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An appellate court in New Jersey has ruled that an insurer’s court action seeking to vacate an award by a dispute resolution professional (“DRP”) as well as the ruling by a three-member DRP panel affirming the DRP’s award was timely even though it was filed 159 days after the DRP’s decision – well past the 45 day deadline.

The Case

Personal Service Insurance Company (“PSIC”) terminated personal injury protection (“PIP”) benefits to its insured, Rachel Sackie, asserting that she had not attended an independent medical exam.

Ms. Sackie then assigned her rights to her medical provider, Relievus, to seek payment of her PIP benefits on her behalf.

Relievus filed a demand for arbitration with Forthright, the dispute resolution organization appointed by the New Jersey Department of Banking and Insurance to administer PIP benefits disputes, and received a favorable DRP award on April 29, 2016.

Rather than pursuing its rights under N.J.S.A. 2A:23A-13(d)(1) and N.J.A.C. 11:3-5.6(f) to file a summary court action to vacate the DRP’s award, PSIC filed an internal appeal before a three-member DRP panel in accordance with Forthright’s procedures.

The DRP panel rejected PSIC’s appeal and confirmed the DRP award.

Forty-three days later, and 159 days after the DRP award, PSIC filed a summary action in a New Jersey court seeking to vacate the awards of both the DRP and the DRP panel, contending that the decisions violated New Jersey law governing PIP benefits.

The trial court dismissed PSIC’s action and upheld the DRP’s award, determining that, under N.J.S.A. 2A:23A-13(a), PSIC’s action was untimely because it had not been filed within 45 days of the April 29 DRP award. The trial court reasoned that because the 45 day time limit commenced when the DRP rendered his decision, PSIC should not have waited until after its unsuccessful appeal to the DRP panel to file for summary action.

The trial court remarked that PSIC did “not get two opportunities [to] appeal.”

PSIC appealed the trial court’s decision, arguing in essence that the 45 day period to file its action to vacate the DRP award had been tolled when it took advantage of Forthright’s internal appeal process.

New Jersey Law

N.J.S.A. 2A:23A-13(a) provides:

A party to an alternative resolution proceeding shall commence a summary application in the Superior Court for its vacation, modification or correction within 45 days after the award is delivered to the applicant, . . . unless the parties shall extend the time in writing. The award of the umpire shall become final unless the action is commenced as required by this subsection.

The regulation at N.J.A.C. 11:3-5.6(g) provides:

The final determination of the dispute resolution professional shall be binding upon the parties, but subject to clarification/modification and/or appeal as provided by the rules of the dispute resolution organization, and/or vacation, modification or correction by the Superior Court in an action filed pursuant to N.J.S.A. 2A:23A-13 for review of the award.

(Emphasis added.)

The Appellate Court’s Decision

The appellate court reversed.

In its decision, the appellate court observed that, to avoid delay in resolving disputes, N.J.S.A. 2A:23A-18(b) provides that, after a trial court’s review of a DRP award, “[t]here shall be no further appeal or review of the judgment or decree.” Nonetheless, the appellate court continued, appellate courts had “discretion to exercise supervisory authority over such trial court rulings for reasons of public policy.” Thus, the appellate court continued, N.J.S.A. 2A:23A-18(b) did not bar its review of the trial court’s dismissal of PSIC’s action on timeliness grounds, and it had the authority to examine the order dismissing PSIC’s complaint as untimely.

The appellate court then pointed out that, even though disputes resolved by a DRP were binding under N.J.S.A. 39:6A-5.1(c), applicable regulations and case law allowed for a “limited right of review of the DRP’s rulings” in a trial court “following internal review procedures that may be available within the arbitral forum itself.”

Here, the appellate court said, in challenging the DRP award, PSIC had followed Forthright’s internal appeal process, which allowed it to appeal to a DRP panel. The appellate court added that, after exhausting that process, PSCI filed its summary action under N.J.S.A. 2A:23A-13(a) to vacate the awards of both the DRP and the DRP panel.

The appellate court then found that neither the statute nor regulation provided that a party to a PIP benefits dispute had to choose between an internal appeal process or filing a summary action to challenge a DRP award. Accordingly, it ruled, either party could pursue the internal appeals process under Forthright’s rules and retain the right thereafter to seek summary relief in court. A different ruling, the appellate court concluded, might encourage a party to file a summary action within 45 days of a DRP award and request a stay of that action while simultaneously pursuing an internal appeal before a DRP panel.

The case is Personal Service Ins. Co. v. Relievus, No. A-2393-16T2 (N.J. Ct.App. Aug. 3, 2018). Attorneys involved include: Michael R. Eatroff argued the cause for appellant (Methfessel & Werbel, attorneys; Michael R. Eatroff, of counsel and on the brief). Bruce A. Wallace argued the cause for respondent (Law Office of Bruce A. Wallace, LLC; Bruce A. Wallace, on the brief).

Steven A. Meyerowitz, Esq., is the Director of FC&S Legal, the Editor-in-Chief of the Insurance Coverage Law Report, and the Founder and President of Meyerowitz Communications Inc. As FC&S Legal Director, Mr. Meyerowitz, a member of the team that conceptualized FC&S Legal, provides daily analysis and commentary on the most significant insurance coverage law decisions from courts across the country and news regarding legislative and regulatory developments. A graduate of Harvard Law School, Mr. Meyerowitz was an attorney at a prominent Wall Street law firm before founding Meyerowitz Communications Inc., a law firm marketing communications consulting company.