NJ Supreme Court Limits Boardable Medical Expenses Where Plaintiffs Elect Reduced Coverage Auto Policies

On March 26, 2019 the New Jersey Supreme Court rendered its decision in Haines v. Taft, a case not handled by Zarwin attorneys, overturning the Appellate Division in holding that Plaintiffs electing reduced PIP coverage of $15,000 instead of the “standard” amount of $250,000 available to all persons may not admit, or “board,” medical bills above their $15,000 PIP limit but below the standard $250,000 limit. Previously, the New Jersey Legislature precluded Plaintiff’s from boarding medical bills paid pursuant to their PIP policy up to the $15,000 limit in N.J.S.A. §39:6A-12:

Except as may be required in an action brought pursuant to section 20 of L. 1983, c. ([N.J.S.A.] 39:6A-9.1), evidence of the amounts collectible or paid under a standard automobile insurance policy pursuant to sections 4 and 10 of L. 1972, c. 70 ([N.J.S.A.] 39:6A-4 and 39:6A-10), amounts collectible or paid for medical expense benefits under a basic automobile insurance policy pursuant to section 4 of L. 1998, c. 21 ([N.J.S.A.] 39:6A-3.1) and amounts collectible or paid for benefits under a special automobile insurance policy pursuant to section 45 of L. 2003, c. 89 ([N.J.S.A.] 39:6A-3.3), to an injured person, including the amounts of any deductibles, copayments or exclusions, including exclusions pursuant to subsection d. of section 13 of L. 1983, c. 362 ([N.J.S.A. 39:6A-4.3), otherwise compensated is inadmissible in a civil action for recovery of damages for bodily injury by such injured person.

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Nothing in this section shall be construed to limit the right of recovery, against the tortfeasor, of uncompensated economic loss sustained by the injured party.

The question before the Court in Haines was focused on the medical bills that fall within the $15,000 to $250,000 range and specifically considered the context of “a stand-alone claim to be able to sue for only uncompensated medical expenses where the limitation-on-lawsuit policy option prevented a claim for bodily injury.” In other words, the Supreme Court only addressed the limited scenario where the Plaintiff could not sue for non-economic damages and was only seeking recovery of the amounts billed for treatment. Whether or not the holding has effect in any other scenario was not specifically addressed in this decision.

The Plaintiffs in Haines* were precluded from pursuing a non-economic bodily injury claim pursuant to the limitation on lawsuit election on the policies that covered them. Plaintiffs argued that Section 12’s plain language meaning of “uncompensated economic loss” should enable a Plaintiff to board amounts outstanding above and beyond those amounts paid pursuant to their $15,000 PIP coverage. The Defense argued that such an interpretation would hinder the goals of the no-fault system, namely limiting court costs and resources (the defense argued if the amounts above $15,000 were to be considered, protracted litigation would be necessary to determine whether or not the treatment rendered was reasonable and necessary), lowering insurance policy premiums and frustrating the purpose of a No-Fault based system (recovery of the amounts above the $15,000 limit would require a finding of fault against the tortfeasor).

The Court considered the historical aspects of New Jersey’s no-fault/insurance law up to the most recent amendments accomplished through the Automobile Insurance Cost Reduction Act (AICRA) in 1998. The stated goals of AICRA were “to preserve the No-Fault system, while at the same time reducing unnecessary costs which drive premiums higher.” N.J.S.A. 39:6A-1.1(b) (1998). The Senate Sponsor’s Statement regarding AICRA noted that “the overutilization of medical benefits under automobile insurance policies” was “the principal cause of the escalation in premiums in recent years.” The Court ultimately agreed and took a “cost-containment” approach, rather than a “full coverage” approach, and determined that “to interpret Section 12 to allow the admission of evidence of medical expenses falling between the insured’s PIP policy limit and the $250,000 PIP statutory ceiling transgresses the overall legislative design of the No-Fault law to ‘reduc[e] court congestion[,]…lower the cost of automobile insurance[,]’ and most importantly, avoid fault-based suits in a No-Fault system…”

Accordingly, at least in instances of claims for “uncompensated medical expenses where the limitation-on-lawsuit policy option prevent[s] a claim for bodily injury,” medical bills above the $15,000 PIP limit but below the $250,000 standard limit are inadmissible in a Plaintiff’s personal injury case.

*The Court considered the consolidated cases of Joshua Haines and Tuwona Little. Each Plaintiff was covered under a policy with $15,000 in PIP coverage. Mr. Haines alleged $28,000 and Ms. Tuwona alleged $10,488 in outstanding medical bills.

For more information, please contact Matthew Kessler at mpkessler@zarwin.com.