On appeal from The New Jersey Department of Insurance.
Dreier, Gruccio and Brochin. The opinion of the court was delivered by Gruccio, J.A.D.
This appeal involves an application by Helena Markowska, Marla Pino, Evelyn Pino, Kelly Sanders, Mary Sanders and the Association of Trial Lawyers of America-New Jersey (claimants) for a stay pending appeal of the Plan of Operation (the Plan) devised by the trustee for the New Jersey Automobile Full Insurance Underwriting Association (JUA) and implemented by the Commissioner of Insurance. After balancing the countervailing interests, we deny the stay, but order an administrative hearing on the Plan pursuant to the Administrative Procedure Act.
The JUA is an unincorporated, non-profit underwriting organization consisting of companies licensed to write automobile insurance in New Jersey. The JUA was created pursuant to the New Jersey Automobile Full Insurance Availability Act, N.J.S.A. 17:30E-1 to -24, the purpose of which was to provide automobile insurance to persons unable to obtain coverage in the voluntary market.
On March 12, 1990, the Fair Automobile Insurance Reform Act of 1990 (FAIRA) was signed into law. L. 1990, c. 8. This act provided, inter alia, for the termination of the JUA as the provider of private passenger automobile liability insurance to the New Jersey residual market. N.J.S.A. 17:33B-2h(2).
Through the FAIRA Act, the Legislature recognized that the JUA was operating under a $3 billion deficit which had been incurred over six years. N.J.S.A. 17:33B-3(a). In light of this deficit, the Legislature eliminated the JUA and precluded it from issuing or renewing insurance policies after October 1, 1990. N.J.S.A. 17:30E-7e. The Legislature also eliminated the assessment of residual market equalization charges after March 31, 1991. N.J.S.A. 17:30E-8a.
Knowing this would drastically reduce the JUA's income, the Legislature created the New Jersey Automobile Insurance Guarantee Fund (NJAIGF), a non-lapsing treasury fund dedicated to satisfying the financial obligations of the JUA. N.J.S.A. 17:33B-5. The NJAIGF was funded by surtaxes, assessments and other charges imposed by the FAIRA Act. N.J.S.A. 17:33B-49 and 17:33A-8. Although challenged on constitutional grounds, the NJAIGF's legislative scheme was upheld by the New Jersey Supreme Court in State Farm Mut. Auto. Ins. Co. v. State, Comm'r of Ins., 124 N.J. 32, 590 A.2d 191 (1991).
The Legislature authorized the Commissioner to appoint a trustee to carry out the purposes of evaluating, prioritizing and satisfying the JUA's obligations. N.J.S.A. 17:33B-2h(3). The FAIRA statute required the trustee to promulgate a Plan of Operation to administer the affairs of the JUA as though it were an insolvent insurer. N.J.S.A. 17:33B-3b(1). The Plan was to be approved by the Commissioner of Insurance and was to have as its aim the liquidation of the JUA and the satisfaction of its financial obligations. N.J.S.A. 17:33B-3b(2). The Plan was to include a schedule for the prioritization of claim payments, and allowed for deferral of residual bodily injury payments for up to four years. N.J.S.A. 17:33B-3b(2).
The Commissioner of Insurance appointed Marshall Selikoff, a retired Superior Court Judge, to serve as the JUA's trustee. The trustee's first Plan of Operation was approved by the Commissioner on March 20, 1991. It provided for the payment of covered losses on behalf of the JUA, the deferral of claims and used language identical to that found in the FAIRA Act.
At that time, the JUA's financial condition was critical. The premium income ceased on October 1, 1990, pursuant to FAIRA's requirements. On April 1, 1991, the last two sources of JUA income, the residual market equalization charge and the policy constant, also terminated. N.J.S.A. 17:33B-6. ...