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)

NOT FOR PUBLICATION WITHOUT THE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