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A New Jersey appellate court affirmed the dismissal of an insurance company's declaratory judgment action, holding that the insurance company was attempting to re-litigate an issue that had already been resolved through arbitration.
In Liberty Mutual Insurance Co. v. Brunswick Surgical Center, PC, L-6633-06; L-9186-06, 2008 WL 2776131 (N.J. Super. Ct. App. Div. July 18, 2008), Brunswick Surgical Center, PC and Pain Control Center of New Jersey (collectively, Brunswick) provided medical services to people who were injured in automobile accidents and qualified for personal injury protection (PIP) benefits.
Liberty Mutual was the insurance company for two individuals who received services at Brunswick. Liberty Mutual refused to pay a number of claims submitted by Brunswick, arguing that Brunswick had made illegal self-referrals. The dispute was submitted to the National Arbitration Forum (FORUM), the dispute resolution organization chosen to resolve PIP benefit disputes through an arbitration program.
The FORUM arbitrator resolved all the claims in Brunswick's favor. Thereafter, Liberty Mutual filed a declaratory judgment action against Brunswick, alleging that Brunswick had made illegal referrals under the Codey Statute and that Liberty Mutual should not be responsible for the costs associated with those referrals.
The New Jersey Alternative Procedure for Dispute Resolution Act provides that a party to an arbitration proceeding may seek review on any award in Superior Court. Once the order is entered confirming, modifying, or correcting an award, there is no further appellate review of the judgment. In examining Liberty Mutual's complaint, the Superior Court noted that the action commenced was not an action to confirm, vacate, or modify an arbitration award.
Instead, Liberty Mutual attempted to re-litigate the same issues that had been resolved in arbitration. The Superior Court rejected Liberty Mutual's attempt to re-litigate through a declaratory judgment action and confirmed the arbitration awards. The issue that Liberty Mutual attempted to re-litigate was whether Brunswick was involved in an illegal self-referral system and thus did not deserve to be compensated for services provided.
On appeal from the confirmation ruling, the Court noted that the declaratory judgment action was Liberty Mutual's impermissible attempt at trying to evade the arbitration process. The Court thus affirmed the Superior Court's dismissal of the action.
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