In a landmark opinion, the New Jersey Supreme Court put to rest a longstanding dispute concerning what measure of economic damages an injured motorist could recover, when that plaintiff opted for a policy of automobile insurance, under which they elected to purchase smaller amounts of personal injury protection (PIP) benefits than the default $250,000 policy limits. In Haines v. Taft, 2019 N.J. LEXIS 441 (2019), the Court considered two consolidated actions, each dealing with a plaintiff who alleged being hurt in a car accident. Each plaintiff was insured under a “standard policy,” with insurance that provided for $15,000 in PIP coverage, rather than the default amount of $250,000. Ultimately, the Court determined that New Jersey law does not allow the plaintiff to pursue claims for economic damages for unpaid medical bills in excess of the $15,000 policy limit, and beneath the $250,000 presumptive PIP limits.
Neither plaintiff was able to support a claim for noneconomic loss because their policies had contained a limitation-on-lawsuit option, colloquially known in New Jersey as the “verbal threshold.” Each plaintiff was suing for outstanding medical provider charges that were in excess of their elected PIP coverage. The court noted that the outstanding charges had not been subjected to the cost containment requirements under the PIP regulatory scheme, presumably indicating that, at minimum, the mandatory fee schedules had not been applied.
The Appellate Division (New Jersey’s intermediate court) determined that the plaintiffs could introduce evidence of their outstanding medical bills in excess of the PIP policy limits in support of their liability claims against the other motorists.
The Supreme Court disagreed, noting that the highly regulated first-party PIP insurance scheme in New Jersey was not clearly designed to allow this outcome. The Court’s decision was premised on the language of the Automobile Insurance Cost Reduction Act (AICRA). That Act opened with a findings and declarations section, which noted that “in order to keep premium costs down, the cost of the benefit [of PIP insurance] must be offset by a reduction in the cost of other coverages, most notably a restriction on the right of persons who have non-permanent or non-serious injuries to sue for pain and suffering.” N.J.S.A. 39:6A-1.1(b) (1998).
The plaintiffs had contended that medical bills in excess of their $15,000 policy limits constituted an “economic loss,” and asked that the jury be permitted to consider those damages. Ordinarily, medical bills that are paid or collectible under a policy of No-Fault insurance are not elements of damages that can be presented as evidence of loss to a jury. The pertinent statutory language relied upon by the plaintiffs provided that “[n]othing in this section shall be construed to limit the right of recovery, against the tortfeasor, of uncompensated economic loss sustained by the injured party.” N.J.S.A. 39:6A-12. The Court, however, found that there was an inherent tension between the prescription in introducing evidence of bills collectible or paid, and between the above-cited statute, and as such was required to resolve the tension.
After reviewing the legislative history of New Jersey’s No-Fault insurance scheme, and the competing statutory provisions at issue, the Court ruled that the Legislature did not clearly decide to permit suits for economic damages in cases such as the one at bar. Thus, plaintiffs may not sue for economic damages in the form of medical expenses between $15,000 and $250,000 when they have selected PIP coverages in that amount. The Court nevertheless invited the Legislature to make its intention to introduce fault-based suits into the no-fault medical reimbursement scheme more explicit, if so desired.
Justice Albin issued a dissenting opinion decrying the “catastrophic impact on the right of low-income automobile accident victims to recover their medical costs from the wrongdoers who cause their injuries.” He similarly invited the Legislature to intervene and clarify the statute at hand.