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Oswin v. Shaw

Decided: August 2, 1991.


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

King, R.s. Cohen and Stern. The opinion of the court was delivered by King, P.J.A.D.


This case calls for the practical application of the limitation on the right to sue for non-economic loss under, the tort exemption, contained in N.J.S.A. 39:6A-8(a); L. 1988, c. 119 § 6, effective January 1, 1989. In more common parlance, this tort exemption has become known as the "verbal threshold." This threshold must be crossed before the plaintiff in a car accident may pursue a common-law tort claim for temporary or permanent disability and pain and suffering.

The statute was a pragmatic accommodation provoked by the spiraling costs and decreasing availability of automobile insurance, congestion in the courts, and the conviction of many that the judicial system should not give audience to minor automobile injury claims. Judge Muir has treated us to the history in Emmer v. Merin, 233 N.J. Super. 568, 572-574, 559 A.2d 845 (App.Div.), certif. denied, 118 N.J. 181, 570 A.2d 950 (1989), where we upheld the regulations promulgated by the Commissioner of Insurance pursuant to the statute. See N.J.A.C. 11:3-15.7. We will not repeat this history except to reiterate that the 1988 tort exemption statute was an effort to reform the "no-fault" system by "providing an effective way to materially reduce the number of auto-related personal injury cases litigated in the courts." Id. at 572, 559 A.2d 845. Consumer pressures led to legislative efforts to pass a law with significant premium reduction. Id. at 573, 559 A.2d 845.

Ultimately, as Judge Muir explains, a legislative compromise was reached which eliminated the previous dollar thresholds, which had ranged from $200 to $1,500. On September 8, 1988 Governor Thomas Kean signed into law the act which included the "verbal threshold" we apply today. Id. at 574, 559 A.2d 845. The primary change in existing law required insurance consumers to elect between two types of coverage, literally column a or column b. N.J.S.A. 39:6A-8.1. The consumer would pay a lower premium for a policy which restricted recovery for non-economic loss, N.J.S.A. 39:6A-8(a), or a higher premium for a policy with an unrestricted right of recovery for non-economic loss, N.J.S.A. 39:6A-8(b). The plaintiff here, Annie Oswin, bought the lower price option a.

In the Governor's Reconsideration and Recommendation Statement that lead to the compromise which produced the final draft of the verbal threshold law, we find the reasons for the tort options. See Emmer v. Merin, 233 N.J. Super. at 573-574, 559 A.2d 845. We repeat the pertinent part of Governor Kean's Statement which was the prelude to the act because of its obvious importance to our understanding and application of the legislation to the problem before us.

[A] better compromise than that contained in the present bill, and one which can be supported and passed in both Houses, has been reached. That compromise is to make the verbal threshold the basic liability coverage in every automobile insurance policy the law of the land in New Jersey. At the same time, individual insureds will be permitted to opt for a monetary threshold, at a higher cost, if they so choose. I recommend adoption of a zero dollar threshold option. In effect, the zero dollar threshold will allow individuals to opt into a pure fault liability system, a choice which will be reflected in their higher premiums. The purpose of the zero dollar option is to remove the incentive to inflate medical bills -- thereby placing an unnecessary burden on PIP coverage -- in order to reach some specified monetary threshold. I believe the citizens of New Jersey recognize that when their medical bills are being promptly paid, without regard to fault, they lose next to nothing in relinquishing the ability to sue for pain and suffering for nonserious injuries only and, consequently, the vast majority will maintain the base verbal threshold. The verbal threshold contained in this recommendation is patterned after that in force in New York State (See New York Insurance Law §§ 5102, 5104). This verbal threshold specifically sets forth those injuries which will be considered "serious." Lawsuits for non-economic injuries, such as pain and suffering, will be allowed for

these enumerated "serious injuries" only. It is my intention that the term "serious injury," as defined in this recommendation, shall be construed in a manner that is consistent with the New York Court of Appeals' decision in Licari v. Elliot, 57 N.Y. 2d 230, 455 N.Y.S. 2d 570, 441 N.E. 2d 1088 (1982). Whether a plaintiff has sustained a "serious injury" must be decided by the court, and not the jury. Otherwise, the bill's essential purpose of closing the courthouse door to all lawsuits except those involving bona fide serious injuries will be diluted and the bill's effectiveness will be greatly diminished. In addition, strict construction of the verbal threshold is essential; any judicial relaxation of this plain language will impede the intent of maintaining the substantial benefits of no-fault at an affordable price. [ Id., 233 N.J. Super. at 573-574 n. 1, 559 A.2d 845; Governor's Reconsideration and Recommendation Statement to Senate, No. 2637-L.1988, c. 119, see N.J.S.A. 17:28-1.4.]

We consider the Statement of the Chief Executive strong evidence of legislative intent where it led directly to the legislation we are called upon to construe. Communications from the Executive Branch to the Legislature may be reliable historical aids to legislative interpretation. Skeer v. EMK Motors, Inc., 187 N.J. Super. 465, 472, 455 A.2d 508 (App.Div.1982), cited with approval, Fields v. Hoffman, 105 N.J. 262, 270, 520 A.2d 751 (1987); 2A Sutherland, Statutory Construction § 48.05 at 305-306 n. 7 (4th ed. 1984); see also Schulman v. O'Rielly-Lando, 226 N.J. Super. 626, 630, 545 A.2d 241 (App.Div.1988).

As noted, Annie M. Oswin, the plaintiff here, chose N.J.S.A. 39:6A-8(a), the less expensive option. We are told by the amicus, ATLA-NJ, that 85% of the population have opted for the lower cost "verbal threshold" over the higher cost "no threshold" option. To qualify for damages for "non-economic loss" plaintiff had to prove that her claim fell within one of these nine categories:

Type 1: Death

Type 2: Dismemberment

Type 3: Significant disfigurement

Type 4: A fracture

Type 5: Loss of a fetus

Type 6: Permanent loss of use of a body organ, member, ...

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