Kowaleski v. Allstate Ins. Co.

• Decision Date: 05 February 1990
• Citation: 238 N.J.Super. 210,569 A.2d 815
• Parties: Stacy A. KOWALESKI, Plaintiff-Respondent, v. ALLSTATE INSURANCE CO., Defendant-Appellant. Carmen FERNANDEZ, Plaintiff-Respondent, v. ALLSTATE INSURANCE CO., Defendant-Appellant. Michael A. MARRAZO, Plaintiff-Respondent, v. ALLSTATE INSURANCE CO., Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 210

238 N.J.Super. 210

569 A.2d 815

Stacy A. KOWALESKI, Plaintiff-Respondent, v. ALLSTATE INSURANCE CO., Defendant-Appellant.

Carmen FERNANDEZ, Plaintiff-Respondent, v. ALLSTATE INSURANCE CO., Defendant-Appellant.

Michael A. MARRAZO, Plaintiff-Respondent, v. ALLSTATE INSURANCE CO., Defendant-Appellant.

Superior Court of New Jersey,

Appellate Division.

Argued Dec. 20, 1989.

Decided Feb. 5, 1990.

Thomas F. McGuane, for defendant-appellant Allstate Ins. Co. (Carpenter, Bennett & Morrissey, attorneys, John E. Keale, of counsel, Thomas F. McGuane, Newark, on the brief).

John Paul Dizzia, for plaintiff-respondent Stacy A. Kowaleski (John Paul Dizzia, Cranford, on the brief).

Howard Duff, for plaintiff-respondent Carmen Fernandez (Nemergut & Duff, attorneys, Howard Duff, Woodbridge, on the brief).

Charles A. Zahn, for plaintiff-respondent Michael A. Marrazo (Shore & Zahn, attorneys, Charles A. Zahn, East Brunswick, on the brief).

Francis & Berry, attorneys, filed a brief amicus curiae on behalf of the New Jersey Automobile Full Ins. Underwriting Ass'n (Hugh P. Francis, of counsel, Joan Bannan Lorio, Morristown, on the brief).

Before Judges GAULKIN, DREIER and SCALERA.

The opinion of the court was delivered by

DREIER, J.A.D.

Defendant Allstate Insurance Co. has appealed from three adverse summary judgments entered by two Middlesex County Superior Court judges. We have been informed that there have been several additional decisions concerning similar issues in Middlesex County and elsewhere, all unreported, consistent with and opposed to the statutory interpretation advanced by the trial judges in the cases before us. As the three cases before us all raise similar issues, we have consolidated them for the purpose of this opinion.

In each of the cases before us the respective trial judge determined that an insurer's failure to comply with the notice requirements set forth in N.J.S.A. 39:6A-5(b) acts as a bar to the insurer's right to contest payment for medical bills submitted under the Personal Injury Protection (PIP) section of defendant's automobile insurance policy. See N.J.S.A. 39:6A-4a. In order to provide the factual basis for our interpretation of the statute, we will briefly describe the underlying facts in each of the three cases.

Kowaleski claim:

On November 2, 1984, the plaintiff, Stacy A. Kowaleski, was injured in an automobile accident. Allstate, as the servicing carrier for the New Jersey Automobile Full Insurance Underwriting Association (JUA), provided PIP coverage and paid many of plaintiff's medical bills. The problem commenced on January 21, 1986 when Ms. Kowaleski began to incur further and substantial medical expenses. On that date she consulted Ira M. Klemons, D.D.S. concerning pains she claimed to be experiencing in or near her face and neck and temporomandibular joint (TMJ). Dr. Klemons and his associate, Janet Crain, D.M.D. treated Ms. Kowaleski at the TMJ Trauma and Headache Center operated by them in Parlin, New Jersey, for TMJ problems from January 1986 to May 16, 1986. They also obtained diagnostic electromyography from Martin Feldman, M.D. Allstate asserts that discovery has revealed that they regularly referred patients to Dr. Feldman for electromyography, and that myelogram readings were rendered by Dr. Feldman or his corporation on one of four duplicated reports, all of which recommended additional treatment. Ms. Kowaleski submitted the bills to Allstate with a report indicating that her need for TMJ treatment was causally related to her November 2, 1984 car accident. Soon after receipt of most of those bills, Allstate by letter dated April 29, 1986 informed Ms. Kowaleski that she should schedule an "independent" medical exam with Robert Bonda, D.M.D. The letter informed her that Allstate's

doctor will examine you under the 'No Fault' statute. This examination is necessary in order for us to consider payment of benefits under No Fault.

Ms. Kowaleski, however, did not schedule the examination, and Allstate sent a second similar notice requesting her to call Dr. Bonda to arrange an appointment for an examination. This letter also was disregarded. By letter dated July 8, 1986 Allstate advised Ms. Kowaleski that it had suspended her benefits pending an examination with Dr. Bonda. Finally on July 31, 1986 she submitted to the examination.

Dr. Bonda concluded that none of plaintiff's TMJ treatment was for a condition causally related to the November 2, 1984 accident. By letter dated September 3, 1986 Allstate enclosed a copy of Dr. Bonda's report and informed Ms. Kowaleski that it "will not honor any bills for treatment given by Dr. Klemons, Crain or Feldman or for any costs dealing with TMJ care."

One month later Ms. Kowaleski filed this action to compel Allstate to pay any present unpaid and future medical bills incurred as a result of her accident, as well as counsel fees, costs, and interest. Allstate timely filed its answer denying the allegations of the complaint and plaintiff moved for summary judgment.

The trial judge determined that:

The statute says that a carrier has 30 days in which to deny the claim and give their reasons or they can ask for a forty-five day extension within that 30 days and in both instances they have to give the reasons for this and they did not, in fact, do it and they're absolutely bound by the statute which is 39:6A-5.

He therefore precluded Allstate from further contesting these bills. Judgment was thereafter entered in the sum of $1,925 plus interest, costs and attorneys' fees. After Allstate's unsuccessful motion to vacate the order for summary judgment and plaintiff's successful application to fix the amount of counsel fees and interest, judgment was entered in the amount of $3,752.01.

Fernandez claim:

On November 5, 1986, plaintiff Carmen Fernandez received injuries in an automobile accident. As in the Kowaleski case, Allstate as servicing carrier for the JUA paid Ms. Fernandez's medical bills from November 19, 1986 through January 29, 1987. On February 4, 1987 she allegedly incurred additional medical expenses for treatment by Dr. Klemons for TMJ problems. The treatment continued through June 6, 1987, and bills for the TMJ treatment at the TMJ Trauma and Headache Center and for diagnostic x-rays by a Dr. Ashendorf were first received by Allstate on March 11, 1987. Although plaintiff contends that she submitted to a PIP examination by an Allstate orthopedist who diagnosed cervical sprain and TMJ Syndrome (causally related to the accident), the record before us contains no reference to this examination.

By letter of April 6, 1987 Allstate informed Ms. Fernandez that an out-of-county examination had been arranged for her by Dr. Rauof Mansour on April 25, 1987. Plaintiff's attorney, however, objected to the location of the examination and contended that it must be given locally. ¹ Allstate nevertheless informed plaintiff that if she did not attend the examination, benefits would be suspended. Plaintiff filed her complaint on August 28, 1987, but on the return date of an order to show cause, agreed to submit to the examination by Dr. Mansour. The examination report stated that

there is no objective evidence presented to show that [Ms. Fernandez] required ... any dental services by any dentist.... [T]here is no disability and there is no anticipation of any as a result of the 11/5/86 [motor vehicle accident].

The Fernandez case was consolidated with six other matters involving treatment at the TMJ Trauma and Headache Center. The trial judge [not the judge who had decided the Kowaleski case] granted the consolidation motions and found that Allstate was absolutely responsible for the bills at issue because it had failed to deny responsibility for payment within the period fixed by N.J.S.A. 39:6A-5b. Based upon this decision, a third judge, after reviewing the affidavit supporting counsel fees, awarded $2,500 in attorneys' fees in addition to the judgment for the payment of bills plus interest. Marrazo claim:

Plaintiff MichaelMarrazo was injured on May 2, 1985 in an automobile accident, and, again, Allstate as servicing carrier for the JUA made PIP payments for hospital and doctors' bills. On July 11, 1985, however, Mr. Marrazo incurred additional medical bills continuing through October 1, 1985 for TMJ treatment at the same TMJ Trauma and Headache Center. The bills totalled $7,893. Prior to the first submission of bills, Allstate informed Mr. Marrazo that it had arranged for an examination by Marvin J. Ladov, D.D.S. The doctor's report was submitted nearly three months later, followed by a supplemental report five weeks after the first. Dr. Ladov concluded that he

would recommend no payment at the present time for all treatment rendered the patient following August 2, 1985.... It is my opinion that this treatment was excessive and probably was un-necessary [sic ].

Based upon this letter, Allstate paid Dr. Klemons $4,511 representing the full amount of all bills submitted through August 2, 1985 and denied the balance of plaintiff's claim. Mr. Marrazo filed his complaint to compel payment of the balance of the TMJ bills, and the matter was consolidated with the other cases noted in the discussion of the Fernandez matter. Summary judgment was entered, including counsel fees of $1,407.25.

Allstate filed a timely appeal from all three of these determinations.

N.J.S.A. 39:6A-5b and c provide in part:

b. Personal injury protection coverage benefits shall be overdue if not paid within 30 days after the insurer is furnished written notice of the fact of a covered loss and of the amount of same ...; provided, however, that any payment shall not be deemed overdue where within 30 days of receipt of notice of the claim, the insurer notifies the claimant ... in writing of the denial of the claim or the need for additional time, not to exceed 45 days, to investigate the claim, and states the reasons therefor....

c. All overdue...