The Appellate Division provided clarity to the one or two insurers in the State of New Jersey that tried to reduce their insured's PIP benefit coverage (Personal Injury Protection benefits) by a dubious argument that co-pays and deductibles are included as part of the total PIP benefits coverage. For example, if an insured purchased PIP coverage for $15,000, with a $500 deductible and the mandated 20% co-pay on the first $5,000 in benefits, Travelers argued that its own actual payout burden was $13,500 - shorting the insured $1,500 by taking credit for the deductible and co-pays. Attorneys representing PIP claimants have fought against this ridiculous interpretation by the insurers, however no insurer was foolish enough to try and push the point at trial. Until this year. Birmingham, et al. v. Travelers N.J. Ins. Co., et al., A-0429-21 (App. Div. 3/31/23)
The Appellate Division found that the deductible and co-pay are not part of the calculated PIP benefits but stopped short of the correct legal reasoning. In the case at bar, the Court held that because there was no language or agreed upon terms between the insurer and insured as to whether deductibles and co-pays are part of PIP benefits, the insurer was wrong to reduce its PIP benefits payout. However, an auto insurance policy is an adhesion contract between an Insurer and an Insured. Both the Insurer and Insured have legal obligations which flow from the contract. Following a motor vehicle accident wherein a claim for medical benefits is made, an Insurer must pay benefits for medically necessary treatment until the policy limits are exhausted. An Insured is responsible for paying, out-of-pocket, a pre-selected deductible and a co-payment at the rate of 20% on the first $5,000 in benefits paid, pursuant to their PIP policy. A "deductible" means the "portion of an insured loss to be borne by the insured before he is entitled to recovery from the insurer." Black's Law Dictionary 372 (5th Ed. 1979).
The New Jersey Department of Banking and Insurance (“NJDOBI”), the agency charged with creating regulations governing PIP, created the New Jersey Auto Insurance Buyer’s Guide (the "Guide"). A plain reading of the Guide reveals deductibles and co-payments are the responsibility of the Insured, and the Insurer cannot take same as a credit as benefits paid.
NJDOBI defines “deductible” as “[p]ayments you have to make before the insurer pays. For example, a $750 deductible means that you pay the first $750 of each claim.” The Guide at p.6. The Guide also states, with one caveat, “[y]our insurer will pay the medical bills over the deductible amount you choose.” Id. That caveat is that a co-payment of 20% for medical expenses between the deductible selected and $5,000 applies. The Guide continues, “[t]hat means you pay 20 percent, and your insurer pays 80 percent.” Id. A “co-payment” is, as explained in the Guide, a 20% responsibility of the Injured on amounts up to $5,000. The Insurer is responsible for 80%. Id.
The public policy behind the deductible and co-payment, was to assist in controlling auto insurance rates in this State. See Craig and Pomeroy, N.J. Auto Insurance Law § 1 (2014). In addition, there was a problem with lower income individuals bypassing auto insurance policies due to the exorbitant costs of procuring same. As the legislature declared,
"Whereas, The high cost of automobile insurance in New Jersey has presented a significant problem for many-lower income residents of the state, many of whom have been forced to drop or lapse their coverage in violation of the State's mandatory motor vehicle insurance laws, making it necessary to provide a lower-cost option to protect people by providing coverage to pay their medical expenses if they are injured." §39:6A-1.1.
Thus the Legislature instituted the deductible and co-pay system, and, along with the Courts, understood that sometimes following an accident an injured person will only require minimal medical treatment. Craig and Pomeroy, N.J. Auto Insurance Law § 1 (2014).
There are times that an injured will not require ANY benefits to be paid by an Insurer. See Roig v. Kelsey, 135 N.J. 500 (1994). In those situations, when the deductible covers all expenses, the Insurer has effectively paid nothing in benefits. It is incongruous to accept the argument that out-of-pocket payment by an injured should be credited to the benefit of a multi-billion dollar auto insurer.
In 1995 New Jersey enacted the Affidavit of Merit ("AOM") statute as past of tort reform. That meant plaintiffs who file a professional negligence or malpractice suit against certain professionals must submit a signed AOM within 60 days of the filing of an answer, otherwise the suit can be dismissed.
In a recent case, Gilligan v. Junod, the plaintiff sued, but not limited to, Ms. Junod who is a licensed practical nurse. The action sounded in health care negligence and malpractice. The plaintiff did not submit an AOM. Ms. Junod argued that as a licensed professional the plaintiff was required to submit an AOM, and because plaintiff did not timely submit one, the suit must be dismissed as to her.
The Appellate Division held that the AOM statute was clear that - as to the nursing profession - only a registered nurse was a covered professional. Therefore no AOM was needed to sustain a suit against a licensed practical nurse.
Guy Gilligan, et al. v. Susan Junod, L.P.N., et al., A-1907-21 (11/9/22)
In a recent published Appellate Division case, the court firmly upheld a trial court's summary judgment decision which dismissed an action filed by an automobile insurer seeking remuneration from a health insurer for PIP benefits paid for certain people injured in auto accidents. The pertinent facts are that these individuals procured auto insurance from the auto insurer but designated the health insurance as the "primary" payor of PIP benefits in the event of accident.
Here, the health insurer never processed any requests for payment which were made directly by the auto insurer. Here, the auto insurer voluntarily issued PIP benefits (i.e., payments) on behalf of the injured people. Here, it appears that the auto insurer did not direct the injured people to submit their claims to the health insurer first. This is an important step in the PIP scheme of "primary vs. secondary" because only after a denial by the health insurer will the auto insurer become responsible for payment.
Therefore due to the many mis-steps by this auto insurer, its complaint was dismissed with prejudice.
Palisades Insurance Company v. Horizon Blue Cross Blue Shield of New Jersey A-2830-19.
In a lengthy unpublished decision from the Law Division, a beneficiary of the state funded health insurance plan (NJ Direct Plan) was denied the ability to sustain a legal action filed in the Superior Court. At issue was a benefit determination by the insurer, by no fault of the insured, which resulted in double payment being made to an out of network healthcare provider. Subsequent to the health insurer making double payment for one date of service, the insurer began reducing further payments to this beneficiary and her other healthcare providers. This left the insured to settle each account out-of-pocket.
The error which this insured made was that she did not try to file an internal appeal with the health insurer, and did not follow the steps required by the insurance Plan or the statutory constructs which enables a state funded health insurance plan. Following an adverse benefit determination by a state funded health insurer, the aggrieved insured must file an internal appeal/s, proceed to the State Benefits Healthcare Commission and then the Appellate Division which has original jurisdiction in such matters.
Although in the instant case the insured tried to circumvent the statutory law and the insurer's Plan by asserting a tort occurred, this Court saw through the ruse and held the legal issue here was an adverse benefit determination. The case was dismissed with prejudice and it remains to be seen if the insured can still timely file an appeal and begin the process as outlined in the insurer's Plan. (Tomaszewski v. Horizon Healthcare Services, Inc.)
The NJ Supreme Court recently affirmed an Appellate Division's decision that medical providers' claims for reimbursement, related to and arising from treatment rendered in a workers' compensation context, are not time barred by the two-year statue of limitations as found in the enabling workers compensation statute but rather remain legally viable for the full six-year period allotted for contracts per N.J.S.A. § 2A:14-1.
The genesis of the challenge was a 2012 amendment to the WC enabling statute which "granted the Division of Workers' Compensation . . . exclusive jurisdiction over claims brought by medical providers for payment of services rendered to injured employees." The employers, by and through their insurance providers, argued that the Legislature must have also truncated the statue of limitations for medical providers' claims for reimbursement, related to and arising from treatment rendered in a workers' compensation context, because of the 2012 amendment.
The Court disagreed with that argument after an examination of the Legislature's intent when it amended N.J.S.A. § 34:15-51. Since the amended statute remained silent as to altering the statute of limitations, and because for many, many years prior the SOL was a six-year period, there could be no finding that the medical providers' claims should be time barred after two-years. The Court noted the Legislature can reexamine this issue and could truncate the SOL, however it did not do so with the 2012 amendment. (The Plastic Surgery Center, PA v. Malouf Chevrolet-Cadillac, Inc. )
In a recent opinion, the New Jersey Supreme Court held that a change in the trial testimony of a defendant-physician in a medical malpractice litigation did not warrant a new trial. In the underlying trial, the physician's testimony deviated from that given in his discovery responses, including his deposition. Plaintiff's counsel did not object to this deviation at trial, and ultimately a jury found in favor of the physician defendant. The Appellate Division, in as split opinion, overturned the verdict and ordered a new trial. However, the Supreme Court reversed the appellate court's decision, holding that there was no prejudice to Plaintiff in the failure of plaintiff's counsel to object at trial regarding the difference in testimony. On the contrary, they noted that counsel for Plaintiff indicated it was "strategic and tactical" why no objection was made. Specifically, Plaintiff's counsel believed that the changed testimony now favored the Plaintiff because the defendant-physician admitted to reviewing data from a clinical trial of the prescribed medication and same was rife with dangerous side effects. Thus, Plaintiff's counsel believed that Plaintiff's position that the physician must have known the dangers prior to prescribing was supported by the testimony. However, the jury ultimately denied compensation to the Plaintiff. The Supreme Court's main focus was on whether or not the change in testimony prejudiced the Plaintiff. Citing to a prior decision named McKenney that the Appellate Division relied upon, the Supreme Court recapitulated that in McKenney the change in testimony was "egregious and clearly prejudicial" while in the matter at bar, the change was "arguably favorable" to the Plaintiff. Consequently, the jury verdict was affirmed. (T.L. v. Jack Goldberg, M.D.)
If you lend your car to someone who you know does not have a driver's license, should they be covered by your automobile's insurance PIP policy if they drive your car and get into an accident? The New Jersey Appellate Division has ruled unlicensed drivers should not be covered and are therefore ineligible for recovery of medical benefits under the personal injury protection provisions of the owner's auto insurance policy.
This decision builds upon prior case law and continues to refine who a "permissive user" of an automobile can be. The Appellate Division held that public policy bars an owner from giving "permission" to someone who cannot, and should not, legally be operating a vehicle on the roadways. In this particular case, the owner was the mother of the unlicensed driver and both of them lived at the same residence. Not only was knowledge imputed to the mother, but she admitted that she knew the driver was unlicensed. Although the terms of the insurance policy did not explicitly exclude coverage of unlicensed drivers, the Court examined public policy which forbids unlicensed drivers from operating vehicles on the roadways of this State. If you are not entitled to drive but chose to do so, then you are not entitled to the benefits provided by an automobile's PIP insurance coverage, even if you are operating the vehicle with the owner's permission. (Norma Blanco-Sanchez v. Personal Service Insurance Company)
Peter J. Vazquez, Jr.