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PIP Carrier Entitled to Subrogation

July 16, 2009

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In Fernandez v. Nationwide Mutual Fire Insurance Company the plaintiff was the owner and operator of an automobile insured by Nationwide Mutual Fire Insurance Company when he was involved in an accident with a commercial vehicle owned by Go Pro Waste Services, Inc., and operated by Peter Garofalo (collectively, the tortfeasors). The tortfeasors’ vehicle was insured by Proformance Insurance Company for personal injury liability coverage in the amount of $1,000,000. As a result of the accident, Fernandez suffered serious injuries and incurred medical expenses totaling over $500,000. Nationwide paid Fernandez its PIP coverage limit of $250,000. Fernandez then filed a personal injury action against the tortfeasors. On July 14, 2004, Nationwide filed for intercompany arbitration against Proformance to recover the PIP benefits paid to Fernandez, together with interest.
On appeal, the Appellate Division reversed the trial court’s decision in a published opinion. The panel held that a PIP carrier who has paid PIP benefits to an insured is entitled to reimbursement of those benefits from the insurance proceeds of the third-party tortfeasor, even when the amount of the tortfeasor’s insurance is insufficient to make the insured whole.
Thanks to Sheila Osei for her contribution to this post.
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