• Are PIP Benefits Truly No-Fault Now?
  • January 5, 2018
  • Key Points:

    • A standard PIP policy can include five different policy limit options.

    • Medical expenses over and above any limited PIP policy can be admissible at the time of trial.

    • However, minor expenses may be inadmissible.

    The New Jersey legislature attempted to tackle the issues of rising insurance premiums and medical expenses by enacting what is known as the “No-Fault Act.” Under this statute, insurance policies must provide personal injury protection coverage in the amount of $250,000, unless the insured selects from one of four other amounts valued at $150,000, $75,000, $50,000 or $15,000 per person per accident. The No-Fault Act was meant to preclude minor claims for medical expenses, such as co-pays or deductibles. Not surprisingly, there has been some confusion by the courts and litigants alike as to whether an injured party can sustain a claim for medical expenses above a PIP policy limit that is under the maximum $250,000 PIP policy. This issue has now been clarified by the Appellate Division, which has held that an injured party can submit a claim for losses over and above one of the lesser PIP policy limits.

    The defense industry must now calculate these potential economic losses when evaluating a claim in which the injured party has selected a lesser PIP policy. The Appellate Division noted that any one of the four PIP policy limits is considered a standard policy. However, if no selection is made by the insured, the limit, by default, will be for a $250,000 PIP policy.

    The issue regarding whether or not these losses are admissible stemmed from N.J.S.A. § 39:6A-12, which states that evidence of losses collectible under personal injury protection coverage is inadmissible at the time of trial. This limitation specifically restricts evidence of “the amounts of any deductibles, copayments or exclusions.” There was some question as to whether this portion of the statute also limited one’s right to recover medical expenses if one selected a limited PIP option of $15,000. Previously, the lower courts had decided that the statutory language would not permit a person with a $15,000 PIP policy from seeking recovery of that amount up to the $250,000 standard policy limits.

    This changed on June 1, 2017, when the Appellate Division published their decision regarding this issue. In Haines v. Taft, 162 A.3d 396 (N.J.Super. App.Div. 2017), the court concluded:

    Section 12 does not make inadmissible medical expenses between the PIP limit in an insured’s standard automobile insurance policy and $250,000, less deductibles, copayments or exclusions. Such expenses are a kind of uncompensated economic loss that an injured party may seek to recover against a tortfeasor.

    The court’s decision acknowledged the legislative intent when enacting the No-Fault Act. However, it concluded that this reading of the law would not frustrate the goals of limiting minor lawsuits and reducing insurance costs.

    The legislature’s goal in prohibiting evidence of payments made under an injured person’s PIP policy was also to eliminate the potential for double recovery. In Haines, the court looked at a previous decision where it found that an injured party could not recover the minor expenses of the deductibles and copayments that were “contrary to the legislative intent to reduce minor claims from the court system.” The Haines court found that the language of the statute did not bar the introduction of all medical expenses. In the two cases brought up on appeal in Haines, both were seeking to recover $28,000 and approximately $10,000 in uncompensated medical expenses above and beyond their $15,000 PIP policies. The court concluded that those could not be considered minor expenses and, thus, could be presented at the time of trial in their personal injury lawsuits. The Haines opinion surmised that these expenses are different then deductibles and co-payments, which can be reasonably calculated when purchasing insurance. The court concluded that one “[c]an hardly be expected to anticipate the severity of his or her injuries and the consequent expenses of his or her medical care.”

    At this time, the Appellate Division has mostly resolved this issue. Some outstanding questions and issues can be considered if an injured party is seeking a nominal amount of outstanding medical expenses over and above a limited PIP policy. The panel acknowledged that there might be an issue in which there are medical expenses “just above his or her PIP limits that arguably might be minor.” The court declined to discuss or decide that potential issue. As such, there is an argument to be made, on a case-by-case basis, that the outstanding medical expenses are minor and should be excluded at the time of trial. However, based upon this recent decision, it is important to evaluate the claimant’s PIP limits as anything above and beyond the PIP limits may be admissible at the time of trial, notwithstanding deductibles and copayments.