HACKENSACK SURGERY CENTER, ETC. VS. ALLSTATE INSURANCECOMPANY(L-3829-15, PASSAIC COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3896-15T3
HACKENSACK SURGERY CENTER
a/s/o CHRISTINA PEREIRA,
Plaintiff-Respondent/
Cross-Appellant,
v.
ALLSTATE INSURANCE COMPANY,
Defendant-Appellant/
Cross-Respondent.
_________________________________
Argued April 4, 2017 – Decided September 5, 2017
Before Judges Reisner and Sumners.
On appeal from Superior Court of New Jersey,
Law Division, Passaic County, Docket No. L-
3829-15.
Robert A. Cappuzzo argued the cause for
appellant/cross-respondent (Chasan Leyner &
Lamparello, attorneys; Mr. Cappuzzo, of
counsel and on the brief; Richard W. Fogarty,
on the brief).
Julie Lefkowitz argued the cause for
respondent/cross-appellant.
PER CURIAM
Defendant Allstate Insurance Co. (Allstate) appeals from an
April 7, 2016 order compelling it to comply with a personal injury
protection (PIP) arbitration award to pay $2,036.99, plus
interest, attorney's fees and costs, to plaintiff Hackensack
Surgery Center (HSC) as subrogee of Christina Pereira. HSC cross-
appeals a provision of the same order that denied its request for
attorney's fees and costs related to its efforts to confirm the
arbitration award. Having considered the record and applicable
law, we affirm.
I.
On March 31, 2013, Pereira was involved in an automobile
accident, which resulted in her receiving medical treatment with
various providers. She was insured under a policy by Allstate
that provided PIP benefits totaling $15,000 per accident. Allstate
denied payment to HSC, one of Pereira's treatment providers, based
on its determination that the treatment rendered on September 4,
2013, and totaling $8,527.07, was not medically necessary. HSC
filed a demand for arbitration to be conducted by Forthright
Solutions (Forthright). Prior to the August 6, 2015 arbitration
hearing, Allstate advised that there was $2,132.74 in remaining
PIP benefits due to prior payments totaling $12,867.26.
During the pendency of HSC's claim, another one of Pereira's
treatment providers, Thermocare Plus, LLC (Thermocare) sought to
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reverse Allstate's denial of its bill totaling $2,032.74 for
services rendered on September 27, 2013, by utilizing Allstate's
internal appeals process. In a letter dated August 21, 2015,
Allstate advised Thermocare that the previous denial was
"overturned" and placed Thermocare's "bill in line for
processing." The record does not indicate the time of day that
Allstate decided to pay Thermocare or issued the letter notifying
Thermocare.
On the same date of Allstate's letter to Thermocare, the
arbitration award - dated the day before, August 20 - was
electronically transmitted to HSC and Allstate at 12:29 p.m. The
arbitrator determined that, based upon review of the medical
records, Allstate's internal appeals process, and relevant case
law and state statutes, HSC's treatment to Pereira was medically
necessary and awarded HSC the full amount it sought, $8,438.58,
plus interest. He noted, however, that since $12,867.26 of the
$15,000 PIP benefits had already been paid, the award to HSC was
subject to "the policy limits for medical payments, still available
to [HSC] at the time of the award." HSC was also awarded attorney's
fees and costs totaling $1325 under N.J.S.A. 39:6A-5(h).
On August 28, 2015, seven days after receipt of the
arbitration award and the date of the internal appeal decision
approving payment to Thermocare, Allstate paid Thermocare
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$2,032.74, plus interest. Allstate subsequently complied with the
arbitration award on September 15, 2015, by processing a payment
to HSC in the amount of $100, plus interest, reflecting the amount
of the remaining PIP benefits.
Dissatisfied with Allstate's decision to pay Thermocare's
bill before paying the arbitration award, HSC filed an order to
show cause contending that it should have been paid first, and
sought an additional payment of $2,036.99, as well as attorney's
fees and costs caused by its further legal action. Following
argument on April 7, 2016, the trial judge issued an order and
rendered an oral decision requiring Allstate to pay HSC an
additional $2,036.99 that was "remaining on the date of the [August
21, 2015] arbitration award," and denied HSC's request for
additional attorney's fees and costs. The judge noted the
uniqueness of this situation and in the absence of guiding case
law, and reasoned:
When [August 21, 2015,] came around[,]
somebody at Allstate . . . could have [seen]
we have a problem here. We're only sitting
on $2,036.99. We've got this [Thermocare]
bill [,] which we are in the process of
committing to pay, or we've already committed
to pay it, and now we've been told as part of
an arbitration proceeding that we have to pay
this $8,000 to [HSC]. . . . I understand the
mechanism was put in place to pay [Thermocare]
but the check hadn't been issued. There could
have been a stop . . . payment of the check.
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And I don't believe the equitable outcome
occurred here.
I'm not in any way saying that Allstate
engaged in any sort of bad faith or that
Allstate said, you know what[,] let's stick
it to [HSC] for taking us to arbitration.
Let's beat them out of money and give it to
[Thermocare]. . . . But that's not the
ultimate deciding point. The point is there
[were] certain limited funds and there were
bills that needed to be paid [by] Allstate,
and there wasn't enough money to pay both of
them in full. In fact, there wasn't enough
money to pay either one of them in full.
. . . .
So, what I'm going to do is I'm going to rule
in favor of [HSC]; however, I'm going to
direct that the remaining $2036.99 be used to
pay the [HSC] bill.
I'm not awarding legal fees on top of that. I
think that would unfair to Allstate. Allstate
is already paying more than their policy
limit.
This appeal and cross-appeal followed.
II.
In its appeal, Allstate contends that the trial court's order
is contrary to Endo Surgi Ctr., P.C. v. Liberty Mut. Ins. Co., 391
N.J. Super. 588, 594 (App. Div. 2007), because it had depleted the
PIP benefits under Pereira's policy limits by paying Thermocare
and that requiring payment to HSC would result in PIP payments
beyond the policy limits. Allstate also argues that under
Forthright's rules, it had thirty-five days to seek
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modification/clarification of the arbitration award with the
arbitrator, and under and N.J.S.A. 2A:23A-13 and N.J.A.C. 11:3-
5.6(f), it had forty-five days to vacate, modify, or correct the
arbitration award to the Superior Court, thus it was under no
obligation to comply with the arbitration award to pay HSC when
the award was received on August 21, 2015. Thermocare's bill was
approved for payment on that same day, Allstate maintains that it
satisfied N.J.S.A. 39:6A-6, by paying Thermocare the balance of
the PIP benefits available when Thermocare's bill had accrued.
Since the salient facts are not in dispute, and the issue
presented is a question of law, which we review de novo. Davis
v. Devereux Found., 209 N.J. 269, 286 (2012). We begin with the
understanding that, absent bad faith, an insurer may settle with
one or more claimants, notwithstanding that the settlements may
exhaust the policy limits. Goughan v. Rutgers Cas. Ins. Co., 238
N.J. Super. 644, 649 (Law Div. 1989) (limiting an underinsured
motorist carrier's credit against the tortfeasor's liability
insurance policy to the amount that remains available to the
injured party after the tortfeasor's insurer made payments to
other injured victims of the accident). PIP benefits, which are
provided regardless of fault, are governed by the collateral source
rule in the Automobile Insurance Cost Reduction Act (AICRA),
N.J.S.A. 39:6A-1 to -35. Rivera v. Morales, 373 N.J. Super. 494,
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497 (App. Div. 2004). Such benefits shall be payable "as [the]
loss accrues, upon written notice of such loss," N.J.S.A. 39:6A-
6, and "without the need or determination of fault or other time-
consuming litigation." Id. at 500.
Absent any guidance by statute, regulation, or legislative
history, we construe the phrase "as [the] loss accrues," N.J.S.A.
39:6A-6, to require the insurer to pay PIP benefits immediately
upon determination that the loss is due and owing, without
consideration that the loss may also be covered by another source,
subject, however, to the insurer recouping the amount paid from
either the insured, if the insured received payment from another
source stated in the statute, or from the other source itself.
See Toppi v. Prudential Ins. Co. of Am., 153 N.J. Super. 445, 450
(Cty. D. Ct. 1977) ("To allow an insurer to unilaterally deduct
temporary disability benefits which it deems will be payable to
its insured violates the mandate of N.J.S.A. 39:6A-6 which requires
the payment of benefits as a 'loss accrues.'").
Applying these principles, we conclude that HSC is entitled
to an additional PIP payment of $2,036.99 pursuant to the
arbitration. In reaching this decision, we acknowledge that
Allstate has already paid this amount to Thermocare and payment
to HSC is beyond the policy limits. Yet, under the unique
situation here, HSC is entitled to this additional amount based
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upon several factors that lead us to determine that HSC's bill was
due and owing before Thermocare's bill. HSC's bill was for
services rendered before Thermocare provided its services.
Allstate received HSC's bill before it received Thermocare's bill.
The August 20, 2015 arbitration award stated that payment to HSC
was subject to PIP benefits available at the "time of the award,"
and Thermocare had not been paid or authorized to be paid by the
date of the award. There is no proof that Allstate's internal
appeal reversal on August 21, 2015, to pay Thermocare was finalized
before Allstate received the arbitration award that same day
compelling payment to HSC. Allstate did not issue payment to
Thermocare until seven days after receiving the arbitration award.
Turning to the cross-appeal, HSC, without citing any legal
standard contends that it is customary for attorney's fees and
costs to be awarded for a confirmed arbitration award, and that
the Legislature's "strong desire to assure accident victims
receive prompt and necessary medical care, . . . would be
undermined" if attorney's fees and costs are not allowed. We are
unpersuaded.
An award of attorney's fees in a PIP action may include
counsel's efforts both before the umpire and before the trial
court. Allstate Ins. Co. v. Sabato, 380 N.J. Super. 463, 474
(App. Div. 2005). Permitting reimbursement of attorney's fees
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reflects "[t]he theory . . . that one covered by a policy is
entitled to the full protection provided by the coverage, and that
benefit should not be diluted by the insured's need to pay counsel
fees in order to secure its rights under the policy." Liberty
Vill. Assocs. v. W. Am. Ins. Co., 308 N.J. Super. 393, 406 (App.
Div.) (citing Sears Mortg. Corp. v. Rose, 134 N.J. 326, 356 (1993),
certif. denied, 154 N.J. 609 (1998). To effect that theory, "[a]
successful insured is presumptively entitled to attorney's fees
and need not establish that the insurer acted in bad faith or
arbitrarily in declining a claim." Sabato, supra, 380 N.J. Super.
at 473-74 (citing Liberty Vill., supra, 308 N.J. Super. at 405-
06).
Despite the presumption in favor of reimbursement, however,
under Rule 4:42-9(a)(6) "the trial judge has broad discretion as
to when, where, and under what circumstances counsel fees may be
proper and the amount to be awarded." Iafelice ex rel. Wright v.
Arpino, 319 N.J. Super. 581, 590 (App. Div. 1999) (citations
omitted).
Factors which the court may consider include:
(1) the insurer's good faith in refusing to
pay the demands; (2) excessiveness of
plaintiff's demands; (3) bona fides of one or
both of the parties; (4) the insurer's
justification in litigating the issue; (5) the
insured's conduct in contributing
substantially to the necessity for the
litigation on the policies; (6) the general
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conduct of the parties; and (7) the totality
of the circumstances.
[Enright v. Lubow, 215 N.J. Super. 306, 313
(App. Div.) (internal citations omitted),
certif. denied, 108 N.J. 193 (1987).]
"[F]ee determinations by trial courts will be disturbed only on
the rarest of occasions, and then only because of a clear abuse
of discretion." Packard-Bamberger & Co., Inc. v. Collier, 167
N.J. 427, 444 (2001) (quoting Rendine v. Pantzer, 141 N.J. 292,
317 (1995)).
Here, the trial judge denied additional attorney's fees and
costs to HSC because of Allstate's good faith in handling HSC's
PIP claim and the depletion of available PIP benefits. We do not
find sufficient ground to disturb his exercise of discretion in
denying reimbursement of additional attorney's fees and costs.
Affirmed.
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