JERSEY SHORE UNIVERSITY MEDICAL CENTER v. OXFORD HEALTH PLANS, INC.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3525-04T13525-04T1

JERSEY SHORE UNIVERSITY

MEDICAL CENTER, A Division of

Meridian Hospitals Corporation,

Plaintiff-Appellant,

v.

OXFORD HEALTH PLANS, INC.,

Defendant-Respondent.

________________________________________________________________

 

Submitted January 11, 2006 - Decided March 17, 2006

Before Judges Weissbard, Winkelstein and Lihotz.

On appeal from Superior Court of New Jersey,

Law Division, Monmouth County, L-5335-04.

Podvey, Meanor, Catenacci, Hildner, Cocoziello &

Chattman, P.C., attorneys for appellant (J. Barry Cocoziello, of counsel and on the brief; Anthony M. Rainone, on the brief).

Mandelbaum, Salsburg, Gold, Lazris, Discenza &

Steinberg, P.C., attorneys for respondent (William H. Healey and Phillip G. Ray, on the brief).

PER CURIAM

Plaintiff Jersey Shore University Medical Center (Jersey Shore), a division of Meridian Hospital Corporation, appeals from an order dismissing its complaint against defendant Oxford Health Plans, Inc. We reverse and remand for further proceedings.

The controversy begins with a Letter of Agreement (LOA) entered into between plaintiff and defendant on February 13, 2001. The LOA requires plaintiff to "participate in the Oxford Liberty and Freedom Product networks and all other commercial Oxford products; provided, however, that each such Oxford commercial product shall have a benefit design incorporating managed care features . . . ." The LOA explicitly states that it will not apply to, "any auto insurance product, workers compensation product, governmental product (such as Medicaid or Medicare), or any product that does not contain the Benefit Design described [earlier in that paragraph]." Plaintiff's receipt of payment is contingent on defendant being allowed to "coordinate benefits and pay claims for which it is primarily and secondarily responsible in accordance with New Jersey law, as amended from time to time." The LOA expressly requires the parties to submit any grievances arising from claims covered by the LOA to arbitration.

The LOA has been amended four times, none of which changed the grievance procedure. The only germane changes to the LOA's language came in the Fourth Amendment, dated January 1, 2004, which altered plaintiff's reimbursement when defendant is a secondary payer on "any new Indemnity product [or] . . . Automobile or vehicular plan. . . ." Under those circumstances, "Oxford's liability shall be limited to the difference between [plaintiff's] charges and the amount [plaintiff] collects from all payers primary to Oxford. . . ." Prior to this amendment, defendant was liable at contracted rates for any service plaintiff provided to claimants covered under an Oxford commercial health product, regardless of whether they were the primary or secondary insurer.

On December 28, 2001, Oxford member John Vafiadis was involved in a car accident in which he suffered severe, life-threatening injuries. Vafiadis was taken to Jersey Shore's Trauma Center, where he received treatment until his release on February 28, 2002. The hospital charges totaled $656,351.20. When the accident occurred, Vafiadis' Personal Injury Protection (PIP) carrier was State Farm Insurance. State Farm covered $150,828.19 of plaintiff's bill, leaving a balance due of $505,523.01.

Vafiadis executed an assignment of his Oxford benefits in favor of plaintiff. Thereafter, plaintiff provided defendant with invoices in connection with Vafiadis' hospitalization and demanded payment. Defendant denied payment on the bill's balance because it was secondary to the PIP carrier, and the allowed amount represented the PIP carrier's maximum allowed amount.

Following defendant's refusal to cover Vafiadis' bill, plaintiff threatened to arbitrate the claims against defendant pursuant to the LOA. Specifically, plaintiff's Corporate Director of the Department of Managed Care, Ina Gelfound, sent an email on June 10, 2003, warning that, "[i]f Oxford refuses to pay the claim as [the LOA] provides, [plaintiff] will be taking the claim and surrounding issues to arbitration." In a letter dated May 21, 2004, Ann Gavzy, plaintiff's Senior Vice President, Legal Affairs and General Counsel, stated that, "given the length of time this matter has been outstanding, we believe we have no choice but to request that this matter be submitted to arbitration in accordance with Paragraph 12 of the LOA."

In that same letter, Gavzy, on behalf of plaintiff, contended that the LOA's coordination of benefits and pay rates does not cover an "auto claim." On June 18, 2004, Oxford replied by advising plaintiff that the LOA applies because "Vafiadis was covered under a health insurance product, not an auto product. . . ." Plaintiff filed this complaint shortly thereafter.

On June 3, 2003, Oilda Betancourt was involved in a motor vehicle accident and was taken to Jersey Shore for treatment. She remained at plaintiff's facility receiving care until June 23, 2003. The length of her stay resulted from injuries that were unrelated to the underlying accident.

Betancourt's bills totaled $294,069.50. Her PIP carrier, Claredon Insurance Company, paid $72,672 of the total balance; this represented the portion of the bill covering the injuries related to the car accident and left a balance due of $221,397.50. This balance represented treatment for injuries resulting from conditions unrelated to the car accident, for which defendant was the primary insurer. Betancourt executed an assignment of her Oxford benefits in favor of plaintiff.

In an email sent on June 10, 2004, plaintiff again took the position that the treatment it rendered to Betancourt related to "auto/PIP injuries," totaling $44,069, which were not covered by the LOA. Further, plaintiff desired remuneration for the "days of acute treatment related to the health issues unrelated to the auto injuries." At this point, plaintiff asserted that if defendant was unable to determine its own liability in Betancourt's case, they should "proceed to arbitration ASAP."

On May 19, 2004, Melissa Elam was involved in a motor vehicle accident and was taken to Jersey Shore for treatment. Elam received treatment at plaintiff's hospital until her release on May 28, 2004. The bill totaled $83,975. Elam had no PIP insurance at the time of the accident, and Oxford was her primary insurer.

Defendant tendered $13,933 on the bill, leaving a balance of $70,042 owed to plaintiff. Elam executed an assignment of her Oxford benefits in favor of plaintiff. Plaintiff contends that the LOA's discounted rates are inapplicable to Elam's bill because she was brought to plaintiff involuntarily.

Ariel Bryant was involved in the same May 19, 2004 accident as Elam and was taken to plaintiff's hospital for treatment. Bryant, an infant, received care at the hospital until her discharge on May 20, 2004. The bill amounted to $11,144. Bryant did not have a PIP insurer, leaving Oxford primarily liable for plaintiff's services rendered.

Defendant admitted that Bryant was a member, but paid only $1471 against the outstanding bill, leaving a balance due of $9673. Bryant's lawful guardian executed an assignment of the infant's Oxford benefits in favor of plaintiff. Plaintiff contends that the LOA's discounted rates are inapplicable to Bryant's bill because she was brought to plaintiff's facility involuntarily.

On November 30, 2004, plaintiff instituted suit against defendant, demanding payment for the services rendered to Vafiadis, Betancourt, Elam and Bryant. The total amount of the four claims was $796,635.31. In lieu of an answer, defendant moved to dismiss the complaint and to compel arbitration. On February 18, 2005, the motion judge dismissed the complaint, finding that plaintiff had waived or was otherwise estopped from asserting its right to sue. The judge stated:

The Court: I make the following findings. First of all, the LOA, the letter of agreement, is certainly subject to interpretation with respect to what should and shouldn't go to arbitration. However, I find, that that interpretation was clarified by two documents. One document is the May 21, '04 letter of Ann Bitton Gavzy, senior vice-president, legal affairs and general counsel to Jersey Shore University Medical Center, [regarding] patient John Vafiadas where she states,

"We believe we have no choice but to request that this matter be submitted to arbitration in accordance with paragraph 12 of the LOA. Contact me so that we can coordinate the commencement of arbitration." She's the lawyer for Meridian.

Then we have, -- and that's regarding the 500,000 or 505,000?

[DEFENSE COUNSEL]: 505,000 and change.

THE COURT: Okay. That claim which is count one of the complaint. Then we have the June 10th, '04 e-mail of Ina Gelfound, corporate director, department of managed care, and interestingly, a copy of the Ann Bitton Gavzy letter went to Ina Gelfound. And Gelfound, in her e-mail regarding both Vafiadas and the Betancourt case, says, "I'm interested in your response, ASAP, as Ann is awaiting," -- that's probably Ann Bitton Gavzy, "my recommendation. I sent another letter to Roger Smith. The letter states that Meridian wants to proceed to arbitration at least on the Vafiadis case at this time. I'm open to your recommendation and will consider a settlement if the terms meet Meridian's expectations."

In fact, more importantly, the June 10, '04 e-mail from Gelfound says this regarding, "On the matter of the arbitration case, Vafiadis, our attorney has had no response from Oxford. This is a heads up for you. PC is going to ask for a recommendation either to settle the matter or proceed to arbitration. Either way we want to move the case." Either way, meaning settlement or arbitration. No talk at all about lawsuits.

There's a second case. And I'm going to have Rosa send to you, and that is very interesting and very, very complicated. And that one is the Betancourt case which is $220,000 of this $850,000 claim which is probably 90 percent of it, or 80 percent anyhow.

Meridian does not agree with Oxford's determination or payment. And in Oxford's letter to Meridian on April 26, '04, Oxford told Meridian that if they disagree with the decision to arbitrate the matter because it has already been though a review process. Then we get down to the other part that I said about arbitrating.

I find that if there's some ambiguity about whether or not these claims were to be arbitratable under the LOA, that ambiguity has been resolved and clarified by Jersey Shore's position in this case. Namely, they have interpreted it to require arbitration and have taken that position.

I find by doing so they have done either one or both of two things. Either they have waived their right to now argue as Ms. Gelfound does in her certification before me, -- now she's sort of switching horses in midstream and saying no, no, no, no, I had my fingers crossed; I really didn't mean it; now I say we don't have to go to arbitration.

Well, I can't call it a sham affidavit only because the e-mails are not under oath. If it were, I would call it a sham affidavit. I'll tell you the case in a moment. Here it is. In this doctrine, which is set forth in Shelcusky v. Garjulio, 172 N.J. 185 (2002), a trial court, when it's called upon to evaluate whether a true issue of material fact remains in a case when an affidavit is presented in opposition to a motion for summary judgment, notwithstanding affiant's earlier contradictory deposition testimony, courts should not reject alleged sham affidavits where the contradiction is reasonably explained.

But the case does say we can not consider them if there's no explanation. I have no explanation here. And if that

e-mail had been a deposition, I would not even consider this certification of Gelfound now because I would find it to be a sham affidavit solely to defeat this motion.

But I am not relying upon that. But I do want the record to reflect that if it were under oath, that e-mail, I would consider this certification today, -- well, that I am reviewing today, to be considered a sham affidavit submitted to defeat this motion. Because it is absolutely contrary to our previous position which said we have got to arbitrate. Now she says, no we don't. It's clearly contradictory to her previous position stated.

However, I find that based upon the facts that I have found today that the plaintiff, Jersey Shore, has either waived its right to now go to court or is estopped from now denying the position they previously took; either equitable estoppel or judicial estoppel. I found they have previously taken the position that these are arbitrable and therefore the motion is granted.

We disagree with the judge's analysis. Waiver is "'the intentional relinquishment of a known right.'" G.E. Capital Mortgage Servs. v. Marilao, 352 N.J. Super. 274, 281 (App. Div. 2002) (quoting W. Jersey Title & Guar. Co. v. Indus. Trust Co., 27 N.J. 144, 152 (1958)). For waiver of a legal right to be effective, there must be "'a clear, unequivocal, and decisive act of the party showing such a purpose or acts amounting to an estoppel on his part.'" Ibid. (citation omitted). Further, to be operative, a waiver "'must be supported by an agreement founded on a valuable consideration, or the act relied on as a waiver must be such as to estop a party from insisting on performance of the contract or forfeiture of the condition.'" Ibid. (citation omitted). Finally, "'[w]aiver presupposes a full knowledge of the right and an intentional surrender; waiver cannot be predicated on consent given under a mistake of fact.'" Ibid.

The several correspondences from Gelfound and Gavzy do not constitute a waiver of plaintiff's right to sue. There was no "'agreement founded on a valuable consideration,'" ibid. (citation omitted), nor did defendant rely on those communications to its detriment so as to estop plaintiff from changing its position, to the extent that the correspondence even asserted a definitive position on behalf of plaintiff. In that regard, we have no need to consider the Gelfound certification, submitted in opposition to defendant's motion to dismiss, which the motion judge likened to a "sham affidavit." See Shelcusky v. Garjulio, 172 N.J. 185 (2002). Plaintiff's lawsuit itself constituted an assertion that it was entitled to sue rather than arbitrate.

The judge also referred to equitable or judicial estoppel as a basis for dismissal of the complaint. Equitable estoppel differs from waiver in that it requires one party to rely on the representations of another. Knorr v. Smeal, 178 N.J. 169, 178 (2003) (citing Country Chevrolet, Inc. v. Twp. of N. Brunswick Planning Bd., 190 N.J. Super. 376, 380 (App. Div. 1983)). The burden of proof lies with the party claiming estoppel. Ibid. (citing Miller v. Miller, 97 N.J. 154, 163 (1984). Here, defendant did not contend that it detrimentally relied on some conduct by plaintiff.

The rule of judicial estoppel is that, "'a party who, with knowledge of the facts, has assumed a particular position in judicial proceedings, and has succeeded in maintaining that position, is estopped to assume a position inconsistent therewith to the prejudice of the adverse party.'" Chattin v. Cape May Greene, Inc., 243 N.J. Super. 590, 620 (App. Div. 1990) (quoting Brown v. Allied Plumbing & Heating Co., 129 N.J.L. 442, 446 (Sup. Ct. 1943), aff'd, 130 N.J.L. 487 (E. & A. 1943)), aff'd, 124 N.J. 520 (1991). This doctrine is inapposite here, where the plaintiff's putatively inconsistent positions were propounded before it filed suit. Indeed, in its brief on appeal, defendant does not seek to support the dismissal on the basis of either type of estoppel.

Having concluded that the dismissal was in error, it still remains to determime whether the four claims at issue are subject to arbitration under the LOA and its amendment. At the outset of the motion proceedings, the judge noted his "initial feelings [that] [t]he policy doesn't require arbitration of automobile claims until the Fourth Amendment on 12/24/03. And these claims are all before that. The policy doesn't require arbitration if the defendant is secondarily liable. And here, there was a PIP which comes first." The judge did make clear that his view was tentative and open to change based on the argument to ensue. However, as we have noted, the judge ultimately never reached the merits of the controversy due to his view on waiver/estoppel.

Under these circumstances, we believe that the better course is to remand the matter for further proceedings at which the parties may again seek to persuade the judge of their respective positions on the merits, i.e., whether the four claims are, or are not subject to arbitration. On remand, the judge is free to conduct an evidentiary hearing concerning the intent of the parties in entering into the LOA and in amending it. We are confident that the judge will set aside his "initial feelings" and decide the matter anew, now that it is squarely before him. We leave the course and scope of the remand proceedings in his able hands.

 
Reversed and remanded for further proceedings. We do not retain jurisdiction.

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A-3525-04T1

March 17, 2006