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Oswin v. Shaw

Decided: July 30, 1992.


On certification to the Superior Court, Appellate Division, whose opinion is reported at 250 N.J. Super. 461 (1991).

Clifford, Wilentz, Handler, Pollock, O'Hern, Garibaldi, Stein


The opinion of the court was delivered by


This appeal focuses on the procedure and the standard for determining compliance with the verbal threshold, N.J.S.A. 39:6A-8a, set forth in New Jersey's no-fault automobile-insurance statute, N.J.S.A. 39:6A-1 to -35. Plaintiff sustained soft-tissue injuries in an automobile accident. She sued defendant in the Law Division to recover noneconomic losses. The trial court entered summary judgment for defendant on the ground that the statute does not permit recovery of noneconomic losses due to soft-tissue injuries. The Appellate Division affirmed, 250 N.J. Super. 461 (1991), stating that although soft-tissue injuries may indeed be compensable under the statute, plaintiff's injuries did not meet the verbal-threshold standard. Significantly, that court also declared that the trial Judge must determine all aspects of a plaintiff's compliance with the verbal threshold, including material disputes of fact.

We granted certification, 127 N.J. 552 (1991), and now hold that the correct procedure for verbal-threshold cases follows the summary-judgment model -- that is, the court decides whether the injury alleged would, if proven, meet the requirements of one of the verbal-threshold categories, and the jury decides factual disputes about the nature and extent of the plaintiff's injuries. Because plaintiff's injuries do not fit within any of the verbal-threshold categories, we affirm the judgment of the Appellate Division.


To provide a context for this case, we begin with an overview of the statutory scheme. New Jersey adopted no-fault insurance legislation with the goal of "compensating a larger class of citizens than the traditional tort-based system and doing so with greater efficiency and at a lower cost." Emmer v. Merin, 233 N.J. Super. 568, 572 (App. Div.) (citing Mario A. Iavicoli, No Fault & Comparative Negligence in New Jersey 20 (1973)), certif. denied, 118 N.J. 181 (1989). Under a pure no-fault system, a person injured in an automobile accident is compensated for those injuries without regard to fault. Inherent in an effective no-fault system is either a limitation on or the elimination of conventional tort-based personal-injury lawsuits. Jeffrey O'Connell & Robert H. Joost, Giving Motorists a Choice Between Fault and No-Fault Insurance, 72 Va. L. Rev. 61, 63-64 (1986). Many no-fault systems compensate injured persons for their economic losses -- for example, medical expenses, lost income, essential services, and death benefits -- under their own policies' personal-injury-protection coverage (hereinafter PIP). However, under those systems those who are injured may sue third parties for recovery of noneconomic loss stemming from certain types of injuries. New Jersey's statute follows that structure. See N.J.S.A. 39:6A-4, -8. Determining which injuries can give rise to such noneconomic-loss lawsuits is a problem that has plagued legislatures and courts in no-fault states.

The movement to adopt no-fault legislation in New Jersey was the result of ever-increasing automobile-insurance premiums. The New Jersey Automobile Reparation Reform Act, the state's original no-fault legislation, was enacted in 1972. Emmer, supra, 233 N.J. Super. at 572. That Act allowed lawsuits only when the insured had "sustained death, permanent disability, permanent significant disfigurement, permanent loss of any bodily function or loss of a body member in whole or in part," or "bodily injury [that is] confined solely to the soft tissue of the body" that resulted in medial expenses in excess of a $200 threshold. L. 1972, c. 70, § 8. That statute defined such injuries as "injuries in the form of sprains, strains, contusions, lacerations, bruises, hematomas, cuts, abrasions, scrapes, scratches, and tears confined to the muscles, tendons, ligaments, cartilages, nerves, fibers, veins, arteries and skin of the human body."

Because that limitation did not slow the rise in insurance premiums, the Legislature passed the New Jersey Automobile Insurance Freedom of Choice and Cost Containment Act of 1984. To resolve the lawsuit dilemma, that act introduced tort options: the insured would now choose between two monetary thresholds for soft-tissue injuries, either $200 or $1,500. L. 1983, c. 362, § 14. The cost of insurance continued to spiral, however, and New Jersey's insurance premiums became among the highest in the United States. Emmer, supra, 233 N.J. Super. at 573.

In 1988, after much disagreement about how to resolve the problem, the Legislature arrived at a compromise measure that gave automobile owners two thresholds from which to choose. One option allowed lawsuits for injuries that resulted in medical expenses in excess of $750, and the other provided for a verbal threshold (that is, one that is defined by words rather than dollar amounts). Senate Labor, Industry and Professions Committee Statement to S-2637 (June 16, 1988).

Then-Governor Kean conditionally vetoed that bill and issued a statement in which he expressed disapproval of any monetary threshold because of the incentive to pad medical bills. He advanced a different compromise, one that would give citizens the choice between a verbal threshold and a pure-fault liability system, i.e., no threshold. The statement included his vision of the practical effect of the 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. Elliott. 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.

[Governor's Reconsideration and Recommendation Statement 3-4

(Aug. 4, 1988) (citation omitted)

[hereinafter Governor's Statement].]

The final legislation, however, made no reference whatsoever to the adjudication of disputed factual issues.

The Governor signed the Act on September 8, 1988, and it took effect on January 1, 1989. Persons buying automobile insurance now choose between two types of coverage regarding the right to seek recovery of noneconomic losses resulting from automobile-related injuries. N.J.S.A. 39:6A-8. The first, the "verbal threshold," allows recovery for noneconomic losses resulting only from those personal injuries that fit into one of nine specified categories. N.J.S.A. 39:6A-8a. (Those nine categories are listed infra at (slip op. at 32)).

The alternative to the verbal-threshold option is the traditional tort option, which allows unrestricted recovery of noneconomic damages. N.J.S.A. 39:6A-8b. The insured who elects that option pays a higher premium in return for the unlimited right to sue. See N.J.S.A. 39:6A-8.1a. An insured who makes no election is deemed to have chosen the verbal threshold. N.J.S.A. 39:6A-8.1b.


- A -

This litigation originated with a collision on June 24, 1989, when the automobile driven by plaintiff, Annie Oswin, was struck in the rear by a vehicle operated by defendant, Gregory Shaw.

Plaintiff went to the emergency room at a local hospital on the day of the accident, and again two days later. x-rays of her spine, taken during her second visit, were negative. Complaining of headaches and neck pain, she began a course of treatment with Dr. Gregory Hila, a chiropractor. Between July 12, 1989, and December 4, 1989, she visited Dr. Hila thirty-two times for a program of "conservative chiropractic management." Dr. Hila's diagnosis was cervical myofascitis with discogenic radiculopathy and hyperflexion-hyperextension syndrome. She also saw Dr. Otto Lehman, an orthopedist, on September 18, 1989. Dr. Lehman took X-rays, which also were negative. Oswin missed a total of only four hours from work as a bank teller.

On August 4, 1989, Oswin filed a complaint against Shaw, claiming that as a result of the accident she had "sustained severe and permanent internal and external bodily injuries" resulting in present and future pain and suffering and in the expenditure of "substantial sums of money for medical care and treatment."

In the course of discovery plaintiff supported her claim with Dr. Hila's medical report, which recited Oswin's complaints; the tests he had used in determining her condition; and his findings. The report indicated that Dr. Hila had noted tenderness and spasm on palpation and slight weakness of the left hand. The report also listed and quantified Oswin's limitations in six specified types of motion: flexion, extension, right rotation, left rotation, right lateral bending, and left lateral bending. The chiropractor reported respective ranges of motion of thirty degrees (he said that forty-five degrees is normal), thirty-two degrees (fifty-five degrees is normal), forty degrees (seventy degrees is normal), forty-one degrees (seventy degrees is normal), twenty-nine degrees (forty degrees is normal), and twenty-eight degrees (forty degrees is normal). Dr. Hila also reported that although X-rays revealed no fractures or dislocations, they did show a "foraminal encroachment between the fourth and fifth and the fifth and sixth cervical vertebrae."

In a summary Dr. Hila stated that Oswin has "sustained a significant permanent injury from her accident of said date. This permanent injury is in the form of a significant limitation of use of a body function, which includes a loss of range of motion, accompanied by pain." He reported further that Oswin's condition affected her ability to participate in athletic activities and to perform household chores, and limited her ability to sleep or to sit or stand for extended periods. Nothing else in the report connected Oswin's injuries to the accident. It concluded that Oswin will require "active" treatment "on an indefinite basis to alleviate any significant discomfort * * * ." The chiropractor also included a copy of the bill for his services, totalling $1,510.00. We presume that Oswin's own PIP coverage reimbursed her for those medical expenses. See N.J.S.A. 39:6A-4; Elkins v. New Jersey Manufacturers Insurance Co., 244 N.J. Super. 695 (App. Div. 1990).

Shaw moved for summary judgment, asserting that the language of the verbal-threshold provision indicates a clear intent to eliminate all lawsuits stemming from soft-tissue injuries. Defendant argued that because Oswin had elected the verbal threshold when purchasing her automobile insurance, her complaint failed to state a claim on which relief could be granted. He did not submit any evidence to rebut Dr. Hila's report. The trial court entered summary judgment for Shaw.

Oswin argued before the Appellate Division that the statute does not, as Shaw had contended, bar all soft-tissue claims, and that the issue of whether Oswin's injury was sufficiently serious to allow recovery under the statute was a factual question that should have been presented to a jury. In response, Shaw noted that Oswin had freely chosen the verbal threshold over the more-expensive no-threshold option and that the trial court's ruling was consistent with the intent underlying the verbal-threshold provision, namely, to limit the right to sue for noneconomic loss.

The Appellate Division affirmed, 250 N.J. Super. 461. The court rejected defendant's contention that the verbal threshold forecloses all claims based on soft-tissue injuries: "Just because the injury is to 'soft tissues' does not bar the claim. Nothing in the nine categories in N.J.S.A. 39:6A-8(a) or the history so suggests that this is the test." Id. at 470. The Appellate Division rejected the traditional summary-judgment standard and held that the trial Judge is to decide all issues regarding whether a plaintiff's injury is "serious," including disputed issues of fact; "where there is a genuine issue of fact, this can be decided by the Judge, as on an Evid. R. 8 hearing." Id. at 471. Evidence Rule 8(1) requires that the court make findings "when the qualification of a person to be a witness, or the admissibility of evidence, or the existence of a privilege is stated in these rules to be subject to a condition, and the fulfillment of the condition is in issue * * *."

In deciding that the entire determination should be made by the trial court, the Appellate Division relied on so much of the Governor's Statement, supra, as declares that "whether a plaintiff has sustained a 'serious injury' must be decided by the court, and not the jury." 250 N.J. Super. at 465. The Appellate Division also relied on Licari v. Elliott, 441 N.E.2d 1088, 1091 (N.Y. 1982), the decision cited in the Governor's Statement. Id. at 471-72.

The court below reasoned that judicial resolution of the verbal-threshold issue "serves to 'advance efficient judicial administration.'" Ibid. (quoting Weinisch v. Sawyer, 123 N.J. 333, 345 (1991)). Noting that "the resolution of the issue of 'serious injury' * * * is fraught with imprecision," the court decided that the criterion for determining whether an injury meets the verbal threshold is "whether the injury has a serious impact on the plaintiff and her life." Id. at 470.

In applying its rule to the facts, the Appellate Division agreed with the trial court's determination that the injuries did not fall into any of the types of injury set out in the verbal-threshold statute. Id. at 472. It noted that Dr. Hila's report was too vague and merely parroted the statutory language. The court concluded that Oswin had not met "the burden of producing a persuasive, documented showing that the threshold of 'serious injury' has been met." Id. at 473.

- B -

During the pendency of this appeal, two New Jersey courts have issued opinions on the issue that this appeal projects. In Siriotis v. Gramuglia, 254 N.J. Super. 223 (1991), the Law Division applied the summary-judgment standard, under which the jury resolves factual disputes and the court determines whether the injuries meet the verbal threshold.

The Siriotis court distinguished Oswin by noting that in Oswin the defendant had not challenged the plaintiff's documentation of her injuries. The court relied on the Appellate Division's indication that if the plaintiff had made a "'persuasive, documented showing that the Threshold of serious injury had been met', and the defense had produced a report contradicting those findings, * * * a 'material issue or conflict of fact in the traditional sense on [a] motion for summary judgment' would have been presented." 254 N.J. Super. at 228 (quoting Oswin, supra, 250 N.J. Super. at 473, 467). Thus, the Siriotis court apparently misread Oswin as adhering to a summary-judgment standard rather than as formulating a rule in which the Judge makes all factual determinations in respect of the verbal threshold. In Siriotis, the court stated that Nick Siriotis's medical report was no "'mere parroting'" of the statutory language, but

made findings of decreased range in motion of the cervical spine to rotation to the left of 20 degrees and to the right 30 degrees. The report also indicated side bending was diminished to the left by 15 degrees and to the right by 20 degrees. The report also made findings concerning plaintiff's legs where straight leg raising was 60 degrees to the left and 80 degrees to the right with pain, while normal straight leg raising is usually 90 degrees. The doctor's final diagnosis was as follows: "1) acute cervico-thoraco-lumbar sprain with myothesis; 2) persistent soft tissue changes to the above areas; and 3) permanent loss of motion of the lumbar spine."

[Id. at 229.]

Furthermore, in Siriotis the court noted that the defendant had submitted a report by an examining physician, who had stated that the plaintiff needed no further treatment. Ibid. The court found a dispute of material fact sufficient to warrant sending the case to the jury. Ibid.

More recently, in Brown v. Puente, N.J. Super.(1992), the Appellate Division held that when, as in the case before it, a case involves a disputed question of fact on the nature and extent of plaintiff's injuries, the court must follow the summary-judgment model: the jury, rather than the court, should resolve that factual dispute. Id. at (slip op. at 7). The court determined that the jury should resolve factual disputes concerning the nature and extent of the plaintiff's injuries, notwithstanding the Governor's Statement. Id. at (slip op. at 11-13).


- A -

In resolving this appeal we must answer two questions: (1) whether the verbal-threshold issue is to be decided by the court or instead by the jury; and (2) whether Annie Oswin's disability falls into one of the nine categories of the verbal-threshold statute. Part III of this opinion addresses the first question, and Part IV deals with the second.

Plaintiff contends that the summary-judgment rule is appropriate in the context of the "verbal threshold" test, and that because the determination of whether plaintiff has met the verbal threshold is a factual one, the jury must decide it. Defendant replies that the Governor's Statement indicates a legislative intent that the court resolve all verbal-threshold questions, and that the need for efficient judicial administration compels that result. Defendant, not surprisingly, agrees ...

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