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Legal Updates for Coverage and Bad Faith

March 28, 2019
Presented by the Insurance Coverage/ Bad Faith Litigation Group

Edited by Allison L. Krupp, Esq.

New Jersey Supreme Court Holds that Evidence of an Insured’s Uncompensated Medical Expenses Falling Between the Insured’s Selected PIP Coverage and the Statutory Maximum PIP Coverage of $250,000 Is Inadmissible.

By Patricia McDonagh, Esq.

In the recent decision rendered by the New Jersey Supreme Court in Joshua Haines v. Jacob W. Taft, the court held that the plaintiffs were not permitted to recover medical expenses in excess of their chosen Personal Injury Protection (PIP) limits in a standard auto policy from a tortfeasor. The decision was issued in response to two automobile negligence actions, Haines v. Taft and Little v. Nishimura, which were consolidated on appeal before the New Jersey Appellate Division. In both actions, each plaintiff was insured under a standard auto policy with insurance that provided for $15,000 in PIP coverage instead of the default amount of $250,000. Neither plaintiff was able to sustain a claim for bodily injury due to each policy’s limitation-on-lawsuit option. Each plaintiff was suing for outstanding medical expenses in excess of their elected PIP coverage.

The trial court barred the plaintiffs from introducing into evidence their medical bills, which exceeded their selected PIP policy limits of $15,000. The Appellate Division consolidated the cases on appeal and reversed both trial court orders. In reversing the trial court decisions, the Appellate Division held that the provision in the Automobile Insurance Cost Reduction Act (AICRA), found at N.J.S.A. 39:6A-12, which made “evidence of the amount collectible or paid under a provision for PIP benefits in a standard policy” inadmissible, did not refer solely to policy limits of $250,000, but instead referred to those PIP limits covering the particular insured, making only those medical expenses up to and including the insured’s chosen PIP limits inadmissible.

The court granted the defendants’ petitions for certification. In a decision rendered on March 26, 2019, the court reversed the Appellate Division’s ruling, holding that evidence of medical expenses falling between the insured’s chosen PIP policy limit and the $250,000 PIP statutory ceiling is inadmissible. In reaching this decision, the court noted that an interpretation of Section 12 of AICRA did not lead to the conclusion that the legislature had expressed a clear intent to “introduce fault-based suits into the no-fault medical reimbursement scheme.” The court stated:

Here, interpreting Section 12 to allow the admission of evidence of medical expenses falling between the insured’s PIP policy limit and the $250,000 PIP statutory ceiling transgresses the overall legislative design of the No-Fault Law to “reduc[e] court congestion[,]…lower[ ] the cost of automobile insurance[,]” and most importantly, avoid fault-based suits in a no-fault system, as we previously acknowledged in Roig, 135 N.J. at 516.

In support of its decision, the court further stated that “the legislature has consistently determined that medical costs are a special breed [of damages]” and “the benefits of creating limited but automatic medical reimbursement for injured motor-vehicle-accident victims outweigh the ability of a minority of injured parties to recover larger amounts in tort.”

While the court’s ruling is premised upon its interpretation of Section 12 of AICRA, the court invited the legislature, if it so chooses, to make its intention of introducing fault-based suits into the medical reimbursement scheme more explicit.

Justice Albin filed a dissenting opinion, wherein he expressed concern that the court’s opinion will have a catastrophic impact on the right of low-income automobile accident victims to recover their medical costs from the tortfeasors who caused their injuries and stressed that the legislature can make clear that the court’s decision is not what it intended or envisioned.



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Allison L. Krupp
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