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Endo Surgical Center v. Allstate New Jersey Insurance Co.

December 18, 2009

ENDO SURGICAL CENTER A/S/O MARILUS RODRIGUEZ, PLAINTIFF-APPELLANT,
v.
ALLSTATE NEW JERSEY INSURANCE COMPANY, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7160-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 30, 2009

Before Judges Fuentes and Gilroy.

Plaintiff Endo Surgical Center, as subrogee of Marilus Rodriguez, appeals from the November 13, 2008 order denying its application for an order compelling defendant Allstate New Jersey Insurance Company*fn1 to comply with the June 30, 2008 arbitration award that directed defendant to pay plaintiff $11,400 in personal injury medical expense benefits. We affirm.

The facts are not in dispute. On April 17, 2006, Marilus Rodriguez suffered personal injuries while operating a motor vehicle owned by her mother, Tomasa Morales, and insured by defendant. The insurance policy provided personal injury protection (PIP) medical expense benefits with limits of $250,000 per person/per accident. Rodriguez's treating medical providers submitted bills totaling $623,677.51 to defendant, of which Allstate paid $250,000 in accordance with the terms of its policy.

On November 3, 4, and 5, 2006, Dr. Michael Haddad of Chiropractic Care, P.C., performed manipulations under anesthesia (MUAs) of Rodriguez's spine at plaintiff's surgical center. Rodriguez assigned her PIP claims for Dr. Haddad's services and for use of plaintiff's facility to the respective medical providers. On November 6, 2006, plaintiff submitted a statement to defendant in the amount of $37,750 for hosting the MUAs. Chiropractic Care submitted an additional statement to defendant in the amount of $9,911 for Dr. Haddad's services in performing the MUAs. Defendant denied both claims on the basis that neither was medically reasonable nor necessary.

On April 27, 2007, plaintiff filed a demand for arbitration with the National Arbitration Forum seeking to compel defendant to issue payment for use of the surgical center. Chiropractic Care also filed a demand for arbitration seeking to compel defendant to pay $9,911 for Dr. Haddad's services.

On April 9, 2008, the appointed Dispute Resolution Professional (DRP) conducted a hearing on the consolidated arbitration matters and reserved decision. On June 30, 2008, the DRP entered an arbitration award directing defendant to pay plaintiff $11,400 for Dr. Haddad's use of the surgical center in performing the MUAs. As a result, defendant obtained a $26,350 reduction from the original $37,750 demanded by plaintiff. The arbitration award also directed defendant to pay plaintiff $1,750 in attorney's fees and $229.88 in costs. On the same day, the DRP issued a separate arbitration award directing defendant to pay Chiropractic Care $6,039.98 for Dr. Haddadd's services, together with attorney's fees of $1,300, and costs of $225. As Chiropractic Care had originally demanded $9,911, the award reduced defendant's obligation by $3,871.02.

In the interim, while the arbitration proceedings were pending, defendant paid two statements of third-party medical providers relating to surgery that Rodriguez had undergone on May 21, 2007. On March 18, 2008, defendant paid Northern New Jersey Orthopedic Specialists $86,285. On June 19, 2008, defendant paid St. Clare's Hospital $140,618.35. These two payments, together with previously-paid payments, to other third-party medical providers exhausted the medical expense benefits under the policy.

On July 2, 2008, defendant informed plaintiff that the limits of PIP medical expense benefits had been exhausted, and as such, defendant could not honor the arbitration award. However, defendant paid plaintiff the award of attorney's fees and costs.

On September 18, 2008, plaintiff filed a complaint and an order to show cause seeking to compel defendant to pay the $11,400 arbitration award.*fn2 On November 13, 2008, the trial court issued an order denying plaintiff's application to compel payment of the arbitration award. In its statement of reasons attached to the order, the court explained:

Plaintiff's Order to Show Cause is denied. Defendant had a reasonable basis for not allocating a reserve for this matter. Plaintiff has submitted no law which entitles it to priority to the funds it claims it is owed. Absent such law, the [c]court must defer to the insurance carrier as to what provider should be paid first.

The [c]court finds no basis for plaintiff's contention that defendant acted in bad faith in this matter. The proceeding had commenced and only the date and amount of award remained when the policy limits were exhausted. Defendant could not have disclosed the exhaustion of the policy limits ...


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