AMBULATORY SURGICAL CENTER OF SOMERSET et al v. ALLSTATE FIRE CASUALTY INSURANCE COMPANY

Filing 30

OPINION filed. Signed by Judge Anne E. Thompson on 8/2/2017. (mps)

RECEIVED
NOTFOR PUBLICATION

AUG 0 9 2017

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
AMBULATORY SURGICAL CENTER OF
SOMERSET, individually and as a Class
Representative on behalfofothers similar
situated, and JUAN GONZALEZ,
individually and as a Class Representative on
behalfof others similar situated,

AT 8:30
WILLIAM T. WALS~;
CLERK

Civ. No. 16-5378

OPINION

Plaintiffs,

v.
ALLSTATE FIRE CASUALTY
INSURANCE COMPANY,
Defendant.

THOMPSON,U.S.D.J.
This matter comes before the Court upon the motion by Defendant Allstate Fire and
Casualty Insurance Company1 ("Defendant") to compel arbitration and to stay. (ECF No. 19).
Plaintiffs Ambulatory Surgical Center of Somerset and Juan Gonzalez ("Gonzalez")
(collectively, "Plaintiffs") oppose. (ECF No. 24). The Court has issued the opinion below based
upon the written submissions of the parties and without oral argument pursuant to Local Civil
Rule 78.l(b). For the reasons stated herein, Defendant's motion to compel arbitration and to stay
will be denied.

BACKGROUND
This matter arises out of an automobile accident, subsequent surgery, and Defendant
insurance company's refusal to pay for that specific surgery. Plaintiffs' allegations, in brief, are
1

Defendant acknowledges the lawsuit against it and states that it was improperly pleaded as
Allstate Fire Casualty Insurance Co., rather than Allstate Fire and Casualty Insurance Company.

Vi

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as follows: On August 7, 2011, Plaintiff Gonzalez was in an automobile accident in Jefferson
Township New Jersey. (Compl. iMf 5-6, ECF No. 1). He sustained injuries which required
medical attention. (Id.). Gonzalez underwent a related surgery on March 10, 2015 at the
Ambulatory Surgical Center of Somerset. (Id.

~ 9).

Defendant refused to pay for the procedure

because there is no procedure code listed in the New Jersey Auto Fee Schedule. (Id. 110).
Plaintiff contends that where, as here, there is no procedure code listed in the New Jersey Auto
Fee Schedule, the procedure is payable at reasonable rates pursuant to N.J. Ins. Code§ 11 :3-29.
(Id.

W 12-13).

Defendant has refused and continues to refuse to pay for procedures performed

at ambulatory surgical centers for which procedure codes are not listed in the New Jersey Auto
Fee Schedule..

(Id.~~

14, 16). Plaintiffs seek liability and damages on behalf of the classes.of

individuals insured by Defendant who have sustained injuries in automobile accidents and are
entitled to automobile medical benefits pursuant to New Jersey law and of ambulatory surgical
facilities who performed procedures for which there are not codes listed in the New Jersey Auto·
Fee Schedule and.for which Defendant refused payment. (Id.

W 19-23).

Plaintiffs seek

declaratory judgment that Defendant must pay for those procedures, and assert related claims. for
breach of contract, breach of implied covenant of good faith and fair dealing, and violation of the
New Jersey Consumer Fraud Act. (Id.

mf 41-79).

Per the parties stipulation and consent, the Court vacated the Clerk's entry of default
against Defendant and extended Defendant's time to answer to January 31, 2017. (ECF No. 14).
Defendant answered the Complaint on January 31, 2017. (ECF No. 16). On April 7, 2017,
Defendant moved to compel arbitration and to stay. (ECF No. 19). This motion is presently
before the Court.

2

DISCUSSION
Where there is a contract between the parties that provides for arbitration, there is "an
emphatic federal policy in favor of arbitral dispute resolution." KPMG LLC v. Cocchi, 565 U.S.
---, 132 S. Ct. 23, 25 (2011) (per curiam) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614, 631 (1985) (internal quotation marks omitted); see Federal
Arbitration Act, 9 U.S.C. § 2. "Any doubt concerning the scope of arbitrability should be
resolved in favor of arbitration." Mitsubishi Motor Corp., 473 U.S. at 626 (quoting Moses H.

Cone Mem 'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)); see also Gray Holdco,
Inc. v. Cassady, 654 F.3d 444, 451 (3d Cir. 2011). When a party refuses to submit to arbitration
pursuant to a valid contract provision, the party seeking to arbitrate may petition a court for an
order compelling arbitration. 9 U.S.C. § 4.
In order for this presumption in favor of arbitration to apply, there must be a valid
contract between the parties. The Court must find that "(l) there is an agreement to arbitrate and
(2) the dispute at issue falls within the scope of that agreement." Century Indem. Co. v. Certain

Underwriters at Lloyd's, London, 584 F.3d 513, 523 (3d Cir. 2009).
In this case, the parties agree that there was no agreement to arbitrate. Rather, Defendant
asserts a right to compel arbitration based on a statutory provision of the New Jersey Automobile
Insurance Cost Reduction Act ("AICRA"), N.J.S.A. 39:6A-5.1. Therefore, the Federal
Arbitration Act and its presumption do not apply. Century Indem., 584 F.3d at 523.
The Court turns then to whether the statute applies to an out-of-state insured who utilized
New Jersey personal injury protection ("PIP") coverage under AICRA. Defendant argues that
the entire PIP statute applies to an out-of-state insured who received coverage in New Jersey
pursuant to the statute, based on the "Deemer Statute," N.J.S.A. 17:28-1.4. (Def.'s Br. 5-13,

3

ECF No. 19-1). However, the plain text of the N.J.S.A. 17:28-1.4 only provides for coverage of
out-of-state insured who are insured by insurers authorized to transact or transacting automobile
insurance business in New Jersey. It does not incorporate other aspects of the PIP statute.
N.J.S.A. 17:28-1.4; see also Cooper Hosp. Univ. Med. Ctr. v. Prudential Ins. Co., 378 N.J.
Super. 510, 518 (App. Div. 2005) (finding that the Deemer Statute mandated coverage based on
the New Jersey statute, and not finding that the Deemer Statute included other aspects of the
New Jersey PIP statute); Hamilton v. Gov't Employees Ins. Co., 283 N.J. Super. 424, 430 (App.
Div. 1995) (same); Burlington Ins. Co. v. Northland Ins. Co., 766 F. Supp. 2d 515, 526 (D.N.J.
2011) (same).
One case deals with the application of the PIP statute arbitration provision2 to an out-ofstate insured who utilized in-state care. In that case, the New Jersey Appellate Court found that
the non-resident insured could compel the insurance company to arbitrate based on the statute,
even though the Deemer Statute did not specifically incorporate the arbitration clause. 3 State
Farm Mut. Auto. Ins. Co. v. Crocker, 288 N.J. Super. 250, 256 (App. Div. 1996). To be subject

to the statute, the insurance company had to be authorized to transact or transacting an
automobile insurance business in New Jersey. Id., 288 N.J. Super. at 256; N.J.S.A. 39:6A-5c.
Therefore, the insurance company had notice that it could be compelled to arbitrate. That is
distinct from the present case, in which the insurer seeks to compel arbitration based on the New

2

The statute provides for "submi[ ssion] to dispute resolution on the initiative of any party to the
dispute." N.J.S.A. 39:6A-5.l(a). It does not specify that the dispute resolution must be
arbitration; however, that seems how the provision is most used, that is how the parties refer to
the provision, and the Court will do so here.
3
This case utilized an older version of the statute, in which only the insured had the statute right
to select arbitration. The statute permitted "any claimant" to compel arbitration. N.J.S.A.
39:6A-5c; Crocker, 288 N.J. Super. at 256. The current statute has been amended to permit "any
party to the dispute" to submit the dispute to "dispute resolution." N.J.S.A. § 39:6A-5.l(a).
4

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Jersey statute. 4 The out-of-state insured might have no notice that it could be compelled to
arbitrate. In this case, the parties agree that there is no contractual agreement to arbitrate; the
motion to compel arbitration is based purely on the statute.
Therefore, based on the text of the relevant statement and the interpreting case law, it is
unclear that the arbitration provision permits insurers to compel arbitration based on the Deemer
Statute with out-of-state insureds who utilize in-state coverage.
Both the Federal Arbitration Act and New Jersey policy express a preference for
resolution by arbitration. However, both are predicated on a formal agreement between the
parties or notice that they may be forced to submit a dispute to arbitration. See Century Indem.,
584 F.3d at 539-40; Crocker, 288 N.J. Super. at 256. As there is no agreement or notice in this
case, the Court will decline to compel arbitration. All other questions and arguments are moot.

CONCLUSION
For the reasons above, Defendant's motion to compel and to stay will be denied. A
corresponding order will follow.

Dated:~

~'2. )

4

See note 3. The statute was amended to permit "any party to the dispute" to submit the dispute
to "dispute resolution." N.J.S.A. 39:6A-5.l(a).
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