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The Valley Hospital v. Lq Management LLC and Zurich American Insurance Company


August 8, 2011


On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7362-10.

Per curiam.


Argued May 25, 2011

Before Judges Fuentes and Ashrafi.

Plaintiff Valley Hospital appeals from an order dated October 1, 2010, dismissing its complaint on the ground that the Superior Court did not have subject matter jurisdiction over its claim for money owed. Because the matter involves hospital bills arising out of work-related injury to a patient, the trial court concluded that N.J.S.A. 34:15-49 vests exclusive jurisdiction in the Division of Workers' Compensation. We reverse and reinstate plaintiff's complaint.

Our standard of review is plenary from an order as in this case dismissing a complaint pursuant to Rule 4:6-2(e). Smerling v. Harrah's Entm't, Inc., 389 N.J. Super. 181, 186 (App. Div. 2006). We view the "complaint in depth and with liberality" to determine whether a cause of action is "'suggested' by the facts." Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 746 (1989).

Plaintiff's two-count complaint alleges that an employee of defendant LQ Management, LLC, was admitted and treated for work-related back injury at the plaintiff hospital. The hospital billed a total of $65,549.07 for its services and submitted the bill to defendant Zurich American Insurance Company, the workers' compensation carrier for LQ Management. Zurich utilized the services of a claim administrator to process the bill. According to the complaint, the claim administrator issued an explanation of benefits indicating that Zurich was paying the bill under the hospital's contract with FOCUS - Aetna Workers Comp Access, LLC ("Aetna contract").

The complaint alleges that, under the terms of the Aetna contract, the hospital accepts as full payment eighty percent of its billed charges in conformity with preferred provider rates. Plaintiff alleges that it should have been paid $52,456.38, which is eighty percent of the billed charges. Instead, Zurich paid $24,743.07, leaving a balance due of $27,713.31. Plaintiff alleges causes of action for breach of contract and unjust enrichment in defendants' failure to pay the balance due.

Defendants filed a motion to dismiss the complaint under Rule 4:6-2(e). They asserted that the Superior Court lacked jurisdiction to determine an issue of compensation for a work-related injury. They argued that the patient has a workers' compensation claim pending before the Division of Workers' Compensation and that any dispute about coverage for his medical treatment must be presented to that tribunal for resolution.

In opposition to the motion to dismiss, plaintiff submitted a certification of its accounts manager, to which was attached the hospital bill, its billing notes, and the explanation of benefits document from the claim administrator. *fn1 According to the hospital, the explanation of benefits used codes and wording indicating that the claim was paid under the Aetna contract, and the Aetna contract requires that the carrier accept the hospital's charges, although payable at the discounted rate.

The separate listing of the hospital's charges in the explanation of benefits showed that no payment at all was made for a charge of $40,806.00 for implants that were apparently inserted as part of the patient's back surgery, and that all other hospital services were paid in full, totaling $24,743.07. The trial court relied on that document to conclude that the allegations and evidence did not support a claim that Zurich made payment under the discounted rate of an alleged Aetna contract. The court concluded that the issue in dispute is whether the implants are covered as medically reasonable and necessary treatment for the patient's injury, and that issue is within the exclusive jurisdiction of the Division of Workers' Compensation.

N.J.S.A. 34:15-49 states: "The Division of Workers' Compensation shall have the exclusive original jurisdiction of all claims for workers' compensation benefits." To be covered by the Workers' Compensation Act, N.J.S.A. 34:15-1 to -128, medical treatment must be necessary and related to an accident or injury that occurred in the course of employment. Univ. of Mass. Mem'l Med. Ctr., Inc. v. Christodoulou, 180 N.J. 334, 344-45 (2004); N.J.S.A. 34:15-7 and -15. Furthermore, the fees charged for medical services must be reasonable. N.J.S.A. 34:15-15. In Christodoulou, the Court held that "while an employee's claim for a work-related injury is pending in the Division, a medical provider's action for unpaid services must be transferred from the Law Division to the Division of Workers' Compensation." 180 N.J. at 352.

Plaintiff argues, however, and we agree, that its complaint does not seek payment from the patient directly as in Christodoulou, or from Zurich under the Workers' Compensation Act. Rather, the complaint states a common law contract claim against the insurance carrier under the alleged Aetna contract, as well as a common law claim of unjust enrichment related to that contract and its discounted rates. Plaintiff alleges it is entitled to total payment of $52,456.38 on its charges not by virtue of the nature of the patient's injury and his statutory right to workers' compensation coverage. It alleges that a carrier's decision to take advantage of the discounted rates available through the Aetna contract binds the carrier to accept the hospital's charges. In exchange, the hospital accepts the twenty percent reduction in its charges.

Defendants dispute that they paid the hospital's charges under the discounted rate of the Aetna contract, or that the claim administrator's alleged use of that contract bound them to its terms. But those disputes are contested issues of fact that cannot be resolved on the pleadings and conflicting submissions pursuant to a motion to dismiss under Rule 4:6-2(e).

On a motion to dismiss a pleading for failure to state a claim, the court must accept as true the factual allegations of the pleading. See Smerling, supra, 389 N.J. Super. at 186. Here, we accept as true plaintiff's allegations that the notations and codes on the explanation of benefits indicate that the claim was paid through the Aetna contract. We do not decide whether that allegation has been proven or whether payment through the Aetna contract bound defendants to accept the hospital's charges without further review or challenge. Those issues must be determined based on evidence of the alleged contract and its terms, as well as the meaning of the claim administrator's references in the explanation of benefits document.

Plaintiff's claim under such a contract, however, is not a matter pertaining to compensable benefits under the Workers' Compensation Act. In other words, whether the implants were necessary and the charge for them reasonable is not an issue that must be decided to determine whether Zurich is bound by the terms of the alleged Aetna contract. Moreover, the Division of Workers' Compensation is not the appropriate forum to determine the terms of the Aetna contract and disputes arising under that contract. Jurisdiction of the subject matter of the litigation as presented in the complaint lies in the Superior Court.

If plaintiff fails to prove its allegations regarding the Aetna contract, its complaint can then be dismissed or transferred to the Division of Workers' Compensation in accordance with the holding of Christodoulou, supra, 180 N.J. at 352.

Reversed and remanded for reinstatement of plaintiff's complaint.

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