NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5591-06T25591-06T2

ORTHOPAEDIC ASSOCIATES a/s/o

SAMUEL MDIGOS-MULLI,

Plaintiff-Appellant,

v.

THE DEPARTMENT OF BANKING AND

INSURANCE, FIRST MANAGED CARE

OPTIONS, INC., NATIONAL

ARBITRATION ASSOCIATION,

PROGRESSIVE INSURANCE COMPANY,

JEFFREY LAKIN, M.D.,

Defendants-Respondents.

_____________________________________

Argued September 10, 2008 - Decided:

Before Judges Stern, Payne and Waugh.

On appeal from the Superior Court, Law Division, Bergen County, L-9017-06.

Joseph A. Massood argued the cause for appellant (Mr. Massood, attorney; Jamie S. Aretsky, on the brief).

Justin Walker argued the cause for respondent, Jeffrey Lakin (Piekarsky & Associates, L.L.C., attorneys; Scott B. Piekarsky, on the brief).

Paul G. Witko, Deputy Attorney General, argued the cause for respondent Department of Banking and Insurance (Anne Milgram, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Emerald Erickson Kuepper, Deputy Attorney General, on the brief).

Stephen V. McHugh argued the cause for respondent Progressive Insurance Company (Kent & McBride, P.C., attorneys; Mr. McHugh, on the brief).

Paul Alongi argued the cause for respondent First Managed Care Options (Alongi & Associates, L.L.C., attorneys; Mr. Alongi, on the brief).

The opinion of the court was delivered by

WAUGH, J.S.C. (temporarily assigned).

This appeal requires us to revisit that portion of our decision in New Jersey Coalition of Health Care Professionals, Inc. v. New Jersey Department of Banking and Insurance, Division of Insurance, 323 N.J. Super. 207 (App. Div.), certif. denied, 162 N.J. 485 (1999) (N.J. Coalition), that upheld the validity of personal injury protection (PIP) dispute resolution procedures, N.J.A.C. 11:3-5.1 to -5.12, governing medical review organizations (MROs) and the health care professionals (MRO physicians) utilized by them. The regulations at issue were adopted by the New Jersey Department of Banking and Insurance, Division of Insurance (DOBI), pursuant to the Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-1 to -35.

Plaintiff Orthopaedic Associates, as subrogee of its patient Samuel Mdigos-Mulli, contends that the MRO process, as established by the regulations and overseen by DOBI, is so inherently flawed that it violates the provisions of N.J.S.A. 39:6A-5.2, which require DOBI, in consultation with the Commissioner of Health and Senior Services, to establish standards of performance for MROs that include procedures for ensuring an "impartial review of the medical records of the injured person." More specifically, Orthopaedic Associates contends that, because MROs regularly utilize MRO physicians who also routinely perform evaluative services for insurance carriers, the required impartiality of the process is irredeemably compromised. Because we have concluded that the existing procedures, as interpreted and upheld in N.J. Coalition, supra, 323 N.J. Super. at 264-69, provide a mechanism to contest the impartiality of the MRO physician, we affirm the trial court's dismissal of this action.

I

This case has its origins in an automobile accident that took place on April 2, 2001. Mdigos-Mulli sustained an injury as a result of the accident. He sought and received PIP benefits from his automobile insurer at the time of the accident, defendant Progressive Insurance Company (Progressive).

Following the April 2001 accident, Mdigos-Mulli received conservative treatment for injuries to his right and left shoulders and to his cervical and lumbar spine. In May 2001, he underwent an MRI of his right shoulder, which the radiologist interpreted as normal. Bryan Massoud, M.D., a board certified orthopedic surgeon affiliated with Orthopaedic Associates and one of Mdigos-Mulli's treating physicians, reviewed the films and diagnosed hypertrophic changes in the acromioclavicular (AC) joint of the right shoulder.

Mdigos-Mulli was involved in a second automobile accident in November 2002. He alleged, however, that the pain in his right shoulder had not subsided prior to the November 2002 accident. Shortly after the second accident, on November 12, 2002, Mdigos-Mulli had a second MRI of the right shoulder. The radiologist interpreted the second MRI as revealing right- shoulder hypertrophic changes in the AC joint, which was essentially the diagnosis reached by Massoud based upon the first MRI.

In December 2003, Massoud performed arthroscopic right- shoulder surgery on Mdigos-Mulli at the Saddle Brook Surgicenter. In January 2004, Orthopaedic Associates submitted a request for payment for its services rendered in connection with the surgery to Progressive, the insurer responsible for PIP benefits arising out of the April 2001 accident. Progressive refused payment, arguing that the right-shoulder problem was not a result of the April 2001 accident. It relied on a defense examination performed in September 2001, prior to the second accident, which concluded that no further treatment was required, and a peer review examination, conducted in February 2004, which concluded that the surgery was not medically necessary and, in any event, was not related to the first accident.

On April 29, 2004, Orthopaedic Associates filed a demand for arbitration with defendant National Arbitration Forum Association (NAF), which is the dispute resolution organization (DRO) chosen by DOBI pursuant to N.J.S.A. 39:6A-5.1(b). In June 2004, Progressive entered an appearance and the matter was scheduled for arbitration in September 2004. On August 17, 2004, defense counsel requested that the matter be submitted for an MRO review and that the arbitration be adjourned pending receipt of the MRO physician's report. Orthopaedic Associates objected to the request for an MRO review as untimely, but NAF granted the request for an adjournment and directed that there be an MRO review.

In December 2004, NAF provided Orthopaedic Associates with a copy of the MRO report and identified the MRO physician as defendant Jeffrey Lakin, M.D. Lakin concluded that Mdigos-Mulli's right-shoulder injury was not related to the first accident, but "most likely secondary to some event after, the [first accident]," noting that there were two subsequent accidents.

In letters to both NAF and DOBI, Orthopaedic Associates objected to any consideration of Lakin's MRO report on the grounds that Lakin had a conflict of interest arising from the fact that he performed independent medical examinations and peer reviews for insurance companies in PIP and other matters. DOBI advised NAF to contact defendant First Managed Care Options (First MCO), the MRO organization assigned to provide the MRO review, about the request for Lakin's disqualification. In the interim, the arbitration was again adjourned.

Orthopaedic Associates contacted DOBI and NAF in June 2005, stating that it had not received any response to its application to disqualify Lakin. In July 2005, NAF advised Orthopaedic Associates that DOBI had instructed it that a decision on whether to disqualify Lakin would be made by First MCO. In November 2005, Orthopaedic Associates wrote to NAF, stating that it had not received any decision from DOBI or First MCO regarding its application to disqualify Lakin. The arbitration was again adjourned and rescheduled for May 2006. In December 2005, NAF advised Orthopaedic Associates to submit its application to disqualify Lakin directly to First MCO. Orthopaedic Associates complied.

On December 16, 2005, NAF informed Orthopaedic Associates that First MCO had reviewed Orthopaedic Associates' application to disqualify Lakin and determined that there was no conflict of interest and that Lakin would not be disqualified. First MCO apparently never issued an explanation for its denial, at least none was received by Orthopaedic Associates and there is no such document in the record.

The arbitration was finally held on May 15, 2006. The arbitration award, which was in favor of Progressive, was entered on September 8, 2006. The dispute resolution professional (DRP) determined that "the claimant failed to successfully rebut the presumption of correctness afforded to the MRO physician." Although permitted to do so by N.J.S.A. 2A:23A-13, Orthopaedic Associates did not seek review in the Law Division of either the DRP's decision or the determination that Lakin had no conflict of interest because of his work for automobile insurers in other contexts.

Instead of seeking judicial review pursuant to N.J.S.A. 2A:23A-13, Orthopaedic Associates sought to attack the DRP's decision collaterally through the present action. On December 4, 2006, Orthopaedic Associates filed a complaint against DOBI, First MCO, NAF, Progressive, and Lakin. The complaint sought the following relief:

A. Vacating the arbitration award entered by [the] DRP [].

B. Compelling Progressive to pay Orthopaedic Associates on behalf of their insured, Samuel Mdigos-Mulli the sum of $10,572.45 together with interest, costs, and attorney's fees.

C. Barring Dr. Jeffrey Lakin [] from performing MROs as he is unqualified and conflicted pursuant to N.J.S.A. 39:6A-5.

D. Staying MRO reviews until the DOBI [] implements fair and impartial procedures for MRO reviews as required by N.J.S.A. 39:6A-5.2.

E. Barring First MCO [] from performing MROs pursuant to N.J.S.A. 39:6A-5 as First MCO [] does not meet the minimum requirements, is not currently certified by the DOBI [], the MRO process is controlled by the insurance industry, not impartial, and deprives patients of necessary medical care and payment of their medical bills.

F. Barring MRO review with the NAF for the reasons aforementioned.

G. Punitive damages.

H. For such other relief as the Court deems equitable and just.

Although the first two items of relief sought in the complaint and Orthopaedics Associates' brief on appeal clearly seek to overturn the DRP's decision and compel payment by Progressive for Mdigos-Mulli's surgery, Orthopaedic Associates has taken the position in its arguments before the Law Division and before us that it is not really seeking to circumvent the DRP's decision, but is merely seeking to challenge what it argues is an unfair procedure that is violative of the fairness requirements of AICRA.

On February 21, 2007, Lakin filed a motion to dismiss the complaint pursuant to Rule 4:6-2 in lieu of filing an answer. On March 30, 2007, the motion judge granted Lakin's motion and, sua sponte, dismissed the entire complaint. Orthopaedic Associates filed a motion for reconsideration and other relief on April 20, 2007. Reconsideration was denied and all remaining cross-claims were dismissed by order dated May 16, 2007. This appeal followed.

II

Our opinion in N.J. Coalition, supra, contains a comprehensive history of New Jersey's no-fault legislation up to and including the enactment of AICRA. 323 N.J. Super. at 215-23. See also Coalition for Quality Health Care v. N.J. Dep't of Banking & Ins., 348 N.J. Super. 272, 282-85 (App. Div.) certif. denied, 174 N.J. 194 (2002). AICRA was "comprehensive legislation designed to preserve the no-fault system, while at the same time reducing unnecessary costs which drive premiums higher." N.J.S.A. 39:6A-1.1. As set forth in the Legislature's findings and declarations of purpose, one of the concerns that led to the enactment of AICRA was that "[t]he [then] present arbitration system ha[d] not sufficiently addressed the