November 19, 2012
AIG CENTENNIAL INSURANCE COMPANY, PLAINTIFF-RESPONDENT,
GREGORY R. THOMPSON D/B/A THOMPSON TRUCKING, DEFENDANT, AND ARI MUTUAL INSURANCE COMPANY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-3822-11.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 23, 2012
Before Judges Harris and Hoffman.
This appeal arises from the Law Division's declaration that defendant ARI Mutual Insurance Company (ARI Mutual) is obliged to reimburse plaintiff AIG Centennial Insurance Company (AIG) for personal injury protection (PIP) medical expense benefits paid to AIG's insured under N.J.S.A. 39:6A-9.1. We reverse because the benefits were not paid in accordance with the policy covering the insured, but instead exceeded the policy limits due to AIG's error.
The dispute between the insurers has its genesis in an automobile accident that occurred on September 11, 2006. On that date, Dorothy Davis was the driver of a private passenger automobile owned by Sherman Harris, AIG's named insured. According to a police report, Davis's vehicle was struck by a dump truck operated by William H. Kanauss, III, a driver for Thompson Trucking.
At the time of the accident, Thompson Trucking's liability insurer was ARI Mutual. Because the dump truck was a commercial vehicle, see N.J.S.A. 39:6A-2(a) and -4, there was no PIP coverage provided by ARI Mutual's Business Auto Policy, except for injuries suffered by pedestrians. See N.J.S.A. 17:28-1.3.
Harris, however, had procured from AIG a basic automobile insurance policy, N.J.S.A. 39:6A-3.1, which provided PIP medical expense coverage of $15,000 per person, per accident. By letter dated September 18, 2006, AIG mistakenly notified Davis that Harris's policy provided her with PIP coverage of $250,000. After submitting her written application for PIP benefits to AIG on September 25, 2006, Davis relied on AIG's $250,000 representation and obtained medical treatment costing far in excess of the basic automobile insurance policy's $15,000 PIP medical expense limitation. At some point, AIG realized that it had mistakenly advised Davis about the policy's limit of liability and declined to provide further PIP benefits beyond what it had already expended. ARI Mutual reimbursed AIG $15,000 pursuant to N.J.S.A. 39:6A-9.1.
Davis filed a personal injury lawsuit against Kanauss, Gregory Thompson, and Thompson Trucking (the Thompson defendants) in August 2008. ARI Mutual provided a defense to the Thompson defendants pursuant to its Business Auto Policy.
In December 2009, Davis commenced a separate action against AIG, ARI Mutual, and the Thompson defendants, which sought, among other things, a declaration that "AIG is to afford coverage for any medical and/or hospital expenses up to $250,000 under the policy it issued and defendant AIG should be estopped from denying PIP benefits in excess of $15,000."*fn1 The complaint also sought a judgment "declaring that defendant AIG's policy is reformed to include PIP coverage in the amount of $250,000." Among the reasons for bringing this declaratory judgment action was Davis's claimed inability "to resolve the third party case since she is uncertain as to whether or not said third party defendants and their carrier ARI [Mutual] would be responsible for the unpaid medical and surgical expenses." Although AIG and ARI Mutual were co-defendants in Davis's declaratory judgment action, they did not file cross-claims against each other relating to the ultimate responsibility for PIP payments under N.J.S.A. 39:6A-9.1.
In October 2010, Davis settled her personal injury lawsuit against the Thompson defendants for $225,000. In March 2011, Davis's claims against ARI Mutual and the Thompson defendants in the declaratory judgment action were dismissed. In like vein, but on a date not disclosed in the record, Davis separately settled her dispute with AIG, wherein AIG agreed to pay for all of Davis's requested PIP expenses. The record is silent about the specific details concerning that settlement. AIG refers to having "reformed" the insurance contract, but it does not appear that Harris was a party to the "reformation" of his basic automobile insurance policy.
On April 28, 2011, AIG demanded reimbursement from ARI Mutual for the PIP benefits paid on Davis's behalf in excess of $15,000, a sum totaling $75,634.29. On May 4, 2011, ARI Mutual declined to reimburse AIG for any amounts in excess of the $15,000 it had already paid.
On August 1, 2011, AIG filed the present lawsuit seeking
(1) money damages against the Thompson defendants*fn2
and (2) reimbursement or arbitration of AIG's dispute against
Mutual. After consideration of the parties' motions for
summary judgment, the Law Division dismissed all of AIG's claims
against the Thompson defendants. In denying ARI Mutual's motion, the
court granted AIG's application to not cap reimbursement at
$15,000, and directed the insurers "to submit [AIG's] claim for
reimbursement to binding arbitration." This appeal followed.
"An appellate court reviews a grant of summary judgment de novo, applying the same standard governing the trial court under Rule 4:46." Chance v. McCann, 405 N.J. Super. 547, 563 (App. Div. 2009) (citing Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007)). In such review, "'[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 382 (2010) (alteration in original) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). Moreover, because we are specifically reviewing the Law Division's application of N.J.S.A. 39:6A-9.1, we need not defer to the motion court's "interpretive conclusions." Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012).
PIP reimbursement to a PIP carrier is strictly governed by N.J.S.A. 39:6A-9.1. IFA Ins. Co. v. Waitt, 270 N.J. Super. 621, 622 (App. Div. 1994). The statute states in pertinent part:
a. An insurer, health maintenance organization or governmental agency paying benefits pursuant to subsection a., b., or d., of section 13 of P.L. 1983, c. 362 (C. 39:6A-4.3), personal injury protection benefits in accordance with section 4 or section 10 of P.L. 1972, c. 70 (C. 39:6A-3.1) or benefits pursuant to section 45 of P.L. 2003, c. 89 (C. 39:6A-3.3), as a result of an accident occurring within this State, shall, within two years of 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 coverage required to be provided in accordance with section 18 of P.L. 1985, c. 520 (C. 17:28-1.4), or although required did not maintain personal injury protection or medical expense benefits coverage at the time of the accident.
b. 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. Any recovery by an insurer . . . pursuant to this subsection shall be subject to any claim against the insured tortfeasor's insurer by the injured party and shall be paid only after satisfaction of that claim, up to the limits of the insured tortfeasor's motor vehicle . . . insurance policy. [N.J.S.A. 39:6A-9.1 (emphasis added).]
The statute was not among the provisions contained in the original New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 to -35. Instead, it was enacted as part of the New Jersey Automobile Insurance Freedom of Choice and Cost Containment Act of 1984. Liberty Mut. Ins. Co. v. Selective Ins. Co., 271 N.J. Super. 454, 458 (App. Div. 1994). Its purpose was to reduce "the cost of insurance for automobile owners and allow automobile insurers to recover PIP through reimbursement." State Farm Mut. Auto. Ins. Co. v. Licensed Beverage Ins. Exch., 146 N.J. 1, 9 (1996). "Allowing the PIP carrier to recoup its payments from a commercial liability carrier reduces premiums for private automobile insurance, thus advancing a purpose of N.J.S.A. 39:6A-9.1." Liberty Mut., supra, 271 N.J. Super. at 458.
"Our paramount goal in interpreting a statute is to give effect to the Legislature's intent." Wilson ex rel. Manzano v. City of Jersey City, 209 N.J. 558, 572 (2012). To do so, "courts begin with the language of the statute." In re Kollman, 210 N.J. 557, 568 (2012). Statutory words gain their meaning and significance by reading them within the context of the legislation as a whole. See DiProspero v. Penn, 183 N.J. 477, 492 (2005).
There are no disputed facts here. ARI Mutual recognizes its responsibility to reimburse AIG for the $15,000 PIP medical expense benefit provided in Harris's basic automobile insurance policy pursuant to N.J.S.A. 39:6A-9.1. ARI Mutual understandably objects to paying more simply because of AIG's initial mistake and subsequent unilateral settlement with Davis.
While acknowledging its error, AIG argues that ARI Mutual nevertheless should be responsible for reimbursing PIP medical expense amounts in excess of the basic automobile insurance policy limit because if AIG had hewed to the $15,000 limit, ARI Mutual would have been exposed to Davis's claim for the difference as part of the personal injury action. That may theoretically be true, but we are not engaged in an equitable redistribution divorced from the Legislature's intent. Instead, we are involved with a purely statutory reimbursement scheme between insurers, and Davis's purported rights vis-a-vis ARI Mutual are not relevant to our determination.
ARI Mutual relies on N.J.S.A. 39:6A-9.1's phrase "pursuant to" in arguing that reimbursement over the $15,000 policy limit is not available to AIG because the PIP medical expense benefits paid to Davis were not those pursuant to the amount in the actual policy. We agree.
AIG's payment of up to $250,000 was not made within the confines of the basic automobile insurance policy covering Davis. Instead, it was an ad hoc adjustment that suited AIG's litigation strategy. Hence, the payment was not made "pursuant to" or "in accordance with" the PIP reimbursement statute. See N.J.S.A. 39:6A-9.1. The payment was made because AIG was potentially estopped from doing otherwise after providing representations to Davis for up to $250,000 in PIP benefits, upon which Davis reasonably relied. Furthermore, ARI Mutual was not involved in perpetrating the mistake; it was an operational gaffe made by AIG alone in the administration of its insurance business. Thus, the court "should not abruptly increase the exposure of [ARI Mutual]" to compensate AIG for its own error. IFA Ins. Co., supra, 270 N.J. Super. at 626.
The legislative intent of PIP benefits is clear. They enable persons injured on our streets and highways to get medical treatment and payment quickly, within the coverage limits designated in the policy, and without regard to fault. Furthermore, the Legislature ensured that carriers could obtain reimbursement from a tortfeasor's insurer directly, to facilitate cost containment, rather than endure a cumbersome subrogation process. Nowhere does the legislation indicate that a tortfeasor's insurer should also be exposed to liability due to one-sided errors made by the injured's insurer. While reimbursement from a tortfeasor is provided for by N.J.S.A. 39:6A-9.1, it is limited to the PIP limit set forth in the policy covering the accident victim. "For a court to presume that the Legislature intended something other than that which it clearly and plainly expressed in plain language would be tantamount to rewriting the Legislature's written enactment by judicial fiat." Wise v. Marienski, 425 N.J. Super. 110, 120-21 (Law Div. 2011).
AIG argues that ARI Mutual is reaping a windfall if it does not provide the reimbursement AIG seeks. However, the excess benefits paid resulted from AIG's unilateral mistake and self-motivated settlement with Davis. It was a circumstance that ARI Mutual had no hand in producing. ARI can hardly be said to be reaping a windfall. From a public policy standpoint, allowing AIG to recover the amount in question from ARI Mutual would condone sloppiness by insurers and increase the cost of insurance in direct contravention of our no fault laws.