Can Your Arbitration Forum Impact Your Case Outcome?

By Daria B. Janka, Esquire

On March 14, 2018 , the New Jersey Superior Court, Appellate Division, decided the matter of State Farm Guaranty Insurance Company v. Hereford Insurance Company et. al., docket No. A-3749-16T3. There, the Court interpreted the language of the New Jersey Arbitration Act, N.J.S.A. 2A:23B-3, and directed that where there is a dispute between two insurance companies, the Act does not entitle the companies to an in-person hearing within their arbitration, absent a contract right, or a showing of a specialized need.

In general, one insurance company may seek reimbursement from another for personal injury protection benefits (PIP benefits). While the insurance company seeking reimbursement can elect to sue, New Jersey’s public policy strongly favors resolution via arbitration. N.J.S.A. 39:6A-24. See also Badiali v. N.J. Mfrs. Ins. Grp., 220 N.J. 544, 556 (2015).

In the new State Farm decision, the Plaintiff filed and won a motion to compel arbitration. Different insurance companies may not be members of the same arbitration forum, and procedural rules are not uniform across the alternative dispute resolution industry. In particular the requirement that the hearing be held in-person is not a universal guarantee. In State Farm, the forum in which both parties were ordered to appear did not require an in-person hearing and the manner of the hearing was left to the discretion of the arbitrator who allowed a telephonic presentation of proofs.

The Appellate Court found that a telephonic hearing [where one has the opportunity to present evidence, cross-examine witnesses and argue] satisfies due process, citing Lopez v. Patel, 407 N.J. Super. 79, 88-89 (App. Div. 2009), and the Arbitration Act, and the New Jersey Automobile Insurance Cost Reduction Act. N.J.S.A. 39:6A-1 to- 35.(The Insurance Act does not govern PIP benefit reimbursement disputes but it is complimentary to the Arbitration Act).

While telephonic appearance may satisfy due process, there is persuasion value to an in-person presentation of your case. Controlling the manner of presentation is an important part of trial advocacy which can ultimately impact the outcome.

Date Published: March 23, 2018


Written by: Cooper Levenson, P.A.