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Haines v. Taft

Supreme Court of New Jersey

March 26, 2019

Joshua Haines, Plaintiff-Respondent,
v.
Jacob W. Taft, Bonnie L. Taft, jointly, severally and/or in the alternative, Defendants-Appellants, and John McHenry, Defendant. Tuwona Little, Plaintiff-Respondent,
v.
Jayne Nishimura, Defendant-Appellant.

          Argued October 22, 2018

          On certification to the Superior Court, Appellate Division, whose opinion is reported at 450 N.J.Super. 295 (App. Div. 2017).

          Michael J. Marone argued the cause for appellants Jacob W. Taft, Bonnie L. Taft, and Jayne Nishimura (McElroy, Deutsch, Mulvaney & Carpenter, attorneys; Michael J. Marone, of counsel and on the briefs, and Eric G. Siegel, on the briefs).

          Vincent A. Campo argued the cause for respondent Joshua Haines (Malamut & Associates, attorneys; Vincent A. Campo, on the brief).

          Jeffrey M. Thiel argued the cause for respondent Tuwona Little (Petrillo & Goldberg, attorneys; Jeffrey M. Thiel, on the brief).

          Susan Stryker argued the cause for amici curiae Insurance Council of New Jersey and The Property Casualty Insurers Association of America (Bressler, Amery & Ross, attorneys; Susan Stryker, of counsel and on the brief).

          Stephen J. Foley, Jr., argued the cause for amicus curiae New Jersey Defense Association (Campbell, Foley, Delano & Adams, attorneys; Stephen J. Foley, Jr., on the brief).

          Kenneth G. Andres, Jr., argued the cause for amicus curiae New Jersey Association for Justice (Andres & Berger, attorneys; Kenneth G. Andres, Jr., of counsel and on the brief, and Tommie Ann Gibney, on the brief).

          LaVECCHIA, J., writing for the Court.

         In this consolidated appeal, the Court considers one question of law: Did the Legislature intend to deviate from its highly regulated no-fault system of first-party self-insurance to cover medical expenses arising from automobile accidents when it amended the statutory scheme to allow an insured to elect smaller amounts of personal injury protection (PIP) under a standard policy?

         Each plaintiff in this appeal was injured in a car accident. Each was insured under a standard policy with insurance that provided for $15, 000 in PIP coverage instead of the default amount of $250, 000. Neither plaintiff was able to sustain a claim for bodily injury (noneconomic loss) due to each policy's limitation-on-lawsuit option. Each was suing for outstanding medical provider charges in excess of their elected PIP coverage ($28, 000 and $10, 000, respectively).

         Each plaintiff filed a personal injury claim, and each defendant moved to preclude plaintiff from presenting evidence of medical expenses that exceeded their $15, 000 PIP limits. Defendants relied on N.J.S.A. 39:6A-12 (Section 12), which addresses the inadmissibility of evidence of losses collectible under personal injury protection, and Roig v. Kelsey, 135 N.J. 500 (1994). In Roig, the Court held that the public policies underlying the no-fault system required that Section 12 be construed to prohibit injured parties from recovering medical deductibles and copayments from a tortfeasor. 135 N.J. at 513, 515.

         In opposition to the motion, plaintiff Joshua Haines maintained that medical bills exceeding PIP coverage constitute "economic loss" as that term presently is defined in N.J.S.A. 39:6A-2(k) and that evidence of such medical bills should thus be admissible. Similarly, plaintiff Tuwona Little distinguished the present case from Roig, stating that, in amending the definition of economic loss to include "medical expenses" after Roig, the Legislature "clearly evinced its intention to allow recovery [in tort] for medical expenses."

         The trial courts ruled against plaintiffs in each matter and prohibited plaintiffs from admitting evidence of their medical expenses that exceeded their $15, 000 PIP limits. The Appellate Division consolidated the cases on appeal, and, in a published opinion, reversed both trial court orders. 450 N.J.Super. 295, 309-10 (App. Div. 2017). The Court granted defendants' petitions for certification. 231 N.J. 179 (2017); 231 N.J. 155 (2017).

         HELD: The Court cannot conclude that there is evidence of a clear intention on the part of the Legislature to deviate from the carefully constructed no-fault first-party PIP system of regulated coverage of contained medical expenses and return to fault-based suits consisting solely of economic damages claims for medical expenses in excess of an elected lesser amount of available PIP coverage. Unless the Legislature makes such an intent clearly known, the Court will not assume that such a change was intended by the Legislature through its amendments to the no-fault system in the Automobile Insurance Cost Reduction Act.

         1. Section 12 addresses evidence that is admissible or not in a claim for bodily injury. Despite the provision's narrow focus on evidentiary matters in trials for noneconomic losses, plaintiffs construe the third paragraph's language -- "Nothing in this section shall be construed to limit the right of recovery, against the tortfeasor, of uncompensated economic loss sustained by the injured party" -- in concert with the present definition of "economic loss" in N.J.S.A. 39:6A-2(k), to give rise to a stand-alone right to pursue a third-party liability claim against a tortfeasor exclusively for uncompensated economic loss of medical benefits not covered due to having a lesser amount of PIP coverage. Section 12 does not unmistakably compel plaintiffs' interpretation. Indeed, one can envision an equally plausible construction that such uncompensated economic losses may be recovered from the tortfeasor within the context of a viable suit for bodily injury. In light of the ambiguity within Section 12 and due to the consequences that would flow from interpreting that section in line with plaintiffs' construction and as the appellate panel did, the Court examines the question in light of the historical development of New Jersey's no-fault law. (pp. 11-17)

         2. The history of no-fault insurance is one of changing priorities, shifting from full coverage to cost containment. The Court summarizes the law's historical evolution. (pp. 18-23)

         3. Against that backdrop came the most recent amendments to the insurance law provisions that are at the heart of the instant case, accomplished through the Automobile Insurance Cost Reduction Act (AICRA). L. 1998, c. 21. The Legislature declared in AICRA's opening section that its goals were "to preserve the no-fault system, while at the same time reducing unnecessary costs which drive premiums higher." N.J.S.A. 39:6A-1.1(b) (1998). AICRA changed the arbitration process used for benefit disputes, established bases for determining whether treatments and diagnostic tests are medically necessary, revised the threshold for suits for noneconomic loss, and created insurance options with decreased coverage in exchange for lower premiums. Some provisions indicate that the Legislature was concerned that people might be subject to the lower PIP coverage limits without making the conscious decision to do so -- a concern that would seem overblown if a private cause of action remained to recover any medical costs above the selected PIP ceiling. (pp. 23-26)

         4. AICRA's regulatory scheme ensured that benefits were paid according to their medical necessity, keeping premiums at a manageable level, while preventing such claims from inundating the court system. AICRA also established new procedures and assigned considerable resources to combat fraud in the delivery of medical benefits. (pp. 26-27)

          5. AICRA's legislative history demonstrates that there was a legislative awareness of the possibility of creating a gap in medical coverage should PIP coverage be lowered, which presumes the absence of other forms of reimbursement, such as suits in tort, to fill that gap. (pp. 28-29)

         6. Interpreting Section 12 to allow the admission of evidence of medical expenses falling between the insured's PIP policy limit and the presumptive PIP amount of $250, 000 transgresses the overall legislative design of the No-Fault Law to "reduc[e] court congestion[, ] . . . lower[] the cost of automobile insurance[, ]" and most importantly, avoid fault-based suits in a no-fault system, as acknowledged in Roig. 135 N.J. at 516. Efforts to subject medical costs to careful review and control through AICRA's extensive regulatory programs and, to a lesser degree, its fraud prevention methods, would be undercut by the ability of a third party to sue for medical expenses above their PIP policy coverage limit but below the presumptive amount of $250, 000. Those suits would commandeer the judicial resources that the arbitration system was enacted to preserve. The result of plaintiffs' reading of AICRA could allow the unintended -- and, one could assert, absurd --consequence whereby someone who chooses a lower PIP coverage option could receive a higher overall reimbursement. The Court cannot envision that the Legislature countenanced such results. Under the No-Fault Law, the ability to sue is the exception, not the rule. The Legislature has determined that the benefits of creating limited but automatic medical reimbursement for injured motor-vehicle-accident victims outweigh the ability of a minority of injured parties to recover larger amounts in tort. (pp. 30-33)

         7. Accordingly, the Court concludes that the Appellate Division judgment must be reversed. The interpretation given to Section 12 by the panel must, in the Court's view, abide a time when the Legislature has more clearly indicated its intention. Without greater clarity of statutory language, any other reading of AICRA results in too large of a shift from the historical priorities and purposes of the statute. (pp. 33-34)

         The judgment of the Appellate Division is REVERSED and the matters are REMANDED to the trial courts for entry of their respective judgments of dismissal.

          JUSTICE ALBIN, dissenting, expresses the view that N.J.S.A. 39:6A-12 is intended to prevent a double recovery of damages, not to deny an automobile accident victim a just recovery of damages, and that the majority's interpretation is at odds with the plain wording of N.J.S.A. 39:6A-12, the legislative history of the No Fault Act, and public policy. Justice Albin expresses concern that the Court's opinion will have a catastrophic impact on the right of low-income automobile accident victims to recover their medical costs from the wrongdoers who cause their injuries and stresses that the Legislature can make clear that today's decision is not what it meant or ever envisioned.

          CHIEF JUSTICE RABNER and JUSTICE SOLOMON join in JUSTICE LaVECCHIA's opinion. JUSTICE ALBIN filed a dissenting opinion, in which JUDGE FUENTES (temporarily assigned) joins. JUSTICES PATTERSON, FERNANDEZ-VINA, and TIMPONE did not participate.

          OPINION

          LAVECCHIA JUSTICE.

         In this consolidated appeal, we consider one question of law: Did the Legislature intend to deviate from its highly regulated no-fault system of first-party self-insurance to cover medical expenses arising from automobile accidents when it amended the statutory scheme to allow an insured to elect smaller amounts of personal injury protection (PIP) under a standard policy?

         Each plaintiff in this appeal was injured in a car accident. Each was insured under a standard policy with insurance that provided for $15, 000 in PIP coverage instead of the default amount of $250, 000. Neither plaintiff was able to sustain a claim for bodily injury (noneconomic loss) due to each policy's limitation-on-lawsuit option. Each was suing for outstanding medical provider charges in excess of their elected PIP coverage ($28, 000 and $10, 000, respectively). The trial court record reveals that the outstanding provider charges had not been subjected to the cost containment requirements under the PIP regulatory scheme.

         The Appellate Division concluded that plaintiffs could introduce evidence of their outstanding medical bills in excess of the elected PIP policy coverage in support of fault-based claims for economic damages against their respective tortfeasors.

         For the reasons that follow, we reverse. We cannot conclude that there is evidence of a clear intention on the part of the Legislature to deviate from the carefully constructed no-fault first-party PIP system of regulated coverage of contained medical expenses and return to fault-based suits consisting solely of economic damages claims for medical expenses in excess of an elected lesser amount of available PIP coverage. Unless the Legislature makes such an intent clearly known, we will not assume that such a change was intended by the Legislature through its amendments to the no-fault system in the Automobile Insurance Cost Reduction Act (AICRA).

         Indeed, in the opening findings and declarations section of AICRA, it was the Legislature's belief that "it is good public policy to provide medical benefits on a first party basis, without regard to fault, to persons injured in automobile accidents," but "in order to keep premium costs down, the cost of the benefit must be offset by a reduction in the cost of other coverages, most notably a restriction on the right of persons who have non-permanent or non-serious injuries to sue for pain and suffering." N.J.S.A. 39:6A-1.1(b) (1998). Upon consideration of the coordinated amendments accomplished through AICRA to tighten up medical utilization, contain insurance costs, and make first-party no-fault insurance coverage more affordable and available, we find the Appellate Division's conclusion counter-intuitive and look for greater guidance from the Legislative Branch.

         I.

         On October 19, 2011, plaintiff Joshua Haines was in an automobile accident. While driving his father's car, he was struck by a car driven by defendant Jacob W. Taft.[1] Not having any health insurance, Haines sought coverage for medical treatment for his injuries under the PIP plan in his father's standard automobile insurance policy. The PIP plan provided for $15, 000 of coverage -- the minimum amount permitted under N.J.S.A. 39:6A-4.3(e). Haines exhausted the PIP coverage. He claims to have approximately $28, 000 in outstanding medical claims that providers are seeking from him. The record before the motion court reveals that Haines' counsel represented that the majority of the $28, 000 in costs were not subjected to applicable PIP fee schedules but rather are based on the full amount billed by the providers.

         On September 13, 2016, the motor vehicle driven by plaintiff Tuwona Little was rear-ended by defendant Jayne Nishimura's vehicle. Little also was insured under a standard insurance policy that provided $15, 000 in PIP coverage. She sought treatment for the personal injuries she sustained in the accident. Like Haines, Little eventually exhausted her PIP coverage. She claims that she has $10, 488 in unpaid medical expenses. Similar to the record in Haines, the record considered by the motion court indicated that the individual medical expenses had not been subjected to any detailed review to determine if they were "reasonable and necessary," and the court did not deem it essential to resolve that factual matter before proceeding with the legal question before it.

         Each plaintiff filed a personal injury claim against the respective defendant-driver and requested a jury trial. Each defendant filed a pre-trial motion to preclude plaintiff from presenting evidence of medical expenses that exceeded the $15, 000 PIP limits. Defendants relied on N.J.S.A. 39:6A-12 (Section 12), which addresses the inadmissibility of evidence of losses collectible under personal injury protection, and Roig v. Kelsey, 135 N.J. 500 (1994). In Roig, our Court reasoned that the public policies underlying the no-fault system required that we construe Section 12 to prohibit injured parties from recovering medical deductibles and copayments from a tortfeasor. 135 N.J. at 513, 515.

         In opposition to the motion, Haines maintained that medical bills exceeding PIP coverage constitute "economic loss" as that term presently is defined in N.J.S.A. 39:6A-2(k) and that evidence of such medical bills should thus be admissible at trial. Similarly, Little distinguished the present case, stating that, in amending the definition of economic loss to include a reference to "medical expenses" after the Roig decision, the Legislature "clearly evinced its intention to allow recovery [in tort] for medical expenses."

         The trial courts ruled against plaintiffs in each matter and prohibited plaintiffs from admitting evidence of their medical expenses that exceeded their $15, 000 PIP limits. In Little's case, the trial court reasoned that "under the AICRA, the Legislature did not intend to have ancillary litigation or to have litigation over medical bills not covered by the PIP limits that [Little] selected." In Haines's case, the trial court reasoned that a person who chooses a $15, 000 PIP plan should not be allowed to recover in excess of that amount because he or she has made an affirmative decision to buy less insurance for less money. The court concluded that the purpose of the no-fault system is to keep premiums lower by allowing insureds to buy smaller policies, and a necessary component of that goal, as discussed in Roig, is eliminating litigation over claims for medical expenses exceeding an insured's PIP limit.

         The Appellate Division consolidated the cases on appeal, and, in a published opinion, reversed both trial court orders. Haines v. Taft, 450 N.J.Super. 295, 309-10 (App. Div. 2017).

         The panel found persuasive plaintiffs' argument in favor of a plain-language approach to N.J.S.A. 39:6A-12 and also agreed that allowing recovery of uncompensated medical expenses is not contrary to the statute's principal goal of avoiding double recovery of medical expenses by plaintiffs. Id. at 302, 307.

         Examining N.J.S.A. 39:6A-12 and the statutory provisions referred to therein, the Appellate Division concluded that "amounts collectible or paid under a standard automobile insurance policy" did not "refer[] solely to the maximum PIP coverage, or $250, 000, that is potentially available in a standard policy." Id. at 302. The panel reasoned that "because the statutory language expressly allows varying levels of PIP benefits paid or collectible under a standard policy," ibid. (citing N.J.S.A. 39:6A-4.3(e)), Haines and Little were barred from admitting evidence of medical expenses up to their $15, 000 PIP policy limit. The panel concluded, however, that evidence of their medical expenses between $15, 000 and $250, 000 was not barred by Section 12 and therefore was "admissible and recoverable against the tortfeasors." Id. at 303.

         The panel declined to accept defendants' position that the policies underlying AICRA necessitated the exclusion of recovery for medical expenses between $15, 000 and $250, 000. Id. at 306-07. Similarly, the panel was unpersuaded that allowing admission of medical expenses above an insured's PIP policy limit, but below the $250, 000 PIP limit, would insert a fault-based aspect into a no-fault system even though a plaintiff would have to first prove that the defendant was at fault for their injuries before he or she would be entitled to recovery. Ibid.

         The panel did not find that our Court's earlier decision in Roig precluded its result because, in the panel's view, Roig did not "bar an injured insured from recovering any medical bills in excess of an insured's PIP limits." Id. at 305. In reaching that conclusion, the panel noted that it was "significant" that "Section 12 remained intact even after the Legislature expanded the definition of 'economic loss' in 1998 to include uncompensated medical expenses." Id. at 306; see also id. at 308-09. And the panel highlighted that, in Roig, the Court recognized a legislative intent "to bar the recovery of minor expenses." Id. at 306-07. In a footnote, the panel observed that although the Roig decision never defined a "minor" medical expense, the Roig Court did highlight a quotation from Governor Cahill's First Annual Message, which noted that "minor automobile negligence case[s]" are those that "result[] in a judgment of settlement under $3000." Id. at 306 n.5 (quoting Roig, 135 N.J at 510).

         Ultimately, the panel reasoned that "copayments and deductibles are insufficiently analogous to the kind of expenses at issue here," referring to Haines and Little's outstanding medical expenses as "hardly minor." Id. at 307. Quoting an earlier published trial court decision, the panel noted that, unlike copayments and deductibles, the severity of an accident victim's injuries and the resultant medical expenses cannot be anticipated and "AICRA is devoid of any legislative intent to have insureds bargain for potentially bankrupting medical bills, in exchange for lower premiums." Ibid. (quoting Wise v. Marienski, 425 N.J.Super. 110, 124-25 (Law Div. 2011)).

         Ultimately, the panel crafted an exception to its interpretation and application of N.J.S.A. 39:6A-12 by noting that there may be instances in which medical expenses at issue may minimally exceed a plaintiff's PIP policy limits and that arguably under those circumstances they might be considered minor and, thus, unrecoverable. Id. at 310. The panel ultimately left the issue of what constitutes minor expenses unanswered, but made clear its view that Haines' and Little's unpaid medical bills were not minor. Ibid.

         We granted defendants' petitions for certification. 231 N.J. 179 (2017); 231 N.J. 155 (2017). We also granted amicus curiae status to the New Jersey Association for Justice (NJAJ). The Insurance Council of New Jersey (ICNJ), the Property Casualty Insurers Association of America (PCI), and the New Jersey Defense Association (NJDA), who participated before the Appellate Division, also served as amici ...


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