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Emergency Physicians of St . Clare's, LLC v. ProAssurance Corp.

August 19, 2010


The opinion of the court was delivered by: William J. Martini, U.S.D.J.





Plaintiffs, three group medical practices located in New Jersey, have brought a diversity action alleging fraud and other state law causes of action against Defendant ProAssurance Casualty Company, their provider of medical malpractice insurance, and affiliated entities. Specifically, Plaintiffs assert three causes of action: (1) Count I -- the New Jersey Consumer Fraud Act ("NJCFA"); Count II -- common law breach of contract; and Count III -- accounting and unjust enrichment.

A "claims-made" policy covers the policyholder for alleged incidents of malpractice that occur on or after the applicable coverage date and are first reported during the policy period. At the time the claims-made policy expires, a policyholder may renew coverage for an additional term, or, purchase an ERP endorsement providing "tail coverage" for alleged incidents of malpractice that occurred during a prior coverage period, but are first reported after the claims-made policy period has ended. The gravamen of the Plaintiffs' claim is that when Plaintiffs purchased Extended Reporting Period ("ERP") coverage, they were charged in excess of the "filed rate" (that is, the rate on file with the N.J. Department of Banking and Insurance at the time the ERP became effective). Plaintiffs seek to vindicate their own interests and to bring this action on behalf of two classes: similarly situated New Jersey plaintiffs and on behalf of putative plaintiffs nationally. Defendants have filed a Motion to Compel Arbitration or, in the Alternative to Dismiss the Complaint (the "Motion").

Having considered the Motion, the Court, for the reasons elaborated below, will GRANT Defendants' Motion to Compel Arbitration. This Court will order this action to ARBITRATION. Finally, this action will be administratively STAYED pending arbitration or further Court order. See DiGeronimo, P.A. v. John Cullinane & Asso., 2008 WL 5109743, at *3 (D.N.J. Dec. 2, 2008).


Plaintiffs, three New Jersey-based group medical practices, purchased ERP Endorsements to insurance polices, so called "tail coverage," which extends the reporting time for coverage of a claim of alleged medical malpractice that occurred during the policy coverage period. Plaintiffs allege that they were overcharged by ProAssurance Casualty, the entity which sold the ERPs. The primary allegation is that Plaintiffs had a right "to purchase an ERP at rates in effect on the date of termination of their policies ... but that instead of charging those rates ... defendants charged plaintiffs the rate applying to ERP endorsements attaching to policies written after plaintiffs' policies [had] terminated." Opp'n Br. 10. The rate charged was allegedly higher than the rate Defendants had put on file with the State of New Jersey. Id. Plaintiffs allege fraud, breach of contract, and unjust enrichment under state law. Jurisdiction is based on diversity. See 28 U.S.C. § 1332.*fn1

Plaintiffs seek relief on their own behalf on behalf of other similarly situated parties. Plaintiffs seek to represent both a class of New Jersey plaintiffs who purchased ERP endorsements (and whose policies terminated in 2003, 2004, and 2005), and a national class who purchased ERP endorsements (and whose policies, likewise, terminated in 2003, 2004, and 2005).


Motions to compel arbitration are reviewed under the Rule 56(c) standard for summary judgment. Fed. R. Civ. P. 56(c); Hunish v. Assisted Living Concepts, Inc., 2010 WL 1838427 (D.N.J. May 6, 2010); Markel Int'l Ins. Co. v. Westchester Fire Ins. Co., 442 F. Supp. 2d 200, 202 (D.N.J. 2006). Summary judgment is appropriate if the "if the pleadings, the discovery [including, depositions, answers to interrogatories, and admissions on file] and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990). A factual dispute is genuine if a reasonable jury could find for the non-moving party, and is material if it will affect the outcome of the trial under governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The summary judgment stage, "the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249; see also Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (explaining that a court may not weigh the evidence or make credibility determinations). Rather, the court must consider all evidence and inferences drawn therefrom in the light most favorable to the non-moving party. Andreoli v. Gates, 482 F.3d 641, 647 (3d Cir. 2007).

To prevail on summary judgment, the moving party must affirmatively identify those portions of the record which demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323-24. The moving party can discharge the burden by showing that "on all the essential elements of its case on which it bears the burden of proof at trial, no reasonable jury could find for the non-moving party." In re Bressman, 327 F.3d 229, 238 (3d Cir. 2003); see also Celotex, 477 U.S. at 325. If the moving party meets this initial burden, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts," but must show sufficient evidence to support a jury verdict in its favor. Boyle v. County of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). However, if the non-moving party "fails to make a showing sufficient to establish the existence of an element essential to [the non-movant's] case, and on which [the non-movant] will bear the burden of proof at trial," Rule 56 mandates the entry of summary judgment because such a failure "necessarily renders all other facts immaterial." Celotex Corp., 477 U.S. at 322-23; Jakimas v. Hoffman-La Roche, Inc., 485 F.3d 770, 777 (3d Cir. 2007).

If the nonmoving party has the burden of proof at trial, the party moving for summary judgment is not required to "support its motion with affidavits or other similar material negating the opponent's claim," Celotex, 477 U.S. at 323, in order to discharge this "initial responsibility." In this situation, the movant "[merely] show[s] -- that is, point[s] out to the district ...

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