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Fireman's Fund Insurance Co. v. New Jersey Manufacturers Insurance Co.

June 29, 2001


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-11946-98.

Before Judges Wecker and Landau.

The opinion of the court was delivered by: Landau, J.A.D.


Argued May 22, 2001

Plaintiff Fireman's Fund Insurance Company (Fireman's) appeals from a Law Division order granting summary judgment to defendant New Jersey Manufacturers Insurance Company (NJM) in Fireman's action, filed December 4, 1998, to recover Personal Injury Protection (PIP) benefits it paid to the driver of its insured vehicle for treatment of injuries arising from a 1987 motor vehicle accident caused by a commercial vehicle insured by NJM. Notwithstanding the language of the complaint, Fireman's briefs on appeal make it clear that its purpose is to seek "a declaratory judgment of this court [affording an opportunity] to submit the matter to arbitration."

The appeal requires us to address the meaning of a special statute of limitations provision of N.J.S.A. 39:6A-9.l in light of related statutes and court decisions and in order to achieve an interpretation consistent with logic and the purpose of the statute. N.J.S.A. 39:6A-9.1 affords to insurers, HMOs, or governmental agency payors of either PIP or N.J.S.A. 39:6A-3.1 medical benefits, a right of reimbursement (as distinguished from "subrogation"*fn1) against tortfeasors who are either not required to maintain coverage for such payments, or who are so required, but have failed to comply. N.J.S.A. 39:6A-9.1 provides, in pertinent part, that the paying PIP insurer, HMO, or governmental agency "shall, within two years of the filing of the claim, have the right to recover the amount of payments" made under PIP from the non-PIP-covered tortfeasor. It also provides:

In the case of an accident occurring in this State involving an insured tortfeasor, the determination as to whether an insurer, health maintenance organization or governmental agency 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. [N.J.S.A. 39:6A-9.1.]

Under the PIP scheme, medical expense benefits to covered persons are payable up to an amount of $250,000 per person per accident. N.J.S.A. 39:6A-4. However, where benefits paid by a PIP insurer exceed $75,000 on account of bodily injury to one person in one accident, the "excess shall be paid by the insurer in consultation with the Unsatisfied Claim and Judgment Fund Board and shall be reimbursable to the insurer from the Unsatisfied Claim and Judgment Fund . . . ." Ibid.

Fireman's insured, Michael Himowitz, was severely injured in a 1987 motor vehicle accident when the vehicle he was operating was struck from behind by a commercial vehicle owned by Jevic Transportation and insured by NJM. The Jevic driver was found to be at fault.

After providing initial PIP medical benefits of $2193.68 requested by Himowitz in 1988, Fireman's filed a N.J.S.A. 39:6A-9.1 claim for reimbursement with NJM on June 21, 1988. Fireman's simultaneously filed a separate subrogation claim for recovery of the property damage payments it had made. NJM issued checks for both claims and Fireman's issued a separate "Notice of Payment Received" on November 21, 1988, for each claim. The property damage receipt stated "Subro/final/100%". The medical payments receipt stated "Subro/Partial". NJM's check for the medical payments reimbursement was modified at Fireman's insistence to remove a "final payment" statement in the endorsement section.

The next communication between the two insurers is reflected in a notation in Fireman's files that an NJM representative called on December 10, 1990, to request a printout of Fireman's PIP payments under this claim file and that Fireman's sent a printout via fax on December 13, 1990. At that time Fireman's internal memorandum stated "our claim is over $20,000."

No further request for reimbursement was made by Fireman's until February 25, 1993, by which time the Himowitz medical benefits totaled $113,233.11. By letter dated July 26, 1993, NJM's attorneys replied to Fireman's February 25, 1993, request, stating that no obligation existed because the request was "made almost five years after Michael Himowitz applied for PIP on March 10, 1988." The letter went on to state that, "[a]s you know, N.J.S.A. 39:6A-9.1 requires you to assert this type of subrogation claim within a period of two years." (Apparently, the statutory reimbursement right continues to be referred to colloquially in the industry as "subrogation".) This litigation followed.

In granting NJM's motion for summary judgment, the motion judge cited New Jersey Automobile Full Insurance Underwriting Association v. Liberty Mutual Insurance Co., 270 N.J. Super. 49, 53 (App. Div. 1994), and noted that no arbitration request had been made within two years of Himowitz's first claim nor even within two years after Fireman's payment of PIP benefits.

We reverse. Initially, we observe that the judge did not have the benefit of the opinion in Allstate Insurance Co. v. Universal Underwriters Insurance Co., 330 N.J. Super. 628 (App. Div. 2000), decided less than two months after judgment was entered in this case. In Allstate, as here, the tortfeasor's insurer, Universal, having reimbursed Allstate for its initial PIP payments, rejected a subsequent claim for ongoing medical benefits, asserting expiration of the N.J.S.A. 39:6A-9.1 two-year statute of limitations. An arbitration was then requested and conducted, subject to the stipulation that the limitations issue could be judicially resolved. The Law Division found that Allstate failed to comply with the two-year limitations provision because Universal did not waive its right to assert the limitations bar. On appeal, we recognized the holding in Underwriting that required filing of a demand for arbitration within two years of the filing of the PIP claim in the absence of an agreement to reimburse. Underwriting, supra, 270 N.J. Super. at 53. We also concluded, however, that ...

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