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Berman v. GEICO


May 10, 2010


On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-4071-09.

Per curiam.


Argued January 20, 2010

Before Judge Carchman and Lihotz.

Plaintiff Alana Berman (Berman) and her Assignee, Premier Orthopaedics and Sports Medicine, P.C. (Premier) (collectively referred to as plaintiffs), appeal from the trial court's order denying their emergent application and dismissing their complaint for satisfaction of an arbitration award against defendant GEICO. After reviewing the record in light of the facts and applicable law, we affirm.

On August 15, 2007, Berman, then nine years old, was a passenger in a vehicle involved in an automobile accident. After the accident, Berman experienced "a bump on her left temple and [p]ain radiating onto the front of her head" and "reported getting sharp headaches." On August 29, Berman was brought to Premier for examination. Dr. Margaret Meyer diagnosed a head contusion and headaches. Given the child's age and the lapse of time since the accident, Dr. Meyer recommended Berman receive a CT scan to rule out brain injuries.

Premier billed GEICO for an initial office visit under Current Procedural Terminology [CPT] code 99204, reflecting a visit lasting approximately forty-five minutes and requiring a medical decision of "moderate complexity."*fn1 Such visits are assigned a value of $114.32 under New Jersey's automobile medical fee schedule. See generally N.J.A.C. 11:3-29.1 (establishing a fee schedule for PIP providers and insurers).

For reasons that are not explained in this record, a GEICO employee downgraded the visit to code 99203. This code reflected a visit lasting approximately thirty minutes, which required a medical decision of "low complexity." Visits coded 99203 are assigned a value of $80.02. GEICO then agreed to pay this amount, subject to any co-payment and contract deductibles.

Premier disputed GEICO's decision to downgrade its claim and, as Berman's assignee, filed a Demand for Arbitration with the National Arbitration Forum (NAF) for the cost of Berman's care on April 19, 2008. The Commissioner of Banking and Insurance has designated NAF as the body to handle arbitration of PIP disputes in New Jersey. N.J.S.A. 39:6A-5.1.

A hearing was conducted before Gary T. Lesser, a Dispute Resolution Professional with NAF. After reviewing the parties' submissions, Lesser found Premier had correctly coded Berman's care. The arbitrator entered an award of $114.32 in compensatory damages, less any sums GEICO previously paid, and $831.00 in attorney's fees and costs.

GEICO applied $34.30, which was the unpaid compensatory award, to Berman's deductible. It did not pay the attorney fee portion of the award.

On May 5, 2009, thirty-four days after the award was issued, plaintiffs filed a Verified Complaint and an Order to Show Cause (OTSC) demanding GEICO's payment of the remaining $831.00. To support their claim that GEICO had defaulted, plaintiffs relied upon N.J.A.C. 11:3-5.6(e), which states that "[i]f the [PIP arbitration] award requires payment by the insurer for a treatment or test, payment shall be made . . . within [twenty] days of receipt of a copy of the determination" on the award. Two days later, GEICO paid the sum awarded as attorney's fees and costs.

The Law Division reviewed the OTSC on June 8, 2009. In response to plaintiffs' allegations, GEICO acknowledged that at the time plaintiffs initiated their action, it had not satisfied all components of the arbitration award. However, GEICO maintained that, as the forty-five day appeal period provided by N.J.S.A. 2A:23A-13(a) had not expired, no actionable claim arose.

The court noted the conflict in the time frames stated in the statute and regulation, concluding the statute controlled and stating "the 20-day time period in which the award must be paid does not begin to run until the award becomes final, i.e., when the time to appeal has expired."

The court dismissed plaintiffs' complaint, and this appeal ensued. As the appeal presents a question of law, we review the Law Division's determination de novo. Manalapan Realty, L.P. v. Manalapan Tp. Comm., 140 N.J. 366, 378 (1995).

The Alternate Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23A-1 to -30, is New Jersey's equivalent of the Federal Arbitration Act, 9 U.S.C.A. § 1-14. Incorporation of the APDRA into an agreement to utilize alternative dispute resolution (ADR) provides the Superior Court with jurisdiction "to enforce that provision or agreement pursuant to the provisions set forth in this act and to enter judgment thereon." N.J.S.A. 2A:23A-2(b). N.J.S.A. 2A:23A-13(a) states:

A party to an alternative resolution proceeding shall commence a summary application in the Superior Court for its vacation, modification or correction within 45 days after the award is delivered to the applicant . . . unless the parties shall extend the time in writing. The award of the umpire shall become final unless the action is commenced as required by this subsection.

The Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-1.1 to -35, provides that either party to a PIP dispute may select ADR in lieu of filing an action in Superior Court, and vests in the Commissioner of Banking and Insurance (the Commissioner) the authority to "promulgate rules and regulations with respect to a conduct of dispute resolution" and designate an organization to administer the dispute resolution program. N.J.S.A. 39:6A-5.1; Allstate Ins. Co. v. Sabato, 380 N.J. Super. 463, 470 (App. Div. 2005). In exercising this authority, the Commissioner chose to adopt the APDRA's procedures for resolution of PIP claims. N.J.A.C. 11:3-5.1 to -5.12. Thus, compliance with APDRA rules is a mandatory requirement of PIP ADR. Riverside Chirop. Group. v. Mercury Ins. Co., 404 N.J. Super. 228, 235 (App. Div. 2008).

While the APDRA is designed to assist in providing "prompt and efficient provision of benefits for all accident injury victims" and "minimiz[ing] resort to the judicial process," these goals - whether reflected in regulations or otherwise - must yield to the plain language of the statute's specific provisions. Caviglia v. Royal Tours of Am., 178 N.J. 460, 467 (2004). Accordingly, "when the provisions of the statute are clear and unambiguous, a regulation cannot amend, alter, enlarge or limit the terms of the legislative enactment." In re N.J.A.C. 12:17-9.6, 395 N.J. Super. 394, 406 (2007); see Reck v. Dir., Div. of Taxation, 345 N.J. Super. 443, 449 (App. Div. 2001), aff'd, 175 N.J. 54 (2002); Lewis v. Catastrophic Illness Fund, 336 N.J. Super. 361, 369-70 (App. Div.), certif. denied, 168 N.J. 290 (2001). When conflict arises between a statute and the regulations enacted thereunder, the statute is "'the controlling authority as to the proper disposition'" of the contested issue and "'any regulation or rule[making] which contravenes a statute is of no force[.]'" L. Feriozzi Concrete Co. v. Casino Reinvest. Dev. Auth., 342 N.J. Super. 237, 251 (App. Div. 2001). (quoting Terry v. Harris, 175 N.J. Super. 482, 496 (Law Div. 1980)).

N.J.S.A. 2A:23A-13(e) specifically grants parties who participate in PIP arbitration forty-five days to secure vacation or modification of a PIP award. The Commissioner's salutary intention in providing a twenty-day time frame for payment of claims awarded cannot thwart the appeal rights of a party dissatisfied with an ADR result.

Plaintiffs' suggestion that GEICO must pay the award before determining whether to file an appeal is unsupportable. In fact, the language of N.J.A.C. 11:3-5.6(f) makes a final decision of an ADR professional subject to "vacation, modification or correction by the Superior Court in an action filed pursuant to N.J.S.A. 2A:23A-13 for review of the award." Therefore, to the extent that N.J.A.C. 11:3-5.6(e) frustrates the policies set forth by the Legislature in the APDRA, it must yield. See In re N.J.A.C. 10:82-1.2 & 10.85-4.1, 117 N.J. 311, 325 (1989); In re N.J.A.C. 7:7A-2.4, 365 N.J. Super. 255, 265 (App. Div. 2003).

Additionally, any PIP award may include accrued interest computed to the date of payment, N.J.S.A. 39:6A-5(h), thus abating any concern of possible prejudice from intentional delay.

Although we agree with the trial court's conclusion that plaintiffs' action was premature and, therefore, affirm, we reject that portion of the trial court's opinion suggesting "the [twenty]-day time period in which the award must be paid does not begin until the award becomes final, i.e., when the time to appeal has expired." Such a construction impedes the purpose of the APDRA's procedures designed to provide expedited efforts of resolving conflicts. See 30 N.J.R. 4437(a). Thus, any request to vacate or modify an award shall be filed within the forty-five day period provided by the statute. If no appeal is filed, the award shall be paid by that date.


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