SURGICAL CENTER MILLBURN v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

SURGICAL CENTER @ MILLBURN

a/s/o JAMES PETUCH,

Plaintiff-Appellant,

v.

NEW JERSEY MANUFACTURERS

INSURANCE COMPANY,

Defendant-Respondent.

_______________________________________

July 16, 2015

Before Judges St. John and Rothstadt.

On appeal from Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-0315-13.

Keith J. Roberts argued the cause for appellant (Brach Eichler, LLC, attorneys; Mr. Roberts, of counsel and on the briefs; Richard B. Robins, on the briefs).

Pasquale A. Pontoriero argued the cause for respondent (Carroll McNulty & Kull, LLC, attorneys; Mr. Pontoriero, on the brief).

PER CURIAM
 

Plaintiff Surgical Center @ Millburn a/s/o James Petuch appeals from a Law Division order dismissing its complaint, which sought to vacate an arbitration award in favor of defendant New Jersey Manufacturers Insurance Company (NJM). For the reasons that follow, we dismiss the appeal.

The record establishes that NJM's insured, James Petuch, was in a motor vehicle accident on December 11, 2006. Petuch suffered multiple injuries and subsequently received surgical services from plaintiff on February 2 and August 26, 2008. On February 2, Petuch executed an assignment of benefits by which he assigned the rights and benefits available to him under his NJM policy to plaintiff. Plaintiff submitted bills in the amount of $10,733.40 for the February 2 service, and $17,450.10 for the August 26 service, and was reimbursed $7,776.70 and $4,850 by NJM for each respective date. NJM paid in part for the services at issue based on its usual, customary and reasonable rates. Thereafter, plaintiff instituted a demand for arbitration against NJM through Forthright, New Jersey's administrator for PIP claims, for the entire cost of services rendered to Petuch on August 26. The first arbitration was held before a Dispute Resolution Professional (DRP One) on November 10, 2009.

In defense, NJM argued that Petuch's assignment of benefits should be rendered null and void because plaintiff did not submit an internal appeal to NJM prior to initiating arbitration as required by NJM's Decision Point Review Plan (DPRP).1 The DPRP states, in relevant part

For disputes on issues other than requests for decision point review and pre-certification, any treating provider who has accepted an assignment of benefits must submit a written request for reconsideration and appeals specifying the issues in dispute accompanied by supporting documentation at least twenty-one days prior to initiating arbitration or litigation.

NJM argued before DRP One that plaintiff's failure to utilize the DPRP's mandatory reconsideration and appeals process following the denial rendered the assignment of benefits null and void, thus precluding plaintiff from proceeding with the arbitration due to lack of standing and requiring dismissal of the matter.

Plaintiff did not provide any proof that an internal appeal was filed. Rather, plaintiff argued that NJM's failure to notify it of the DPRP requirements violated N.J.A.C. 11:3-4.7 and, as such, it had no obligation to follow the DPRP's provisions.

DRP One determined it was "undisputed that claimant did not file a request for an internal appeal in this case." She concluded that the failure to utilize the internal appeals process prior to commencement of the arbitration rendered the assignment of benefits void. She determined "the demand is denied without prejudice." With regard to attorneys' fees and costs, DRP One decided that the plaintiff "did not prevail" and did not award costs or fees. Finally, she determined that "this award is rendered in full satisfaction of all claims and issues presented in the arbitration proceeding."

Plaintiff subsequently submitted a second demand for arbitration seeking payment for services rendered on both February 2 and August 26, 2008. NJM denied payment, asserting that the claim was barred by the entire controversy doctrine and res judicata. The matter was heard by a second DRP (DRP Two) on December 13, 2012. DRP Two determined that

At the time of the initial filing of the demand in the prior claim the 2/2/08 date of service was ripe for litigation. The facts in this matter are distinguishable from the opinion cited by Claimant in the matter of Spine & Orthopedic Center of NJ aso R.B. v. Palisades Safety & Insurance Co., Docket L-98-12. In that matter, the judge emphasized that there was not a mandatory joinder of claims and that the claim presented was not ripe for litigation when the initial claim was filed. In this matter the 2/2/08 date of service predates the filing of the demand and the 8/26/08 date of service that was the subject of the prior claim. Claimant has not offered any basis or arguments as to why this claim was not brought with the original demand for arbitration. Claimant merely asserts that they are not required to file or join all claims in a single action. I find that failure to file all claims that are ripe for litigation at the time of the initial demand, absent a reason, bars the filing of a future claim for those dates of service. The doctrine of the Entire Controversy rests on a balance of the equities. In this matter, the desire for judicial economy, fairness and consistency, outweigh the unexplained failure to file all claims in a single matter.

With regard[] to the dismissal based upon res judicata, I find that Claimant is not permitted to proceed with the claim in this matter. Although the DRP below notes that the claim is dismissed without prejudice[,] a review of the rules governing arbitration contain no such reference. The matter was scheduled for a hearing between the parties. Both sides were given ample opportunity to argue the matter and present their case. A final determination was rendered by the DRP. In essence, Claimant had its day in court and lost. The only viable option was available to file an appeal of the DRP below. The option to refile the same claim is not stated in the rules and therefore is not permissible.

Accordingly, DRP Two entered an arbitration award in favor of NJM. Following the issuance of the award, plaintiff submitted a Request for Modification/Clarification of the award to DRP Two pursuant to Forthright Rule 24,2 asserting it had standing to initiate the second demand for arbitration. DRP Two denied the request.

On June 11, 2013, plaintiff filed a verified complaint seeking to vacate the award and permitting it to file a new arbitration demand. Plaintiff alleged that, contrary to N.J.S.A. 2A:23A-13(c)(5), DRP Two committed prejudicial error by erroneously applying the law to the issues and facts presented for alternative resolution. On December 4, 2013, the trial court denied plaintiffs' application.

In rejecting plaintiff's arguments, the trial court concluded

It is clear that DRP [One] was correct in her interpretation of law requiring [p]laintiff [] to submit to the internal appeals process of NJM's Decision Point Review Plan. Plaintiff agreed that with the assignment of benefits from Mr. Petuch it would follow the requirements of NJM's Decision Point Review Plan. The Plan states: "Failure to comply with . . . (2) the requirement to follow the reconsideration and appeals process prior to initiating arbitration or litigation will render any prior assignment of benefits under the policy null and void." An insurer may place reasonable restrictions on a medical provider's assignment of benefits. Coalition for Quality Health Care vs. N.J. Dep't. of Banking and Ins., 348 N.J. Super. 272, 315 (App. Div. 2002). As DRP [One] noted, requiring a provider to comply with the requirements in a decision point review is a reasonable restriction. Id. at 317.

However, DRP [One] was incorrect in her interpretation of the Rules governing PIP arbitration with respect to a dismissal "without prejudice." The Entire Controversy Doctrine embodies the principle that the adjudication of a legal controversy should occur during the course of one litigation, in one court. Accordingly, all parties involved in a litigation should, at the very least, present in that proceeding all of their claims and defenses that are related to the underlying controversy. Cogdell v. Hosp. Ctr. at Orange, 116 N.J. 7, 15 (1989). Additionally, collateral estoppel, or issue preclusion, bars relitigation of any issue actually determined in a prior action, generally between the same parties, involving a different claim or cause of action. State v. Gonzalez, 75 N.J. 181, 186 (1977).

The principles espoused in the Entire Controversy Doctrine and the doctrine of collateral estoppel apply to matters decided in PIP arbitration. Habick v. Liberty Mut. Fire Ins. Co., 320 N.J. Super. 244, 257 (App. Div. 1999). Therefore, DRP [Two] correctly reasoned there is no basis in the Rules for a dismissal "without prejudice."

[(third alteration in original).]

This appeal followed.

On appeal, plaintiff reiterates the arguments raised before the trial court and contends that appellate review is required because the trial court failed to exercise its supervisory function. We find plaintiffs' arguments unpersuasive.

The resolution of disputes between automobile insurers and claimants as to whether benefits are due may be resolved through binding arbitration. N.J.S.A. 39:6A-5.1(a). Such arbitrations must be conducted through the procedures set forth in the Alternative Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23A-1 to -30. APDRA provides for very limited judicial review of arbitration awards. Trial courts can vacate an award only in circumscribed instances that cause the rights of a party to be prejudiced. See N.J.S.A. 2A:23A-13(c).3 Moreover, judicial scrutiny by the trial court is designed to be the final level of appellate review. N.J.S.A. 2A:23A-18(b). Under APDRA, after adjudication by the trial court, "[t]here shall be no further appeal or review of the judgment or decree." Ibid.

Consequently, the general rule is that a plaintiff has no right to appeal from a trial judge's order in an APDRA case. Morel v. State Farm Ins. Co., 396 N.J. Super. 472, 475 (App. Div. 2007). The statute limits the role of appellate review to determine "whether the trial judge acted within APDRA's bounds." Fort Lee Surgery Ctr., Inc. v. Proformance Ins. Co., 412 N.J. Super. 99, 103 (App. Div. 2010). If so, then the appeal must be dismissed, even if the trial judge's evaluation was imperfect or if the appellate court "might have decided the merits differently." Id. at 104; see also Mt. Hope Dev. Assocs. v. Mt. Hope Waterpower Project, L.P., 154 N.J. 141, 152-53 (1998) (affirming dismissal where trial court affirmed arbitration award and no rare circumstances compelled review); N.J. Citizens Underwriting Reciprocal Exch. v. Kieran Collins, D.C., LLC, 399 N.J. Super. 40, 49-50 (App. Div.) (dismissing auto-accident coverage appeal where trial judge modified arbitrator's award and thoroughly explained the legal errors therein), certif. denied, 196 N.J. 344 (2008).

However, "'in rare circumstances, a court may vacate an arbitration award for public-policy reasons.'" Riverside Chiropractic Grp. v. Mercury Ins. Co., 404 N.J. Super. 228, 239 (App. Div. 2008) (quoting In re Tretina Printing, Inc. v. Fitzpatrick & Assocs., Inc., 135 N.J. 349, 364 (1994)). "These circumstances arise in areas where the courts have 'a nondelegable, special supervisory function.'" Ibid. (quoting Mt. Hope, supra, 154 N.J. at 152). Appellate review may also be available when needed to effectuate the supervisory function of the Appellate Division. Morel, supra, 396 N.J. Super. at 476.

We hold, in concluding that DRP Two did not err in applying the law to the facts and issues before him, the trial court acted within APDRA's bounds and adequately explained the basis for its decision. This case implicates no compelling public policy issue that warrants appellate review. Therefore, because the trial court complied with APDRA, we have no jurisdiction to review the court's decision, even if "we might have decided the merits differently." Fort Lee, supra, 412 N.J. Super. at 102.

Dismissed.

1 NJM is permitted to have internal appeals provisions in its DPRP and implement reasonable restrictions on assignments of benefits pursuant to N.J.A.C. 11:3-4.7(c)(6)-(7).

2 FORTHRIGHT, New Jersey No-Fault PIP Arbitration Rules (2013), available at http://www.nj-no-fault.com/users/nj/resources/NJ%20PIP%20Arbitration%20Rules%20-%20Amended%20April%2015%20%202013.pdf (last visited June 29, 2015).

3 The statute provides the following grounds for vacating an arbitration award due to prejudice

(1) Corruption, fraud or misconduct in procuring the award;

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

(3) In making the award, the umpire's exceeding their power or so imperfectly executing that power that a final and definite award was not made;

(4) Failure to follow the procedures set forth in this act, unless the party applying to vacate the award continued with the proceeding with notice of the defect and without objection; or

(5) The umpire's committing prejudicial error by erroneously applying law to the issues and facts presented for alterative resolution.

[N.J.S.A. 2A:23A-13(c).]