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O''Boyle v. Prudential Insurance Co.

Decided: June 6, 1990.

MARIE O'BOYLE, PLAINTIFF-APPELLANT,
v.
PRUDENTIAL INSURANCE COMPANY OF AMERICA, DEFENDANT-RESPONDENT



On appeal from the Superior Court of New Jersey, Law Division, Sussex County.

King, Shebell and Baime. The opinion of the court was delivered by King, P.J.A.D.

King

This case concerns the right of an insured to collect "no fault" income continuation benefits (N.J.S.A. 39:6A-4) provided by her personal injury protection (PIP) coverage where she has already been fully reimbursed for her lost earnings through an income continuation plan provided by her employer, Sears. Plaintiff worked at Sears as a salesperson when she was hurt in an automobile accident on August 4, 1983. She earned $627.12 a week. She lost ten weeks from work because of her injury. She actually lost no income, however, as her wage loss was reimbursed entirely by Sears' private disability employee-benefit income plan, approved by the State. See N.J.S.A. 43:21-32.

Plaintiff had PIP income protection benefits with her automobile insurer Prudential Insurance Company of America for up to $400 per week. N.J.S.A. 39:6A-4. Plaintiff claims that since this State's temporary disability benefit act provides for a maximum benefit of only $236 per week, she was entitled to recover $164 per week from Prudential, the difference between

$236 and the maximum PIP benefit of $400, for her ten-week period of disability, or a sum of $1,640. We agree and reverse the summary judgment entered in Prudential's favor in the Law Division.

The applicable section of the "no fault" law is N.J.S.A. 39:6A-6 (Collateral Sources), which states in pertinent part:

The benefits provided in section 4 and section 10 [income continuation benefits] shall be payable as loss accrues, upon written notice of such loss and without regard to collateral sources, except that benefits, collectible under workers' compensation insurance, employees' temporary disability benefit statutes, medicare provided under Federal law, and benefits, in fact collected, that are provided under Federal law to active and retired military personnel shall be deducted from the benefits collectible under section 4 and section 10. [Emphasis supplied.]

Plaintiff was paid in full by her employer's disability plan for her lost earnings over ten weeks. Her employer's disability plan was a qualified private plan established and approved under our Temporary Disability Benefits Law in lieu of the State plan, N.J.S.A. 43:21-25 to -42. See N.J.S.A. 43:21-32; N.J.S.A. 43:21-37. Under this Act, an employer must participate in either the State plan or a qualified private plan of disability benefits. N.J.S.A. 43:21-28; see N.J.A.C. 12:18-1.1 to -3.9.

The temporary disability benefit exception to the "collateral source" rule contained in N.J.S.A. 39:6A-6 has been in our "no fault" law since its inception in January 1973. See Iavicoli, No Fault & Comparative Negligence in New Jersey, § 19 at 54 (1973); Frazier v. Liberty Mutual Ins. Co., 150 N.J. Super. 123, 142, 374 A.2d 1259 (Law Div.1977); Puzio v. N.J. Manufacturers Co., 165 N.J. Super. 585, 589, 398 A.2d 934 (Dist.Ct.1979); Tillman v. Allstate Ins. Co., 154 N.J. Super. 206, 209-210, 381 A.2d 74 (Ch.Div.1977). The three original deductions from collateral source benefits mandated in our "no-fault" law, N.J.S.A. 39:6A-6 -- workers' compensation, temporary disability and medicare -- all contributed to the insurance premium reduction mandated by the Act. Iavicoli, at 56; N.J.S.A. 39:6A-18; L.

1972, c. 70, § 18. The federal military benefit deduction was added in 1981. L. 1981, c. 95, § 1.

The purpose of the collateral source deduction was to prevent double recovery of benefits by accidental victims of personal injury to the extent that these benefits were mandated otherwise by law. Iavicoli, at 55-56. The supplementary benefits above $236 a week awarded to plaintiff through Sears' disability plan, however, were not required by law. The Temporary Disability Law makes such private supplementary plans, to ...


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