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EMPLOYERS ASSN. OF NEW JERSEY v. NEW JERSEY

January 24, 1985

EMPLOYERS ASSOCIATION OF NEW JERSEY, Plaintiff,
v.
STATE OF NEW JERSEY AND JOSEPH F. MURPHY, COMMISSIONER DEPARTMENT OF INSURANCE, STATE OF NEW JERSEY, Defendant



The opinion of the court was delivered by: ACKERMAN

 In this action, the plaintiff, Employers Association of New Jersey, seeks declaratory and injunctive relief invalidating certain provisions of the New Jersey Automobile Insurance Freedom of Choice and Cost Containment Act of 1984, N.J. Stat. Ann. § 39:6A-1 et seq. as pre-empted by federal law. Plaintiff is a non profit, tax exempt organization consisting of more than 700 employers having facilities in New Jersey and engaging in such undertakings within this state as manufacturing, utilities, pharmaceuticals, petrochemicals, insurance and banking. Defendants are the State of New Jersey and Joseph F. Murphy, Commissioner of Insurance of New Jersey. I note that Mr. Murphy was subsequently replaced by Acting Commissioner Kenneth D. Merin.

 This case is presently before me on three motions: plaintiff's motion for summary judgment, defendant's cross motion for summary judgment or dismissal and a motion by the New Jersey state AFL-CIO, representing the interests of employees, to intervene as a party plaintiff for the purpose of submitting a brief on behalf of plaintiff Employers Association. For the reasons set forth below, I have decided to grant the motion to intervene, to deny plaintiffs action for summary judgment and to grant summary judgment in favor of the defendants herein.

 The undisputed facts are as follows. Since 1973, New Jersey has required that every owner of an automobile registered or principally garaged in this state maintain liability coverage in specified minimum limits, N.J. Stat. Ann. § 39:6A-3 (West 1973); N.J. Stat. Ann. § 39:6B-1 et seq. (West 1973); every automobile liability policy was required to provide, in addition to liability coverage, Personal Injury Protection ("PIP") benefits which were payable to an insured who was injured as a result of an auto accident without regard to negligence or fault. N.J. Stat. Ann. § 39:6A-4 (West 1973 Supp. 1984). This additional coverage, known as "No-Fault," provided benefits for medical expenses, income continuation, essential services, survivor payments and funeral expenses. Motorists were required to purchase this complete package of coverage regardless of the individual's need, even if the person were paying for the same or similar coverage from another source. Since PIP coverage was considered "primary" in most instances (only workers' compensation, temporary disability and medicare benefits were deductible from PIP recoveries, N.J. Stat. Ann. § 39:6A-6 (West 1973 Supp. 1984)) comprehensive health coverage provided by employers or others could not be used with respect to injuries arising from auto accidents. This was so because PIP provided "first dollar" coverage (i.e., no deductible amount applied) and was not limited by any maximum payment.

 The only option available to motorists was the option to purchase even greater non-medical PIP coverage. Section 39:6A-10 of the Act permitted insureds to purchase increased income continuation, essential services, death and funeral expense benefits at increased premiums.

 On or about October 4, 1983, New Jersey enacted a series of automobile insurance reforms known as the "New Jersey Automobile Insurance Freedom of Choice and Cost Containment Act of 1984." The primary purpose of the Act was to help reduce the high cost of mandatory automobile insurance in this State. The Act created options which the individual policy holder could elect to significantly reduce his insurance premiums. The Act requires auto insurers to offer insureds (a) three deductible options (in amounts of $500, $1,000 and $2,000) with respect to the PIP medical expense coverage; (b) the option to exclude all of the non-medical PIP coverages, and (c) the option to reimburse the insurer for medical expenses paid on behalf of the insured in the event the insured later recovers a "pain-and-suffering" judgment against the at-fault driver. Curiously, plaintiff does not challenge these substantive changes in the insured's options under the New Jersey Scheme.

 The Act further contains the following provisions challenged by the plaintiff herein. Section 4 of the Act, N.J. Stat. Ann. § 39:6-86.2 (West 1973 Supp. 1984) states:

 
The benefits provided in sections 7 and 10, shall be payable as loss accrues, upon written notice of such loss except that benefits collectible under:
 
* * * *
 
b. Any hospital, medical or dental benefits plan or policy coverage with benefits similar to those provided under section 7, in an amount not to exceed $2,500.00 for any one claim for any one person, shall be deducted from the benefits collectible under sections 7 and 10.

 This provision rendered personal injury benefits available from the Unsatisfied Claim and Judgment Fund secondary up to a maximum of $2,500.00. Of course, amounts in excess of $2,500.00, or of the chosen deductible, are compensable as before from the Fund. Section 17(a) of the Act, N.J. Stat. Ann. 39:6A-23(a) (West 1973 & Supp. 1984) requires that "written notice identifying and containing a brief description of all available policy coverages and benefit limits, and identifying which coverages are mandatory and which are optional under state law, as well as all deductible, exclusion, set off and tort limitation options offered by the insurer" be provided to all policy holders and accompany all applications for new policies or renewals. Further, "the insurer shall identify the percentage of premium rate credit for each option as the case may be". Lastly, the notice must "also contain a statement on the possible coordination of other health benefits coverages with the personal injury protection coverage options, the form and contents of which shall be prescribed by the Commissioner of Insurance". Subsection (c) requires the Commissioner to "promulgate standards for the written notice and buyers guide required to be provided under this section".

 Pursuant to this enabling legislation, the Commissioner has adopted the following regulations pertinent to the instant action:

 
a) In accord with section 17(a) of [the Act] the written notice and buyer's guide are to contain a statement on the possible coordination of other health benefit coverages with the personal injury ...

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