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Otto v. Prudential Property and Cas. Ins. Co.

Decided: December 21, 1994.

JOYCE OTTO, PLAINTIFF-RESPONDENT,
v.
PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, DEFENDANT-APPELLANT.



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

Before Judges Brody, Long and Levy.

Levy

LEVY, J.A.D.

In this declaratory judgment action, plaintiff sought to obviate reimbursing her automobile insurer for monies it paid on plaintiff's behalf. Cross-motions for summary judgment were filed, and the trial court ruled in plaintiff's favor. Defendant appeals, and we reverse in part.

On March 10, 1985, plaintiff was involved in a motor vehicle accident with a commercial vehicle principally garaged in this state. She sustained serious injuries for which she sought medical treatment. Plaintiff made a claim with her own insurer, Prudential Property and Casualty Ins. Co. (Prudential). Prudential honored that claim and eventually paid $75,745 for plaintiff's medical expenses. Plaintiff brought an action against the owner and operator of the commercial vehicle, and she settled that claim for $490,000.

N.J.S.A. 39:6A-4.3 authorized automobile insurers to provide certain personal injury protection coverage (PIP) options at appropriately reduced premiums." Plaintiff chose the "reimbursement setoff" option, and an endorsement to her policy provided:

The named insured may select an option entitling the company to reimbursement from any recovery for non-economic loss from an award, judgment or settlement (including recoveries under Uninsured and Underinsured Motorists coverage), for medical expense benefits it has paid. Reimbursement is limited to the lower of the amount paid by the company for medical expenses, or, 20% of the amount of the award, judgment or settlement. The company has a lien on this recovery. This option is indicated on the Declarations as, "PIP Reimbursement Option Applies." This option applies to the named insured and each resident relative who is not a named insured under another automobile insurance policy.

This option, authorized in 1983 by N.J.S.A. 39:6A-4.3(c),*fn1 entitled an automobile insurer paying [PIP] benefits . . . to reimbursement from, and a lien on, any recovery for noneconomic loss by an injured party . . . for the amount of the medical expense benefits paid[.]" If the tortfeasor operated a commercial vehicle, N.J.S.A. 39:6A-9.1 provided an entitlement to reimbursement for PIP benefits the PIP carrier had paid to its insured, and the claim for such reimbursement was to be made against the insurer of the commercial tortfeasor within two years of the filing of the claim. N.J.S.A. 39:6A-9.1, as it applies to an insured commercial vehicle, also provides:

the determination as to whether an insurer . . . is legally entitled to recover the amount of payments and the amount of recovery, including the costs of processing benefit claims and enforcing rights granted under this section, 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.

Prudential's internal files indicate it was aware of its right to seek reimbursement from the commercial tortfeasor or the tortfeasor's insurer, but it failed to do so within the time prescribed by law. On November 7, 1987, two notes from Prudential claim representatives state:

Kathy, quickly, now, before statute runs, get a Ltr (letter) out to Ovc (other vehicle carrier) . . . advising them of our total PIP subro lien to date . . . we want to get our $(money) back before the statute runs.

She was involved with a truck who is 100% responsible for P.I.P subro recovery . . . Our 2 year statute is running out and I don't ...


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