A New Jersey appellate court has reversed a lower court order rejecting a challenge to an arbitrator's decision that the claimant was not entitled to personal injury protection benefits. The Court permitted the appeal based on a public policy exception and reversed the ruling because the lower court failed to apply the standard prescribed by statute.

In Morel v. State Farm Insurance Co., L-2726-06, 2007 WL 3396439 (N.J. Super. Ct. App. Div. Nov. 16, 2007), Morel filed an arbitration claim for personal injury protection benefits. The question for the arbitrator was whether Morel was in his car at the time of the accident. The arbitrator rejected Morel's claim and ruled in favor of State Farm.

Morel challenged the arbitrator's ruling pursuant to the New Jersey Alternative Procedure for Dispute Resolution Act (APDRA), arguing that the arbitrator's decision was not supported by substantial evidence. In rejecting this challenge, the lower court stated that its review was limited to whether the arbitrator's award was marred by fraud, corruption, or a conflict of interest.

On appeal, Morel argued that the lower court erred by failing to apply the relevant provisions of the APDRA – specifically, the provision indicating that an arbitrator's decision must be supported by "substantial evidence." See N.J. Stat. Ann. § 2A:23A-13(b).

As the Court noted, there is generally no appeal from a lower court order issued pursuant to the APDRA. However, New Jersey courts have recognized a public policy exception to this rule. The Court applied that exception in this case on the reasoning that public policy requires the lower court to apply the standards prescribed by the APDRA.

Since the lower court failed to apply the standards prescribed by the APDRA, the Court reversed the lower court order and remanded the matter with instructions to apply the relevant standard.