbitrations involving the Brunswick defendant. We note, however, that we discern no error in that action.
We also hold that the AIM defendants were properly dismissed as a party. Judge Rodriguez held that the Codey Statute does not apply to the provider who received the referral. He found that the AIM defendants were the recipients of a referral from one of the Brunswick defendants.
N.J.S.A. 45:9-22.5a provides in pertinent part that "[a] practitioner shall not refer a patient . . . to a health care service in which the practitioner, or the practitioner's immediate family . . . has a significant beneficial interest." The penalty for the prohibited self-referral is a civil penalty of not more than $10,000 for the first violation and not more than $20,000 for the second and subsequent violations. N.J.S.A. 45:9-22.8; N.J.S.A. 45:1-25. The express terms of the prohibition extends only to the practitioner.
Here, the practitioner was Alexander Levin not Elena Levin or AIM. The statute could have been drafted to extend the prohibition and any sanctions to the recipient of the referral, as well as the practitioner who made the impermissible referral, but it was not. It is not this court's function to revise or improve upon a statute that is clear and unambiguous, and if the statute is susceptible to only one interpretation, this court will apply it as written. Twp. of Pemberton v. Berardi, 378 N.J. Super. 430, 437 (App. Div. 2005).
The statute clearly applies only to the practitioner who makes the illegal referral. Moreover, the Legislature may have desired to limit the scope of the prohibition solely to the referring practitioner. The AIM defendants were not within the scope of the statutory prohibition on referrals, and the complaint filed against it in the August 2006 declaratory judgment action was properly dismissed.