New Jersey Supreme Court Holds That Injured Motorists Cannot Recover PIP Benefits In Excess of Policy PIP Limits

In Haines v. Taft, the New Jersey Supreme Court considered whether injured motorists who chose the $15,000 insurance minimum for PIP benefits can seek admission of evidence regarding medical expenses in excess of the minimum amount. The Court examined whether the New Jersey Legislature intended 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 Automobile Insurance Cost Reduction Act (“AICRA”) to allow an insured to elect smaller amounts of PIP coverage. Finding that there was no evidence of a clear intent by the Legislature to deviate from the no-fault first-party PIP system of regulated coverage of contained medical expenses, the Court held that the admission of medical expenses above an individual’s PIP limit was barred by the AICRA.

Plaintiff was insured under a standard policy and chose a PIP limit of $15,000. After being injured in an auto accident, Plaintiff brought suit to recover outstanding medical provider charges in excess of the $15,000 PIP limit. When Plaintiff sought to introduce evidence of the excess medical bills, defendant moved to preclude the admission of the evidence, relying on N.J.S.A. 39:6A-12, which addresses the inadmissibility of evidence of losses collectible under PIP coverage. Plaintiff argued that the excess medical bills constituted “economic loss” under the AICRA and thus should be admissible. The trial court ruled in favor of defendant and prohibited plaintiff from admitting evidence of medical bills in excess of $15,000. Plaintiff appealed and the Appellate Division reversed. This appeal then followed.

The Court examined the issue in light of the historical development of New Jersey’s no-fault law, which shifted focus over the years from full coverage to cost containment. It noted that the goals of the AICRA were to “preserve the no-fault system, while at the same time reducing unnecessary costs which drive premiums higher.” The Court found that the Appellate Division’s analysis of the statute to allow admission of medical charges in excess of the PIP limit “transgresses the overall legislative design of the No-Fault law to reduce court congestion, lower the cost of automobile insurance, and most importantly, avoid fault-based suits in a no-fault system.” Holding that the goals of the statute would be undercut by the ability of a third-party to sue for medical expenses above the PIP policy coverage limit, the Court reversed the Appellate Division’s decision. The Court also determined that it was up to the Legislature to clearly indicate its intention to allow the admission of such evidence. Any other reading of the AICRA would result in too large a shift from the historical priorities and purposes of the statute.