MYRNA TAGAYUN ROBERT MANDELL v. UNITED HEALTHCARE OF NEW JERSEY INC (2013)

Plaintiffs appeal from an order of the Special Civil Part, Small Claims Section, dismissing their complaint on a book account without prejudice on the ground that the contract between the parties requires them to “submit the dispute to binding arbitration․”  Plaintiffs argue that the arbitration clause in the contract should not be enforced because the contract is “one of adhesion” and does not explicitly preclude resort to the courts;  the Health Care Information Networks and Technologies (HINT) Act, N.J.S.A. 17B:26–9.1(d), and the Prompt Payment Act, N.J.S.A. 17B:30–26 to –34, preempt the arbitration clause by providing a right to individual physicians to file a suit against a carrier;  and defendant failed to invoke the arbitration clause.

Plaintiff Myrna B. Tagayun, M.D., is a neurologist whose practice is run by her “business partner”, plaintiff Robert S. Mandell.   Tagayun entered into a contract with defendant to provide medical services to members of defendant's health plan.   Defendant agreed to pay Tagayun in accordance with a specified fee schedule for services rendered to health plan members provided that, among other things, the fee claims were properly documented and submitted in a timely fashion.

The contract provides for various internal “dispute procedures” to be followed by the parties, and thereafter states, in pertinent part:

We will resolve all disputes between us by following the dispute procedures set out in our Administrative Guide.   If either of us wishes to pursue the dispute beyond those procedures, they will submit the dispute to binding arbitration in accordance with the Commercial Dispute Procedures of the American Arbitration Association (see http://www.adr.org) within one year.

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The arbitrator will not vary the terms of this agreement and will be bound by governing law.   We both acknowledge that this agreement involves interstate commerce, and is governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq.   The arbitrator will not have the authority to award punitive or exemplary damages against either of us, except in connection with a statutory claim that explicitly provides for such relief.   Arbitration will be conducted in Essex County, NJ.

On April 4 and 23, 2011, Tagayun performed medical services for a member of defendant's health plan and on July 26, 2011, submitted to defendant fee claims of $850 for each day of service, for a total of $1700.   Defendant acknowledged receipt of the claims, but requested copies of the patient's treatment records.   Mandell thereafter provided documents to defendant.

When payment was not made by defendant, plaintiffs filed a Small Claims complaint against defendant on October 3, 2011, seeking payment of $1700 plus costs of suit.   The matter was called in for trial on November 16, 2011.   Plaintiffs briefly testified, as did a representative of defendant, who asserted that the fee claim was submitted late.   Plaintiffs disputed that their fee claim was submitted late.   The trial judge reviewed the contract between the parties and found that the contract required disputes to be resolved by binding arbitration and, therefore, dismissed the complaint without prejudice and required the parties to arbitrate their dispute.   This appeal followed.

We begin by stating some general principles that guide our analysis.  “An arbitration agreement is a contract and is subject, in general, to the legal rules governing the construction of contracts.”  Fawzy v. Fawzy, 199 N.J. 456, 469 (2009) (citing McKeeby v. Arthur, 7 N.J. 174, 181 (1951)).   When the issue of contract interpretation is before an appellate court, it is “subject to de novo review by [that] court.”  Kieffer v. Best Buy, 205 N.J. 213, 222–23 (2011).   Thus, the appellate court offers “no special deference to the trial court's interpretation and look[s] at the contract with fresh eyes.”  Id. at 223 (citing Manalapan Realty, L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995)).

While New Jersey traditionally views arbitration as a favored remedy, Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124, 131 (2001), the availability of compulsory arbitration is ultimately a contract question, which is “dependent solely on the parties' agreement” with respect to the arbitration of claims under the contract.  Cohen v. Allstate Ins. Co., 231 N.J.Super. 97, 101 (App.Div.), certif. denied, 117 N.J. 87 (1989).   If a court finds no agreement to arbitrate exists, it matters little how well favored it is as a remedy.   See AT & T Techs. v. Communs.   Workers of Am., 475 U.S. 643, 649, 106 S.Ct. 1415, 1418, 89 L. Ed.2d 648, 656 (1986) (whether the parties agreed to arbitrate is a question to be answered by the court).

Our courts have recognized the strong Federal and State policies favoring arbitration and have upheld arbitration clauses even if they are included in contracts of adhesion.   See Martindale v. Sandvik, Inc., 173 N.J. 76, 85–92 (2002).   In this case, the arbitration clause at issue also serves a specific State policy of encouraging the use of arbitration to resolve billing disputes between doctors and health insurers.   See N.J.A.C. 11:22–1.8(a) and (b) (requiring health insurers to provide alternate dispute resolution mechanisms to resolve disputes with health care providers relating to payment of claims).

With these principles in mind, we determine that the contract between the parties requires binding arbitration of their disputes.   The contract explicitly provides that an aggrieved party “will submit the dispute to binding arbitration[.]”  Moreover, nothing in the HINT Act or the Prompt Payment Act suggests any intent to preclude resort to arbitration.   Indeed, the opposite is true.   As noted, N.J.A.C. 11:22–1.8(b) requires health insurers to offer an external alternate dispute resolution mechanism to participating health care providers, which the parties may agree to be binding.

The remainder of plaintiffs' arguments on appeal are without sufficient merit to warrant discussion in a written opinion.   R. 2:11–3(e)(1)(E).

Affirmed.

PER CURIAM