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United Services Automobile Association v. Usa Chiropractic A/S/O Adriana Guzman

December 13, 2012


On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-618-11.

Per curiam.


Argued May 21, 2012

Before Judges A. A. Rodriguez, Sabatino and Fasciale.

Intervenor Forthright*fn1 appeals from a June 24, 2011 order remanding to Forthright four consolidated PIP awards, and paragraph two of an ensuing October 6, 2011 order denying Forthright's motion to vacate the June 2011 remand order. The primary question is whether N.J.S.A. 2A:23A-14 authorized the judge to remand the PIP arbitrations to Forthright because the parties were prejudiced by the arbitrator's conflict of interest bearing upon an appearance of partiality. We hold that it does and affirm.

Adriana Guzman sustained injuries in a motor vehicle accident and sought medical treatment with defendants. When plaintiff, Guzman's PIP carrier, refused to pay for her medical treatment, defendants filed separate demands for PIP arbitration seeking unpaid PIP benefits for the health care services that they rendered. The NAF consolidated the arbitration proceedings and an arbitrator conducted oral argument at which counsel for each defendant participated. Thereafter, before issuing his decision in these cases, the arbitrator accepted a job at the law firm that represented defendant USA Chiropractic. The arbitrator followed NAF's procedure and notified NAF about his conflict of interest. Other than the law firm that represented USA Chiropractic, none of the other parties apparently were informed about the pending employment. NAF informed him that no conflict existed and instructed him to proceed with the matters.*fn2

In March 2011, the arbitrator issued four separate awards in favor of defendants.*fn3

In or around June 2011, plaintiff filed a complaint and order to show cause seeking to vacate each award pursuant to N.J.S.A. 2A:23A-13c. Plaintiff argued that all four awards were invalid because the arbitrator had a conflict of interest. In June 2011, the judge conducted oral argument, issued an oral opinion vacating the awards, and remanded all four arbitrations to Forthright for a rehearing. In July 2011, Forthright filed a motion to intervene and vacate that part of the order remanding the matters. The judge permitted Forthright to intervene but denied its motion to vacate her remand order. This appeal followed.

On appeal, Forthright contends that the judge erred by (1) misapplying N.J.S.A. 2A:23A-13; (2) remanding the matter to Forthright contrary to the public policy of prompt and efficient PIP arbitrations; (3) failing to consider the underlying disputes de novo; and (4) improperly "bridging the gap between the judiciary and arbitration process."

We reject plaintiff's contention that the judge vacated the awards erroneously by misapplying N.J.S.A. 2A:23A-13. A pertinent regulation on point, N.J.A.C. 11:3-5.6(f) provides that "[t]he final determination of the dispute resolution professional shall be binding upon the parties, but subject to vacation, modification[,] or correction by the Superior Court in an action filed pursuant to N.J.S.A. 2A:23A-13." (Emphasis added). N.J.S.A. 2A:23A-13c(2) provides in part that [t]he award shall be vacated on the application of a party who either participated in the alternative resolution proceeding or was served with a notice of intention to have alternative resolution if the court finds that the rights of that party were prejudiced by:

(2) Partiality of an umpire appointed as a neutral.

Here, the judge determined that the parties were prejudiced by the arbitrator's conflict-generated appearance of partiality, and the judge acted within her authority to vacate the awards.

We are not persuaded by Forthright's argument that by failing to consider the PIP disputes de novo the judge contravened the public policy of prompt and efficient PIP arbitrations. PIP arbitration disputes are to be resolved pursuant to the New Jersey Alternative Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23A-1 to -35. N.J.S.A. 2A:23A-13b provides that [i]n considering an application for vacation, modification or correction, a decision of the umpire on the facts shall be final if there is substantial evidence to support that decision; provided, however, that when the application to the court is to vacate the award pursuant to paragraph (1), (2), (3), or (4) of subsection c., the court shall make an independent determination of any facts relevant thereto de novo, upon such record as may exist or as it may determine in a summary expedited proceeding as provided for by rules adopted by the Supreme Court for the purpose of acting on such applications.

Here, the judge determined expeditiously that the parties were prejudiced by the arbitrator's apparent partiality, pursuant to N.J.S.A. 2A:23A-13c(2). Having reached that determination de novo, the judge remanded the arbitrations pursuant to N.J.S.A. 2A:23A-14 which provides that [u]pon vacating an award pursuant to section 13, . . . the court may order a rehearing and determination of all or any of the issues, either before the same umpire, having due regard for whether the award was vacated by reason of the actions of the umpire which were violative of paragraph (1), (2), (3), or (4) ...

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