On May 23, 2019, the Appellate Division issued a decision in Liberty Mutual Insurance Company, et al. v. Penske Truck Leasing Co., et al., and made clear that New Jersey insurers are permitted to pursue reimbursement of personal injury protection (“PIP”) benefits through arbitration against the insurance carriers for insured tortfeasors, even where there has been no adjudication of whether or not the other party is a “tortfeasor.”
Pursuant to New Jersey’s No Fault Act, every insurance policy for a private passenger automobile registered or garaged in New Jersey must offer no-fault based coverage for personal injury protection benefits. N.J.S.A. 39:6A-1, et seq. In other words, regardless of who is at fault for a motor vehicle accident, insurance carriers are required to provide insurance to pay medical benefits, and other benefits, to their insureds who are injured in car accidents. The No Fault Act presently does not permit subrogation by those insurance carriers for the recovery of PIP benefits. However, a separate statutory cause of action for reimbursement was created, at N.J.S.A. 39:6A-9.1. This provides that:
An insurer, health maintenance organization or governmental agency paying benefits pursuant to subsection a., b. or d. of [N.J.S.A. 39:6A-4.3], personal injury protection benefits in accordance with [N.J.S.A. 39:6A-3.1] or benefits pursuant to [N.J.S.A. 39:6A-3.3], as a result of an accident occurring within this State, shall, within two years of the filing of the claim, have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain personal injury protection or medical expense benefits coverage, other than for pedestrians, under the laws of this State, … or although required did not maintain personal injury protection or medical expense benefits coverage at the time of the accident.
If that tortfeasor is insured, the reimbursement is to be made by the insurer. The statute also provides that “the determination as to whether an insurer … is legally entitled to recover the amount of payments and the amount of recovery, including the costs of processing benefit claims and enforcing rights granted under this section, shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration.” N.J.S.A. 39:6A-9.1(b).
In the case before the Appellate Division, a motor vehicle accident had occurred between a pick-up truck and a tractor-trailer owned by the self-insured respondent, CEVA Freight LLC. That tractor-trailer was backing up into a car dealership lot, and other vehicles had seen the vehicle and managed to stop without issue. The injured insured, however, struck the vehicle, and filed an application for PIP benefits through Liberty Mutual. CEVA, as a self-insured owner of a commercial vehicle, was not required by law to carry PIP insurance, and as such was subject to the recovery statute, N.J.S.A. 39:6A-9.1.
CEVA refused to proceed to arbitration, contending that it was not a “tortfeasor” within the meaning of the statute insofar as no court had determined its fault for the accident. Liberty Mutual filed a motion to compel arbitration before the trial court, and CEVA opposed. The trial court agreed with CEVA’s position, and denied the motion. An appeal as of right by Liberty Mutual followed.
The Appellate Division disagreed, noting that the construction of the statute argued by CEVA would require adjudication of whether a tortfeasor was negligent before permitting arbitration of an insurance carrier’s claim for reimbursement. This “would undermine the statutory scheme by creating an extra and potentially lengthy step in what the Legislature intended to be an expeditious and efficient process.” The court determined that the question of whether the operator of the CEVA Freight vehicle was negligent was not strictly a question of law, but was a question of fact that was more than appropriate for an arbitrator to decide. The court reversed the trial court and compelled the parties to proceed to arbitration. Thus, parties may not resist PIP reimbursement arbitration merely on the basis that they deny liability for the happening of the accident.