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Open Mri & Imaging of Rochelle Park A/S/O Carmen Hernandez v. Mercury Insurance Group

July 14, 2011


On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-4993-10.

The opinion of the court was delivered by: Payne, J.A.D.



Submitted March 22, 2011

Before Judges Wefing, Payne and Hayden.

The opinion of the court was delivered by PAYNE, J.A.D.

In this matter, plaintiff Open MRI & Imaging of Rochelle Park as subrogee of its patient, Carmen Hernandez, obtained precertification from Mercury Insurance Company to perform a computerized tomography (CT) scan with reconstructive imaging on the lumbar spine of Mercury's insured, Hernandez, following an auto accident that occurred on February 12, 2008. The scan was performed on August 28, 2008; the bill for a total of $1,600 was submitted to Mercury on September 8, 2008. After holding the bill for more than the statutory sixty-day maximum, see N.J.S.A. 39:6A-5g,*fn1 on November 24, 2008, Mercury denied payment claiming that its policy's personal injury protection (PIP) limits of $15,000 had been exhausted. That statement was, in fact, the result of clerical error. Available benefits in the amount of $418.63 remained as of that date, which were paid to another provider on February 2, 2009 for services performed on January 13, 2009.*fn2

On June 11, 2009, Open MRI filed a demand for arbitration of its claim with the National Arbitration Forum pursuant to the Alternative Procedure for Dispute Resolution (APDR) Act, N.J.S.A. 2A:23A-1 to -19,*fn3 asserting that the facts required reformation of the policy in accordance with the unreported opinion of a Bergen County judge in PMI of Union City a/s/o J.M. v. GEICO, Ber-L-11036-99 (March 1, 2010). A hearing was conducted on March 16, 2010 before a Dispute Resolution Professional (DRP), who issued a written opinion on May 6, 2010. After setting forth the facts of the matter, the DRP held that there was "no basis in law or fact in this case to hold Respondent responsible for the payment of PIP benefits to Claimant beyond the PIP policy limits of $15,000." Turning to Open MRI's claim for reformation of the policy in accordance with PMI, the DRP held:

N.J.S.A. 39:6A-5.1 specifically references the PIP statute, which states that only those PIP disputes arising under the PIP statute may be arbitrated. N.J.S.A. 39:6A-5.1 and N.J.A.C. 11:3-5.2 define "PIP dispute" to include interpretation of the insurance contract. Clearly, however, "interpretation" does not extend to reformation of the policy. Accordingly, a DRP's jurisdiction to award medical expense benefits extends to the policy limits and does not go beyond. Thus, while the facts presented are indeed similar to the PMI case presented, a DRP in this Forum cannot reform the policy or find claimant to be a prevailing party. No award of medical expense benefits can be made.

Thereafter, on May 14, 2010, Open MRI brought an action in the Law Division of the Superior Court pursuant to N.J.S.A. 2A:23A-13 seeking an order summarily vacating the award in Mercury's favor and entering an award in Open MRI's favor in the net amount of $3,900. Upon review, the Law Division judge, determined that he was empowered to vacate the award as the result of N.J.S.A. 2A:23A-13c(5) because the umpire had committed "prejudicial error by erroneously applying law to the issues and facts presented for alternative resolution." Then, determining that the DRP "did not have the authority to reform the PIP policy to compel coverage," the judge concluded that in circumstances mirroring those in PMI, policy reformation was proper to permit payment to Open MRI. The judge held: "It would be inequitable to punish Plaintiff for the accounting error of Defendant." This appeal by Mercury followed.

On appeal, we first address an issue that has been the frequent subject of litigation: the effect of N.J.S.A. 2A:23A-18b upon Mercury's right of appeal. That statute provides:

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.

In Mt. Hope Development Associates, EAJ, Inc. v. Mt. Hope Waterpower Project, L.P., 154 N.J. 141 (1998), a complex real estate contract dispute, the Court addressed whether N.J.S.A. 2A:23A-18b infringed on an individual's constitutional right to appeal and the Court's constitutional rulemaking authority. The Court rejected the constitutional challenge on the ground that because the APDRA was a voluntary procedure for alternative dispute resolution, operative only with the agreement of the parties, id. at 145-46, the waiver by sophisticated businessmen of their right to ...

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