LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff–Respondent, v. LIBERTY FIRST RISK RETENTION GROUP, Defendant–Appellant.
Defendant Liberty First Risk Retention Group (First Risk) appeals from the confirmation of a personal injury protection (PIP) reimbursement arbitration award in favor of plaintiff Liberty Mutual Insurance Company (Liberty Mutual). We affirm.
The parties' insureds were involved in a car accident in Morris County. Liberty Mutual's insured was the driver of a private passenger automobile allegedly struck by a tractor-trailer insured by First Risk. Liberty Mutual paid PIP benefits on behalf of its insured and sought reimbursement for those payments from First Risk pursuant to N.J.S.A. 39:6A–9.1.1 See Sherman v. Garcia Const., Inc., 251 N.J.Super. 352, 356 (App.Div.1991).
Specifically, Liberty Mutual instituted a Law Division action against First Risk demanding that First Risk arbitrate Liberty Mutual's “claims for [PIP] benefits paid to [its] insured” and naming the arbitration forum in which the matter would proceed. Although Liberty Mutual had already paid PIP benefits of $19,831.52, as it had advised First Risk's insured by letter, it did not specify those sums in its complaint.
First Risk did not file an answer, but instead agreed to arbitrate Liberty Mutual's PIP reimbursement claim. The parties filed a stipulation of dismissal stating that “all issues raised in the plaintiff's complaint are to be decided by Arbitration Forums, Inc.” (Arbitration Forums).
Liberty Mutual thereafter initiated the arbitration with Arbitration Forums. Before First Risk was required to respond in arbitration, the parties agreed to a settlement of the amounts Liberty Mutual had paid in PIP benefits up to that point. Both parties acknowledged that the PIP claim remained open as Liberty Mutual's insured continued to receive treatment. The release Liberty Mutual provided to First Risk acknowledged payment by First Risk of $21,536.39, but noted that it did not “act as a[r]elease, waiver or discharge of any claims for benefits which are paid by Liberty Mutual ․ on behalf of its insured ․ subsequent to medical bills in the amount of $21,536.39.” The release also reserved to First Risk the right to review all future PIP expenses and require Liberty Mutual's insured to undergo an independent medical exam prior to any future payments by First Risk.
Several months later, Liberty Mutual presented additional bills to First Risk for payment. When First Risk did not respond to its request for payment, Liberty Mutual initiated a second arbitration with Arbitration Forums. Despite service of the demand in accordance with Arbitration Forums' rules, First Risk neither responded to the filing nor appeared at the arbitration hearing. The arbitrator entered an award of $90,542.18 in favor of Liberty Mutual.
When First Risk failed to respond to requests for payment of the award, Liberty Mutual filed a summary action to confirm it. First Risk defended the action by arguing that it had never agreed to arbitrate the second round of bills. The judge found that by not objecting to the jurisdiction of Arbitration Forums when served with Liberty Mutual's second demand, after having agreed to arbitrate the first round of claims, First Risk waived its right to object to arbitration. She thus confirmed the award. This appeal followed.
On appeal, First Risk contends that our courts have held that “where only one of the parties believes that the arbitrator was empowered to act, in the absence of evidence of an actual agreement, there is no agreement and therefore the arbitrator has no authority to act at all.” Kimm v. Blisset, LLC, 388 N.J.Super. 14, 25 (App.Div.2006), certif. denied, 189 N.J. 428 (2007). While we agree with the proposition, we conclude that First Risk's reliance on Kimm, which did not involve inter-company arbitration of PIP claims, is misplaced. Here, arbitration is not a creature of contract but one of statute. See Liberty Mut. Ins. Co. v. Selective Ins. Co., 271 N.J.Super. 454, 456–59 (App.Div.1994) (explaining statutory cause of action under N.J.S.A. 39:6A–9.1).
N.J.S.A. 39:6A–9.1 allows a PIP carrier, such as Liberty Mutual, a reimbursement right of action against the insurer of a tortfeasor who, like First Risk's insured, had no obligation to maintain PIP benefits because it owned and operated a commercial vehicle. See Sherman, supra, 251 N.J.Super. at 356. The Legislature, however, required that claim between insurers to be arbitrated in the absence of agreement otherwise. N.J.S.A. 39:6A–9.1b; N.J. Auto. Full Ins. Underwriting Ass'n v. Liberty Mut. Ins. Co., 270 N.J.Super. 49, 53 (App.Div.1994) (“[T]he Legislature contemplated two scenarios. The preferred one is agreement between the carriers. The alternative is binding arbitration.”).
Although acknowledging that it was obligated, pursuant to N.J.S.A. 39:6A–9.1, to arbitrate Liberty Mutual's claim for additional PIP payments to its insured, First Risk insists that it had not yet agreed to do so when Liberty Mutual filed its second petition with Arbitration Forums. It contends that Liberty Mutual was thus obligated to file a new action in the Law Division to compel it to arbitrate reimbursement of additional sums paid to the same injured insured. We disagree.
Liberty Mutual sued First Risk to compel it to arbitrate Liberty Mutual's reimbursement claim for PIP payments to its named insured. Liberty Mutual did not sue to recover any specific amount because a PIP reimbursement action does not lie in Superior Court. Instead, it sought an order compelling arbitration of its reimbursement claim in an “appropriate arbitration forum.” Cf. N.J. Mfrs. Ins. Grp. v. Holger Trucking Corp., 417 N.J.Super. 393, 394–95, 400 n.2 (App.Div.2011) (distinguishing “the many bills for payment that may be served on the insurer in a given case” from what the Legislature likely viewed as an insured's “claim” for PIP benefits).
The parties settled that action by agreeing on the forum and they subsequently resolved Liberty Mutual's initial reimbursement request by agreement. This case is thus reminiscent of Allstate Insurance Co. v. Universal Underwriters Insurance Co., 330 N.J.Super. 628, 636–37 (App.Div.2000), in which we held that after insurers reach an initial reimbursement agreement within two years of the filing of an insured's PIP claim, any future disputes over the PIP insurer's entitlement to recovery or the reimbursement amount must also be resolved by agreement or arbitration, but the two-year statute of limitations can no longer be raised as a bar. Specifically, we held:
Once the parties agreed that Universal would reimburse Allstate for the initial PIP payments, the two-year statute of limitations, contained in N.J.S.A. 39:6A–9.1, was no longer a factor. Waiver of the right to assert the statutory bar was quite beside the point. The applicable statute of limitations was satisfied by the agreement.
[Id. at 636.]
When the parties settled the first Law Division action, they agreed on a forum for resolution of Liberty Mutual's claim for PIP reimbursement. Any future disagreements over Liberty Mutual's entitlement to recovery or the reimbursement amount, unless settled by agreement, would have to be resolved by arbitration. The forum in which the arbitration would occur was resolved in the first litigation.2 The parties having agreed on a forum in the event arbitration was necessary, there was no need for Liberty Mutual to file another Law Division action to re-designate that forum when a new dispute arose.
Medical payments to a PIP insured may continue to be made sporadically for a number of years after the initial claim. Requiring the PIP insurer to file a new Superior Court action each time it presents additional bills to the tortfeasor's insurer would frustrate the Legislature's intent that these claims not be pursued in the courts. See Fireman's Fund Ins. Co. v. N.J. Mfrs. Ins. Co., 341 N.J.Super. 528, 533 (App.Div.), certif. denied, 170 N.J. 211 (2001).
Having agreed on a forum for arbitration, First Risk's failure to participate in the forum it chose is not a basis to vacate a validly entered arbitration award. See Selective Ins. Co. v. Nat'l Cont'l Ins. Co., 385 N.J.Super. 62, 67 (App.Div.), certif. denied, 188 N.J. 218 (2006). Liberty Mutual was not required to file a new Law Division complaint to compel First Risk to arbitrate every new medical bill Liberty Mutual paid on an open claim that First Risk had already agreed to arbitrate.
FN1. N.J.S.A. 39:6A–9.1 provides, in pertinent part thata. An insurer ․ paying ․ [PIP] benefits ․ as a result of an accident occurring within this State, shall ․ have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain [PIP] ․ coverage ․b. In the case of an accident ․ involving an insured tortfeasor, the determination as to whether an insurer ․ is legally entitled to recover the amount of payments and the amount of recovery, ․ shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration. Any recovery by an insurer ․ pursuant to this subsection shall be subject to any claim against the insured tortfeasor's insurer by the injured party and shall be paid only after satisfaction of that claim, up to the limits of the insured tortfeasor's motor vehicle ․ liability insurance policy.. FN1. N.J.S.A. 39:6A–9.1 provides, in pertinent part thata. An insurer ․ paying ․ [PIP] benefits ․ as a result of an accident occurring within this State, shall ․ have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain [PIP] ․ coverage ․b. In the case of an accident ․ involving an insured tortfeasor, the determination as to whether an insurer ․ is legally entitled to recover the amount of payments and the amount of recovery, ․ shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration. Any recovery by an insurer ․ pursuant to this subsection shall be subject to any claim against the insured tortfeasor's insurer by the injured party and shall be paid only after satisfaction of that claim, up to the limits of the insured tortfeasor's motor vehicle ․ liability insurance policy.
FN2. We agree with the trial court that, under these circumstances, it was incumbent on First Risk to raise any objection it had to proceeding in the forum at the time Liberty Mutual filed its second arbitration claim.. FN2. We agree with the trial court that, under these circumstances, it was incumbent on First Risk to raise any objection it had to proceeding in the forum at the time Liberty Mutual filed its second arbitration claim.