A New Jersey state appellate court has determined that it lacks the authority to review trial court orders modifying arbitration awards, if the modification is properly granted based on statutory grounds.

In New Jersey Citizens Underwriting Reciprocal Exchange v. Collins, No. A-3705-06T1, 2008 WL 704399 (N.J. Super. Ct. App. Div. Mar. 18, 2008), insurer Exchange denied coverage of certain Personal Injury Protection (PIP) reimbursement claims to Collins for treatment provided to individuals involved in an auto accident. Exchange alleged that the injured insured made misrepresentations in his policy application that warranted refusing all reimbursements.

Collins filed demands for arbitration of the claims. Collins requested consolidation of the two claims, since they arose out of the same incident and under the same disputed policy, but the arbitration administrator denied consolidation. One claim, decided by arbitrator Carr, was resolved in favor of Collins. The other claim, decided by arbitrator Johnston, was resolved in favor of Exchange.

Because of the inconsistent results, Exchange filed an action with the trial court seeking vacatur, modification, or correction of the Carr award. The trial court found that Exchange had been prejudiced by the administrator's refusal to grant consolidation once inconsistent decisions were rendered. The trial court determined, based on the extensive fact pattern documented by Johnston, that the Carr award could not stand and entered a final order in the matter in favor of Exchange.

The Court considered whether it had jurisdiction to hear Collins's appeal of the trial court's order under N.J. Stat. Ann. 2A:23A-18(b). Exchange argued that the statute forbade "further appeal or review of the judgment or decree" regarding the award at the trial court. The Court, however, held that it had jurisdiction to review these particular orders when a trial court has failed to limit his or her review of the award to the statutory grounds for vacatur, modification, or correction.

According to the Court, the trial court had properly limited its review by modifying the award due to the arbitrator's commission of "prejudicial error by erroneously applying law to the issues and facts presented," namely, Carr's erroneous application of a statute in rendering Collins's award. See N.J. Stat. Ann. 2A:23A-13(c)(5) (permitting modification based on erroneous application of law). Because the trial court had modified the award based on statutory grounds, the Court held it had no authority to hear Collins's appeal.