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Game Changing NJ Supreme Decision Impacts Boardable Medical Expenses in NJ PIP Cases

April 3, 2019

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The New Jersey Supreme Court issued a decision in <a href=""><em>Haines</em> <em>v.Taft</em></a><em> </em>that will have a significant impact on how plaintiffs present their damages in motor vehicle accident cases. Each plaintiff in this appeal before the New Jersey Supreme Court was injured in a car accident, and was insured under a standard policy with a $15,000 PIP coverage limitation, rather than the default amount of $250,000. Drivers often elect for the $15,000 PIP coverage to pay lower insurance premiums. However, when accidents occur, medicals often exceed the amount of their insurance coverage, as was the case in <u>Haines</u>.

Each plaintiff filed a personal injury claim for outstanding medical provider charges in excess of their elected PIP coverage. Defendants moved to preclude plaintiffs from presenting evidence of medical expenses that exceeded their $15,000 PIP limits. In opposition, plaintiffs maintained that the medical bills exceeding PIP coverage constitute “economic loss” and should be admissible as defined in N.J.S.A. 39:6A-2(k).

The trial courts ruled against plaintiffs in each matter and barred plaintiffs from admitting evidence of their medical expenses that exceeded their $15,000 PIP limits. The Appellate Division consolidated the cases on appeal, and reversed both trial court orders. The NJ Supreme Court then granted defendants’ petitions for certification.

The Court analyzed the legislative history and the intent of No-Fault laws. It found that the Automobile Insurance Cost Reduction Act (AICRA), sought to preserve the no-fault system, while at the same time reducing unnecessary costs which drive premiums higher. AICRA changed the arbitration process used for benefit disputes, established bases for determining whether treatments and diagnostic tests are medically necessary, revised the threshold for suits for non-economic loss, and created insurance options with decreased coverage in return for lower premiums.

AICRA’s regulatory scheme sought to keep premiums at a manageable level, ensuring that benefits were paid according to their medical necessity and created a “verbal threshold” that barred minor claims from inundating the court system. The NJ Supreme Court, upon review of the legislative intent of the AICRA, found that efforts to subject medical costs to careful review through extensive regulatory programs would be undercut by the ability of a third party to sue for medical expenses above their PIP policy coverage limit but below the presumptive amount of $250,000. Those lawsuits would commandeer the judicial resources that the AICRA enacted to preserve.

The Court found that if they interpreted the law through plaintiff’s perspective, wherein medical bills exceeding the PIP coverage constitute “economic loss” that should be admissible, it could create the absurd consequence whereby someone who chooses a lower PIP coverage option could receive a higher overall reimbursement than one who elected for a $250,000 PIP coverage policy. The Court determined that under the No-Fault Law, the ability to sue is the <em>exception</em>, not the rule. The Legislature has determined that the benefits of creating limited but automatic medical reimbursement for injured motor-vehicle-accident victims outweigh the ability of a minority of injured parties to recover larger amounts in tort.

As such, the Supreme Court reversed the decision of the appellate Division.  Thanks for Steve Kim for his contribution to this post.  Please email <a href="">Brian Gibbons</a> with any questions.

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