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Allstate New Jersey Ins. Co. v. Lajara

Superior Court of New Jersey, Appellate Division

October 9, 2013

ALLSTATE NEW JERSEY INSURANCE COMPANY, ALLSTATE INSURANCE COMPANY, ALLSTATE INDEMNITY COMPANY, ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, ALLSTATE NEW JERSEY PROPERTY AND CASUALTY INSURANCE COMPANY AND ENCOMPASS INSURANCE, F/K/A CONTINENTAL INSURANCE COMPANY, AND COMMERCIAL INSURANCE COMPANY OF NEWARK, NJ, PLAINTIFFSRESPONDENTS,
v.
GREGORIO LAJARA; PEDRO GONZALEZ; MILEYDIS T. DIAZ A/K/A MILLY DIAZ; AWILDA D. RODRIGUEZ A/K/A AWILDA D. GONZALEZ; KENNETH J. VIAFORA; JOSE ORLANDO HERNANDEZ; FRANCISCA HERNANDEZ; FRANCISCO CABA; AQUALINA RAMOS; ASHRAF Y. AZIR; MUHAMMAD A. SHAMSHAIR; MICHAEL C. GOLOWSKI; ELVIA BEDOYA; NYDIA MARTINEZ; NEREDA ZUNIGA; ALEXANDRA GALLEGOS; BIBARS KAGHDOU, D.C.; STEPHEN LOMANTO, D.C.; DAVID STEPHENS, D.C.; THOMAS J. BONACUSO, D.C.; MICHAEL CARLESIMO, D.C.; BRYAN SIEGEL, D.C.; KEITH LEWANDOWSKI, D.C.; WEI JU; LUCY LIU; JIANMIN LI, A/K/A JIAN MIN LI; SHAN S. NAGENDRA, M.D.; ALEKSANDR LEVIN, M.D.; MANOJ D. PATHARKAR, M.D.; ALFRED REZK TAWADROUS, M.D.; HOWARD KESSLER, M.D.; NATALIO DAMIEN, M.D.; DAVID WALKER, ESQ.; MEDICO MANAGEMENT CO., INC.; UNION COLLECTIONS, LLC; PLAINFIELD MEDICAL MANAGEMENT, INC.; SPINAL AD-JUSTMENT CENTER, P.C. F/K/A SPINAL ADJUSTMENT CENTER, INC.; RAHWAY SPINAL INJURY P.C. F/K/A RAHWAY SPINAL CENTER CORP; ADVANCED SPINAL CARE, P.C.; MILLENNIUM TOTAL HEALTH, P.C.; ALEVE CHIROPRACTIC, P.C.; INLINE CHIROPRACTIC, P.C.; BAYVIEW HEALTH, P.C. A/K/A BAYVIEW HEALTH SERVICE, P.C.; BOUND BROOK CHIROPRACTIC, P.C.; NEW WAVE CHIROPRACTIC, P.C.; ABSOLUTE CHIROPRACTIC, P.C.; BACK PAIN P.C.; AM PAIN CARE, P.C.; ACUPUNCTURE ACADEMY P.C.; TCM ACUPUNCTURE, P.C.; AMERICAN ACUPUNCTURE ACADEMY, P.C.; CONVERY MEDICAL GROUP, P.C.; RARITAN PAIN MANAGEMENT AND REHAB CENTER, P.C.; ASBURY MEDICAL AND REHABILITATION P.C.; PAIN MANAGEMENT ASSOCIATES OF CENTRAL JERSEY, PA.; BEST HEALTH MEDICAL, P.C.; PERTH AMBOY HEALTH CARE, LLC D/B/A " PERTH AMBOY DIAGNOSTIC IMAGING" ; LIBERTY SUPPLIES, L.L.C.; KMED SERVICES, INC.; PRESTIGE MEDICAL SUPPLIES, LLC; THERAPEUTIC DEVICES, INC., DEFENDANTSRESPONDENTS, AND A.P. DIAGNOSTIC IMAGING, INC. AND DR. HARSHAD PATEL, DEFENDANTSAPPELLANTS

Argued: April 30, 2013.

Approved for Publication October 9, 2013.

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On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-4091-08.

Carl A. Salisbury ( Kilpatrick Townsend & Stockton, LLP ) argued the cause for appellants.

Thomas O. Mulvihill argued the cause for respondents Allstate New Jersey Insurance Company, Allstate Insurance Company, Allstate Indemnity Company, Allstate Property and Casualty Insurance Company, Allstate New Jersey Property and Casualty Insurance Company and Encompass Insurance, f/k/a Continental Insurance Company, and Commercial Insurance Company of Newark, N.J. ( Pringle Quinn Anzano, P.C., attorneys; Mr. Mulvihill, on the brief).

The Law Office of Jeffrey Randolph, LLC, attorneys for respondents Plainfield Medical Management, Pedro Gonzalez and Awilda D. Rodriguez a/k/a Awilda D. Gonzalez, join in the briefs of appellants.

Bubb Grogan & Cocca, LLP, attorneys for respondents Shan Nagendra, M.D., Convery Medical Group, P.C., and Raritan Pain Management and Rehab Center, P.C., join in the briefs of appellants.

Archer & Greiner, P.C., attorneys for respondents Dr. Manoj Patharkar and Pain Management Associates of Central Jersey, P.A., join in the briefs of appellants.

Before Judges MESSANO, LIHOTZ and OSTRER. The opinion of the court was delivered by OSTRER, J.A.D.

OPINION

Page 495

[433 N.J.Super. 27] OSTRER, J.A.D.

On leave granted, defendants appeal from the trial court's order (1) granting plaintiffs' motion to withdraw their jury demand in their action under the Insurance Fraud Prevention Act (Act), N.J.S.A. 17:33A-1 to -30; and (2) striking defendants' jury demand. The Act is silent on the right to trial by jury. We therefore must determine whether the Act implied that right, or whether the Constitution's right to trial by jury, N.J. Const. art. I, par. 9, encompasses a private action under the Act.

After considering the Act's plain language, its legislative history, and the legislative intent, and applying well-settled principles of statutory construction, we conclude the Act does not create a right to a jury trial. Also, as the equitable nature of the statutorily created right to relief was unknown at common law before adoption of the State Constitution, we conclude the Constitution does not guarantee a right to a trial by jury. We therefore affirm the trial court's order.

I.

Given the purely legal nature of the question before us, the pertinent facts may be briefly stated. Plaintiffs alleged they paid $8.2 million in personal injury protection (PIP) benefits under the New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 to -35, as a result of violations of the Act. The forty-two count complaint included as defendants individual physicians and chiropractors; [433 N.J.Super. 28] medical and chiropractic practices; management companies of medical practices; medical equipment companies; attorneys; and unlicensed individuals.

Among their allegations, plaintiffs asserted that Gregorio Lajara, who was neither a licensed physician nor a chiropractor, directed a scheme to defraud plaintiffs. He allegedly did so, in part, by controlling and effectively owning chiropractic facilities, which plaintiffs alleged violated the law. Plaintiffs alleged various defendants performed services in violation of professional regulations; billed for various services performed by unlicensed persons; engaged in unlawful fee-splitting; knowingly and intentionally concealed facts concerning services provided; billed for services and equipment not actually provided, or medically unreasonable or unnecessary; failed to charge co-pays; paid persons who intentionally caused accidents in order to generate fraudulent bills; and paid kickbacks to attorneys who referred clients.

The complaint sought a declaratory judgment that plaintiffs were not obligated to pay PIP benefits to defendants; disgorgement of sums already paid to defendants; imposition of a constructive trust and equitable lien on defendants' assets until they disgorged the sums sought; and damages allowed under the Act.

Plaintiffs initially demanded a jury trial. However, after answers were filed, plaintiffs moved for leave to withdraw their prior demand. Defendants opposed the motion and demanded a jury trial, some of them for the first time, having omitted the demand from their answers. The Commissioner of Banking and Insurance, who had earlier intervened in the suit, moved to strike the jury demand as it related to the Commissioner's claims. See N.J.S.A. 17:33A-7(d) (authorizing the Commissioner to join in an insurance company's private action, in order to recover civil penalties authorized by N.J.S.A. 17:33A-5).

Judge Kenneth J. Grispin granted plaintiffs' motion, and struck defendants' jury demand. Defendants sought leave to appeal, which another panel granted.

[433 N.J.Super. 29] Renewing arguments they presented to the trial court, defendants urge us to

Page 496

find an implied jury trial right under the Act, just as the court found an implied jury trial right under the analogous Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -109, in Zorba Contractors, Inc. v. Housing Authority of Newark, 362 N.J.Super. 124, 827 A.2d 313 (App.Div.2003). In response, plaintiffs distinguish Zorba, supra, based on differences between the relief available under the CFA and the Act. They also argue that the inherently equitable nature of relief authorized by the Act compels a non-jury trial. They rely on our prior holding that actions under the Act by the Commissioner, as opposed to private parties, are not subject to a jury trial right, given the restitutionary, and hence, equitable nature of relief available to the Commissioner. State v. Sailor, 355 N.J.Super. 315, 323-24, 810 A.2d 564 (App.Div.2001).

II.

A.

We apply a de novo standard of review to the trial court's determination that there does not exist a right to trial by jury. See id. at 320, 810 A.2d 564 (citing Manalapan Realty, L.P. v. Twp. ...


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