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IFA Insurance Co. v. Spine Institute of Southern New Jersey


April 22, 2010


On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-920-09.

Per curiam.


Argued April 13, 2010

Before Judges Fuentes, Gilroy and Simonelli.

Defendant Spine Institute of New Jersey, a/s/o Edwin Burgos, appeals from the July 9, 2009 Law Division order modifying and confirming an arbitration award issued pursuant to the Alternative Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23A-1 to -30. Because this court lacks jurisdiction to review this case, we dismiss the appeal.

On May 14, 2003, Burgos sustained injuries while a passenger in a vehicle owned and operated by an insured of defendant IFA Insurance Company. The automobile insurance policy issued to IFA's insured provided personal injury protection (PIP) coverage with limits of $250,000 per person/per accident with a $250 deductible and a 20% co-payment for the first $5,000 of approved medical bills.

Defendant provided medical services to Burgos and submitted to IFA a claim for medical benefits in the amount of $147,180. Following an audit, IFA determined that only $61,576.33 constituted a reasonable and customary charge for the services defendant rendered to Burgos and paid defendant that amount.

Defendant filed a demand for arbitration with the National Arbitration Forum (NAF) seeking $84,728. Prior to arbitration, defendant reduced its claim to $619.08, representing Burgos's 20% co-payment. IFA refused to pay this amount, claiming that the policy limit of $250,000 had been reached on January 10, 2008, and that deductibles and co-payments are included in the limit.

Following a hearing, the Dispute Resolution Professional (DRP) rendered a written decision awarding defendant $619.08 plus attorney's fees. The DRP concluded "that [the] policy provides for the payment of $250,000 in medical expense benefits, not $250,000 less the co-pay and deductible[,]" and that the "policy does not indicate that the $250,000 limit is inclusive of deductible and co-pay." The DRP relied entirely on other NAF awards and rejected, without explanation, the case law IFA cited supporting its position.

IFA commenced this action, seeking to modify the award asserting that it had appropriately processed Burgos's co-payment and the bills defendant submitted, and to confirm the modified award. IFA contended that the DRP failed to set forth findings and legal conclusions based on the record, erroneously applied the law to the issues and facts presented, and failed to consider the policy's language limiting the medical expense benefit to $250,000. Defendant filed a cross-motion to confirm the arbitration award and dismiss the verified complaint, contending, as it does on appeal, that the NAF, not the court, has primary jurisdiction over this matter, and that IFA failed to exhaust its administrative remedies through the NAF.

In a written opinion dated July 9, 2009, Judge Suter granted IFA's motion and denied defendant's cross-motion. She found that the court had primary jurisdiction to modify the award because the matter involved whether the DRP erroneously applied the law to the issues and facts presented, and that the issues presented required the court's legal interpretation of the Automobile Insurance Cost Reduction Act, N.J.S.A. 39:6A-1 to -35, pertaining to insurance co-payments, not a technical matter within the purview of an administrative agency. The judge also found that IFA was not required to appeal to the NAF. The judge concluded that the DRP's decision was contrary to N.J.S.A. 39:6A-4 and applicable case law, which provide that medical expense benefits limits include deductibles and co-payments. This appeal followed.

The APDRA sets forth procedures to be used in an arbitration. N.J.S.A. 2A:23A-2(a). It also provides that "[a]n appeal from a final [arbitration] award decision by the umpire may be obtained only as provided in section 13 of this Act." N.J.S.A. 2A:23A-5(b). Section 13 grants trial courts the authority to modify an award where the "rights of the party applying for the modification were prejudiced by the umpire erroneously applying law to the issues and facts presented for alternative resolution." N.J.S.A. 2A:23A-13(e)(4). "Upon the granting of an order confirming, modifying or correcting an award, a judgment or decree shall be entered by the court in conformity therewith and be enforced as any other judgment or decree. There shall be no further appeal or review of the judgment or decree." N.J.S.A. 2A:23A-18(b) (emphasis added).

In interpreting these provisions, our Supreme Court has concluded that parties waive certain rights when choosing to arbitrate a dispute. One of those rights is the ability to appeal through the regular court process. Mt. Hope Dev. Assocs. v. Mt. Hope Waterpower Project, L.P., 154 N.J. 141, 149 (1998). The Court has explained:

[P]arties to arbitration also waive, to some extent, their right to appeal. There is no distinction between arbitration and the APDRA that would prohibit parties who invoke the APDRA from likewise waiving those rights. Indeed, the public policy underlying the APDRA is essentially the same as that underlying the Arbitration Act: finality and limited judicial involvement.


Although limited judicial review is a central component of the APDRA, the APDRA's procedures are entirely voluntary, and thus, parties are free to invoke its procedure in toto or subject to agreed upon modifications. Had the parties to this action desired to preserve their right to appeal, they could have inserted a provision into the consent judgment reserving that right and delineating the scope and extent of any appeal. [Ibid. (internal quotations and citations omitted.)]

The Court has also recognized that there are "rare circumstances" where public policy necessitates appellate review of arbitration awards. Id. at 152. In those circumstances, the court has been said to be exercising its "special supervisory functions." Ibid. See also Allstate Ins. Co. v. Sabato, 380 N.J. Super. 463, 472-73 (App. Div. 2005). Those "special supervisory functions" include review of child support enforcement and "other limited circumstances where public policy would require appellate court review[,]" Mt. Hope, supra, 154 N.J. at 152, review of arbitration awards of attorney's fees, Allstate Ins. Co., supra, 380 N.J. Super. at 473, and review of cases where the judge applied the wrong standard of review and failed to rule at all on the plaintiff's specific claims, Morel v. State Farm Ins. Co., 396 N.J. Super. 472, 475 (App. Div. 2007).

Absent factors warranting the exercise of our "special supervisory functions," we must dismiss an appeal where the trial judge articulated a rational explanation for how the arbitrator committed prejudicial error. N.J.S.A. 2A:23A-18(b); Fort Lee Surgery Center v. Proformance Ins. Co., _____ N.J. Super. _____ (App. Div. 2010) (slip op. at 6).

We discern no reason to exercise our "special supervisory functions" in this case. We are satisfied that Judge Suter had primary jurisdiction over this matter, acted within the APDRA's parameters, and articulated a rational explanation for how the DRP committed prejudicial error by erroneously applying N.J.S.A. 39:6A-4 and applicable case law to the issues and facts presented. Accordingly, this court lacks jurisdiction to review Judge Suter's decision.



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