NJ Supreme Court Holds that Passenger in Own Uninsured Vehicle Cannot Pursue Personal Injury Lawsuit

June 22, 2011

On June 1, 2011, the NJ Supreme Court held that N.J.S.A. 39:6A-4.5(a) bars a person who was injured while a passenger in her own uninsured automobile from pursuing a  personal injury action to recover economic and noneconomic damages for those injuries. 

On August 24, 2006, the plaintiff, Denise Perrelli and Geovanni Valverde were driving south on the Garden State Parkway in Perrelli’s uninsured vehicle.  When they left the plaintiff’s home, Perrelli was driving the vehicle but after stopping at a rest area, Valverde took over the driving.  Upon leaving the rest area, the plaintiff’s vehicle was involved in an accident with a car driven by Paul Pastorelle.  As a result of the accident, Valverde was killed and Perrelli sustained serious physical and psychological injuries.

Two years before the accident, the plaintiff had purchased a 1992 Oldsmobile Cutlass and insured it through New Jersey Manufacturers (NJM).  When the plaintiff was first insured by NJM, she lived in Paramus where she received her premium notices.  Thereafter she moved twice.  She could not recall whether she received any premium notices at her last address, but believed her insurance was in effect on the day of the accident.  Perrelli’s coverage remained in effect until August 4, 2006 when NJM canceled her policy for nonpayment of premium.

On August 22, 2008, the plaintiff filed her complaint alleging her injuries were caused by the defendant’s negligence.  The defendant filed an answer and subsequently moved for summary judgment asserting that N.J.S.A. 39:6A-4.5(a) barred the action.  The trial court denied the defendant’s motion and the Appellate Division denied defendant’s motion for leave to appeal.  The Supreme Court granted defendant’s motion for leave to appeal.

N.J.S.A. 39:6A-4.5(a) states, “any person who, at the time of an automobile accident resulting in injuries to that person, is required but fails to maintain medical expense benefits coverage…(mandated by N.J.S.A. 39:6A-4 or N.J.S.A. 39:6A-3.1) shall have no cause of action for recovery of economic or non-economic loss sustained as a result of an accident while operating an uninsured automobile.”

The issue presented to the court was whether the phrase “while operating” required the plaintiff herself to have actually been driving her uninsured automobile at the time of the accident.  The defendant asserted that it was irrelevant whether the plaintiff was physically driving the car.  “The same legislative purpose of deterring the operation of uninsured motor vehicles, and precluding injured persons who caused the operation of an uninsured motor vehicle and did not contribute to the insurance pool from collecting it, apply equally whether the person seeking recovery for their injury is the driver of his or her own uninsured vehicle or a passenger in it.  Each involves an equal attempt to drain from the insurance pool without contributing to it, and each involves an equal violation of the law.”

The plaintiff argued that the statute, by its “clear and unambiguous meaning”, precludes recovery but only if the plaintiff was physically “operating the vehicle.”  The plaintiff’s noted that the statute had been amended on three occasions and the Legislature never added language to the effect of one who “operates or causes to be operated” an uninsured vehicle.  Lastly, the plaintiff argued that the Statute makes clear the uninsured person must be “culpably” or “knowingly” uninsured and in this case because the plaintiff believed she was insured, she could not be culpably uninsured.

The Supreme Court noted that in interpreting the Statute, if the language is clear on its face, courts should enforce the statute according to its terms.  However, where a literal interpretation would create a manifestly absurd result, the spirit of the law should control.  The Court noted that “to reduce the costs of automobile insurance, to protect victims of automobile accidents and reduce public expenditures when accidents are caused by judgment-proof tortfeasors, New Jersey requires all owners of motor vehicles registered or principally garaged in (the State)…to maintain minimum amounts of…insurance coverage for bodily injury, death and property damage caused by their vehicles.” N.J.S.A. 39:6A-4.5, adopted in 1985, was designed to further the costs and judicial objectives of the No Fault Act.  The Legislature wanted to ensure that an injured, uninsured driver did not draw on the pool of accident victim insurance funds to which he (or she) did not contribute.  The Court found that there was no doubt that the Legislature wanted to assure that all automobiles were covered by compulsory insurance by precluding those who do not have the required coverage from recovering from others merely by having someone else drive their vehicle.

The Court then held “that the preclusion of recovery contained in N.J.S.A. 39:6A-4.5(a) applies to the owner of an uninsured vehicle whether injured as a driver or passenger.”

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Reardon Anderson Successful in having client dismissed from lawsuit seeking over $350,000 in damages

April 27, 2011

Reardon Anderson was successful in having its insurance company client and their third-party administrator dismissed from a subrogation action in which the plaintiff was seeking monetary damages in excess of $350,000.  In this matter, Reardon Anderson’s client had issued a Non-trucking Liability policy to a trucking company.  In the underlying case, a driver operating a tractor and trailer owned by the trucking company struck a personal automobile.  As a result of the accident, the occupant in the personal automobile claimed neck and back injuries resulting in a fusion.  The insurer of the personal automobile paid $250,000 in PIP benefits to their insured and $100,000 for uninsured motorist coverage.  Upon the conclusion of the underlying personal injury claim by its insured, the insurer of the personal automobile filed suit against our insurance company (and third-party administrator) client that issued the NTL policy and the insurance company which had issued a commercial auto policy to the trucking company, seeking reimbursement for those funds it had expended.

During this case, it was argued that at the time of the accident, the driver of the truck was under dispatch.  Accordingly, under the NTL policy, no coverage was available.  Interestingly, the principal for the trucking company claimed that the driver of the truck was not authorized to use his trucks as he had never heard of the driver before this accident.  Ultimately, the court granted Reardon Anderson’s summary judgment motion filed on behalf of the insurance company which issued the NTL policy and that company’s third-party administrator.

— Erik Anderson, Esq.

Reardon Anderson is a Tinton Falls, New Jersey based law firm which represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.


Court Holds that Two Year Statute of Limitations for PIP Reimbursement Claim Begins to Run Upon the Filing of a PIP Claim Form

January 28, 2011

In an unreported Appellate Division decision, the court held that the two-year Statute of Limitations for a PIP reimbursement claim is triggered upon the submission of the PIP claim form.

N.J.S.A. 39:6A-9.1 states “an insurer… paying [PIP] benefits… or medical expense 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 [PIP] protection or medical expense coverage at the time of the accident.”

On December 1, 2006, Garrison Lange was injured in an automobile accident when his vehicle was struck by a vehicle owned by Holger Trucking Company.  That day, Lange contacted his automobile insurer, New Jersey Manufacturers Insurance Group (NJM) advising of the accident and claiming he had sustained neck and back injuries.  That day, NJM created a PIP file and assigned a file number.

On December 4, 2006, the NJM adjuster mailed Lange a PIP application.  That day, Lange treated with Dr. Palluzzi.  On December 6, 2006, Dr. Palluzzi submitted bills to NJM for treatment.  On December 8, 2006, NJM received the bills.  Also on December 8, 2006, Dr. Palluzzi sent NJM a letter of medical necessity and requesting approval for a one-month treatment plan.  NJM authorized the treatment plan on December 11, 2006.

On December 20, 2006, Lange sent NJM a completed PIP application which NJM received on December 26, 2006.  It was not until December 24, 2008, that NJM filed its complaint against Holger and ARI seeking reimbursement of approximately $53,000 in PIP benefits NJM paid on Lange’s behalf.

Holger and ARI moved for Summary Judgment alleging that NJM’s suit was filed more than two years after Lange first advised NJM of the accident and more than two years after NJM opened its PIP  file.   NJM argued that the suit was timely filed because it did not receive Lange’s formal PIP application until December 26, 2006.  The trial court agreed with NJM and denied defendant’s motion.  On appeal, the Appellate Division noted that the statute does not define what is meant by “the claim.”  The court focused on the Legislatures’ use of the definite article in reference to the submission of “the claim” as the event triggering the running of the statute of limitations.  Accordingly, the court found that the Legislature likely intended to mean a single, definitive event and not any of a series of events in defining “the claim.”  The court also noted the very nature of the undertaking, (i.e., the fixing of the moment upon which the limitations period begins to run) suggests a need to provide the parties with a clear and unambiguous understanding of which of any number of occurrences is the triggering event for the statute of limitations.  The court placed significant emphasis on the fact that the Legislature described that event as the filing of “the claim” and not “a claim.”

The court then examined whether “the claim” meant the first claim (the initial telephone call); the last claim (last request for payment from a health care provider) or “the claim that is different from all others, namely, the insured’s PIP application.”  In focusing on the Legislature’s intent to fix one particular, distinguishable event as the trigger for the limitations period, the court concluded that the submission of the PIP claim form triggers the two-year Statute of Limitations.

What is interesting about the decision is that the court noted, “We are concerned by the fact – as the parties recognize – that the policy in question and perhaps others like it, do not require that an insured ever submit a PIP claim form; nor do the no fault laws compel such a filing.  As a result, the event we assume to be the triggering event for the time within which a reimbursement suit must be commenced may be something that, in many cases, may never occur.” The court then noted that “we take comfort in knowing that the Legislature is fully capable of correcting the statute’s ambiguity if it believes we have erroneously interpreted the statute.”

— Tom Reardon, Esq.

Reardon Anderson is a Tinton Falls, New Jersey based law firm which represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.


NJ Court Finds that a Church Van Is Not An Automobile for PIP Purposes

January 19, 2011

The Appellate Division has ruled that a multi-passenger van owned by a church and utilized to transport members to and from services is not an “automobile” for the purpose of recovering PIP benefits.

In this matter, Jose Perez was involved in an accident on April 3, 2009, while driving a fifteen person van owned by Iglesia Pentecostal Roca de Salvacion. At the time of the accident, Perez was driving member of his family and several other church members to services. Perez has been driving the van for the church for the past ten years. The van was insured under a commercial policy issued by Farmers Mutual. This policy did not provide PIP coverage. Perez had a personal automobile policy issued by Encompass Property and Casualty Insurance Company. This policy provided PIP coverage, but was only applicable to “bodily injury…caused by an accident arising out of the ownership, maintenance or use…of an auto as an automobile.”

As a result of the accident, the Perez family sought PIP benefits from Farmers and Encompass. Both insurers disclaimed coverage for PIP benefits. The Perezes brought a declaratory judgment action for a determination that the Farmers and Encompass policies both provided coverage for PIP benefits for the injuries sustained. The trial court determined that the van was an “automobile” under N.J.S.A. 39:6A-2 and Encompass was required to provide PIP benefits. The court further found that as Farmers issued a commercial policy, they were not required to provide PIP benefits.

On appeal, the court was required to determine whether the church van was an “automobile” under the No Fault Law. The court noted that if the van was determined to be an automobile under the law, Encompass and Farmers would be required to pay PIP benefits to the Perezes.

The court noted that N.J.S.A. 39:6A-4 provides that “every standard automobile liability insurance policy…shall contain [PIP] benefits…to the named insured and members of his family residing in his household who sustain bodily injury as a result of an accident while occupying…or using an automobile,…and to other persons sustaining bodily injury while occupying…or using the automobile of the named insured, with permission of the named insured.” Additionally, the law provides that if a policy does not conform to these requirements, it will be “deemed to be conformed with this statute.”

The definition of “automobile” under New Jersey law sets forth two categories of motor vehicles for which, subject to certain exclusions, coverage for PIP benefits are required. These categories are: (1) private passenger automobiles or station wagon type that is owned or hired and is neither used as a public or livery conveyance for passengers or rented to others with a driver; and (2) various other types of motor vehicles, including vans, owned by an individual or by a husband and wife who are residents of the same household and not regularly used in the occupation, profession or business of the insured.

In determining whether the van was to be considered an automobile, the court noted a prior decision finding that a ‘minivan” was deemed to be an automobile for the purposes of determining whether PIP benefits were available. In that case, the court found that the “minivan” was a “station wagon type” vehicle under the law, and as such the insurer owed PIP benefits.

The Appellate Division found that the church van was completely different as it had five rows of seats and was designed to carry fifteen passengers. It further noted that this type of van was more commonly used by hotels and business to transport customers. Accordingly, the court determined that the church van was not a private passenger automobile or “station wagon type” vehicle.

As such the court looked to the second definition of “automobile” under the No Fault Law and found that the vehicle was a “van”. Next, the court was required to determine if the van was “owned by an individual or by a husband and wife who are residents of the same household.” As the van was owned by the church and not the Perzes, the court found that the van did not satisfy this element of the definition of “automobile.” Accordingly, the court found that the Farmers and Encompass policies policy did not owe PIP benefits as the church van is not an “automobile” under the No Fault Law.

— Erik Anderson, Esq.

Reardon Anderson represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.