Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

First Trenton Indemnity Co. v. River Imaging

August 11, 2009

FIRST TRENTON INDEMNITY COMPANY, RED OAK INSURANCE COMPANY, AND TRAVELERS CASUALTY AND SURETY CO., PLAINTIFFS,
v.
RIVER IMAGING, P.A., ET AL., DEFENDANTS, AND MICHAEL W. LICAMELE, MANMOHAN A. PATEL, ELLIOTT VERNON, MARK VERNON, GEORGE BRAFF, AND LYNN FOX, DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS, AND HEALTHCARE INTEGRATED SERVICES, INC., DEFENDANT/THIRD-PARTY PLAINTIFF,
v.
ZURICH AMERICAN INSURANCE COMPANY, THIRD-PARTY DEFENDANT-APPELLANT.
LIBERTY MUTUAL INSURANCE COMPANY, PLAINTIFF,
v.
EDGEWATER DIAGNOSTIC IMAGING, P.A., ET AL., DEFENDANTS, AND ELLIOTT H. VERNON, MICHAEL LICAMELE, LYNN FOX, MARK VERNON, ROBERT MASKULYAK, GEORGE BRAFF, AND MANMOHAN A. PATEL, DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS, AND HEALTHCARE INTEGRATED SERVICES, INC., DEFENDANT/THIRD-PARTY PLAINTIFF,
v.
ZURICH AMERICAN INSURANCE COMPANY, THIRD-PARTY DEFENDANT-APPELLANT.
PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY OF NEW JERSEY, PRUDENTIAL COMMERCIAL INSURANCE COMPANY OF NEW JERSEY, AND PRUDENTIAL GENERAL INSURANCE COMPANY OF NEW JERSEY, PLAINTIFFS,
v.
BLOOMFIELD DIAGNOSTIC IMAGING, EDGEWATER DIAGNOSTIC IMAGING, P.A., ECHELON DIAGNOSTIC IMAGING, P.C., HEALTHCARE INTEGRATED SERVICES, INC., MAINLAND DIAGNOSTIC IMAGING, P.L.C., MONMOUTH DIAGNOSTIC IMAGING P.A., SJG MEDICAL, INC., AND WAYNE MRI, P.A., DEFENDANTS.
STATE OF NEW JERSEY, PLAINTIFF/INTERVENOR,
v.
RIVER IMAGING, ET AL., DEFENDANTS, AND MARK R. VERNON, ELLIOTT H. VERNON, GEORGE BRAFF, LYNN FOX, MICHAEL LICAMELE, ROBERT MASKULYAK AND MANMOHAN A. PATEL, DEFENDANTS/THIRD-PARTY PLAINTIFFS/RESPONDENTS, AND HEALTHCARE INTEGRATED SERVICES, INC., DEFENDANT/THIRD-PARTY PLAINTIFF,
v.
ZURICH AMERICAN INSURANCE COMPANY, THIRD-PARTY DEFENDANT-APPELLANT.
ROBERTSON, FREILICH, BRUNO & COHEN, L.L.C., PLAINTIFF/INTERVENOR-RESPONDENT,
v.
ZURICH AMERICAN INSURANCE COMPANY, DEFENDANT-APPELLANT.



On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-149-01.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 24, 2009

Before Judges Skillman, Graves and Ashrafi.

This appeal involves insurance coverage issues. Third-party defendant Zurich American Insurance Company (Zurich) issued a "Directors and Officers Liability and Reimbursement Policy" to defendant Healthcare Integrated Services, Inc. (HIS), which operated a number of magnetic resonance imaging (MRI) facilities in New Jersey. The policy, which covered the period from November 30, 2001 to November 30, 2002, provided "claims-made" liability coverage for HIS's officers and directors. The persons covered by the policy included third-party plaintiffs Elliott H. Vernon, who was the Chairman of HIS's Board of Directors and its Chief Executive Officer, Manmohan Patel, who was Vice Chairman of HIS's Board, Mark Vernon, Lynn Fox and Robert Maskulyak, who were HIS Vice Presidents, and George Braff, Michael Weiss and Michael Licamele, who were HIS Directors.

In 2001 and 2002, three insurance companies -- plaintiff First Trenton Indemnity Company (First Trenton), Liberty Mutual Insurance Company (Liberty Mutual) and Prudential Property and Casualty Insurance (Prudential) -- filed actions against HIS for the recovery of personal injury protection (PIP) benefits. The insurance companies' complaints claimed that HIS had wrongfully obtained payment of PIP benefits because it operated unlicensed medical facilities, fraudulently overbilled the companies, and violated a statutory prohibition against the operation of medical diagnostic facilities that are not under the control and supervision of New Jersey-licensed physicians. The complaints also asserted that HIS's knowing fraudulent submission of bills for medical imaging services that were not eligible for PIP reimbursement violated the Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30. These three actions were consolidated.

The State subsequently intervened in the First Trenton and Liberty Mutual actions and filed a separate complaint against HIS under the Insurance Fraud Prevention Act. This action was ultimately consolidated with the three insurance company actions.

The third-party plaintiffs were subsequently joined as defendants in the First Trenton and Liberty Mutual actions, which sought to hold them personally liable for the PIP benefits that were alleged to have been wrongfully obtained by HIS.*fn1

The third-party plaintiffs and HIS gave notice to Zurich of the actions and demanded coverage. Zurich refused to provide coverage or to participate in the defense of the actions or settlement negotiations.

As a result, the third-party plaintiffs and HIS filed third-party complaints against Zurich seeking to obtain a declaration of their right to coverage under the HIS policy and indemnification of their defense costs and any amounts for which they might be held liable in the underlying actions.

In August 2004, HIS settled the Prudential action for $100,000. Although Elliott Vernon was not named as a defendant in that action, he claims to have paid this settlement personally and sought recovery of the $100,000 as part of his indemnification claim against Zurich.

In May 2005, HIS and the third-party plaintiffs settled the First Trenton action for $150,000. Elliott Vernon also claims to have paid this settlement personally and included this amount in his indemnification claim against Zurich.

In June 2005, the trial court granted partial summary judgment to Liberty Mutual and the State on their claims against HIS and certain affiliated entities. Those partial summary judgments did not relate to any of the claims against the third-party plaintiffs. Thus, the trial court has not yet decided Liberty Mutual's and the State's claims against the third-party plaintiffs.

In early 2006, third-party plaintiffs Elliott Vernon, Manmohan Patel and Lynn Fox moved for summary judgment on their coverage and indemnification claims against Zurich. The other third-party plaintiffs later joined in the motion. By a written opinion dated August 25, 2006, and an order entered on August 28, 2006, the trial court granted this motion.

Zurich filed a motion for a rehearing and/or reconsideration of the summary judgment order and its own motion for summary judgment, which raised defenses to the third-party plaintiffs' coverage claims that it had not raised previously. By written opinion and an order entered on December 21, 2006, the trial court denied the motion.

Third-party plaintiffs subsequently filed motions to require Zurich to indemnify them for the counsel fees and other costs incurred in the defense of the underlying actions as well as in the coverage action against Zurich. The trial court entered a series of seven orders on June 22, 2007, which determined the counsel fees and other costs to which each of the third-party plaintiffs was entitled both for the defense of the underlying actions and their coverage claims against Zurich. In addition, the court granted Elliott Vernon's motion to be indemnified for the $250,000 he allegedly paid to settle the Prudential and First Trenton actions.

On July 20, 2007, the trial court entered an order which "certified as final judgments" the August 25, 2006, December 21, 2006 and June 22, 2007 orders.

Zurich filed a notice of appeal from these orders. Zurich presents a series of arguments challenging the summary judgments and awards of counsel fees and other defense costs to the third-party plaintiffs. Zurich also challenges the $250,000 judgment in favor of Elliott Vernon indemnifying him for the amounts he paid in settlement of the Prudential and First Trenton actions.

We reject all of Zurich's arguments relating to the awards of counsel fees and other defense costs to the third-party plaintiffs and affirm the orders providing those awards. However, we reverse the judgment for indemnification entered in favor of Elliott Vernon.

I.

When we first reviewed this appeal, we questioned whether the trial court's certification of the various orders entered in this action as "final" and thus appealable as of right was appropriate, and directed the parties to submit supplemental briefs addressing this issue. In response, Zurich submitted a supplemental letter brief which pointed out that six of the June 22, 2007 orders had adjudicated specific monetary obligations and that it had posted a supersedeas bond to obtain a stay of enforcement of those obligations. Although the June 22, 2007 orders did not specifically certify that "there is no just reason for delay of . . . enforcement," as required by Rule 4:42-2, and it is not self-evident that the intent of the certification was to authorize immediate enforcement of Zurich's monetary obligations to the third-party plaintiffs, we accept Zurich's arguments that the June 22, 2007 orders imposing those obligations were certified in accordance with Rule 4:42-2(3) and therefore appealable as of right. In reaching this conclusion, we also note that this is now a two-year-old fully briefed and argued appeal and that a member of the Appellate Division Clerk's Office ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.