NEW JERSEY NO FAULT PIP POLICY COVERAGE: LIMIT OR NO LIMIT?
As a result of a March 26, 2019 decision by the New Jersey Supreme Court, injured motorists are now barred from making claims against their tortfeasors for any medical expenses beyond their chosen, PIP policy coverage limit.[1] In a narrow, 3-2 decision, the Supreme Court Reversed the Appellate Division’s Opinion in the consolidated appeal of Haines v. Taft and Little v. Nishimura, which permitted plaintiffs to introduce evidence of medical expenses in excess of their chosen personal injury protection (PIP) coverage, as economic damages against their tortfeasors.[2]
The relevant facts in the two consolidated cases, Haines v. Taft and Little v. Nishimura, are simple and straight forward: each plaintiff was injured in a car accident; each was insured under a standard policy with the minimum allowable PIP coverage of $15,000, rather than the default amount of $250,000; neither plaintiff was able to sustain a claim for bodily injury (noneconomic loss) because of the limitation-on-lawsuit option in their policies and neither could exceed the necessary threshold[3]; each was suing to recover their medical expenses in excess of their elected PIP coverage of $28,000 and $10,000, respectively.
The Supreme Court opinion focused on the entire legislative scheme behind New Jersey’s carefully constructed and long-standing, no fault law, the Automobile Insurance Cost Reduction Act (AICRA) and its amendments[4] to determine the legislative intent behind the section that addresses the inadmissibility of evidence of losses collectible under PIP in civil cases for claims of bodily injury, Section 12.[5] The Court based its decision to bar plaintiffs from suing tortfeasors for medical expenses beyond their chosen, PIP policy coverage limit on the absence of evidence that the Legislature had a clear intent to deviate from the no-fault, first-party PIP system of regulated coverage of contained medical expenses that is the basis of the no fault law. Notwithstanding AICRA’s 1998 amended definition of “economic loss” to include uncompensated medical expenses,[6] the Court found sufficient ambiguity in the statutory language to identify more than one plausible construction. A strong basis for the Court’s holding appears to be the emphasis it found in the historic change in priorities of the New Jersey no-fault law from full coverage to cost containment. The Court even quoted the goals set forth in the 1998 AICRA Amendments, in its opinion, “to preserve the no-fault system, while at the same time reducing unnecessary costs, which drive premiums higher.”[7]
However, the Haines decision may be as short lived as snow on a hot summer’s day. The Supreme Court’s Dissent, by Justice Albin, invited the New Jersey Legislature to clarify its intent: “The Legislature can make clear that today’s decision is not what it meant or ever envisioned.”[8] Almost immediately, the Legislature took the Court’s invitation as its marching orders and in April, the Senate introduced Bill S-2432,[9] now called the Haines Bill, which is consistent with the Appellate Division’s decision[10] and the Supreme Court’s Dissent, rather than with its Holding. S-2432 directly contradicts the Supreme Court's holding in Haines and permits an injured party in an automobile accident to recover uncompensated medical expenses not covered by the PIP limits applicable to the injured party and sustained by the injured party, as part of the recovery of uncompensated economic loss. Specifically, it specifically states that economic loss, as defined in AICRA, may include uncompensated medical expenses, notwithstanding the longstanding interpretation of that definition to the contrary.
In May 2019, the Haines Bill passed both houses and is currently awaiting the action of Governor Murphy, who has not yet signed it, allegedly due to the widely held opinion that it is too broad. S-2432 provides that all medical expenses that exceed, or are unpaid or uncovered by any injured party's medical expense benefits personal injury protection limits, regardless of any health insurance coverage, to be claimed by any injured party as against all liable parties, including any self-funded health care plans that assert valid liens are recoverable, without further specifics.
In an attempt to revise the Haines Bill, in June 2019, the Legislature introduced and passed a companion, “clean up” Bill, S-3963.[11] The companion to the Haines Bill permits a party injured in an automobile accident to recover, as part of the recovery of uncompensated economic loss, all unreimbursed medical expenses not covered by the personal inquiry protection (PIP) limits applicable to the injured party and sustained by the injured party. Beginning August 1, 2019, the Bill subjects unreimbursed medical expenses in excess of the PIP limits to the automobile medical fee schedules and prohibits balance billing of any medical expenses claimed as damages and paid pursuant to the medical fee schedule. It is the intention of the Legislature that this Bill entirely supplant the provisions of Senate Bill No. 2432 upon the bill’s effective date for accidents occurring on or after August 1, 2019.
It is believed that Governor Murphy will sign these Bills, as written, to overturn the Supreme Court’s Haines decision, and to make the law consistent with the Appellate Court decision that Haines reversed. Be advised that the Haines Bill will apply to causes of action “pending on” or “filed on or after” the date it takes effect (180 days after the Governor signs it), and the companion Bill will apply to automobile accidents occurring on or after August 1, 2019. Until such time these Bills take effect, trial court judges are obligated to follow the Haines decision precedent, to the extent, if at all, that the facts before them, fall under the Supreme Court’s narrow Haines decision.
[1] Haines v. Taft, 237 N.J. 271 (2019)
[2] Haines v. Taft, 450 N.J. Super. 295 (App. Div. 2017).
[3] N.J.S.A. § 39:6A-8(a).
[4] N.J.S.A. § 39:6A-1, et seq.
[5] N.J.S.A. § 39:6A-12.
[6] N.J.S.A. § 39:6A-2(k).
[7] N.J.S.A. § 39:6A-1.1(b) (1998).
[8] Haines v. Taft, 237 N.J. at 297.
[9] https://www.njleg.state.nj.us/2018/Bills/S2500/2432_R1.HTM
[10] See fn 2
[11] https://www.njleg.state.nj.us/2018/Bills/S4000/3963_I1.HTM