On March 26, 2019, the New Jersey Supreme Court issued its long-awaited decision in Joshua Haines v. Jacob W. Taft and Tuwona Little v. Jayne Nishimura, (A-13/14-17) (079600). In a 3-2 decision delivered by Justice LaVecchia, in which Chief Justice Rabner and Justice Solomon joined, the Court held that an insured who elects to purchase reduced amounts of personal injury protection (PIP) coverage under a standard automobile insurance policy may not recover as economic damages medical expenses in excess of the reduced limit elected, up to the PIP default amount of $250,000. The Court thus reversed the Appellate Division’s conclusion that plaintiffs could introduce evidence of their outstanding medical bills in excess of the elected PIP coverage as economic damages, which would have permitted recovery against the tortfeasors.

In the consolidated cases before the Court in Haines, each of the plaintiffs was injured in a motor vehicle accident where they incurred medical bills exceeding the $15,000 in PIP coverage provided for in the policies purchased. Neither plaintiff could sustain a claim for bodily injury because of each policy’s limitation-on-lawsuit option. Accordingly, plaintiffs sought economic damages from their tortfeasors for unpaid medical bills exceeding the $15,000 PIP coverage provided for in the policies. The Court observed that the damages sought by plaintiffs were based on the full amount billed by the providers and were not subjected to any detailed review to determine if they were “reasonable and necessary” under the comprehensive regulatory scheme governing PIP. (Opinion at 3)

The Court’s decision serves as a primer on the history and development of New Jersey’s no-fault system of automobile insurance. The Court notes, at the outset of its analysis, that “as is universally understood, authorization to bring claims for bodily injury under our regulated system of motor vehicle insurance law is heavily circumscribed.” (Opinion at 13) Finding the Appellate Division’s conclusion, adopted by the minority in its dissent, “at odds with the overall intent of the legislative scheme for no-fault insurance” (Opinion at 15), the majority held that because the policyholders affirmatively elected to purchase reduced PIP coverage, instead of the default PIP amount of $250,000 provided, plaintiffs could not recover unpaid medical expenses. The Court reasoned that in the absence of “greater clarity of statutory language,” any other result would create “too large of a shift from the historical priorities and purposes of the statute.” (Opinion at 34)

In a scathing dissenting opinion, Justice Albin, joined by Judge Fuentes (temporarily assigned), states that the majority’s opinion is at “complete odds with public policy” and “will have a devastating impact on low-income insureds who must settle for less PIP coverage options because they cannot afford the highest coverage.” (Dissent at 3; 15) The majority notes that the dissent “glosses over the legislative history of the no-fault system … [and] never acknowledges the extensive legislative efforts … to contain medical utilization and control costs and to keep disputes related to utilization and cost containment out of the courts and in arbitration instead.” (Opinion at 34, n.7)

The decision in Haines is important for all participants, including policyholders, providers and practitioners, in New Jersey’s automobile insurance system and serves to preserve and protect the State’s no-fault system. However, both the majority and the dissent urge the Legislature in the opinion to clarify the statute. Thus, legislative proposals can be expected.

The firm represented amici curaie, Insurance Council of New Jersey and Property Casualty Insurers Association of America, in the matter. A copy of the Court’s opinion may be accessed here.