On appeal from the Superior Court of New Jersey, Law Division, Hudson County.
Before Judges King, A. M. Stein and A. A. Rodriguez.
The opinion of the court was delivered by A.M. STEIN, J.A.D.
We granted leave to appeal from the Law Division Judge's order denying defendant's summary judgment motion. The Judge ruled that plaintiff, an out-of-state resident with noverbal-threshold coverage in her auto insurance policy, was not required to satisfy the verbal threshold requirements set forth in N.J.S.A. 39:6A-8a. We reverse.
Plaintiff's case involves application of New Jersey's "deemer" statute, N.J.S.A. 17:28-1.4. That statute provides that nonresident auto owners insured by companies licensed to operate in this state are subject to the verbal threshold limitations of N.J.S.A. 39:6A-8a*fn1 if the insured vehicle is used or operated in New Jersey. The pertinent part of the statute provides:
Any insurer authorized to transact or transacting automobile or motor vehicle insurance business in this State, or controlling or controlled by, or under common control by, or with, an insurer authorized to transact or transacting insurance business in this State, which sells a policy providing automobile or motor vehicle liability insurance coverage, or any similar coverage, in any other state or in any province of Canada, shall include in each policy coverage to satisfy at least the liability insurance requirements of section 1 of P.L. 1972, c. 197 (C. 39:6B-1) or section 3 of P.L. 1972, c. 70 (C. 39:6A-3), the uninsured motorist insurance requirements of subsection a. of section 2 of P.L. 1968, c. 385 (C. 17:28-1.1), and personal injury protection benefits coverage pursuant to section 4 of P.L. 1972, c. 70 (C. 39:6A-4) or of section 19 of P.L. 1983, c. 362 (C. 17:28-1.3), whenever the automobile or motor vehicle insured under the policy is used or operated in this State.
Any liability insurance policy subject to this section shall be construed as providing the coverage required herein, and any named insured, and any immediate family member as defined in section 14.1 of P.L. 1983, c. 362 (C. 39:6A-8.1), under that policy, shall be subject to the tort option specified in subsection a. of section 8 of P.L. 1972, c. 70 (C. 39:6A-8).
[N.J.S.A. 17:28-1.4 (emphasis added).]
Plaintiff, a Pennsylvania resident, sued defendant, a New Jersey resident, for injuries claimed to have resulted when the two automobiles collided in Jersey City. Her auto insurance policy was written in Pennsylvania by Kemper Insurance Co. which also writes auto insurance in New Jersey. She had elected the Pennsylvania "full tort" coverage, which permitted her to "seek financial compensation for pain and suffering or other nonmonetary damages, as a result of injuries caused by other drivers." 75 Pa. Cons. Stat. Ann. § 1791.1(b).
Pennsylvania and New Jersey both require automobile insurance carriers to provide "full tort" and "verbal threshold" or "limited tort" options. 75 Pa. Cons. Stat Ann. § 1705(a)(1); N.J.S.A. 39:6A-8. In both jurisdictions, under the limited tort or verbal threshold option (option a), the insured can recover for pain and suffering and other noneconomic losses in very limited circumstances. 75 Pa. Cons. Stat. Ann. § 1705(a)(1)A; N.J.S.A. 39:6A-8a. Under the full tort or no threshold option (option b), the policy holder has the unrestricted right to sue for pain and suffering and for other nonmonetary losses. 75 Pa. Cons. Stat. Ann. § 1705(a)(1)B; N.J.S.A. 39:6A-8b. In New Jersey, the policy holder's failure to expressly elect either tort option is considered as an election of the verbal threshold option. N.J.S.A. 39:6A-8.1b. In Pennsylvania, the policy holder's failure to elect either tort option is considered as an election of the full tort option. 75 Pa. Cons. Stat. Ann. § 1705(a)(1)E.
The deemer statute has withstood previous constitutional challenge. Watkins v. Davis, 259 N.J. Super. 482, 614 A.2d 189 (Law Div. 1992), aff'd, 268 N.J. Super. 211, 633 A.2d 112 (App. Div. 1993). Watkins involved a New Jersey accident between plaintiff, a Pennsylvania resident, and defendant, a New Jersey resident. Id. at 485-86. Plaintiff was insured with Aetna Life and Casualty Co. through a policy issued in Pennsylvania. Aetna was also authorized to issue automobile insurance policies in New Jersey. Id. at 486. At the time of the accident, Pennsylvania did not have a verbal threshold statute. Ibid. Judge Bernhard correctly pointed out that the deemer statute was subject to the least stringent "rational basis" test for the purposes of equal protection analysis, i.e., that the statute must be rationally related to the achievement of a legitimate state interest. Id. at 488-89; see also Phillips v. Phillips, 267 N.J. Super. 305, 320, 631 A.2d 564 (App. Div. 1993) (verbal threshold option in no-fault statute bears rational relationship to a legitimate state objective). In Watkins, supra, Judge Bernhard determined:
Whether the purpose of this statute was to: 1) lower the insurance premiums of New Jersey insureds; 2) materially reduce the number of auto-related personal injury cases litigated in the courts; 3) make no-fault PIP benefits available to all people injured in automobile accidents in New Jersey without raising the general level of premiums; and/or all of the above; it is clear that these are legitimate state interests to which the statute is rationally related.
N.J.S.A. 17:28-1.4 not only subjects the class in question to the "verbal threshold" of N.J.S.A. 39;6A-8.1(a), it construes the "out-of-state" policy as providing the more expansive coverage required under New Jersey No-Fault Law (ie. liability insurance requirements, uninsured motorist insurance requirements and personal injury protection benefits coverage). There is a rational basis for imposing upon this class the verbal threshold, even though they do not have the opportunity to elect the "no-threshold", as ...