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James v. State Farm Insurance Co.

Superior Court of New Jersey, Appellate Division

January 18, 2019

LLEDON JAMES and LURLINE JAMES, Plaintiffs-Appellants,

          Argued September 20, 2017

          On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-5051-15.

          Jeffrey A. Rizika argued the cause for appellant (Javerbaum, Wurgaft, Hicks, Kahn, Wikstrom & Sinins, attorneys; Jeffrey A. Rizika, of counsel and on the brief).

          Thomas W. Matthews argued the cause for respondent (Soriano, Henkel, Biehl & Matthews, attorneys; Thomas W. Matthews, on the brief).

          David J. Karbasian argued the cause for amicus curiae New Jersey Association for Justice (Law Offices of David J. Karbasian, attorneys; David J. Karbasian, on the brief).

          Before Judges Fuentes, Koblitz and Suter.


          FUENTES, P.J.A.D.

         Lynval James and plaintiff Lurline James are husband and wife. Their household includes their adult son plaintiff Lledon James, who was a licensed driver at all times relevant to this case.[1] Lynval purchased an automobile policy from defendant State Farm Insurance Company (State Farm) listing his wife and son as additional insureds. Plaintiffs claim that when Lynval purchased this policy from State Farm, he requested the maximum Personal Injury Protection (PIP) benefits of $250, 000, and designated PIP as primary for medical expenses. After Lledon and his mother Lurline were involved in a car accident, plaintiffs claimed they discovered that the State Farm policy provided only $15, 000 in PIP coverage and designated a private health insurance provider as the primary for PIP benefits.

         Plaintiffs filed a verified complaint and an order to show cause seeking to reform the State Farm policy to provide the maximum $250, 000 PIP benefits. Plaintiffs argued that the insurance policy as written was invalid because Lledon was covered by Medicaid, not by a private health insurance carrier. Plaintiffs also alleged that State Farm's actions were willful, wanton, intentional, grossly negligent and in reckless disregard of their legal rights.

         State Farm filed a responsive pleading in which it argued it was immune from civil liability as a matter of law pursuant to N.J.S.A. 17:28-1.9(a). Alternatively, State Farm claimed the PIP benefits coverage in the policy is the coverage Lynval requested at the time he purchased the policy. Plaintiffs filed a motion for partial summary judgment, requesting judicial reformation of the policy to reflect $250, 000 in PIP coverage. State Farm cross-moved for summary judgment relying on the immunity provided by the Legislature in N.J.S.A. 17:28-1.9(a).

         The Law Division judge assigned to this case granted summary judgement in favor of State Farm, finding it was immune from liability in this case under N.J.S.A. 17:28-1.9(a). The judge found the record indisputably showed Lynval signed the coverage selection form that contained a $15, 000 limitation on PIP benefits coverage and designated the health insurance provider as primary. The motion judge also found that at the time Lynval requested this automobile policy from State Farm, he presented his private health insurance card and his declarations page from his previous automobile insurance policy with Geico, which provided coverage that "was exactly the same as what was selected from State Farm in this case." Finally, the judge noted that Lynval renewed the State Farm automobile policy multiple times over a two-year period without objection or modification.

         In light of these undisputed facts, the judge concluded plaintiffs had not presented evidence that shows State Farm's conduct in this case was willful, wanton, or grossly negligent. The judge held State Farm did not have a legal obligation to determine whether each member of an insured's household is covered by private health insurance at the time the insured signs the coverage selection form. The motion judge granted State Farm's cross-motion for summary judgment and dismissed plaintiffs' verified complaint with prejudice pursuant to the immunity provisions in N.J.S.A. 17:28-1.9(a).

         In this appeal, plaintiffs argue the Law Division erred when it found State Farm immune from liability under N.J.S.A. 17:28-1.9(a). The New Jersey Association for Justice, appearing as amicus curiae, argues that plaintiffs' policy should be reformed to reflect the maximum PIP benefits available because State Farm's policy violates both State administrative regulations and the federal Medicare Secondary Payer Act. We reject these arguments and affirm substantially for ...

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