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Selective Insurance Company of America v. Amberg


May 31, 2007


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-1606-98.

Per curiam.


Argued October 18, 2006

Before Judges Stern, Collester and Messano.

Plaintiff, Selective Insurance Company of America (Selective), appeals from the motion judge's denial of its cross-motion for partial summary judgment, his grant of partial summary judgment in favor of defendants, Michael J. Amberg and Yellow Freight Systems (YFS), and his denial of Selective's motion for reconsideration. We have carefully reviewed the record and considered it in light of the governing legal standards. We reverse in part, affirm in part, and remand the matter for further proceedings consistent with our opinion.


The litigation has its genesis in a motor vehicle accident that occurred on March 6, 1989. Ann Marilyn Snider was driving her car when a tractor trailer driven by Amberg, on behalf of YFS, swerved into Snider's lane of traffic and struck her vehicle head-on. Snider required medical treatment for her injuries and applied for Personal Injury Protection benefits (PIP) through her automobile insurance policy with Selective. On June 28, Selective discontinued PIP medical benefit payments to Snider, and in July, it discontinued PIP income continuation benefits to her. In large part, Selective based its decision upon the medical report of Dr. Abbott J. Krieger, retained by Selective to conduct an independent medical examination of its insured. Krieger opined that Snider's "maladies were by and large the result of a number of pre-existing conditions including multiple sclerosis" and a "long-standing spondylosis of her cervical spine." Snider, however, continued her medical treatment despite Selective's discontinuation of her benefits.

Snider filed a lawsuit for personal injuries against Amberg and YFS in 1989. In May 1990, she filed a second suit against Selective seeking payment of her PIP benefits. In February, 1991, Selective initiated this action alleging it was entitled to reimbursement from defendants pursuant to N.J.S.A. 39:6A-9.1 for all sums "paid or to be paid under collision and under PIP" to Snider. In the second count of its complaint, Selective alleged that YFS "refused to engage in negotiations or arbitration despite repeated requests" in contravention of N.J.S.A. 39:6A-9.1 which "contemplates arbitration between PIP carriers . . . and the insurers of commercial vehicles." The complaint, however, did not request the court to compel YFS's participation in any future arbitration.

Selective and Snider then agreed to resolve the PIP suit through binding arbitration. Selective's counsel notified YFS's counsel of this development and invited his participation in the PIP arbitration; YFS declined. Selective never moved to compel defendants' participation in the arbitration. In December, 1992, the arbitration panel awarded Snider $176,443.78 which reflected unpaid medical bills, income continuation benefits, her counsel fees, the arbitrator's fees, and interest. The award was based, in part, upon a second report filed by Krieger in which he acknowledged that he had no expertise with respect to multiple sclerosis and determined that "it [was] far from clear" whether multiple sclerosis had any causal relationship to Snider's injuries or complaints.

In 1994, YFS's motion to consolidate the two actions in which it was named as a defendant was denied but it entered into a partial settlement with Selective over the claimed PIP reimbursements. In return for partial payment, Selective released YFS from any claims based upon PIP benefits it paid during 1989, but it retained the right to pursue reimbursement from the defendants for any PIP payments made thereafter. In June, 1996, Snider settled her direct case against Amberg and YFS for $495,000. However, she continued to amass bills for medical treatment that Selective has paid, and, as of August, 2004, Selective's claim for reimbursement against defendants was more than $500,000 for medical payments, $70,000 for expenses, and $80,000 for counsel fees. Selective's complaint was voluntarily dismissed on several occasions and reinstated; at each turn, defendants agreed to waive any statute of limitations defense.

The parties continued to engage in discovery which included subjecting Snider to examination by defendants' expert, Dr. Stuart D. Cook, a renowned specialist in treating and diagnosing multiple sclerosis. Defendants other expert, Dr. Leo J. Wolansky, a radiologist, read MRI studies of Snider's spine that predated the motor vehicle accident. Both opined in 1996 that Snider was suffering from multiple sclerosis at the time of the accident and that her neurological deficits after the accident were attributable to that condition, not the injuries suffered in the accident.


Defendants moved for partial summary judgment and Selective cross-moved in opposition. Defendants sought relief: 1) limiting their reimbursement obligation to Selective to $75,000 pursuant to N.J.S.A. 39:6A-4(a); 2) declaring they were not collaterally estopped from re-litigating the 1992 arbitration award that resulted from the settlement of Snider's claim against Selective; 3) declaring they were not responsible for Selective's costs and counsel fees. Selective, in turn, cross-moved opposing defendants' motion and arguing: 1) defendants' liability should not be capped at $75,000 under the statute; 2) defendants were collaterally estopped from challenging the $176,443.78 arbitration award made in 1992; and 3) defendants were responsible for Selective's costs and counsel fees.

On May 27, 2005, the judge entered two orders. One denied Selective's cross-motion for partial summary judgment in its entirety. The second granted defendants partial summary judgment and limited their reimbursement liability to a maximum of $51,729.60 -- $75,000 less the amount already paid in partial settlement of the claim. In written "Findings of Fact and Conclusions of Law" issued on June 1, 2005, the motion judge concluded "[b]y the plain language of the statute, PIP benefits in excess of $75,000 are to be reimbursed by the Unsatisfied Claim and Judgment Fund (the UCJF)." He determined defendants could not be held responsible for PIP payments made by Selective in excess of $75,000.

He then concluded that defendants were not "estopped from contesting the arbitration award" because the case primarily relied upon by Selective, Zirger v. Gen. Accident Ins. Co., 144 N.J. 327 (1996), was inapplicable. Since the Supreme Court limited its holding to prospective application, and since the arbitration took place in 1992, Zirger could not apply. The judge further reasoned that collateral estoppel did not apply because defendants and Selective did not share a "privity of interest" at the PIP arbitration.

Lastly, the judge determined that defendants were not responsible for Selective's counsel fees and costs. He reasoned since YFS was a commercial trucking company, self-insured and not required to maintain PIP insurance, N.J.S.A. 39:6A-9.1 limited Selective's right of reimbursement to the "amount of payments" it made and did not provide for reimbursement of Selective's counsel fees and costs.

Selective moved for reconsideration which was denied. On July 22, 2005, the parties entered into a stipulation of partial settlement. Defendants agreed to pay Selective $51,729.60 with the understanding that Selective preserved all rights to appeal the motion judge's orders. Defendants, however, preserved their right in the event "an Appellate Court reverses the orders of the trial Court" "to challenge in its entirety the payment of PIP bills by Selective, on the basis that the treatment received by . . . Snider . . . [was] not causally related to the underlying accident but rather to a pre-existing condition, namely Multiple Sclerosis."

This appeal ensued. On February 1, 2006, we granted the UCJF's motion to intervene.


On appeal, Selective raises four points:









The UCJF joins in the first two points raised by Selective.

In Point I, Selective contends the motion judge erred in capping defendants' potential liability at $75,000. N.J.S.A. 39:6A-9.1 provides, Recovery from tortfeasor

An insurer . . . paying 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, under the laws of this State . . . or although required did not maintain personal injury protection or medical expense benefits coverage at the time of the accident. 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 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.

In concluding defendants' liability for reimbursement under the statute was limited, the motion judge relied upon the express language of N.J.S.A. 39:6A-4(a) as it existed at the time of Snider's accident. It provided,

a. Medical expense benefits. . . . .

In the event benefits paid by an insurer pursuant to this subsection are in excess of $75,000.00 on account of personal injury to any one person in any one accident, such excess shall be paid by the insurer in consultation with the [UCJF] and shall be reimbursable to the insurer from the [UCJF] pursuant to [N.J.S.A. 39:6-73.1].

Defendants urged, and the motion judge agreed, that the statute limited their exposure on Selective's reimbursement claim brought under N.J.S.A. 39:6A-9.1 to $75,000 because the UCJF has reimbursed Selective for all amounts in excess thereof.

They further contend that since the UCJF has never been a party to the litigation, Selective has no right to "sue for reimbursement above its actual damages without naming the UCJF as the actual plaintiff and true party in interest." Additionally, defendants argue that the UCJF itself did not have the right to pursue a reimbursement action under N.J.S.A. 39:6A-9.1 because the statutory language then in existence limited the cause of action to "insurers." They argue the UCJF is a governmental agency and at the time of the accident could not have brought the reimbursement action. Defendants point to the statutory amendment to N.J.S.A. 39:6A-9.1, adopted as part of the "Fair Automobile Insurance Reform Act of 1990," which permitted "health maintenance organization[s]" and "governmental agenc[ies]" to seek PIP reimbursement, as the Legislative response designed to fill this gap. Lastly, defendants argue that the UCJF cannot maintain the action independent of Selective because the two year time limit contained within N.J.S.A. 39:6A-9.1 has long passed.

We disagree with defendants' contentions and therefore reverse this portion of the motion judge's grant of partial summary judgment.

We begin our analysis by examining the language of the statute and the purpose it was meant to serve. Prior to the enactment of Section 9.1, PIP carriers seeking reimbursement for amounts paid out on behalf of their insureds were unable to bring a subrogation claim against culpable tortfeasors or their insurers. Aetna Ins. Co. v. Gilchrist Bros., Inc., 85 N.J. 550, 562 (1981). In his dissent in that case, Justice Sullivan argued the majority's decision resulted in "private automobile owners 'subsidizing' the cost of insurance on non-PIP-covered commercial vehicles in [New Jersey]." Id. at 567-68 (Sullivan, J., dissenting). He noted such a result was inequitable and contrary to the premium-reducing objective of the law. Ibid. The majority of the Court responded to Justice Sullivan's dissent by inviting the Legislature to resolve any imbalance between automobile insurers and commercial vehicle insurers. Id. at 566.

The Legislature's response was the passage of N.J.S.A. 39:6A-9.1. State Farm Mutual Ins. Co. v. Lic. Bev. Ins. Exchange, 146 N.J. 1, 9 (1996). "The legislative intent behind th[e] statute was to alleviate the imbalance identified by Justice Sullivan by reducing the cost of insurance for automobile owners and allowing automobile insurers to recover PIP through reimbursement." Ibid. By "creat[ing] a direct right of reimbursement, not a subrogation right," primary to the "injured party's insurer," and "not depend[ent] on a claim that it acquires from the rights of its insured," N.J.S.A. 39:6A-9.1 "allows PIP carriers to recover not from other PIP carriers but from non-PIP carriers and uninsureds." Unsatisfied Claim & Judgment Fund Bd. v. N.J. Mfrs. Ins. Co., 138 N.J. 185, 191 (1994).

Most reported cases have interpreted section 9.1 in contexts similar to the one at hand, "in which a commercial vehicle was at fault, and recoupment [was sought] from a commercial vehicle's insurer," or, in this case, the commercial vehicle owner. Id. at 196. In recognizing section 9.1's important place within the entire statutory "no-fault" scheme, the Court has said, Uninsured and commercial-vehicle tortfeasors do not share in the costs of maintaining the no-fault system; however, without section 9.1, they would otherwise reap its benefits. That is so because the No-Fault Law forces insurers to pay for their own insureds' expenses and also prohibits injured parties from suing tortfeasors for the same costs, resulting in those tortfeasors avoiding any responsibility for their roles in the accidents. Allowing recoupment simply ensures that the private-passenger automobile insurers do not subsidize other insurers and that those savings are passed on to consumers -- the same consumers the No-Fault Law was designed to protect. [Id. at 205.]

The express language of N.J.S.A. 39:6A-9.1 does not limit the amount a PIP insurer can recover by way of reimbursement. And, from the above discussion, Selective's ability to seek reimbursement from defendants is entirely consonant with the statute's purpose. Nevertheless, the motion judge concluded that Selective's ability to seek reimbursement was limited by N.J.S.A. 39:6A-4(a). We turn now to that section.

After initially adopting a comprehensive no-fault automobile insurance scheme in 1972, the Legislature's first significant amendment, in 1977, was to limit PIP carriers' financial responsibilities to $75,000. This was in direct response to unlimited "medical-expense benefits under PIP . . . posing enormous open-ended liability for insurance companies." Martin v. Home Ins. Co., 141 N.J. 279, 28 (1995). By adopting the limit contained in N.J.S.A. 39:6A-4(a), the Legislature "shift[ed] the burden for any remaining expenses to the [UCJF]" which was to "'reimburse' carriers for such PIP benefits in excess of $75,000." Ibid.; N.J.S.A. 39:6-73.1. The Court explained how the connection between limiting liability and imposing reimbursement obligations upon the UCJF for amounts in excess of the limit served the statutory public policy goals.

[T]he elimination of an insurer's need to maintain large reserves in anticipation of potentially large medical-expense claims curtails the distortion of rates caused by such reserves. Thus, the risks for the private-passenger automobile-insurance market in New Jersey are stabilized, and, instead, insurers in that market maintain adequate reserves for their market participation through contribution to the UCJF. [Id. at 286].

Thus, PIP carriers' mandatory contributions to the UCJF became the method by which the Legislature chose to spread the costs of potentially unlimited medical payments among all insurers who wrote automobile insurance in the state.

Limiting the recoupment of actual amounts paid out and reimbursed by the UCJF does not serve the policy that undergirds the statute; rather, such a limitation undermines the policy. Limiting reimbursement would provide a windfall to the culpable tortfeasor who has not paid premiums for PIP insurance or otherwise contributed to the UCJF, and, at the same time, increase costs for insurance carriers and in turn for New Jersey policyholders.

Indeed, defendants have not even marshaled an argument to the contrary. Rather, they contend that Selective lacks standing because the claim was the UCJF's to bring. We disagree. Selective has paid out more that $500,000. Whether it is entitled to reimbursement from the UCJF, or whether it has been reimbursed, and therefore owes any recovery it may obtain to the UCJF, is irrelevant to the claim it has in the first instance against defendants. There is nothing in the language or the statutory history of N.J.S.A. 39:6A-4(a) or N.J.S.A. 39:6A-9.1 that compels the conclusion that a free pass has been issued to these defendants or other potentially liable tortfeasors. Such a conclusion would be contrary to our longstanding recognition that a tortfeasor is liable for the full measure of harm he has caused. Johnson v. Braddy, 376 N.J. Super. 215, 219-20 (App. Div. 2005), aff'd 186 N.J. 40 (2006).

Since we conclude Selective had the right to bring this action and recoup the full amount of PIP payments it made on behalf of Snider, whether reimbursed by the UCJF or not, we need not consider defendants' argument regarding UCJF's ability to bring the claim or the defendants' statute of limitations argument.


Because of this conclusion, we see no need to consider Selective's second point. In the settlement agreement reached by the parties, defendants' right to "to challenge in its entirety the payment of PIP bills by Selective, on the basis that the treatment received by . . . Snider . . . [was] not causally related to the underlying accident but rather to a pre-existing condition, namely Multiple Sclerosis," was preserved in the event we reversed the motion judge's orders. Therefore, it appears unnecessary for us to decide whether the earlier PIP arbitration is entitled to some preclusive effect.

In other words, were we to affirm the motion judge's denial of Selective's partial summary judgment motion in this regard, thus according the prior arbitration no preclusive effect, defendants would be free to contest all issues of causality at whatever proceedings will follow. Conversely, were we to reverse the motion judge's order and grant Selective partial summary judgment on this issue, the parties have otherwise decided, through their settlement agreement, to render such a decision purely advisory in nature and without any effect. We have repeatedly declined to engage in such decision-making in the abstract. DeBenedictis v. State, 381 N.J. Super. 233, 240 (App. Div. 2005).

Finally, we consider the issues raised by Selective's final two points. It contends the motion judge erred in deciding it could not seek reimbursement for counsel fees and costs pursuant to N.J.S.A. 39:6A-9.1. Under the first portion of the statute, an "insurer," like Selective, has the "right to recover the amount of payments" it made to its insured from any tortfeasor "not . . . required to maintain personal injury protection or medical expense benefits coverage." The motion judge reasoned that Selective's claim against defendants, who were not required to maintain PIP coverages, was therefore limited to only the amounts it paid to Snider or her medical providers.

Selective, however, argues YFS is self-insured, not uninsured, and therefore its reimbursement claim falls under the second portion of N.J.S.A. 39:6A-9.1, which provides

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 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.

Thus, Selective contends it is entitled to recover from YFS "costs of processing [Snider's] benefit claims" and counsel fees incurred in "enforcing [its] rights" under the statute.

We disagree. We recognize that in other circumstances where important policy reasons were advanced, our courts have not hesitated to conclude that a self-insured tortfeasor is both insured and insurer, see Ross v. Transport of N.J., 114 N.J. 132, 139 (1989) (likening a self-insurance certificate to a policy of insurance upon oneself), whose "coverage obligations are co-extensive with the obligations of those possessing liability policies." Ryder/P.I.E. Nationwide, Inc. v. Harbor Bay Corp., 119 N.J. 402, 410 (1990). Here, however, no public policy is served by concluding that YFS, because it was self-insured, is transformed from a "tortfeasor . . . who was not . . . required to maintain" PIP coverage, which it undisputedly was under the first portion of the statute, into an "insured tortfeasor," which it was not, under the second portion of N.J.S.A. 39:6A-9.1.

This second portion of the statute is limited to situations in which reimbursement is sought from another insurer. Unsatisfied Claim & Judgment Fund Bd., supra, 138 N.J. at 193. We have interpreted this second portion of the statute as limiting the PIP insurer's right to seek reimbursement solely from the insurer of a tortfeasor, thus immunizing the tortfeasor from any personal responsibility. Sherman v. Garcia Constr. Co., 251 N.J. Super. 352, 357 (App. Div. 1991). The policy behind "[t]his limitation on PIP reimbursement" was "to protect small commercial operators from the danger of being rendered insolvent by being held liable for large PIP reimbursement claims that sometimes arise from catastrophic injuries." Ibid.

However, by choosing to insure itself, YFS has subjected itself to the potential of direct, personal responsibility for Selective's claims rather than limit any personal exposure through the purchase of liability insurance. Thus, the public policy behind N.J.S.A. 39:6A-9.1 is clearly served by allowing the PIP insurer to seek reimbursement directly from the self-insured tortfeasor, as Selective has indeed done in this case.

We conclude, therefore, that Selective's claim against YFS is governed by the first portion of the statute because YFS is a tortfeasor not required to maintain PIP insurance coverage. Selective's claim for reimbursement is limited to the amount of payments it made to its insured, or on her behalf, and it may not seek reimbursement for costs or counsel fees. As to the latter, we only note that we have already held that N.J.S.A. 39:6A-9.1 does not permit the reimbursement of the PIP insurer's counsel fees. David v. Gov't Employees Ins. Co., 360 N.J. Super. 127, 146 (App. Div.), certif. denied, 178 N.J. 251 (2003). We find nothing in Selective's argument before us that would compel a contrary result.


In conclusion, we reverse the motion judge's grant of summary judgment in favor of defendants that limited their total reimbursement exposure to a maximum of $75,000. We affirm his conclusion that Selective may not seek counsel fees or costs from defendants. We decline to consider whether the prior PIP arbitration between Selective and Snider has any preclusive effect upon the issues because the parties, through their stipulation of settlement, have rendered any such decision moot. We remand the matter for further proceedings consistent with this opinion. We do not retain jurisdiction.

Affirmed in part; reversed in part and remanded.


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