Selective Ins. Co. v. Hudson East Pain Management, 210 N.J. 597 (2012). Defendants provided medical treatment to patients who had personal injury protection (“PIP”) insurance through plaintiff (“Selective”). The patients assigned their right to insurance benefits to defendants so that defendants could get paid by Selective. Suspecting insurance fraud among the treating entities, Selective demanded that defendants provide documents to Selective regarding defendants’ ownership structure, billing practices, and other matters. When defendants declined, Selective sued for a declaratory judgment that defendants were obligated to provide the information or forfeit any right to PIP reimbursement. Selective relied on a provision of its policies with the insureds that required them to cooperate with Selective, a clause that Selective contended bound defendants as assignees. Selective also cited the PIP discovery statute, N.J.S.A. 39:6A-13(b).
Defendants moved to dismiss for failure to state a claim, but the Law Division denied that motion. On appeal, the Appellate Division reversed. The Supreme Court granted review and affirmed the dismissal. Judge Wefing wrote the opinion for a unanimous Court.
The parties disagreed about the appropriate standard of review. Selective contended that this was a discovery issue, and cited the principle that an appellate court reviews a trial level court’s decisions about discovery only for abuse of discretion. Defendants, on the other hand, argued that the issues were of law– the interpretation of the insurance policy’s cooperation provision and the PIP discovery statute– and therefore called for de novo review of the Law Division’s decision in favor of Selective. Judge Wefing agreed with defendants.
After summarizing some of the key principles applicable to interpreting insurance policies, Judge Wefng turned to the policies’ cooperation clause. That clause required insureds to cooperate with Selective “in the investigation, settlement or defense of any claim or suit.”
Though there were authorities holding both ways on the issue of whether an assignment of benefits necessarily also assigns duties (such as the insured’s duty to cooperate), the Court did not resolve or base its decision on that issue, in part because the particular language of the assignments themselves was not in the record. Rather, Judge Wefing observed that, apart from that issue, since an assignee can have no greater rights than his or her assignor, “it must follow that an assignee can have no greater duties than his assignor.” The insured’s duty under the cooperation clause related only to the “investigation, settlement or defense” of claims. It did not extend to providing information about “the ownership structure, billing methods, or referring practices of the medical providers from whom he or she sought treatment.” Since the insureds, the assignors, had no duty to provide that information, the assignees, the defendant providers, had no such duty either.
Nor did the PIP discovery statute, N.J.S.A. 39:6A-13(g), require defendants to provide the information that Selective demanded. The plain language of that statute limited the permissible subjects of discovery to the patient’s “history, condition, treatment, dates and costs of such treatment.” Judge Wefing said that the Court “may not, under the guise of statutory construction, expand [the statute’s] scope in the boundless fashion plaintiff seeks merely because plaintiff has formed the belief that defendants may not have complied with the requirements of other statutes or regulations.”