Below are reviews of five cases—three of them dealing with PIP benefits, and two that are relevant to automobile injuries.
Admissibility of Evidence: Medical Expenses Above PIP Limits
The No Fault Act provides that every standard automobile insurance policy must provide PIP coverage for the payment of medical expenses up to $250,000 per person per accident. N.J.S.A. 39:6A-4(a). Basic policies must provide PIP coverage up to $15,000 per person per accident, N.J.S.A. 39:6A-3.1(a), and special policies must provide only “emergency” PIP coverage, N.J.S.A. 39:6A-3.3(b)(1).
In addition, the act provides that evidence of the amount of PIP benefits paid under a standard, basic or special automobile insurance policy (including deductibles and copayments) are “inadmissible in a civil action for recovery of damages for bodily injury by such injured person.” Nonetheless, the injured person may recover “uncompensated economic loss” (including medical expenses) from the tortfeasor. N.J.S.A. 39:6A-12.
What does this section of the No Fault Act mean?
- An injured person’s medical expenses are to be paid by that person’s own PIP carrier.
- The amount of PIP benefits paid are not recoverable (“inadmissible”) in an action for non-economic loss (pain and suffering) against the tortfeasor.
- The amount of any deductibles or copayments not otherwise compensated are not recoverable (“inadmissible”) from the tortfeasor.
- The medical bills above the $250,000 PIP limit are uncompensated medical expenses and are recoverable (“admissible”) from the tortfeasor.
The No Fault Act also provides the named insured under a standard automobile insurance policy with the option of purchasing “medical expense benefits” in the amounts of $150,000; $75,000; $50,000; or $15,000 per person per accident. If none of these options are “affirmatively chosen in writing,” the policy shall provide medical expense benefits in the amount of $250,000. N.J.S.A. 39:6A-4.3(e).
In Haines v. Taft, 450 N.J. Super. 295 (App. Div. 2017), the court considered whether the No Fault Act precluded the recovery from the tortfeasor of medical expenses that exceed the PIP option applicable to the injured party under a standard automobile insurance policy. The plaintiff, Joshua Haines, was injured in an automobile accident and incurred medical expenses of $43,000. Haines resided with his father who owned a car and purchased a policy with PIP coverage of $15,000. Haines filed a complaint against the tortfeasor and claimed that he was entitled to recover “uncompensated economic loss” of $28,000—the difference between his medical expenses ($43,000) and the $15,000 paid by PIP.
The trial court granted the defendant’s motion to bar Haines from introducing into evidence the unpaid medical bills above the $15,000 PIP option selected by the plaintiff. Accordingly, the complaint for economic loss was dismissed.
On appeal, the plaintiff contended that the only evidence that is “inadmissible” are the medical expenses that have actually been paid and, thus, the defendant is liable for all medical expenses that exceed the PIP limit up to $250,000. In response, the defendant claimed that the statutory PIP limit is $250,000 and, therefore, he is not liable for any medical expenses between $15,000 and $250,000.
The Appellate Division reversed. The court noted that a standard automobile policy provides five different limits of PIP benefits: $15,000; $50,000; $75,000; $150,000; or $250,000. Thus, the only evidence that is “inadmissible” are those medical expenses up to the injured parties PIP limits, not the maximum PIP “potentially” available under a standard policy.
Of course, the plaintiff is barred from introducing evidence of the medical expenses actually paid under the PIP option selected (in this case, $15,000). However, the rest of his uncompensated medical bills are admissible and recoverable against the tortfeasor up to $250,000.
- Commentary: Although the statute provides medical expense benefits options of $15/50/75/150,000, I have never seen a policy with other than $15,000 or $250,000 of PIP coverage. I understand that some companies are aggressively marketing the $15,000 PIP option in urban areas as a method of reducing the cost of automobile insurance. However, in my opinion, this is a bad choice.
To the best of my knowledge, a policyholder will save only about $35 for selecting the lower PIP option. In return, they will incur a reduction of PIP medical expense benefits of $235,000 (the difference between the $250,000 statutory maximum and the $15,000 minimum option). This is too little a savings to justify such a great loss in benefits.
In this day and age, medical expenses of $15,000 are easily exceeded if an injured party needs any extensive medical management such as orthopedic or neurologic consultations, diagnostic radiologic studies, pain management or surgery. It is invariable that my injured clients are shocked to learn that they have exhausted their $15,000 PIP coverage when $250,000 was available at little extra cost.
I always advise my clients, family, friends, doctors, lawyers and judges to select the maximum PIP coverage with medical expense benefits of $250,000 per person, per accident. Do not select a lower PIP medical expense limit.
In addition to the lower PIP medical expense option, the No Fault Act provides that medical expense benefits shall be subject to a deductible of $250 and a copayment of $950 (20 percent of payments between $250 and $5,000) for a total of $1,200. In Roig v. Kelsey, 135 N.J. 500 (1994), the Supreme Court held that an injured party may not recover the amount of any deductibles or copay from the tortfeasor.
While Haines deals with uncompensated medical expenses, the opinion demonstrates the difference between non-economic loss and economic loss. Before the trial, Haines dismissed his claim for “non-economic damages” (presumably because he could not satisfy the limitation on lawsuit option). Nonetheless, he continued to pursue his claim against the tortfeasor for “economic damages,” his uncompensated medical expenses.
Deemer Statute: PIP Coverage
The New Jersey No Fault Act was adopted in 1972 and provides that the owner of every automobile registered or principally garaged in this state shall maintain automobile liability insurance coverage. N.J.S.A. 39:6A-3. In addition, every “standard” automobile liability insurance policy shall contain personal injury protection (PIP) benefits for the payment of medical expense benefits up to $250,000 per person per accident. N.J.S.A. 39:6A-4.
In 1985, the legislature adopted to so-called “Deemer Statute” in order “to protect New Jersey residents injured in automobile accidents from out-of-state operators with insufficient coverage.” The statute provides that any insurer authorized to transact automobile insurance business in this state shall include PIP benefits in each policy “whenever the automobile … insured under the policy is used or operated in this State ….” N.J.S.A. 17:28-1.4.
In Leggette v. Government Employees Insurance Company, 450 N.J. Super. 261 (App. Div. 2017), the court considered, as an issue of first impression, whether the Deemer Statute applies to an out-of-state resident who is injured while a pedestrian in the state of New Jersey when struck by a New Jersey driver.
The plaintiff, Kathleen Leggette, was a Virginia resident insured in her state by Geico, a company authorized to do insurance business in New Jersey. She drove to Princeton University to visit her daughter, parked her car in a parking lot, locked the door, began walking to her daughter’s dormitory and was struck by an automobile while in a crosswalk. Her medical expenses were in excess of $113,000.
The plaintiff filed a declaratory judgment action against Geico and claimed that she was entitled to New Jersey PIP coverage because the Deemer Statute applies to every foreign automobile that “enters into and travels around New Jersey,” even if the injured party is a pedestrian and the automobile is not directly involved in the accident. The defendant claimed that the Deemer Statute does not apply to a pedestrian who was not “using or operating” the insured vehicle at the time of the accident.
The trial court concluded that “a party must be using or operating his or her vehicle at the time of the accident to trigger Deemer Coverage.” Accordingly, the court dismissed the plaintiff’s complaint.
The Appellate Division affirmed. The court noted that there must be a “substantial nexus” between the “occupancy and use” of the automobile and the injury. In this case, the plaintiff’s use of her vehicle had “ended” when she parked her car, locked the doors and walked away. Accordingly, there was no substantial nexus between the use of the vehicle and the accident and she was not entitled to PIP benefits under the Deemer Statute.
- Commentary: The Deemer Statute, which imposes substantial PIP obligations on New Jersey insurance companies who issue policies to out-of-state automobiles, was declared constitutional in Whitaker v. De Villa, 147 N.J. 341 (1997).
The imposition of New Jersey PIP benefits on out-of-state automobiles that are involved in accidents in the state of New Jersey is only one prong of the Deemer Statute. The second prong requires any out-of-state policy to also include liability and uninsured motorist coverage as required by New Jersey law. The third prong provides that any liability insurance policy subject to the Deemer Statute will be subject to the limitation on lawsuit option.
Insurance Fraud Prevention Act: Practice of Medicine
The State Board of Medical Examiners is responsible for establishing standards for professional practice by licensed physicians. The Board’s regulations address the permissible forms for private practice including solo, partnership and corporate. With respect to medical corporations, the regulation explicitly provides that “a medical doctor with a plenary scope of practice may not be employed by a licensee with a more limited scope of practice, such as a chiropractor.” N.J.A.C. 13:35-6.16.
In addition, the Insurance Fraud Prevention Act provides that a practitioner may not submit a claim for payment knowing that the claim contains false information. Likewise, a practitioner violates the act “if he knowingly assists, conspires with, or urges any person or practitioner to violate any of the provisions of this act.” N.J.S.A. 17:33A-4.
In Allstate Insurance Company v. Northfield Medical Center, 228 N.J. 596 (2017), the court considered whether Daniel Dahan, D.C. (a chiropractor), and Robert Borsky (an attorney), violated the IFPA by “knowingly” assisting and conspiring with chiropractor J. Scott Neuner, D.C., in the formation of the Northfield Medical Center.
The plaintiff, Allstate Insurance Company, claimed that the practice model used to create Northfield, denoted as the “Doc-in-the box,” was a sham corporation intended to violate the permissible medical standards of the BOME. While the medical corporation was owned by a medical doctor, the profits were paid to a management company owned by a chiropractor in return for space rental leases, equipment leases and management contracts.
In order to ensure that the chiropractor maintained control of the medical practice, the medical doctor was required to sign an undated resignation letter and an undated affidavit of lost stock so that the chiropractor could remove the medical doctor from his position at any time. These documents were “intended to prevent the nominal doctor-owner of the medical corporation from seizing control of the practice from the real investor, the chiropractor.
In 1997, Northfield began submitting PIP claims to Allstate for multi-disciplinary treatment rendered to patients who were injured in automobile accidents. Allstate began investigating the legality of Northfield’s practice structure and refused payment of $330,000 in claims for treatment at the facility.
Allstate filed a complaint alleging that the defendants, Borsky and Dalian, committed insurance fraud by assisting Neuner in the creation of a practice structure “that was designed to circumvent regulatory requirements with respect to the control, ownership, and direction of a medical practice.”
After a bench trial, the court found that the defendants had violated the Insurance Fraud Prevention Act “by assisting a New Jersey chiropractor … in the creation of an unlawful multi-disciplinary practice.” The Appellate Division reversed on the grounds that the defendants did not actually know “that the practice model violated regulatory requirements governing the lawful ownership and control of a medical practice.”
The Supreme Court reversed. The court stated that the trial court correctly applied a plain-language understanding of “knowing” which means “an awareness or knowledge of the illegality of one’s act.” A person’s “knowledge as to the falsity or illegality of his conduct may be inferred from the surrounding factual circumstances” and may be proven by circumstantial evidence.
Under the facts of this case, the court found that there was “an abundance of proof” that Northfield “placed control of the medical practice in the hands of a chiropractor.” Thus, the trial court could reasonably conclude “that defendants knowingly assisted Neuner in violating the Board’s rules and submitting ineligible and fraudulent medical claims for reimbursement.”
Apportionment of Liability: Fictitious Party
The Comparative Negligence Act provides that the trier of fact shall determine “each party’s negligence” so that the total negligence “of all parties to a suit shall be 100%.” N.J.S.A. 2A:15-5.2(a). In most automobile accident cases, the “parties” to the lawsuit are easily identified: the drivers of each vehicle whose identity can be determined and who are financially capable of satisfying a judgment through insurance.
However, there are some cases where the liability of multiple tortfeasors should be allocated even if the plaintiff does not have the ability to recover damages. For example, one of the tortfeasors might be bankrupt or barred by a statute of repose or have settled.
In Krzykolski v. Tindall, 448 N.J. Super. 1 (App. Div. 2016), the court considered whether an unidentified driver who is named as John Doe (“a fictitious party”) is a “party” within the meaning of the act. If so, then that person’s negligence should be allocated between all of the tortfeasors named in the suit.
The plaintiff, Mark Krzykolski, was driving northbound on Route 130 in Florence Township when he slowed for an emergency vehicle. A vehicle driven by an unknown driver (the fictitious John Doe) passed him on the right and crossed in front of him to make a left turn. Krzykolski stopped his car and was struck in the rear by a vehicle operated by defendant, David Tindall. Krzykolski filed suit against David Tindall but did not name the fictitious driver as a “John Doe” in the complaint. He filed a motion to prevent the jury from allocating negligence between Tindall and the fictitious driver because John Doe was not a “party” to the suit. The trial court denied the motion, and the jury allocated the negligence at 3 percent to Tindall and 97 percent to John Doe. The jury awarded damages of $107,890 and the court entered judgment against Tindall for $3,236.
The plaintiff appealed. He argued that the trial judge “erred in allowing the jury to apportion liability between defendant and the fictitiously-named John Doe.”
The Appellate Division found no merit in the plaintiff’s argument. At the outset, the court noted that the purpose of the Comparative Negligence Act “is not governed by whether that tortfeasor may be said to be a ‘party’ but turns on whether the other tortfeasor ‘will be affected by the verdict.’” Thus, the law is best served “when the factfinder is allowed to evaluate the liability of all those potentially responsible.”
In a concurring opinion, the court noted that “a fictitious party” is a “party” under the Comparative Negligence Act. In addition, the obligation to apportion fault does not apply “only to tortfeasors that are defendants in the litigation.” Thus, the trial court did not err in allowing the jury to apportion liability between defendant Tindall and the fictitious driver, even though John Doe was not named as a defendant in the case.
- Commentary: The Appellate Division also affirmed the jury’s allocation of fault to Tindall at 3 percent and John Doe at 97 percent. The court noted that there were two separate tortfeasors who committed two separate negligent acts. John Doe cut off plaintiff’s vehicle and Tindall failed to keep sufficient distance between the vehicles. Thus, the jurors were faced with a “fact-sensitive question” and found that John Doe was “far more blameworthy” than Tindall.
The court noted in a footnote that the plaintiff has an uninsured motorist claim under his own policy based upon the negligence of the unidentified, fictitious driver. However, the plaintiff refused the UM carrier’s offer of the policy limits both before and after the trial.
The court recognized that the plaintiff could pursue his UM claim by filing a demand for arbitration; however, the court was concerned that the plaintiff could receive a “windfall” by obtaining the full amount of damages from Tindall and, later, seek recovery from the UM carrier. The allocation of fault by the jury “prevents plaintiff from strategically waiting to proceed against UM insurance, allocates fault based on actual negligence of the various drivers, and avoids double recovery by plaintiffs.”
I do not know why the plaintiff rejected the offer of the UM carrier to settle for the policy limits or why the UM claim was not incorporated into the lawsuit against Tindall. In Zirger v. General Accident Insurance Company, 144 N.J. 327 (1996), the Supreme Court adopted a procedure that permits the plaintiff to submit a Notice of Intervention to the UM carrier. Once the UM carrier has been placed on notice, the carrier will be bound by the jury verdict, whether they intervene or not. If the plaintiff had followed this procedure, he would have recovered the full jury verdict, $3,236, from Tindall and the balance from the UM carrier (up to the UM policy limit).
Tort Claims Act: Ordinary Traffic Signs
The New Jersey Tort Claims Act provides that a public entity is not liable for “an injury caused by the failure to provide ordinary traffic signals, signs, markings or similar devices.” N.J.S.A. 59:4-5. In Patrick v. City of Elizabeth, 449 N.J. Super. 565 (App. Div. 2017), the court considered whether a traffic sign within a school zone is an “ordinary traffic sign” so as to afford immunity to the City of Elizabeth, a public entity.
The infant plaintiff, Bryce Patrick, age eight, was struck by a motor vehicle while crossing the street at an intersection located a block away from a public elementary school. An unidentified motorist stopped to allow the child to cross when another motor vehicle passed the stopped car and struck the child.
The plaintiff’s guardian filed suit against the City of Elizabeth and claimed that the traffic signs were not adequate to warn motorists of the presence of children. There was a “Watch for Children” sign posted on the street; however, the plaintiff claimed that a school zone required a higher safety standard including additional speed limit and school zone signs.
The Appellate Division noted that the Tort Claims Act does not define the term “ordinary”; however, there is nothing “to denote signs in a school zone as anything but ‘ordinary.’” Accordingly, the City of Elizabeth is immunized from liability for the placement of signs in a school zone.
In addition, the placement of signs requires the exercise of “discretion.” Thus, the City is also immune from liability “for injury caused by an exercise of judgment or discretion vested in the entity.” N.J.S.A. 59:2-3.