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The No Fault Act still doesn’t work. The act has not reduced the cost of automobile insurance, has not made insurance more readily available, has not resulted in the prompt payment of first-party medical expense benefit claims and has not streamlined judicial procedures for the resolution of third-party liability claims. Is anyone shocked? In the 2002 Automobile Injury supplement to the New Jersey Law Journal[ 167 N.J.L.J. 285, Jan. 28, 2002], I wrote that “with the election of James McGreevey, the public can expect significant changes in automobile insurance. Perhaps the repeal of No Fault. Perhaps a change in the PIP regulations.” After one year in office, the governor still has not produced a plan to repeal or reform the No Fault Act. Again: Is anyone shocked? In 1988, the Legislature amended the No Fault Act to incorporate a verbal threshold � a requirement in words of the type of significant or permanent injury that an accident victim would have to sustain to be permitted to recover damages for pain and suffering. However, the statute did not provide standards or procedures for determining if a plaintiff satisfied the threshold. As a result, in Oswin v. Shaw, 129 N.J. 290 (1992), the New Jersey Supreme Court was required to interpret the 1988 verbal threshold. In 1998, the Legislature adopted the Automobile Insurance Cost Reduction Act (AICRA) which “completely eliminated” the old verbal threshold and “substituted” a new verbal threshold (a “limitation on lawsuit option”), which includes a precise definition of permanent injury (the loss of body function) and a precise procedure for satisfying the threshold (the submission of a physician’s certification). Nonetheless, in James v. Torres, the Court has been asked again to interpret the No Fault Act � that is, whether Oswinapplies to the 1998 verbal threshold. Once again: Is anyone shocked? Since the adoption of the 1988 verbal threshold, there have been 33 published cases that have dealt with soft-tissue injuries. (Pre-AICRA. See Index to Verbal Threshold Opinions.) In Siriotis, Brown, Dabal, Foti, Cineas, Arencibia, Costa, Owens, Moreno, Cavanaugh, McClelland, Jefferson, Nataleand Velucci,the court found that the plaintiff had produced sufficient evidence to satisfy the verbal threshold or to create a material issue of fact for the jury. In these cases, the plaintiffs were able to establish an objective manifestation of injury and a serious impact on their lives. In Oswin, Favell, Granowitz, Phillips, Amaechi, Watkins, Polk, Weiss, Guy, Chalef, Shorter, Duffy, Sherry, Cureton, Loftus-Smith, Whitaker, Comitale, Carmichaeland Montemayor, the court found that the plaintiff did not satisfy the verbal threshold because there was not sufficient objective evidence of injury nor proof of a serious impact. Since the adoption of AICRA, there have been four cases that have interpreted the new, 1998 verbal threshold (post-AICRA). These cases are reviewed in this supplement � Jacquesdealing with the objective test (objective clinical evidence), and Compere, Rogozinskiand Jamesdealing with the subjective test (serious impact). In addition, this supplement will review one case dealing with the applicability of the threshold to immediate family members ( Roman); one case about the certification of permanency ( Rios); and two cases dealing with loss limitations for uninsured and intoxicated drivers ( Cavigliaand Camp). SOFT-TISSUE INJURIES: OBJECTIVE CLINICAL EVIDENCE AICRA created a new “limitation on lawsuit option” that became effective for all policies issued or renewed on or after March 22, 1999. Thereafter, the negligent owner or operator of an automobile would be exempt from tort liability for noneconomic loss unless a claimant who is subject to the verbal threshold sustained one of six types of injury, including “a permanent injury within a reasonable degree of medical probability.” (Type 6). AICRA defined a permanent injury as one where “the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment.” To satisfy the verbal threshold, a plaintiff will be required to submit a certification from the treating physician (or a board-certified physician to whom the plaintiff was referred by the treating physician) that the injuries are permanent. The certification “shall be based on and refer to objective clinical evidence, which may include medical testing.” In Jacques v. Kinsey, 347 N.J. Super. 112 (Law. Div. 2001), the court considered for the first time whether a soft tissue injury was permanent under the new verbal threshold. The plaintiff, Edner Jacques, injured his neck and back in an automobile accident. He went to the emergency room where he was examined and released. A month later, he went to a chiropractor who treated him with physical therapy for four months. After discharge, the treating doctor issued a certification that the plaintiff sustained a permanent injury to his cervical and lumbosacral spine that has not healed to function normally, and that will not return to normal function with further treatment. The doctor indicated that the certification was based on X-rays, muscle spasms and loss of motion. The defendant filed a motion for summary judgment based on the contention that the plaintiff did not sustain a permanent injury under the new verbal threshold. At the outset, the court noted that, under AICRA, the plaintiff’s claim of permanent injury must be supported by “objective clinical evidence.” Under the facts of the case, the court found that the evidence was not sufficient to support a finding of permanent injury. In the first place, the X-rays of the cervical and lumbosacral spine were negative. Thus, the X-rays did not provide any objective evidence of injury. Second, the findings of loss of motion were based on subjective tests that depended only on the patient’s response to pain. Unless verified by physical examination and observation, the court suggested that most range-of-motion tests do not provide the type of objective clinical evidence required by the statute. Finally, the court noted that muscle spasms are objective findings that “may be indicative of permanent injury” if they persist for an extended period of time. On the other hand, muscle spasms that last for only a few months are probably temporary and are not sufficient objective evidence to support a finding of permanency. In this case, the treating doctor documented muscle spasm for only five months after the accident. In addition, the spasms were moderate on the initial visit but only mild on discharge. The record provided no further evidence of treatment or any other objective evidence of permanent injury. Under the circumstances, the court found that the plaintiff’s evidence of negative X-rays, muscle spasms for five months and subjective complaints of loss of motion were not “sufficient objective clinical evidence to support a finding that the condition is permanent.” Accordingly, the court granted the defendant’s motion for summary judgment. It is important to note that the plaintiff’s complaint was dismissed solely because of his failure to produce objective medical evidence of permanent injury � the objective standard under Oswin. The court expressly did not consider whether the new verbal threshold requires a plaintiff to prove that the injury had a serious impact upon his life � the subjective standard of Oswin. SOFT-TISSUE INJURIES: SERIOUS IMPACT The No Fault Act was amended in 1998 to replace the original monetary threshold with the verbal threshold � a definition in words of the type of significant or permanent injury that would permit an accident victim to recover damages from a negligent driver. Nonetheless, the statute did not provide any guidelines for evaluating whether a soft-tissue injury was significant or permanent (types 6-8). In Oswin, the Supreme Court promulgated two standards for determining whether an injury satisfies the verbal threshold. The objective standard requires a plaintiff to produce “credible, objective medical evidence” that the injuries met one of the types set forth in the statute. The subjective standard requires proof that the injury had a “serious impact” on the plaintiff’s life. The 1998 amendment created a new verbal threshold that includes “a permanent injury within a reasonable degree of permanent injury.” (Type 6). I noted in the 1999, 2000 and 2002 Automoblie Injury supplements to the Law Journalthat AICRA clearly maintains the objective standard of Oswin, since the physician’s certification must be based on “objective clinical evidence.” However, since AICRA does not refer to the serious impact test, I suggested that “there was no legal basis to maintain the subjective standard set forth by the Supreme Court in Oswin.” See 155 N.J.L.J. 332, Jan. 25, 1999; 159 N.J.L.J. 267, Jan. 24, 2000; and 167 N.J.L.J. 285, Jan 28, 2002. In 2002, there were three cases that discussed whether the subjective test of Oswin� whether the injuries had a serious impact on the plaintiff’s life � survived the adoption of AICRA. In Compere v. Collins, 352 N.J. Super. 200 (Law Div. 2002), the court held that it did not: A plaintiff does not have to prove that the injury had a serious impact on his life. First, the court found that the plain meaning of AICRA is clear and unambiguous on its face. The statute requires a plaintiff to prove that he sustained a permanent injury based upon objective clinical evidence. The Legislature was “eloquently silent” about the subjective test of Oswinand, therefore, the court would not read the serious impact test “into the otherwise plain language of this statute.” Second, the court found that the legislative history is clear that AICRA “completely eliminates the existing verbal threshold and substitutes a new verbal threshold.” Therefore, the Legislature has replaced the existing law without any legislative history to suggest that it intended to include the subjective test of Oswin. Third, the 1988 verbal threshold was based on the New York statute that requires proof of a “serious injury.” On the other hand, the 1998 verbal threshold is based on the Florida statute that does not require proof of a serious injury. Finally, the court noted that AICRA focuses on permanent injuries and does not use the word serious. Accordingly, the court held that “AICRA does not require a plaintiff to prove the injury had a serious impact on the plaintiff and the plaintiff’s life.” In Rogozinski v. Turs, 351 N.J. Super. 536 (Law Div. 2002), the court reached the opposite conclusion; that AICRA requires proof of both a serious and permanent injury. Rather than stress the plain language of the statute, the court addressed the intent of the Legislature. First, the stated purpose of AICRA was to reduce the cost of automobile insurance. Second, the verbal threshold was “tightened” in order to restrict the number of claims arising from automobile accidents. Third, the preamble to the statute states that the Legislature intended to “eliminate suits for injuries that are not serious or permanent.” Fourth, the court found that there is nothing in the legislative history to suggest that the Legislature intended to change the pre-AICRA requirements of Oswin. Accordingly, the court concluded that a plaintiff must produce evidence that the injury was “serious and permanent” � which means that the injury “has had and will have a serious impact upon the plaintiff and the plaintiff’s life.” Finally, the court reviewed the facts of the case and determined that the plaintiff, Ted Rogozinski, did not provide sufficient objective medical evidence of permanent injury or subjective evidence of serious impact to satisfy the verbal threshold. Rogozinski sustained an injury to his cervical spine that resulted in pain, stiffness, limitation of motion, weather sensitivity and intermittent radiating pain (confirmed by a nerve conduction velocity test, which showed an abnormal right median F wave). He also injured his lumbar spine with pain, stiffness, loss of motion and radiating pain (confirmed by an electromyography and an NCV). The court held that pain and stiffness, intermittent radiating pain, muscle spasm and loss of motion is not indicative of a significant or permanent injury. Therefore, despite some pain and stiffness, the court held that the plaintiff has not shown that his neck and back do not “essentially function normally.” In addition, the court held that the plaintiff’s injuries did not have a serious impact on his life. Rogozinski stated that he was unable to bend, stand, walk, run, jog or drive for long periods of time and that he was limited in the performance of any moderate to strenuous physical activities, such as assisting his wife in household chores. The court noted that he missed no time from work and is still able to engage in “virtually all of the activities he engaged in prior to this accident.” Thus, the plaintiff did not prove that the injuries has a significant impact on his personal life. In James v. Torres, 354 N.J. Super. 586 (App. Div. 2002), the Appellate Division agreed with Rogozinskiand disapproved of Compere. The plaintiff argued that AICRA omits any mention of serious impact � “a clear indication that the Legislature did not intend to carry forward the Oswinrequirements.” The court disagreed for two reasons. First, the “entire thrust” behind AICRA was to stabilize auto insurance premiums by reducing the number of litigated claims. Therefore, any interpretation of the statute that allows more lawsuits would “undermine” the legislative purpose. Second, while the word “serious” does not appear in the body of the statute, the preamble states that the revised threshold is intended to restrict the rights of persons who have “nonpermanent or nonserious” injuries to sue for pain and suffering and to eliminate suits for injuries which are “not serious or permanent.” Accordingly, the court concluded that an injury must be “both permanent and serious” to permit a plaintiff to satisfy the verbal threshold. Under the facts of the case, the court agreed that the plaintiff produced prima facie proof that she suffered a permanent injury. An MRI revealed bulging discs of the cervical and lumbar spine and an EMG disclosed some irritation of the nerve roots. Nonetheless, the court found that the injuries did not have a serious impact on the plaintiff’s life. Therez James testified that she was 20 years of age; that she still had aching pains in her neck and lower back; that her left leg became numb if she stood for a long period of time; and that she had difficulty walking stairs, doing household chores or bathing her two-year-old baby. The court commented that it was difficult to decide whether an injury has a serious impact on a person’s life and that it is “difficult to find an analytical thread unifying” the published judicial opinions. Yet, without “denigrating the impact upon a young mother of difficulty in bathing her child,” the court concluded that the plaintiff was able to participate in her regular daily activities and has not been deprived of social or recreational activities “which had been a significant and important component of . . . her way of life.” The plaintiff has filed a petition for certification, noting that the Supreme Court granted cert in Oswinto create standards and procedures for determining compliance with the 1988 verbal threshold. In contrast, the 1998 verbal threshold “completely eliminates the existing verbal threshold and substitutes a new verbal threshold.” (See statement for S-3.) Therefore, the plaintiff suggests that the Supreme Court should grant cert in this case to determine whether the standards set forth in Oswin� more specifically, the serious impact test � has survived the enactment of AICRA. The defendant has responded that certification should not be granted because there is no conflict between opinions in the Appellate Division. In addition, the defendant argues that existing case law supports the opinion in Jamesthat the serious impact test of Oswin“remains a factor in determining whether a plaintiff has met the requirements of the verbal threshold.” What is involved in Jamesis the meaning of the word “serious.” The words “serious impact” do not appear in the definition of the term “permanent injury.” In the preamble, the Legislature uses the terms “nonpermanent or nonserious” and “not serious or permanent.” There is a difference between the conjunctive, which would require proof of either seriousness or permanency, and the disjunctive, which would require proof of seriousness and permanency. The decision in Jameshangs on that thin thread. In her reply brief, (quoted by the court in Garden State Indemnity v. Miller, 340 N.J. Super. 148 (App. Div. 2001)), the plaintiff quotes Humpty Dumpty, who said to Alice in “Through the Looking Glass:” ‘When I use a word . . . it means just what I choose it to mean, neither more nor less.’ ‘The question is,’ said Alice, ‘whether you can make words mean so many different things.’ ‘The question is,’ said Humpty Dumpty, ‘which is to be master � that’s all.’ The petition for certification is still pending. IMMEDIATE FAMILY MEMBERS The No Fault Act provides that the tort option elected by the named insured shall apply to any “immediate family member residing in the named insured’s household.” The statute defines an “immediate family member” to include the insured’s spouse and any child who is not the named insured under another policy. N.J.S.A. 39:6A-8.1. The statute does not define the term “household.” However, in past years, the courts have explored the family situations to which the verbal threshold will be applied. For example, in Harbold v. Olin, 287 N.J. Super. 25 (App. Div. 1996), the court held that a child who was struck by an automobile while riding a bicycle was an “immediate family member” of his mother and was bound by her election of the verbal threshold, even though the accident did not involve the family car. In Ibarra v. Ventrano, 302 N.J. Super. 578 (App. Div. 1997), the court held that a parent who was injured while a passenger in an automobile owned by her daughter was not an “immediate family member” and was not bound by her daughter’s election of the verbal threshold, even though she resided with her daughter and received PIP benefits under her daughter’s policy. In Vamvakidis v. Peters, 327 N.J. Super. 287 (App. Div. 2000), the court held that an employee of a corporation was not an “immediate family member” and was not bound by the corporation’s election of the verbal threshold. And in Montemayor v. Signorelli, 339 N.J. Super. 482 (App. Div. 2001), the court held that an adult child who lives with her parents (and who does not own a car) is subject to the verbal threshold elected by her father. In the recent case of Roman v. Correa, 352 N.J. Super. 124 (App. Div. 2002), the court noted that the concept of “household” has undergone a transformation over the past 40 years in insurance coverage disputes involving homeowners, PIP, UM and UIM coverage to include “integrated family units” and “dual household residences.” Therefore, there is no reason why the broader definition of “household” should not apply also to the tort threshold. The case involved four minor children who were injured while passengers in an automobile owned by their father and operated by their mother. The parents were separated and the children lived with their mother, but visited their father on the weekends. The mother did not own a car and the father (the owner of the car) elected the verbal threshold. The children sued the owner and operator of the other vehicle. The defendant filed a motion for summary judgment based on the argument that the children lived part-time with their father and should be bound by his election of the verbal threshold (which everyone agrees they did not satisfy). The plaintiffs argued that the verbal threshold should not apply because they lived with their custodial mother (who did not own a car). The court found that the children of separated parents are members of an “integrated family unit” and have a “dual residency” in the homes of their custodial mother and their noncustodial father. Therefore, the plaintiffs were immediate family members who resided in the household of their father and will be bound by his tort option. In this case, the father had elected the verbal threshold and the case was dismissed because the childrens’ injuries were not significant or permanent. However, if the father had elected “no threshold,” the children would have been permitted to proceed with their suit and recover damages for their noneconomic loss. LOSS LIMITATIONS: INTOXICATED DRIVERS The No Fault Act was amended in 1997 to preclude three types of claimants from recovering damages: (1) any person who is the owner of an uninsured automobile and is injured while operating an uninsured automobile; (2) any person who pleads guilty or is convicted of driving while intoxicated; and (3) any person who acts with specific intent to cause injury. The statute states that these persons “shall have no cause of action for recovery of economic or noneconomic loss” for injuries sustained in the accident. N.J.S.A. 39:6A-4.5. In Camp v. Lummino, 352 N.J. Super. 414 (App. Div. 2002), the court considered whether the act that bars an intoxicated driver from recovering damages from the negligent operator of another automobile applies also to other non-motor vehicle tortfeasors. The plaintiff, Robert Camp, was injured in a one-car accident after he left a party at the defendant’s home. He was 20 years of age (below the legal drinking age) and pleaded guilty to driving while intoxicated. Camp sued the defendant homeowners and alleged that they were liable as social hosts who served alcoholic beverages to a person who was under the legal drinking age. The defendant filed a motion for summary judgment and argued that the plaintiff, a person who pleaded guilty to DWI, has no cause of action for the recovery of any economic or noneconomic loss sustained in the accident. The plaintiff responded that the motion should be denied because the statutory preclusion applies only to automobile accidents, not to claims against social hosts. At the outset, the Appellate Division commented that the No Fault Act was amended in 1997 to reduce the cost of automobile insurance and the amount of automobile insurance fraud. As such, the amendment implicates motor vehicle coverage and specifically amends Title 39, Chapter 6A � the laws relating to compulsory automobile liability insurance � and not the laws dealing with the liability of social hosts. The court found that the Legislature did not intend to abrogate the right of an underage driver “to bring an action against a host who illegally served intoxicating beverages” or “to immunize a third party who is responsible for the accident by serving an underage drinker.” Therefore, the court held that the plaintiff was permitted to bring a cause of action against a social host, even though he pleaded guilty to driving while intoxicated. LOSS LIMITATIONS: UNINSURED MOTORISTS The No Fault Act was amended in 1988 to require the owner of an automobile to elect either the verbal threshold (the basic tort option) or no threshold (the alternative tort option). At the same time, the statute was amended to provide that any person who owned an uninsured automobile � a person who is required to maintain PIP coverage but fails to do so � shall be subject to the verbal threshold. N.J.S.A. 39:6A-8. In 1997, the act underwent a “dramatic change” to provide that any person who owned an uninsured automobile “shall have no cause of action for recovery of economic or noneconomic loss” for injuries sustained “while operating an uninsured automobile.” N.J.S.A. 39:6A-4.5. In Caviglia v. Royal Tours of America, 355 N.J. Super. 1 (App. Div. 2002), the court considered the constitutionality of the “loss limitation” provision of the No Fault Act � the “total preclusion” of the right of “a seriously injured uninsured driver” to pursue a tort remedy. Neither the Appellate Division nor the Supreme Court has ever considered the constitutionality of the New Jersey No Fault Act as a whole. In Rybeck v. Rybeck, 141 N.J. Super. 481 (Law Div. 1976), and Guy v. Petty, 275 N.J. Super. 536 (Law Div. 1994), the Law Division held that the act was constitutional, but neither case was resolved on appeal. The upper courts have upheld the constitutionality of the Deemer Statute in Whitaker v. DiVilla, 147 N.J. 341 (1997), and in Phillips v. Phillips, 267 N.J. Super. 305 (App. Div. 1993). In Caviglia, the plaintiff was injured in an accident while driving an uninsured Ford Tempo owned by him. He sued Royal Tours, the owner of the bus that sideswiped his car. The defendant filed a motion for summary judgment on the grounds that the plaintiff was the owner of an uninsured automobile and, therefore, had no cause of action for economic or noneconomic loss under the No Fault Act. The trial court denied the motion because the total preclusion of a right of action against a tortfeasor “ran afoul of the equal protection guarantees of the Fourteenth Amendment of the United States Constitution.” The Appellate Division agreed that the loss limitations for uninsured claimants were unconstitutional under the New Jersey equal protection and due process jurisprudence. At the outset, the Appellate Division noted that both the due process and equal protection clauses protect “against unjustified state regulation of individual rights” which must bear “a real and substantial relation” to the public need. In this case, the Automobile Insurance Cost Reduction Act of 1998 was designed to promote the public welfare by reducing the cost of automobile insurance, requiring the prompt payment of economic losses and providing relief from the expense of adversarial proceedings. The court recognized that the No Fault Act offers trade-offs whereby an injured party receives a prompt payment of first-party economic losses in return for a limitation of the right to sue in tort for third-party economic losses. Thus, the Legislature can impose limitations on the common law right of a victim to recover damages from a negligent tortfeasor. Nonetheless, the court held that the total abrogation of the right of an uninsured driver to pursue a tort remedy was unconstitutional for two reasons. First, the Court found that the denial of any opportunity to recover noneconomic damages from a tortfeasor “constitutes an extreme penalty that is not offset by any reasonable advantage to the public.” In addition, the absolute bar of a cause of action does not bear “a real and substantial relation” to the goals of AICRA. Therefore, the court held that the total preclusion of a claim by an uninsured driver is arbitrary and violates the due process clause. Second, the burden placed on the class of “uninsured drivers” is not justified by the public need. In addition, the distinction between uninsured drivers who sustain a personal injury (who cannot sue) and uninsured drives who sustain property damage (who can sue) has no “rational basis” and does not advance any “legitimate legislative policy.” Accordingly, the absolute bar on claims by uninsured drivers violates the principles of equal protection and is unconstitutional. The defendant has filed a petition for certification. CERTIFICATION OF PERMANENCY AICRA provides that a plaintiff who is subject to the limitation on lawsuit option (the verbal threshold) must provide a certification from the treating physician or a board-certified consultant that the injuries fall within one of the six types set forth in the statute. The certification must be based on “objective clinical evidence, which may include medical testing.” In Rios v. Szivos, 354 N.J. Super. 578 (App. Div. 2002), the court considered whether a physician’s certification by itself was sufficient to satisfy the verbal threshold. The plaintiff, Maria Rios, sustained personal injuries in an automobile accident including a disc bulge at L4-L5 (confirmed by an MRI) and the aggravation of a herniated disc at L5-S1 pre-existing from a prior accident. She submitted a certification from Dr. John Hochberg that her injuries were permanent within a reasonable degree of medical probability based on “clinical objective findings” and “objective medical testing.” The defendant filed a motion for summary judgment based on the allegation that the plaintiff did not prove the aggravation of a pre-existing injury. The plaintiff countered that “the doctor’s certification alone creates a question of fact” and that the objective evidence was sufficient to prove that she sustained a permanent injury because a prior MRI showed no bulge at L4-5. The motion judge denied summary judgment because, once the plaintiff submits a doctor’s certification, AICRA “essentially rules out almost all motions for summary judgment.” The Appellate Division reversed. The court noted that a physician’s certification is “merely a statement of a conclusion” that is subject “to the usual discovery . . . process” and may be challenged on a motion for summary judgment. Thus, “the filing of a certification by itself is not enough to preclude summary judgment.” To survive the motion, the plaintiff still must raise a genuine issue of material fact. Nonetheless, the Appellate Division did not decide whether the plaintiff provided sufficient evidence � in addition to the certification � to prove that she sustained a permanent injury. Instead, the case was remanded for reconsideration (even though the motion judge stated that this was probably the type of case “that I would’ve allowed” under the old verbal threshold). PIP REGULATIONS AICRA delegated to the Commissioner of the Department of Banking and Insurance the responsibility to promulgate medical protocols and standards for the diagnosis and treatment of injuries sustained in automobile accidents. N.J.S.A. 39:6A-4(a). Pursuant to that directive, the commissioner adopted PIP regulations that became effective for all automobile policies issued on or after March 22, 1999. N.J.A.C. 11:3-4. The regulations created care paths for the diagnosis and treatment of soft-tissue injuries of the neck and back; a list of accepted diagnostic tests; a decision point review procedure; and a new system for the resolution of PIP disputes. After the adoption of the regulations, the New Jersey Coalition of Health Care Professionals filed a direct appeal to the Appellate Division. In N.J. Coalition v. DOBI, 323 N.J. Super. 207 (App. Div. 1999), the court held that the regulations were valid because AICRA “expressly authorized” the commissioner to establish medical protocols and because they did not contravene the intent of the Legislature. In March of 1999, after the adoption of AICRA, DOBI began to approve policy forms that permitted PIP carriers to pre-certify certain medical treatments and diagnostic tests; that allowed the creation of networks for diagnostic testing; that limited the resolution of PIP disputes to arbitration; and that restricted a patient’s ability to assign benefits to a health care provider. The Coalition for Quality Health Care and ATLA-NJ filed a direct appeal to the Appellate Division to challenge the validity of the policies on the grounds that DOBI exceeded the scope of its statutory authority and contravened the intent of the Legislature. As a result, the policies adversely affected automobile accident victims and their doctors. In Coalition for Quality Health Care v. DOBI, 348 N.J. Super. 272 (App. Div. 2002), the court noted at the outset that the Legislature granted the commissioner broad power to effectuate AICRA and that the regulations of an administrative agency are presumed to be valid. The court then reviewed the four policy terms challenged by the appellants. The first provision dealt with pre-certification. One of the plans provided that treatment for soft tissue injuries of the neck and back were prescribed by the care paths and were subject to decision point review (prior notice); however, treatment for noncare path injuries may be subject to pre-certification (prior approval). The difference between the two is that “precertification” requires the approval of the PIP carrier before treatment can be continued or a diagnostic test rendered. On the other hand, “decision point review” requires only notice to the carrier and the treatment or diagnostic test may proceed if the carrier does not affirmatively object. More importantly, the court confirmed that diagnostic tests are included within the care paths for soft tissue injuries. While subject to decision point review, such tests are not subject to precertification. Accordingly, the matter was remanded to DOBI to review all approved plans to ensure that pre-certification is not required for tests necessary to diagnose soft tissue injuries. The second policy provision involved the assessment of copayments of 30 percent to 50 percent for diagnostic testing services that would be waived if the patient used an approved network. The appellants argued that AICRA does not authorize the use of “designated providers” and that the insurance company networks constitute an impermissible effort to control an insured’s choice of health care provider. The court concluded that the statute and regulations authorized DOBI to approve policies with copayments for various services and that the commissioner could impose some limits on the patient’s choice of vendor. Pursuant to that authority, DOBI could “chose to encourage, by financial incentive, but not mandate, the use of certain vendors.” The third policy provision required the submission of all PIP disputes to arbitration. The appellants argued that this provision was repugnant to AICRA and improperly barred insureds from access to the Superior Court. The Appellate Division noted that AICRA provided that any party may submit a dispute to arbitration. Accordingly, there is no reason why an insurer could not adopt “a blanket policy of choosing dispute resolution in all PIP disputes.” Finally, the fourth policy provision provided for the assignment of benefits if the PIP carrier gives its written consent. The appellants argued that this provision did not constitute a reasonable restriction on assignments and established a system of dominance by the carriers over the provider community. The court held that PIP carriers may impose reasonable conditions on assignments and that policy forms that require written consent “can help an insurer reduce costs by eliminating fraud and the propensity for overutiliztion of services.” Accordingly, the court approved the regulations adopted by DOBI � with the exception of care path diagnostic tests, an issue that was remanded to the department for modification. Gerald H. Baker isa certified trial attorney who regularly conducts seminars on the verbalthreshold and on automobile insurance legal issues for the New JerseyInstitute for Continuing Legal Education, the Association of Trial Lawyersof America-New Jersey and the New Jersey Law Journal. Baker, a partner inthe Hoboken law firm of Baker, Garber, Duffy & Pedersen, received his B.A.from Cornell University in 1964 and his J.D. from Yale Law School in 1967.Since his admission to the bars of New Jersey and New York in 1968, Bakerhas represented plaintiffs in personal injury cases. A member of the Boardof Governors of ATLA-NJ, Baker is the chair of the New Jersey State BarAssociation’s special committee on automobile reparations. In 2000, he washonored by ICLE as the Alfred C. Clapp Laureate.

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