On March 26, 2019, the New Jersey Supreme Court issued a ruling that impacts a person’s ability to recover medical expenses for injuries sustained as a result of an automobile accident that exceed the elected Personal Injury Protection (PIP) benefits. In Haines v. Taft, the Court narrowly held that injured persons cannot bring a stand-alone claim for uncompensated medical expenses that exceed the elected PIP coverage where the “limitation-on-lawsuit” prevented a claim for bodily injury. In order fully understand the implications of the Haines decision, a brief overview of New Jersey auto insurance law is provided.
We’ve all heard the expression that New Jersey is a “no fault” state, but many consumers do not fully understand what is meant by “no fault” when electing their insurance coverage. Simply put, “no fault” means that your own auto insurance carrier will pay for reasonable and necessary medical expenses for treatment of injuries causally related to an auto accident, regardless of who is at fault for the accident. In an effort to reduce the cost of automobile insurance, the New Jersey Legislature enacted the Automobile Insurance Cost Reduction Act (AICRA). AICRA provides options to consumers when choosing their auto insurance coverage that ultimately serve to reduce the premium (or cost) of said coverage. One such option, is an election of the amount of Personal Injury Protection (PIP) coverage afforded under the policy of insurance. PIP benefits provide for the payment of reasonable and necessary medical expenses causally related to an automobile accident. Consumers can choose to have the maximum available PIP coverage of $250,000, or the minimum coverage of $15,000, or some level of coverage in between. Generally, the election of a lower amount of PIP coverage translates to a reduced premium.
Another option is the choice between having the limitation-on-lawsuit (or verbal threshold) or no limitation (no verbal threshold). Electing “no limitation” is often cost prohibitive, leaving the majority of New Jersey drivers with the “limitation-on-lawsuit.” The “limitation-on-lawsuit” creates restrictions on when a person may sue for non-economic damages, such as pain and suffering, related to an auto accident. If the limitation-on-lawsuit is selected, you must meet at least one of six types of injuries in order to sue for non-economic damages. Those injuries are:
3. Loss of a Fetus;
4. Significant disfigurement or scarring;
5. Displaced fracture;
6. Permanent injury within a reasonable degree of medical probability
In Haines, the Plaintiffs both held standard auto insurance policies that provided $15,000 in PIP coverage and had the limitation-on-lawsuit. Both Plaintiffs incurred medical expenses that exceeded the elected $15,000 in PIP coverage. As a result of electing the limitation-on-lawsuit, neither plaintiff was able to sustain a claim for bodily injury because they could not prove that their injuries satisfied one of the six enumerated types of injuries. The Plaintiffs filed “stand alone” lawsuits to recover the outstanding medical provider charges that exceeded their elected PIP coverage.
In reaching its decision, the Court performed an analysis of the legislative history of AICRA and evaluated the legislature’s intent in enacting AICRA. The Court determined that the overall legislative design of New Jersey’s “No-Fault” law was to reduce court congestion, lower the cost of automobile insurance, and most importantly, avoid fault-based suits in a no-fault system. The Court found that to allow stand-alone lawsuits (where the “limitation-on-lawsuit” prevented a claim for bodily injury) to recover medical expenses that exceed the elected PIP coverage would frustrate the purpose and intent of AICRA. Accordingly, injured persons cannot bring a stand-alone claim for uncompensated medical expenses that exceed the elected PIP coverage where the “limitation-on-lawsuit” prevented a claim for bodily injury.
This holding, though narrowly tailored to a situation where the limitation-on-lawsuit prevents a claim for bodily injury, may create exposure if medical expenses exceed your elected PIP coverage.
In light of the Haines decision, if your PIP coverage is below the maximum amount of $250,000, at a minimum, you should get a quote to determine the cost of increasing your PIP coverage to the maximum amount. If possible, PIP coverage limits should be brought to the maximum allowable amount of $250,000. Doing so would provide additional protection in the event that you, or a relative who lives you, are injured as a result of an automobile crash, and would eliminate any potential exposure created by the Haines decision.
If you have been injured in an automobile crash due to the fault of another person, contact Laddey, Clark and Ryan, LLP to discuss your options. 973-729-1880.