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NJ Law Review Update

Supreme Court Bars Injured Motorists From Claiming Benefits Beyond PIP Limits

A 3-2 decision in the New Jersey Supreme Court ruled that motorists who opt for a $15k insurance minimum in PIP benefits cannot recover medical expenses exceeding that amount.

When the justices examined the Legislature that amended the Automobile Insurance Cost Reduction Act, which allowed motorists to select smaller amounts of medical coverage, they found no evidence that this legislature intended to depart from the first-party PIP system. Ruling otherwise would mean returning to fault-based suits based solely on economic damages claims for medical expenses in excess of a chosen lesser level of PIP coverage, something the court feels law makers did not intend.

This ruling reversed an Appellate Division decision that allowed plaintiffs to recover medical expenses exceeding their $15k PIP coverage and up to a $250k ceiling.

The ruling stems from two consolidated auto injury cases. In the first case, plaintiff Joshua Haines was struck while driving his father’s car. Haines had no health insurance and was being pursued by creditors for $28k remaining after his $15k in PIP benefits was exhausted. The second case involves Tuwona Little whose car was rear-ended leaving him with $10k in medical bills after exhausting her $15k PIP coverage.

In both cases personal injury claims were filed. It was noted that the medical bills were not subjected to any expert review to decide if they were reasonable. A trial court ruled against the plaintiffs and prohibited evidence being entered in regards to their medical expenses exceeding the $15k limit. Both plaintiffs appealed and the Appellate Division reversed both rulings, stating that the additional expenses were not barred by PIP coverage statutes.

There was much assessment on the Legislature’s efforts to reduce overall costs while providing benefits to those who need them. Justice Jaynee LaVecchia opined that the statute “transgresses the overall legislative design of the No-Fault Law to reduce court congestion, lower the cost of automobile insurance, and most importantly, avoid fault-based suits in a no-fault system”. Further, LaVecchia wrote, “The extensive efforts to subject medical utilization and associated costs to careful review and control through AICRA’s extensive regulatory programs and, to a lesser degree, its fraud prevention methods, would be undercut by the ability of a third party to sue for medical expenses above their PIP policy coverage limit but below the presumptive amount of $250,000,”. Chief Justice Staurt Rabner and Justice Lee Solomon joined LaVecchia’s opinion while Justice Barry Albin and Judge Jose Fuentes issued a dissenting opinion.

Albin opined that the impact of the majority’s ruling would be “catastrophic” to low income accident victims who could not afford a higher coverage amount due to their financial circumstances. He stated that the message from the majority opinion is that the innocent insured must bear the financial burden caused by the irresponsible wrongdoer.

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