N.J.S.A. 2A:23A-18b Does Not Always Bar Further Appeal of Arbitration Awards After Proceedings in the Law Division

Open MRI & Imaging v. Mercury Ins. Group, 421 N.J. Super. 160 (App. Div. 2011).  N.J.S.A. 2A:23A-18b, p;art of the Alternative Procedures for Dispute Resolution Act (“APDRA”), provides that “[u]pon the granting of an order confirming, modifying or correcting an [APDRA] award, a judgment or decree shall be entered by the court in conformity therewith and be enforced as any other judgment or decree.  There shall be no further appeal or review of the judgment or decree.”  In Mt. Hope Dev. Assoc. v. Mt. Hope Waterpower Project, 154 N.J. 141 (1998), the Supreme Court made clear that there might be circumstances where public policy would permit further appeals of APDRA awards despite the seemingly absolute bar of the statutory language.  As Judge Payne concluded for the panel in this case, this was one of those instances.

The case involved a claim for personal injury protection (“PIP”) benefits by plaintiff, as subrogee of its insured, against the defendant insurer.  The insurer denied payment, claiming that its policy limits for PIP had been exhausted.  That assertion was mistaken, the result of a clerical error.  There was in fact some available benefit then remaining.  Later, however, the benefits did become exhausted.

Plaintiff then filed a demand for APDRA arbitration, seeking reformation of the policy in accordance with a prior unpublished Law Division decision.  The arbitrator concluded that although the facts were similar to those of the unpublished Law Division case, the arbitrator had no power to reform the policy.  Plaintiff appealed to the Law Division.  That court agreed that the arbitrator had no authority to reform the policy, but that it would be inequitable to penalize plaintiff for the insurer’s error.  Accordingly, the Law Division ordered reformation.  The insurer appealed.

Judge Payne noted that N.J.S.A. 2A:23A-18b might facially preclude the insurer’s appeal to the Appellate Division.  But she found a right of appeal to exist because the arbitrator never had the power to grant reformation, so that plaintiff’s invocation of arbitration was ineffective from the beginning.  “When the relief sought in arbitration (reformation) is beyond the power of the [arbitrator] to award, the Law Division action is in essence a de novo proceeding as to which a right of review exists in order for [the Appellate Division] to carry out [its] supervisory powers as traditionally exercised over Law Division orders.”  The statute barred only appeals of orders “confirming, modifying or correcting an award.”  Since the arbitrator “lacked authority to act, the Law Division judge’s order granting relief did not confirm, modify or correct any action by her.”

The panel proceeded to disapprove the prior unpublished Law Division ruling and the decision appealed from here that granted reformation.  One other aspect of the case was remanded for further consideration.

Judge Payne cited several other cases in which appeals to the Appellate Division of APDRA awards have been permitted despite N.J.S.A. 2A:23A-18b.  Counsel should be aware that the statute may not be as absolute as it seems, and should consider whether their cases too might be appealable if there is dissatisfaction with the result in the Law Division.