This case of first impression is presented pursuant to cross-motions for summary judgment in a suit for declaratory judgment. The issue before the court concerns the interpretation of N.J.S.A. 39:6A-4.3(a) and (c) of the New Jersey Automobile Reparation Reform Act, commonly known as the "no fault" insurance law.
Plaintiff, Barbara Swydersky, seeks the entry of an order compelling defendant, Prudential Property and Casualty Insurance Company (Prudential), to reimburse monies withheld from her personal injury protection benefits pursuant to N.J.S.A. 39:6A-4.3(a) and monies withheld pursuant to a third-party recovery "setoff" pursuant to N.J.S.A. 39:6A-4.3(c).
N.J.S.A. 39:6A-4.3(a) provides inter alia:
With respect to personal injury protection coverage provided on an automobile in accordance with section 4 of P.L.1972, c. 70 (C. 39:6A-4), the automobile insurer shall, at appropriately reduced premiums, provide the following coverage options:
a. Medical expense benefit deductibles in amounts of $500.00, $1,000.00 and $2,500.00 for any one accident;
N.J.S.A. 39:6A-4.3(c) provides inter alia,
c. A setoff option entitling an automobile insurer paying medical expense benefits under section 4 to reimbursement from, and a lien on, any recovery for noneconomic loss by an injured party pursuant to an arbitration award, judicial judgment of voluntary settlement for the amount of the medical expense benefits paid, not to exceed 20% of the amount of the award, judgment or settlement, including recoveries under uninsured and underinsured motorist coverage . . .
Plaintiff is the mother-in-law of David Sutton, the named insured on a liability insurance policy issued by defendant. Plaintiff did not own an automobile nor is she the named insured on any liability insurance policy. Plaintiff resides with her son-in-law and daughter, and pays them $300 a month for room and board.
On March 27, 1985, plaintiff was a passenger in Sutton's vehicle when it was involved in a collision with a vehicle operated by Leonard Holmes, Jr., who also was insured by defendant. Both plaintiff and Sutton were injured and sustained medical bills in excess of $2500.
When Sutton purchased his policy of insurance from defendant, he elected the option of a medical expense benefit deductible of $2500 as permitted by N.J.S.A. 39:6A-4.3(a) and a setoff option entitling an automobile insurer to reimbursement from, and a lien on, any recovery for noneconomic loss by an injured party (named insured or resident relative) "not to exceed 20% of the amount of the award," pursuant to N.J.S.A. 39:6A-4.3(c).
Plaintiff asserted a claim against defendant for personal injury protection benefits, and filed a complaint for noneconomic losses against Sutton and Holmes. Sutton also filed his own claim for medical reimbursement with defendant.
In processing plaintiff's and Sutton's medical reimbursement claims, defendant, relying upon the following statutory language, deducted $1250 from plaintiff's claim and $1250 from Sutton's claim. N.J.S.A. 39:6A-4.3.
In the case of a medical expense benefit deductible, the deductible elected by the named insured shall be satisfied for any one accident, whether the medical expense benefits are paid or provided, in the amount of the deductible, to the named insured or to one or more resident relatives in the named insured's household who are not named insureds under another insurance policy, or to any combination thereof. [ Ibid. ]
When plaintiff settled her claim for noneconomic loss against Sutton and Holmes, defendant also deducted 20% from the total gross settlement ...