MONMOUTH MEDICAL CENTER VS. STATE FARM INDEMNITY COMPANY SAINT BARNABAS MEDICAL CENTER VS. STATE FARM INDEMNITY COMPANY (L-2482-17 AND L-0126-18, MORRIS COUNTY AND STATEWIDE) (CONSOLIDATED) ( 2019 )


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  •                NOT FOR PUBLICATION WITHOUT THE
    APPROVAL OF THE APPELLATE DIVISION
    SUPERIOR COURT OF NEW JERSEY
    APPELLATE DIVISION
    DOCKET NOS. A-3004-17T1
    A-4208-17T1
    MONMOUTH MEDICAL
    CENTER, a/s/o MICHAEL
    ANNUCCI,
    APPROVED FOR PUBLICATION
    Plaintiff-Respondent,
    August 12, 2019
    v.                                    APPELLATE DIVISION
    STATE FARM INDEMNITY
    COMPANY,
    Defendant-Appellant.
    _____________________________
    SAINT BARNABAS MEDICAL
    CENTER, a/s/o PAUL HAM,
    Plaintiff-Respondent,
    v.
    STATE FARM INDEMNITY
    COMPANY,
    Defendant-Appellant.
    _____________________________
    Submitted December 17, 2018 – Decided August 12, 2019
    Before Judges Messano, Gooden Brown and Rose.
    On appeal from the Superior Court of New Jersey,
    Law Division, Morris County, Docket Nos. L-2482-17
    and L-0126-18.
    Gregory P. Helfrich & Associates, attorneys for
    appellant (Alison Leonard Schlein, on the briefs).
    Celentano Stadtmauer & Walentowicz LLP, attorneys
    for respondent Monmouth Medical Center (Steven
    Stadtmauer and Megan Elizabeth Verbos, on the
    brief).
    Celentano Stadtmauer & Walentowicz LLP, attorneys
    for respondent Saint Barnabas Medical Center
    (Kristen Ottomanelli, on the brief).
    The opinion of the court was delivered by
    GOODEN BROWN, J.A.D.
    In these back-to-back appeals, which we consolidate for the purpose of
    issuing a single opinion, defendant State Farm Indemnity Company (State
    Farm) seeks our review of two Law Division orders that vacated decisions
    rendered by a dispute resolution professional (DRP) pursuant to the
    Alternative Procedure for Dispute Resolution Act (APDRA), N.J.S.A.
    2A:23A-1 to -30. Because N.J.S.A. 2A:23A-18(b) bars any "further appeal or
    review" of such trial court orders, we dismiss the appeals.
    In A-3004-17, the record reveals that Michael Annucci was injured in an
    automobile accident on June 21, 2013. As a result of the injuries sustained in
    the accident, on April 30, 2015, Annucci received out-patient hospital services,
    A-3004-17T1
    2
    including surgical and ancillary support services, from Monmouth Medical
    Center (Monmouth). Following Annucci's discharge, Monmouth billed State
    Farm, Annucci's no-fault insurance carrier, for its services in the total amount
    of $21,403.80. On the bill, Monmouth separately itemized its charges, line-by-
    line, in accordance with the Medicare Claims Processing Manual. 1           Thus,
    Monmouth separately billed for the surgical services and the ancillary services,
    consisting of anesthesia, recovery room services, supplies, and drugs provided
    to Annucci.
    State Farm approved payment in the amount of $5707.80, representing
    Monmouth's line item charges for the surgical services only. In two separate
    Explanation of Benefits (EOB) statements, State Farm explained that it
    processed the bill in accordance with the New Jersey Hospital Outpatient
    Surgical Facility (HOSF) fee schedule, the Consumer Health Network (CHN)
    Preferred Provider Organization (PPO) contract, and the New Jersey medical
    fee schedule.   According to State Farm, the ancillary services that were
    separately itemized on Monmouth's bill were integral to the surgical
    1
    Specifically, Chapter 25, Section 75 of the Medicare Claims Processing
    Manual required "[t]he provider [to] enter[] the appropriate revenue code[] . . .
    to identify specific accommodation and/or ancillary charges" and "to explain
    each charge."
    A-3004-17T1
    3
    procedure, were bundled into the HOSF fee schedule facility rate, and were not
    permitted to be reimbursed separately in an HOSF setting.
    After Monmouth's internal appeal of the underpayment was rejected by
    State Farm, Monmouth demanded arbitration pursuant to the APDRA. 2
    Following a hearing, on August 14, 2017, the assigned DRP issued an award
    denying Monmouth's claims. The DRP found that Monmouth was "not entitled
    to any further . . . medical expense benefits" and State Farm properly excluded
    the ancillary services billed separately by Monmouth. In the decision, relying
    on the regulations promulgated by the Department of Banking and Insurance
    (DOBI), the DRP initially acknowledged that it was "uncontroverted" that the
    unpaid ancillary services were, in fact, included in the list of covered services
    authorized in N.J.A.C. 11:3-29.5(a). Further, the DRP found "it noteworthy"
    that "the aggregate of the charges invoiced by [Monmouth did] not exceed the
    HOSF fee schedule rate assigned to the [applicable] primary procedure codes."
    2
    Pursuant to N.J.S.A. 39:6A-5.1(a), also known as the personal injury
    protection (PIP) statute, "disputes between an insurer and a claimant as to
    whether benefits are due under the PIP statute may be resolved, at the election
    of either party, by binding arbitration or by civil litigation." Kimba Med.
    Supply v. Allstate Ins. Co., 
    431 N.J. Super. 463
    , 482-83 (App. Div. 2013)
    (quoting Riverside Chiropractic Grp. v. Mercury Ins. Co., 
    404 N.J. Super. 228
    ,
    235 (App. Div. 2008)). The hospitals were the claimants' assignees.
    A-3004-17T1
    4
    However, according to the DRP, under N.J.A.C. 11:3-29.5(b),3 the
    HOSF fee encompassed all the covered services, including the ancillary
    services, reimbursable for outpatient procedures "provided in [an] HOSF
    setting."    Because N.J.A.C. 11:3-29.5(b) "precluded" reimbursement for
    separately billed "ancillary services provided in support of the primary surgical
    procedures[,]" it "operate[d] as a regulatory preclusion" to any other billing
    methodology. Acknowledging the "conflict . . . between the preclusionary
    provisions" of N.J.A.C. 11:3-29.5(b) and "the Medicare billing requirements
    cited by [Monmouth,]" the DRP explained that "DOBI [was] presumed to be
    aware of such Medicare billing requirements" and "could have permitted the
    invoicing of ancillary services in such instances." However, in the absence of
    "an appropriate exemption . . . inserted into N.J.A.C. 11:3-29.5(b) to permit
    3
    N.J.A.C. 11:3-29.5(b) provides:
    The [HOSF] fee is the maximum that can be
    reimbursed for outpatient procedures performed in a
    HOSF.      The hospital outpatient facility fees in
    Appendix Exhibit 7 [of the Current Procedural
    Terminology (CPT) code] include services that would
    be covered if furnished in a hospital on an inpatient
    basis, including those set forth in (a)[(1) to (8) of
    N.J.A.C. 11:3-29.5].
    N.J.A.C. 11:3-29.5(a)(1) to (8) include "[u]se of operating and recovery
    rooms," "[d]rugs," "supplies," "[a]nesthesia materials," and other ancillary
    services.
    A-3004-17T1
    5
    the billing practices employed by [Monmouth]," the DRP concluded that "State
    regulations [took] precedence over the Medicare regulations."
    After Monmouth's application to the DRP for modification of the award
    was denied, Monmouth filed a verified complaint and order to show cause
    pursuant to N.J.S.A. 2A:23A-13(a) and Rule 4:67-1(a), seeking to vacate the
    award on the ground that the DRP violated N.J.S.A. 2A:23A-13(c)(3) and
    (c)(5).   Specifically, in the complaint, Monmouth alleged the DRP
    "commit[ed] prejudicial errors when he imperfectly executed his power and
    erroneously applied law to the issues and facts presented." Monmouth sought
    a modified award, entering judgment against State Farm for $12,535.02,
    together with attorneys' fees and costs.
    Following oral argument, on February 5, 2018, Judge David H. Ironson
    issued an order, vacating the arbitration award and entering a modified award
    in favor of Monmouth in the amount of $14,107.23. The judge then confirmed
    the modified award in accordance with N.J.S.A. 2A:23A-13(f). In his written
    statement of reasons, the judge explained that:
    [Monmouth] was denied reimbursement for services
    that are permitted pursuant to N.J.A.C. 11:3-29.5(b).
    The [c]ourt finds that denying reimbursement for these
    services constituted prejudicial error by the DRP, via
    his erroneously applying the law to issues and facts
    presented for alternative resolution. [Monmouth]
    should not be penalized for its required method of
    billing, particularly when it would have been fully
    A-3004-17T1
    6
    reimbursed for its costs had it "bundle billed."
    N.J.A.C. 11:3-29.5(b) does not explicitly require
    "bundle billing," and does not set forth how ancillary
    services must be billed. Accordingly, [Monmouth's]
    method of billing does not violate the [regulation].
    Additionally, [Monmouth] is not seeking to be
    reimbursed for more than the maximum amount in the
    . . . HOSF [f]ee [s]chedule.
    This appeal followed.
    In A-4208-17, as a result of injuries sustained by Paul Ham in a January
    18, 2015 automobile accident, on February 3, 2016, Ham received out-patient
    hospital services, including surgical and ancillary support services, from Saint
    Barnabas Medical Center (Saint Barnabas). Following Ham's discharge, Saint
    Barnabas billed State Farm, Ham's no-fault insurance carrier, for its services.
    In the bill, like Monmouth, Saint Barnabas itemized its charges for surgical
    and ancillary support services, line by line, for a total amount of $31,426.10.
    However, State Farm approved payments for only the surgical services,
    totaling $8623.57, and issued two EOBs, explaining, as it did for Monmout h's
    claims, that the fee schedule did not permit separate reimbursement for
    ancillary service fees.
    After Saint Barnabas' internal appeal of the underpayment was denied by
    State Farm, Saint Barnabas demanded arbitration pursuant to the APDRA.
    Following a hearing, on November 8, 2017, the assigned DRP issued an award,
    denying Saint Barnabas' claims. In a written decision, the DRP rejected Saint
    A-3004-17T1
    7
    Barnabas' reliance on the Medicare Claims Processing Manual to justify its
    billing methodology, and determined that State Farm "correctly interpreted
    N.J.A.C. 11:3-29.5(a)," which "precluded . . . separate reimbursement" for
    ancillary services.    After Saint Barnabas' application to the DRP for
    modification of the award was denied, like Monmouth, Saint Barnabas file d a
    verified complaint and order to show cause, seeking to vacate the award
    pursuant to N.J.S.A. 2A:23-13(c)(3) and (c)(5).       Saint Barnabas sought a
    modified award, entering judgment against State Farm for $15,461.10, together
    with attorneys' fees and costs.
    On March 2, 2018, following oral argument, Judge Louis S. Sceusi
    vacated the arbitration award. In an oral decision, the judge adopted Judge
    Ironson's reasoning, and concluded that Saint Barnabas' "billing format" of
    "itemiz[ing] ancillary services individually" was "not prohibited by statute or
    regulation." As a result, Judge Sceusi determined "[t]here was . . . no basis for
    the [DRP] to deny [Saint Barnabas'] application based upon the billing format
    alone[,]" particularly when the total amount billed by Saint Barnabas was
    "consistent with the maximums set forth in . . . the fee schedule." On March 6,
    2018, Judge Sceusi entered a conforming order, modifying the award in favor
    of Saint Barnabas in the total amount of $18,663.60, and confirming the
    modified award in accordance with N.J.S.A. 2A:23A-13(f).             Thereafter,
    A-3004-17T1
    8
    finding that State Farm "raised no new issues," Judge Sceusi denied State
    Farm's motion for reconsideration on April 16, 2018, and this appeal followed.
    In both appeals, State Farm raises the following identical points for our
    consideration:
    POINT I
    THE TRIAL JUDGE INCORRECTLY VACATED
    THE ARBITRATION AWARD BY FAILING TO
    APPLY THE CORRECT STANDARD OF REVIEW.
    POINT II
    THE     TRIAL     JUDGE     ERRED IN
    MISINTERPRETING THE LAW THAT WAS THE
    BASIS FOR THE DRP'S RULING.
    In response, both Monmouth and Saint Barnabas assert that "appellate
    review is not warranted" because "[t]he trial court carried out its legislative
    duty in reversing the DRP when he committed prejudicial error by erroneously
    applying law to the issues and facts." "Moreover, State Farm has not alleged
    any of those 'rare circumstances' grounded in public policy that might compel
    this [c]ourt to grant limited appellate review." Accordingly, they urge us to
    dismiss the appeals for lack of jurisdiction.
    Whether we have jurisdiction to hear these appeals turns on the meaning
    and scope of N.J.S.A. 2A:23A-18(b), which states:
    Upon the granting of an order confirming,
    modifying[,] or correcting an award, a judgment or
    A-3004-17T1
    9
    decree shall be entered by the court in conformity
    therewith and be enforced as any other judgment or
    decree. There shall be no further appeal or review of
    the judgment or decree.
    With increasing frequency, we have been asked to examine the extent to
    which we may intervene in these matters. In considering the scope of N.J.S.A.
    2A:23A-18(b), our Supreme Court recognized in Mount Hope Development
    Associates v. Mount Hope Waterpower Project L.P., 
    154 N.J. 141
    , 152 (1998),
    that there are exceptions to N.J.S.A. 2A:23A-18(b). For example, the Court
    held that the APDRA's general elimination of appellate jurisdiction does not
    apply to child support orders. 
    Ibid. The Court also
    recognized that there may
    be other circumstances "where public policy would require appellate court
    review" and observed that appellate review may occur when necessary for the
    court to carry out its "supervisory function over the courts[.]" 
    Ibid. In Morel v.
    State Farm Insurance Company, 
    396 N.J. Super. 472
    , 476
    (App. Div. 2007), we explained that this "supervisory function" permits our
    exercise of jurisdiction when a trial court has exceeded its jurisdiction.
    "Otherwise, the statute would be rendered meaningless." 
    Ibid. In adhering to
    Morel's approach as well as our deference to the Legislature's decree to
    eliminate review beyond that exercised in the trial court, we have exercised
    such review in only the most unusual circumstances. See, e.g., Open MRI &
    Imaging of Rochelle Park v. Mercury Ins. Grp., 
    421 N.J. Super. 160
    , 166 (App.
    A-3004-17T1
    10
    Div. 2011) (finding appellate review appropriate "when the relief sought in
    arbitration (reformation) is beyond the power of the DRP to award"); Liberty
    Mut. Ins. Co. v. Garden State Surgical Ctr., L.L.C., 
    413 N.J. Super. 513
    , 517
    (App. Div. 2010) (finding the APDRA did not bar appellate review of "the
    judge's denial of leave to file an amended complaint or of the judge's dismissal
    of the action on timeliness grounds"); 
    Morel, 396 N.J. Super. at 475
    (invoking
    our supervisory function where the trial court failed to rule on all of the
    specific claims made by the plaintiff).
    Indeed, in Fort Lee Surgery Center, Inc. v. Proformance Insurance
    Company, 
    412 N.J. Super. 99
    , 104 (App. Div. 2010), we held that appeals to
    this court must be dismissed even when we think the trial judge was mistaken
    in finding the DRP committed error. There, we examined whether the trial
    court exceeded its jurisdiction in its application of N.J.S.A. 2A:23A-13(c)(5),
    permitting trial court intervention upon a finding that the DRP committed
    prejudicial error in the application of the law to the facts, as occurred here. 
    Id. at 104.
    We held:
    Certainly, not every instance in which a judge utters
    the phrase "prejudicial error" will preclude appellate
    review. The exercise of our supervisory function
    cannot be talismanically eliminated by the mere
    invocation of the words of the statute. But, when a
    trial judge is able to provide a rational explanation for
    how the arbitrator committed prejudicial error,
    N.J.S.A. 2A:23A-18(b) requires a dismissal of an
    A-3004-17T1
    11
    appeal of that determination regardless of whether we
    may think the trial judge exercised that jurisdiction
    imperfectly.     Any broader view of appellate
    jurisdiction would conflict with the Legislature's
    expressed desire in enacting [the] APDRA to
    eliminate appellate review in these matters.
    [Ibid.]
    We have said that "when the trial judge adheres to the statutory grounds
    in reversing, modifying[,] or correcting an arbitration award, we have no
    jurisdiction to tamper with the judge's decision or do anything other than
    recognize that the judge has acted within his jurisdiction."         N.J. Citizens
    Underwriting Reciprocal Exch. v. Kieran Collins, D.C., L.L.C., 399 N.J.
    Super. 40, 48 (App. Div. 2008).         The provisions in N.J.S.A. 2A:23A-13
    "define[] the scope of the trial judge's jurisdiction in such matters[,]" ibid., and
    provide:
    In 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 . . . .
    [N.J.S.A. 2A:23A-13(b).]
    A-3004-17T1
    12
    Pertinent here, N.J.S.A. 2A:23A-13(c)(3) provides that "[t]he award
    shall be vacated on the application of a party . . . if the court finds that the
    rights of that party were prejudiced by" the umpires "exceeding their power" in
    "making the award," or "so imperfectly executing that power that a final and
    definite award was not made[.]" Therefore, when the claim is made that the
    umpires "exceed[ed] their power or so imperfectly execut[ed] that power that a
    final and definite award was not made," the judge must de novo consider the
    factual record, and, if necessary, order a summary proceeding to supplement
    the record.
    N.J.S.A. 2A:23A-13(f) further provides:
    Whenever it appears to the court to which application
    is made . . . either to vacate or modify the award
    because the umpire committed prejudicial error in
    applying applicable law to the issues and facts
    presented . . . [, N.J.S.A. 2A:23A-13(c)(5)], the court
    shall, after vacating or modifying the erroneous
    determination of the umpire, appropriately set forth
    the applicable law and arrive at an appropriate
    determination under the applicable facts determined
    by the umpire. The court shall then confirm the award
    as modified.
    Thus, only if the judge concludes the umpire's application of the law to the
    facts was "prejudicial[ly] erro[neous]" may the judge "vacat[e] or modify[] the
    erroneous determination," and apply the "applicable law" to reach the proper
    result. 
    Ibid. A-3004-17T1 13 Applying
    these principles, we are satisfied that the orders under review
    fall within the parameters of N.J.S.A. 2A:23A-18(b). We dismiss the appeals
    because both Judge Ironson and Judge Sceusi properly exercised the authority
    granted to them under the APDRA, adhered to the statutory grounds in
    vacating the DRPs' awards, and provided rational explanations of how the
    respective DRPs committed prejudicial error within the meaning of N.J.S.A.
    2A:23A-13(c)(5).    Thus, "[b]ecause the judge[s] navigated within [the]
    APDRA's parameters," Fort Lee Surgery 
    Ctr., 412 N.J. Super. at 104
    , there is
    no principled reason for the exercise of our supervisory jurisdiction, or any
    unusual circumstances where public policy would require our intervention, and
    we reject State Farm's contrary contentions. See Riverside Chiropractic 
    Grp., 404 N.J. Super. at 239-40
    (noting that "the supervisory function of the
    Appellate Division, as applied in Morel, [wa]s unnecessary" because the "trial
    court in th[at] case did not commit any glaring errors that would frustrate the
    Legislature's purpose in enacting the APDRA").
    Appeals dismissed.
    A-3004-17T1
    14