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Citizens United Reciprocal Exchange v. Ap Surgical Center


March 22, 2012


On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-2579-11.

Per curiam.


Argued February 27, 2012 -

Before Judges Parrillo and Skillman.

This appeal involves the application of the section of the Alternative Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23-1 to -30, which provides that upon entry of a trial court order confirming, modifying or correcting an arbitration award under the APDRA, "[t]here shall be no further appeal or review of the judgment or decree." N.J.S.A. 2A:23A-18(b).

On December 11, 2007, Jassiel Martinez was involved in an automobile accident. At the time of this accident, Martinez was insured by plaintiff Citizens United Reciprocal Exchange (Citizens United). Martinez's policy included personal injury protection (PIP) benefits for any necessary and reasonable medical expenses she incurred as a result of an automobile accident. Following the accident, Martinez sought chiropractic treatment from Dr. Jason Tirado of USA Chiropractic. On three separate occasions, Martinez received treatment, known as manipulation under anesthesia, at the ambulatory surgery center of defendant AP Surgical Center.

AP Surgical filed a PIP claim for $49,650, as Martinez's assignee, for the use of its facility for those treatments. However, Citizens United determined that AP Surgical was entitled to only $6,064.44. AP Surgical then demanded arbitration under the APDRA seeking the full amount of its billings.

On December 20, 2010, the arbitrator assigned to the matter rendered an award in AP Surgical's favor for $36,000. The arbitrator also awarded AP Surgical $1525 for counsel fees and costs incurred in the arbitration proceeding.

Citizens United brought this action in the Law Division seeking to vacate the arbitration award on the ground that the arbitrator had erroneously applied the law to the facts of the case. Following oral argument, the Law Division rejected Citizens United's challenge to the arbitration award and dismissed its complaint. The court also awarded AP Surgical $750 for counsel fees and costs incurred in the Law Division action.

N.J.S.A. 2A:23A-18(b) prohibits appellate review of a judgment of the Law Division confirming, correcting or modifying an arbitration award under the APDRA:

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. [Emphasis added.]

In Mount Hope Development Associates v. Mount Hope Waterpower Project, L.P., 154 N.J. 141, 147-53 (1998), the Court upheld the constitutionality of this prohibition upon appellate review of a judgment confirming, correcting or modifying arbitration awards under the APDRA. However, in upholding the constitutionality of this prohibition, the Court noted that there may be "'rare circumstances' grounded in public policy that might compel this Court to grant limited appellate review." Id. at 152. The Court pointed to a case involving the "enforceability of an award affecting child support" that could "affect[] the substantial best interest of [a] child" as one example of a case implicating a "public policy" that could compel a right of limited appellate review. Ibid. The Court pointed to "an award that is confirmed, modified, or vacated by a biased court" as another example of such an award, because such a decision would implicate "the Court's supervisory function over the courts." Ibid.

In Allstate Insurance Co. v. Sabato, 380 N.J. Super. 463, 473-74 (App. Div. 2005), we concluded that an award of counsel fees by an arbitrator also implicated the Court's exclusive supervisory powers over the practice of law requiring the opportunity for limited appellate review. In reaching this conclusion, we stated that "[t]he award of attorney's fees, whether encompassing bookkeeping records, reasonableness, or the type of fee agreed to, is governed by our Court rules, specifically the Rules of Professional Conduct, RPC 1.5, and Rules of General Application, R. 1:21-6 and R. 1:21-7." Id. at 473.

Citizens United's claim that the arbitrator's award to AP Surgical was excessive does not involve a public policy such as the enforcement of child support or the Court's supervisory responsibilities over the Judiciary, which the Court alluded to in Mt. Hope, nor does it, as in Sabato, involve an award of attorney's fees. Citizens United argues that this case involves the "public policy" of "the proper application of AICRA" because an excessive award to a health care provider will result in the PIP carrier "passing its losses to its policyholders through increased premiums." However, if an allegation of an "improper application of AICRA" resulting in an excessive award to a health care provider were held sufficient to avoid the prohibition against appellate review established by N.J.S.A. 2A:23A-18(b), this prohibition would bar appellate review only in quite limited circumstances. We do not believe such a restrictive application of N.J.S.A. 2A:23-18(b) can be reconciled with the court's interpretation of this provision in Mt. Hope. See Riverside Chiropractic Group v. Mercury, 404 N.J. Super. 228, 240 (App. Div. 2008) (observing that "[s]eeking compensation for performing chiropractic treatments is not comparable to issues affecting the best interests of children, . or the Court's traditional role in monitoring counsel fees under the Rules of Professional Conduct.").

Furthermore, this is not a case in which the trial court failed to "apply[] the relevant statutory standards[,]" as in Morel v. State Farm Ins. Co., 396 N.J. Super. 472, 476 (App. Div. 2007). In rejecting Citizens United's argument that the arbitration award should be vacated, the court stated:

[T]he issue before the Court is whether the [arbitrator] committed prejudicial error by not applying the amended fee schedule effective August 10, '09, and whether [AP Surgical] submitted sufficient evidence to adhere to Cobo factors [Cobo v. Market Transaction Facility, 293 N.J. Super. 374 (App. Div. 1996)] for the [Citizens United] carrier to determine the reasonableness of the [usual, customary and reasonable rates].

Having reviewed the . . . Department of Banking and Insurance Bulletin Number 926, which explains the new fee schedule, having read the case that was the subject . . . of that directive, namely In Re Adoption of N.J.A.C. 11:3-29, [ ], the Court finds that the operative date is when the bill for $49,650 was calculated, and assuming a bill for services rendered in July of 2008 was also calculated in 2008, the new fee schedule does not apply in this matter regardless of whether the arbitration occurred a year later, or that [Citizens United] processed the bill after the effective date.

The Court also finds that [AP Surgical's] explanation of benefits sufficiently provided all of the information needed to make an assessment of reasonableness under the Cobo analysis, and therefore the Court finds that [Citizens United's] argument that [AP Surgical] should have presented alternate evidence is a form over substance argument, and [Citizens United's] application to vacate the arbitration award based on prejudicial error is denied.

It is clear from this part of the trial court's opinion that, unlike in Morel, the court applied the relevant statutory standards. Citizens United's argument is simply that the court misapplied those standards. However, the prohibition against appellate review contained in N.J.S.A. 2A:23A-18(b), as interpreted in Mt. Hope, precludes this court from reviewing the trial court's decision to determine whether it correctly applied the applicable legal standard to the particular facts of this case.



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