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Curts v. Atlantic Mutual Insurance Co.

Decided: March 6, 1991.


On appeal from Superior Court, Law Division, Essex County.

Dreier, Ashbey and Landau. The opinion of the court was delivered by Landau, J.A.D.


This case requires us to determine whether summary judgment was properly granted in favor of defendant Atlantic Mutual Insurance Company (Atlantic Mutual), an Automobile Personal Insurance Protection (PIP) carrier, on a suit by plaintiff-appellant Lorraine E. Curts (Curts) to recover the value of medical services provided following an automobile accident, pursuant to her contract with the Presbyterian Homes of New Jersey (Presbyterian).

Presbyterian, a non-profit corporation, is, according to the contract of record, "organized exclusively for religious, charitable and hospital purposes, and for the moral and mental improvement of men and women." (Emphasis supplied). It operates a senior residence facility known as Meadow Lakes. There, in accordance with agreements such as that signed by the 79-year old Curts, Presbyterian provides living accommodations, meals and other services to seniors in consideration of the payment of a substantial "capital fee" and specified monthly amounts thereafter.

Among the services which Presbyterian agrees to provide are: "f. Medical and hospital care . . . in accordance with the paragraph entitled 'Provisions for Medical Care.'"

A copy of the medical care provisions and a brief addendum which excludes certain cancer benefits, is attached as an Appendix hereto. In general, the provisions include medical, surgical, hospital, and nursing care, both on-site and, when necessary, at off-site hospitals, subject to defined exceptions. Certain subrogation rights are preserved. Presbyterian reports annually to each resident the amount of monthly occupancy charges which has been attributed to the medical care provisions. The Internal Revenue Service has treated that allocated amount in the same manner as other deductible medical expenses. See Rev.Rul. 67-185, 1967-1 C.B. 70; Rev.Rul. 76-481, 1976-2 C.B. 70.

The record includes a statement from Presbyterian showing that the actual medical charges attributable to Curts' accident were $11,575.48. These included an allocation for Curts' substantial hospital stay and physical therapy visits, as well as x-ray and pharmacy charges. Curts suffered a broken leg in the accident. There is no indication that Curts had to make any out-of-pocket disbursements, inasmuch as the Presbyterian contract covered all of her charges.

During oral argument on the summary judgment motion, the trial judge and counsel for Atlantic Mutual agreed that had Curts been insured under a more traditional insurance program which provided her medical benefits, she would have been entitled to recover personal injury protection benefits under the PIP provisions of her automobile insurance policy. Summary judgment appears to have been granted to Atlantic Mutual based upon the trial judge's analysis of our opinion in Sanner v. Government Employees Ins. Co., 150 N.J. Super. 488, 376 A.2d 180 (App.Div.1977), aff'd o.b., 75 N.J. 460, 383 A.2d 429 (1978), and of the County Court opinion in Bernick v. Aetna Life and Casualty, 158 N.J. Super. 574, 386 A.2d 908 (Cty.Ct.1978). Essentially he held that no medical expenses were

"incurred" by Curts, and so there could be no medical expense benefits due under the PIP portions of Curts' automobile policy.

A review of applicable legislation and case law discloses an anomalous pattern respecting duplicate recovery of benefits. At the time of Curts' accident and medical treatment, the definition of medical expense benefits contained in N.J.S.A. 39:6A-4 read:

Payment of all reasonable medical expenses incurred as a result of personal injury sustained in an automobile accident. In the event of death, payments shall be made to the estate of the decedent. In the event benefits paid by an insurer pursuant to this subsection are in excess of $75,000.00 on account of personal injury to any one person in any one accident, such excess shall be paid by the insurer in consultation with the Unsatisfied Claim and Judgment Fund Board and shall be reimbursable to the insurer from the Unsatisfied Claim and Judgment Fund pursuant to section 2 of P.L. 1977, c. 310 (C. 39:6-73.1).

That statute was considered by both the Sanner and Bernick courts in conjunction with the provisions of N.J.S.A. 39:6A-6, which since the enactment of the No Fault Act has provided that medical benefits defined in N.J.S.A. 39:6A-4 shall be payable without regard to collateral sources. The "without regard to collateral sources" language was, at the time of the Sanner and Bernick decisions, subject to an exception for benefits collectible under Workers' Compensation Insurance, Employees' Temporary Disability Benefits statutes and Medicare. Following those decisions and our previous opinion in Lapidula v. Government Employees Ins. Co., 146 N.J. Super. 463, 370 A.2d 50 (App.Div.1977), the Legislature expanded those statutory exceptions to the "without regard to collateral sources" rule to include benefits "in fact collected" which were provided under federal law to active and retired military personnel. The change was made by amendment effective March 31, 1981. See L. 1981, c. 95.

Significantly, both Sanner and Bernick recognized that there was a difference between benefits provided under government programs without cost to the injured party and instances where the injured party's personal hospitalization policy provided medical expense benefits similar to those required by the PIP

statute. See Sanner, supra, 150 N.J. Super. at 495, 376 A.2d 180; Bernick, supra, 158 N.J. Super. at 582, 386 A.2d 908. Indeed, the draftsman of the No Fault Act wrote, shortly after its adoption:

The Act provides that medical expense benefits shall be paid without regard to payments from a collateral source except that benefits collectable [sic] from workmen's compensation insurance, temporary disability benefits, and medicare shall be deducted from the benefits that are collectible under the benefit provisions of the Act. (footnote omitted.) The emphasis is upon the language "benefits collectible." The injured person cannot elect under which coverage he wishes to be paid. If there are collectible ...

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