Breach of Contract, Punitive Damages, and Bad Faith Claims Dismissed in a Win for Global Insurance Carrier and the Insurance Industry
Case Study

Breach of Contract, Punitive Damages, and Bad Faith Claims Dismissed in a Win for Global Insurance Carrier and the Insurance Industry

Unsatisfied with payments it received for medical treatment provided under New York workers’ compensation agreements, a New Jersey hospital attempted to re-litigate the claims in state court against our client, a global insurance carrier. The hospital brought breach of contract, bad faith, and punitive damages claims in the Superior Court of New Jersey, Law Division, and sought compensatory damages in excess of $380,000. Rather than answer the claims, Goldberg Segalla partners John M. McConnell and Paul S. Danner, and associate Matthew E. Selmasska, filed a motion to dismiss and succeeded in having all claims against our client dismissed.

In arguing the motion to dismiss, Goldberg Segalla contended that the Medical Provider Claim (MPC) disputes had already been adjudicated by the New Jersey Division of Workers’ Compensation and, because that division has exclusive jurisdiction for the claims, the Superior Court Law Division lacked subject matter jurisdiction to hear them. We also pointed to the fact that the MPCs had no contacts within New Jersey other than the address of the medical provider. Specifically, the underlying workers’ compensation claims involved New York workers who were employed in New York, injured in New York, treated in New York, and covered under workers’ compensation policies entered into in New York. Finally, we argued that the plaintiff was simply displeased with being paid under the New York fee schedule, which is considerably lower than the New Jersey fee schedule.

In opposition, the hospital argued that the MPCs were, in essence, breach of contract claims which belonged in the Superior Court Law Division, and that the claims should be evaluated according to principles of contract law.

In granting our client’s motion to dismiss, the judge found that the MPCs were to be adjudicated exclusively in the New Jersey Division of Workers’ Compensation, and questioned why the plaintiff chose not to appeal the prior orders of the Division rather than refashioning the MPCs as purported breaches of contract. The judge dismissed all claims—including bad faith, punitive damages, unjust enrichment, and breach of contract—against our client, with prejudice.

Had the plaintiff been permitted to proceed with these claims, it could have opened the door for numerous similar claims to be filed by other medical providers unsatisfied with the amounts received under the New York fee schedule. The decision is favorable not only for our client and its insureds, but for commercial insurance carriers operating throughout New Jersey.

MORE ABOUT GOLDBERG SEGALLA’S COMMERCIAL LITIGATION AND ARBITRATION GROUP:

When litigation becomes necessary, our seasoned litigators and trial attorneys utilize business-minded strategies designed to achieve our client’s desired outcome in the most effective and expeditious way possible.

Paul S. Danner is a partner in Goldberg Segalla’s Newark office, chair of the firm’s Construction Defect practice, and a member of the Global Insurance Services and Commercial Litigation and Arbitration groups.

John M. McConnell is a partner in Goldberg Segalla’s Princeton office, a member of the firm’s Commercial Litigation and Arbitration leadership, and a member of the Civil Litigation and Trial leadership.

Matthew E. Selmasska is an associate in Goldberg Segalla’s Philadelphia office, licensed in New Jersey and Pennsylvania, and is a member of the firm’s Commercial Litigation and Arbitration as well as Product Liability groups.