NOVEMBER 2012 BAD FAITH CASES: COURT FINDS NO BAD FAITH IN ASSIGNEES ASSERTION THAT IT WAS NOT PAID PIP CLAIM WHERE LIMITS WERE EXHAUSTED DURING PENDENCY OF ARBITRATION WHERE BAD FAITH LAW INAPPLICABLE TO AWARD CONSEQUENTIAL DAMAGES IN PIP CONTEXT, AND IN ANY EVENT ARBITRATOR’S AWARD THAT WAS FRACTION OF SUM SOUGHT SHOWED CLAIM WAS FAIRLY DEBATABLE (New Jersey Appellate Division)

In Endo Surgical Ctr. v. Allstate N.J. Ins. Co., the injured insured assigned its PIP claims to her chiropractors. They brought arbitration claims against the carrier, which disputed whether the treatments were necessary and the sums sought should be paid. During the pendency of the arbitration, the PIP benefits were exhausted. The chiropractors prevailed at the arbitration in terms of obtaining some award of their fees for treatment, but only a fraction of what they sought, along with attorneys’ fees and forum costs. The carrier refused to pay the award for the treatment fees since the PIP benefits were exhausted.
The court found nothing improper as to the order in which the carrier paid PIP benefits. As to bad faith allegations in the purported delay of payments by going to arbitration, the court first observed that the PIP remedy is statutory and exclusive and the insured could not seek consequential damages under a bad faith theory.
Moreover, there was no bad faith claim made out in any event. The chiropractors’ claims were clearly fairly debatable since they were only awarded a fraction of what they sought.
Date of Decision: Dec. 18, 2009
Endo Surgical Ctr. v. Allstate N.J. Ins. Co., DOCKET NO. A-2146-08T3, 2009 N.J. Super. Unpub. LEXIS 3072 (App. Div. Dec. 18, 2009) (Fuentes and Gilroy, JJ.)