How Wise Are You Concerning the Admissibility of Medical Expenses Collectible Under PIP?

Key Points:

• Conflicting decisions from the New Jersey Law Division regarding what, if any, medical expenses are recoverable in a tort action when a plaintiff opts for reduced medical expense coverage, has created a potential pitfall for defense practitioners.
• Defense counsel must be prepared to argue that a plaintiff should not benefit from a decision to elect lower coverage for a lesser premium.

As most New Jersey practitioners are aware, N.J.S.A. 39:6A-12 provides, in pertinent part, that all evidence of medical expenses paid or collectible under a "standard automobile policy," including the amount of any deductibles, co-payments or exclusions, "including exclusions pursuant to subsection (d) of N.J.S.A. 39:6A-4.3," are inadmissible in a civil action for recovery of damages for bodily injury.  However, there are now two conflicting law division opinions interpreting this exclusionary language, Wise v. Marienski and Kim v. Kim, and defendants and their carriers should take notice of the rationale underlying these conflicting opinions.

It may be helpful to review certain amendments to the PIP statute in 1998 under the Automobile Insurance Cost Reduction Act (AICRA).  In 1998, the PIP statute was amended to permit an insured to purchase reduced PIP medical expenses under the standard amount of $250,000.  N.J.S.A. 39:6A-4.3 permitted an insured to reduce the "standard" medical expense amount to $150,000, $75,000, $50,000 or $15,000 per person per accident.  Additionally, the legislature extended the definition of "economic loss" to include any and all uncompensated loss of income or property, or other uncompensated expense, including, but not limited to, medical expenses.  However, N.J.S.A. 39:6A-4 still read that a standard automobile policy would automatically include PIP coverage of $250,000 for medical expenses.

Therefore, the question becomes what, if any, medical expenses are recoverable in a tort action when a plaintiff opts for reduced medical expense coverage in exchange for a reduction in his policy premium?  Wise v. Marienski, 425 N.J. Super. 110 (Law Div. 2011), in which Judge Grispin determined  that a plaintiff may enter into evidence and potentially recover medical expenses above his selected $15,000 medical expense limit, and the unpublished decision of Judge Toskos in Kim v. Kim, 2010 N.J. Super. Unpub. LEXIS 2302 (Law Div. May 24, 2010), in which the court determined that such sums were not recoverable, provide two different answers.

In the Kim matter, Judge Toskos ruled in favor of the defendant in barring the admissibility of any medical expenses over and above the $15,000 PIP medical coverage, which had voluntarily been chosen by the plaintiff.  Judge Toskos, using the rationale in the Supreme Court decision in Roig v. Kelsey, 135 N.J. 500 (1994), ruled that an insured who voluntarily chose an optional lower amount of coverage in exchange for a lower premium would not be allowed to avail themselves of potential additional recovery as N.J.S.A 39:6A-4 defined a standard automobile policy to have medical expense limits of $250,000. Judge Toskos determined that N.J.S.A 39:6A-12 permitted only "uncompensated" economic losses to be recoverable.  As the standard amount of medical expense was defined as $250,000, no sum under that amount could be considered uncompensated.  He determined that the sums between the opted coverage of $15,000 and the standard $250,000 were collectible and not admissible, and that the plaintiff should not benefit from his decision to elect lower coverage for a lesser premium.

However, Judge Grispin came to the opposite conclusion.  In Wise, the court determined that the clear and unequivocal language of the PIP statute required a different result.  Judge Grispin determined that the legislature specifically amended the PIP statute to allow for alternative options in regard to reimbursement of medical expenses.  In addition, he held that the legislature specifically included "medical expenses" as an economic loss and, thus, there was no ambiguity under the statute.  The insured, in selecting a smaller amount of coverage, yet a coverage specifically permitted under 39:6A-4.3, had met the definition of a "standard" automobile insurance policy.  Judge Grispin determined that the payment of medical expense benefits under 39:6A-4 can be "subject to any option elected by the policyholder pursuant to 39:6A-4.3" and that, thus, a policy with such lower limits still met the definition of a "standard" policy.

In Wise, the amounts paid or "collectible" under N.J.S.A. 39:6A-12 were not construed to include amounts in excess of the exact coverage actually purchased, i.e., $15,000.  The court held that the standard automobile policy as defined pursuant to 39:6-2(n) required automobile insurance to meet the required coverage under 39:6A-4 and, therefore, incorporated the defined options as set forth under 39:6A-4.3.  Thus, a policy providing PIP coverage for medical expenses of $15,000 comports with the requirement of Wise.  The court rejected the defendant's request to define a standard automobile insurance policy as providing for only $250,000 in medical expense.  According to Judge Grispin, reading the various portions of the statute in pari materia required the determination that the amount collectible under N.J.S.A. 39:6A-12 is equal to the actual limit of the insured's PIP policy, ($15,000). Therefore, the plaintiffs were only barred from admitting evidence of medical expenses under that amount.

From a defense standpoint, it should be argued that the Wise decision ignores certain policy considerations that were set forth under Kim and the Supreme Court decision in Roig.  The No Fault Act was adopted to facilitate an expedited resolution of minor claims and reduce trial backlogs.  In effect, under Wise, the courts are opening up the doors to a flurry of "fault" based claims which would be antithetical to the entire No Fault statutory scheme. Wise would allow an individual who has opted for lower coverage in exchange for lower premiums to obtain a windfall in direct contradiction to the overall purpose of various automobile insurance laws that limit certain claims based on trade-off: lower premiums and faster payments in exchange for surrender of a right to sue.

Both Wise and Kim are Law Division decisions.  Under R. 1:36, a trial court is not bound to follow the published decision of any other trial court.  However, a trial court opinion may have some persuasive value.  Unfortunately, the Kim decision is unpublished, and, therefore, under R. 1:36-3, it is not considered precedential or binding upon any court.  I am sure that the plaintiff's bar will be citing Wise as the "more" persuasive opinion on this issue.  It will take the Appellate Division and/or the legislature to finally resolve this issue.  It is strongly urged that defense counsel always cite to the Kim decision and make the appropriate arguments to preserve this issue for appellate review.

*George is a shareholder in our Roseland, New Jersey, office. He can be reached at 973.618.4141 or gphelfrich@mdwcg.com.

Defense Digest, Vol. 18, No. 3, September 2012