An Injured Party Who Elected Lower PIP Limits May Sue for Medical Bills Over Those Limits
By: Noah Gradofsky, Esq.
February 20, 2012 with updates added February 17, 2015 and July 7, 2017, and June 25, 2018
Although "standard" New Jersey PIP coverage, provided for in N.J.S.A. 39:6A-4, generally covers $250,000 of medical bills, N.J.S.A. 39:6A-4.3(e) allows insurers to offer coverage options that limited PIP to $150,000, $75,000, $50,000 or $15,000 (although these coverages are increased to $250,000 for particularly serious injuries). It is worth noting that N.J.S.A. 39:6A-3.1 and N.J.S.A. 39:6A-3.3 also provide for lesser PIP coverages known as "basic" and "special" coverage, respectively (for further dicussion see here). As the options for these lesser coverages were added to the New Jersey PIP statutes over time, how these provisions relate to other provisions within the PIP scheme is often less than clear. One such issue has resulted in differing opinions by New Jersey trial courts.
In Wise v. Marienski, 425 N.J. Super. 110 (Law Div. 2011), Union County Superior Court Judge Kenneth J. Grispin wrestled with whether a person covered under a "standard" policy with $15,000 of coverage could seek recovery of any excess medical bills from the tortfeasor. Judge Grispin answered the question in the affirmative, thus coming to the opposite conclusion of an unpublished Bergen County Law Division case, Kim v. Kim, Docket No. BER-L-5471-08, 2010 N.J. Super. Unpub. LEXIS 2302, (Law Div., 2010).
At issue in these cases was the interpretation of N.J.S.A. 39:6A-12, a provision that basically prohibits injured parties from recovering from tortfeasors for medical costs that could have been paid under PIP coverage. The statute reads in part:
Except as may be required in an action brought pursuant to . . . (C. 39:6A-9.1), evidence of the amounts collectible or paid under a standard automobile insurance policy . . . a basic automobile insurance policy pursuant to section 4 of P.L. 1998, c. 21 (C. 39:6A-3.1) and . . . under a special automobile insurance policy . . . to an injured person, including the amounts of any deductibles, copayments or exclusions . . . is inadmissible in a civil action for recovery of damages for bodily injury by such injured person. . . .Although this statute serves as an evidentiary bar, it effectively makes it impossible to recover from a tortfeasor the amounts collectible or paid under standard, basic, or special PIP coverage. But, as noted, the normal "standard" policy covers $250,000 in medical expenses. What if the injured party is entitled to only $15,000 of PIP coverage under a "standard" policy? May the injured party recover the balance of medical expenses from the tortfeasor?
Nothing in this section shall be construed to limit the right of recovery, against the tortfeasor, of uncompensated economic loss sustained by the injured party.
In Kim the Bergen County Superior Court prohibited such a recovery. The court reasoned that since generally the "standard" PIP coverage covers $250,000 in expenses, the N.J.S.A. 39:6A-12 limitation on recovery of "amounts collectible or paid under a standard automobile insurance policy," would serve to prohibit recovery of $250,000 worth of medical expenses covered under PIP regardless of whether the person elected to have $250,000 in coverage. The court was influenced by a series of cases, including Roig v. Kelsey, 135 N.J. 500 (1994) and D’Aloia v. Georges, 372 N.J. Super. 246 (App. Div. 2004), which found that PIP deductibles were not recoverable under N.J.S.A. 39:6A-12. Roig reasoned that by choosing a PIP deductible, the insured accepted the tradeoffs between the possible out-of-pocket expense of a deductible versus the cost of a policy with a lesser deductible. Roig also reasoned that the New Jersey PIP scheme is designed to limit fault based recovery for medical costs.
In Wise, Judge Grispin argued that Kim was contrary to the plain meaning of the PIP statutes. Wise notes that N.J.S.A. 39:6A-12 explicitly permits recovery of "uncompensated economic loss," and that N.J.S.A. 39:6A-2(k) explicitly includes "medical expenses" in the definition of "economic loss." Wise distinguished the Roig and D'Aloia cases, because the language of N.J.S.A. 39:6A-12 was interpreted to prohibit evidence of copayments and deductibles, and thus logically "economic loss" did not include such copayments and deductibles.
The Wise decision reasoned that where N.J.S.A. 39:6A-12 prohibits recovery of "amounts collectible or paid under a standard automobile insurance policy," the "standard automobile policy" should be understood as a PIP policy covering $15,000 or more. The court noted that N.J.S.A. 39:6A-2(n) defines a "standard automobile policy" as a policy with the coverages required in N.J.S.A. 39:6A-4, which in turn permits the different levels of coverage permitted in N.J.S.A. 39:6A-4.3(e).
Although not discussed by the court, it seems that another argument in favor of the result in Wise is the explicit mention in N.J.S.A. 39:6A-12 of amounts covered under the "basic" and "special" PIP policies, which indicates that holders of such policies would be entitled to recover from the tortfeasor for any medical expenses not within their lesser coverage. It seems unlikely that holders of these lesser policies would be given a right of recovery that holders of $15,000 "standard" PIP policies would not have.
On the other hand, there is a significant argument that Wise results in a particularly unfair scenario when one takes issues of subrogation into account. Under N.J.S.A. 39:6A-9.1, amounts paid under PIP may not be recovered from an at-fault vehicle if that vehicle is subject to the PIP requirement and has PIP coverage. Though there is no case law on piont, this would presumably includes an at-fault vehicle with a $15,000 "basic" policy. This would mean that a vehicle carrying $15,000 in PIP would be protected from $250,000 in liability to a person carrying regular PIP limits, but would be able to hold an at-fault vehicle liable for all if his or her medical bills beyond his or her $15,000 limits. Take, for example, the situation where A carries $15,000 in PIP, and B carries $250,000 in PIP. If A is at fault and B's insurer pays $250,000 in PIP, B's insurer will not be able to recover that $250,000. On the other hand, if B was at fault and caused $250,000 in medical bills to A, A's insurer would pay $15,000 and A could sue B for $235,000 in medical costs. To the extent that Wise was properly decided, it may indicate a need for a significant amendment to the PIP statute to correct this unfairness.
ADDITIONAL NOTE ADDED 2/17/15: The Appellate Division followed the Wise decision in Kimble v. Lavista, 2014 N.J. Super. Unpub. LEXIS 1308, 11-15 (App.Div. June 6, 2014) and also cited favorably to Wise in Adesina v. Santana, 2012 N.J. Super. Unpub. LEXIS 470, 15 (App.Div. Mar. 5, 2012)(noting that medical expenses beyond $250,000 covered by PIP are recoverable). However, these decisions are unpublished and therefore not binding. See N.J.R. 1:6-3.
ADDITIONAL NOTE ADDED 7/7/17 AND UPDATED 2/7/18 - In the published opinion of Haines v. Taft, 450 N.J. Super. 295 (App.Div., 2017) certif. granted 231 N.J. 155 (2017) (available online here) the Appellate Division ruled that the holder of a $15,000 standard PIP policy could sue for medical bills in excess of the amounts coverd by that PIP policy. The matter is currently on appeal to the New Jersey Supreme Court which will likely settle this issue for the future.
ADDITIONAL NOTE ADDED 6/25/18: Senate Bill S2432 proposes to specify that persons carrying less than $250,000 in PIP may sue for any medical costs that are above their available PIP limit (which would effectively adopt Haines). The bill was voted out of committte on 6/11/18 and can be tracked here.
This issue is also worthy of a few important practice notes. First, N.J.S.A. 2A:15-97 prohibits recovery in personal injury matters of amounts covered by insurance, except those recoveries allowed by the PIP loss-transfer statute, worker's compensation, or life insurance. Therefore, if a party insured under a $15,000 PIP policy were entitled to coverage under a medical insurance policy, the amounts covered under that policy would not be recoverable in suit (except if ERISA preemption applies; see http://www.janmeyerlaw.com/njpip/main_frame.html#erisa).
A second important note is that Haines also creates an interesting possibility of UM/UIM exposure. If injured party P has a $15,000 "standard" PIP policy, the medical expenses that exceed this amount, and the tortfeasor is either uninsured or underinsiured, then the medical expenses not covered under P's PIP policy may be recoverable from P's insurer under the UM/UIM policy.
Please visit our Guide to Recovery of PIP in New Jersey for the text of the key New Jersey statutes regarding PIP recovery, together with an outline of those statutes, hyperlinks to definitions of key terms, discussions of key provisions of each statute, relevant case law, and other selected issues of New Jersey subrogation.
Please note that the information included herein is solely the product of Law Offices of Jan Meyer and Associates, P.C., and does not constitute legal advice. For legal advice kindly contact our office.