Two years ago, the state agency that regulates insurance rolled out changes to its regulations meant to control rising insurance costs.

The Department of Banking and Insurance’s (DOBI’s) revised regulations had to do with personal injury protection (PIP) benefits, the component of auto insurance that pays for medical costs.
The proposals were immediately controversial and almost as soon as the new rules were adopted they were met with a flurry of legal action. Shortly after the adopted regulations were published, three organizations filed appeals in the state Appellate Division to oppose them.
The New Jersey State Bar Association, which had opposed adoption of the regulations, joined the matter as an amicus party, arguing the regulations should be invalidated.
“The regulations exceed DOBI’s authority under the relevant statutes, deprive claimants of their constitutionally guaranteed rights, and are in conflict with existing caselaw and Court Rules,” according to the association’s brief, which was signed by then-President Kevin P. McCann and written by trustee Anthony Murgatroyd.
The association’s brief addresses four issues. Specifically, the association argues the changes impair the ability of accident victims to get appropriate treatment from the doctor of their choice; impair doctors from being promptly and fairly compensated; impair the legal rights of doctors and patients; and unconstitutionally conflict with the Supreme Court’s power to regulate the practice of law.
One regulation requires proceedings under $1,000 to be decided based only on paperwork. The association argues in its brief that the regulations violate the legal rights of litigants under the fifth and 14 th amendments of the U.S. Constitution and deprives them of due process under the New Jersey Constitution. Further, the provision favors the insurance carrier over the claimant.
“A regulatory agency… does not have the authority to deprive a litigant of due process of the law by mandating on-the-paper hearings,” the brief states. “Denying claimants the right to an in-person hearing violates due process and deprives claimants of equal protection under the law.”
The brief argues another regulation relating to the assignment of benefits and duties subjects medical providers to unlimited discovery requests, including financial data, which could amount to harassment. Further, the regulations exceed the scope of the department’s statutory authority, according to the brief.
A third point of contention is that the regulations redefine standard treatment protocols for determining medically necessary treatment, in conflict with rules set out in the No Fault Act, caselaw and evidence rules. This would allow insurance carriers to deny treatment, simply because it had not been written about in a journal, even if it were acceptable in court.
“DOBI’s proposal eliminates the physician’s clinical judgment and expertise and focuses solely on published peer-reviewed literature to form the plan for care,” the brief states.
The association’s final argument is that regulations on attorney fee awards are unconstitutional and usurp the Supreme Court’s authority to regulate fees, among other issues, by establishing standards for counsel fees that conflict with the Rules of Professional Conduct.
The case is currently pending before the Appellate Division. No argument date has been set.