Key Takeaway
New Jersey arbitration statute requires application for Article 75 relief to compel arbitration in no-fault insurance disputes, as New York procedural law controls over substantive New Jersey law.
St. Chiropractic, P.C. v Geico Gen. Ins. Co., 2016 NY Slip Op 26271 (App. Term 2d Dept. 2016)
“Since the insurance policy at issue contains a provision that “he policy and any amendments and endorsements are to be interpreted pursuant to the laws of the state of New Jersey,” the substantive law of New Jersey applies (see Natural Therapy Acupuncture, P.C. v Geico Ins. Co., 50 Misc 3d 107 ; Bay Med., P.C. v GEICO Ins. Co., 41 Misc 3d 145, 2013 NY Slip Op 52084 ). However, New York’s procedural laws control. In Natural Therapy Acupuncture, P.C. and Bay Med., P.C., this court held that dispute resolution is not mandatory pursuant to NJSA § 39: 6A-5.1 (a), as implemented by NJAC § 11:3-5.1 (a) (see also New Jersey Mfrs. Ins. Co. v Bergen Ambulatory Surgery Ctr., 410 NJ Super 270, 272-273 ), which provides that a dispute regarding the recovery of no-fault benefits may be submitted to dispute resolution upon the initiative of either party to the dispute. Similarly, the insurance policy in question provides that a matter may be submitted to dispute resolution “on [*2]the initiative of any party to the dispute.” However, the existence in a contract of an option to arbitrate in the event of a dispute is not a ground to dismiss the complaint in a court action based on that dispute. Rather, where one party commences a court action, the adverse party may seek to exercise the arbitration clause by moving to compel arbitration. If that motion is granted, the court stays the action pending arbitration (see CPLR 7503 ).”
This is the 5th time GEICO has challenged Plaintiff’s on the arbitration clause contained in the Motor Vehicle Code of the State of New Jersey (NJSA title 39), and they continue to fail to move to dismiss through making an Article 75 challenge. The result never changes,
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