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IFA Ins. Co. v. Waitt

Decided: February 3, 1994.


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

J.h. Coleman and Levy. Levy, J.s.c. [temporarily assigned].


Plaintiff appeals from an order granting summary judgment to defendant, holding that a PIP insurance carrier is not entitled to reimbursement from a commercial liability carrier where the commercial carrier's liability limit has been exhausted. We affirm.

On March 13, 1989, defendant Russell C. Waitt drove his truck into the rear of a passenger car operated by Thomas Nedermeyer; that car was propelled into the rear of Robert Smith's car. Smith was injured, and he was paid $30,965.99 in personal injury protection (PIP) benefits by plaintiff IFA Insurance Company (IFA), his auto insurance carrier. Waitt's truck was insured by defendant CNA Insurance Companies (CNA), but the policy limited the liability coverage for any one accident to $75,000. That amount was deposited into court in the underlying personal injury action between Smith and Waitt.

PIP reimbursement to a PIP carrier from a commercial liability carrier is governed by N.J.S.A. 39:6A-9.1. Enacted in 1983, it provides in pertinent part that:

An insurer . . . paying . . . personal injury protection benefits . . . as a result of an accident occurring within this State, shall, within two years of the filing of the claim, have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain personal injury protection

or medical expense benefits coverage . . . other than for pedestrians . . . or although required did not maintain personal injury protection . . . benefits . . . . In the case of an accident occurring in this State involving an insured tortfeasor, the determination as to whether an insurer . . . is legally entitled to recover the amount of payments . . . shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration.

Ordinarily, pursuant to N.J.S.A. 39:6A-9.1, IFA would be reimbursed for the PIP benefits it paid to its insured, by CNA, either voluntarily or by arbitration. Disputes usually involve whether the PIP payments were reasonable and necessary or whether the expenses to be reimbursed were causally related to the accident. See, e.g., Thermographic Diagnostics, Inc. v. Allstate Ins. Co., 125 N.J. 491, 511-12, 593 A.2d 768 (1991); Miskofsky v. Ohio Cas. Ins. Co., 203 N.J. Super. 400, 409-14, 497 A.2d 223 (Law Div.1984). Here, however, CNA resisted reimbursement because its liability coverage had been exhausted in the underlying action brought by the injured driver and passenger against the tortfeasor.

On cross-motions for summary judgment, the trial Judge held statutory PIP reimbursement was restricted to the maximum coverage of the tortfeasor's liability policy. He observed N.J.S.A. 39:6A-9.1 does not specify the commercial carrier was responsible regardless of liability limits, and does not require a carrier to provide additional coverage to reimburse a claim under the statute. Since the underlying claims were based on negligence, he determined benefits were governed by the liability coverage terms and the PIP carrier could be reimbursed until the liability coverage was exhausted, but not thereafter.

N.J.S.A. 39:6A-9.1 was preceded by N.J.S.A. 39:6A-9 of the original No Fault Act,*fn1 which made insurers paying PIP benefits the subrogee of their insured, and granted such insurers a right of reimbursement only from the tortfeasor's insurer (assuming the tortfeasor was insured) and only by intercompany arbitration or agreement. We considered N.J.S.A. 39:6A-9 in Garden State

Fire and Cas. Co. v. Commercial Union Ins. Co., 176 N.J. Super. 301, 306, 422 A.2d 1327 (App.Div.1980). There the tortfeasor's insurer paid the policy limits in settlement, mostly to the injured plaintiff and the balance to that party's PIP carrier. The PIP carrier had paid much more than it was reimbursed, so it sued the tortfeasor's excess carrier for the balance. We held the excess carrier not liable because its policy did not provide PIP benefits, concluding that N.J.S.A. 39:6A-9 required reimbursement to a subrogee only by those insurers who provided No Fault benefits in their automobile liability policies. This decision was partially based on the limited life given N.J.S.A. 39:6A-9, as we noted it was to remain in effect just two years in order "to allow insurers who provide PIP benefits to recover them, at least temporarily, as part of the rate-setting ...

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