On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-11347-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fuentes, Graves and Koblitz.
This appeal arises from a dispute regarding payments made pursuant to the personal injury protection (PIP) coverage*fn1 in an automobile insurance policy between IFA Insurance Company (IFA) and A.R. A.R. was a passenger who was injured in an automobile accident on November 6, 2008, and received spinal treatments for pain by plaintiff, Allied Neurology and Interventional Pain Practice, P.C. (Allied), a medical services provider. A.R. assigned his benefits under his insurance contract with defendant IFA to Allied. Allied filed a class action lawsuit against IFA alleging, "on information and belief," that IFA paid its third-party claims processor using funds from A.R.'s PIP benefits in violation of the Automobile Insurance Cost Reduction Act, N.J.S.A. 39:6A-1.1 to -35. Allied claims that IFA improperly reduced A.R.'s benefits by using cost containment measures. See N.J.A.C. 11:3-28.6(a). IFA responded that A.R.'s PIP benefits were not reduced by such payments and that he has not yet exhausted his $15,000 PIP limit.
The motion judge denied IFA's motion to dismiss Allied's complaint under Rule 4:6-2 on March 4, 2011, and its motion for reconsideration on April 19, 2011. On June 1, 2011, the judge granted IFA's motion to dismiss the complaint and compel arbitration based on arbitration clauses contained in the insurance contract between A.R. and IFA. The parties cross-appeal from these determinations. After reviewing the record in light of the contentions advanced on appeal, we reverse the judge's denial of IFA's motion to dismiss for failure to state a claim on the ground that Allied has not suffered any damages.
The regulations implementing the statute make clear that the insurer's costs must be paid by the insurer, not through the PIP benefits coverage. Pursuant to N.J.A.C. 11:3-28.6(a), "All expenses relating to the investigation of claims, including expenses for medical examinations, file maintenance and cost containment measures, are the responsibility of the automobile liability insurer." The Department of Banking and Insurance issued a regulation in 2010, however, permitting subtraction of certain costs from PIP benefits in limited circumstances, stating that, The actual ODS [organized delivery system] access fee or [twenty-five] percent of the reduction in charges resulting from the use of the ODS provider, whichever is less, may be included within the policy limits for any single bill from an in-network provider in the ODS with billed charges of $10,000 or more. [N.J.A.C. 11:3-4.4(d)(2).]
Thus, when use of a third-party claims processor reduces the cost of the medical service to the insured, the insurance company is now permitted under certain circumstances to deduct some or all of the cost for the processor from the consequent savings to the insured.
In its class action complaint, Allied alleges (in paragraphs 3, 6, 14 and 15) that, prior to 2010, IFA improperly deducted from A.R.'s PIP coverage fees billed by Horizon Casualty Services, Inc. (HCS), a third-party vendor hired by IFA "to review, reprice, process and pay the medical bills." ¶¶ 3, 6, 14, 15. It alleges "on information and belief" that Allied has an unpaid balance of $4,363.88, which "will not be paid because IFA has included payments made to [HCS] in calculating the available PIP balance and the policy limit has since been exhausted." ¶ 14. Allied also alleges "on information and belief" that these improper deductions are "a common practice."
¶ 23. Allied further alleges that "IFA has refused to correct this error by removing these improper charges from the PIP payment ledger and instead paying [Allied] the remaining money for valid medical expenses." ¶ 22.
IFA filed a motion to dismiss pursuant to Rule 4:6-2(e), attaching the PIP payment ledger referred to in the complaint, which showed that no charges were deducted from A.R.'s PIP coverage for HCS expenses. The ledger also reflected that the $15,000 PIP coverage limit had not yet been reached and all Allied bills were paid.*fn2 Allied argues that "[e]ven if A.R.['s] benefits were not subject to the unlawful deductions, Allied may still assert this claim on behalf of its other patients . . . ." It claims that improper deductions are "a recurring problem which should be adjudicated by the court whether or not, in one particular instance, an improper deduction was made by IFA."
At the hearing on the motion to dismiss, the judge expressed his reasons for denying this particular motion: "The test for determining the adequacy of a pleading is whether a cause of action is suggested by the facts. That is in fact the case here. As such the motion to dismiss is denied."
The judge denied IFA's motion for reconsideration because nothing new of significance was offered by IFA and because "[a]n assertion by [d]efendant that A.R. has suffered no damage is a factual issue" not properly addressed in a motion to dismiss.
We agree with the trial judge that the extent of damages is generally a factual issue not resolvable upon a motion to dismiss. See Ming Yu He v. Miller, 207 N.J. 230, 251 (2011) (noting the jury's "task of achieving justice through applying its collective wisdom and judgment in evaluating liability and awarding damages"). As the Supreme Court has instructed, a reviewing court assessing a complaint under Rule 4:6-2(e) must "'search the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary.'" Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (quoting Di Cristofaro v. Laurel Grove Mem'l Park, 43 N.J. Super. 244, 252 (App. Div. 1957)); see also Banco Popular N. Am. v. Gandi, 184 N.J. 161, 165 (2005). The review must be performed in a manner that is ...