New Jersey’s car insurance system is unlike most other states in that the state utilizes a no-fault system. Contrary to many other states, medical bills are typically paid for by each individual’s own insurance. The system intends to provide injured claimants with speedy compensation of medical bills without the need to determine fault. Nevertheless, the no-fault system still has complicated features of its own.
Overview of PIP Coverage Amounts
Pursuant to the New Jersey Personal Injury Protection (hereinafter “PIP” or “no-fault”) statute, N.J.S.A. 39:6A-1, et seq., several first-party payments, including medical expenses, lost wages, essential services, survivor benefits, and funeral expenses are to be paid expeditiously to certain classes of persons injured in automobile accidents without any consideration of fault. How much PIP coverage is available is dependent upon the choices made by the insured and their own economic status.
The default coverage provided for at N.J.S.A. 39:6A-4 is referred to as “standard” PIP coverage and includes mandatory coverage of $250,000 in medical expense benefits. There additionally exists the option of reduced coverage limits in the amounts of $15,000; $50,000; $75,000; and $150,000. However, it is not recommended that a consumer reduce the amount of PIP coverage they have. In addition to medical expense benefits, the standard coverage also may provide income continuation, essential services, survivor benefits, and funeral expenses, in varying amounts, depending upon the choices of the insured.
The next coverage option is referred to as “basic” PIP coverage and provides significantly reduced medical expense benefits in the amount of $15,000 per person/per accident. N.J.S.A. 39:6A-3.1. In other words, if two (2) or more individuals are injured in an accident and seek PIP coverage under the same policy, the insurer is responsible only up to $15,000.
Nevertheless, additional coverage exists for catastrophic injuries limited to “permanent or significant brain injury, spinal cord injury or disfigurement or for medically necessary treatment of permanent or significant injuries rendered at a trauma center or acute care hospital immediately following the accident and until the patient is stable, no longer requires critical care and can be safely discharged or transferred to another facility in the judgment of the treating physician.” N.J.S.A. 39:6A-3.1(a) (emphasis added).
Lastly, the “basic” policy coverage does not provide income continuation, essential services, or death benefits, which are available under the “standard” policy.
The final insurance coverage class is called a “special” policy and is available only to low-income individuals. N.J.S.A. 39:6A-3.3. Under this policy, even less coverage is available than under the “basic” policy. However, unlike the “basic” coverage, this policy may allow for a $10,000 death benefit.
The “special” policy provides medical expense benefits limited to an amount not to exceed $250,000 for “emergency care” only. Emergency care is defined as “all medically necessary treatment of a traumatic injury or a medical condition manifesting itself by acute symptoms of sufficient severity such that absence of immediate attention could reasonably be expected to result in: death; serious impairment to bodily functions; or serious dysfunction of a bodily organ or part.” N.J.S.A. 39:6A-3.3(b)(1). This coverage is additionally extended to “all medically necessary treatment of permanent or significant brain injury, spinal cord injury or disfigurement after the patient is discharged from acute care.” Id.
Overview of Available Benefits
To be payable by PIP, medical expenses (defined at N.J.S.A. 39:6A-2(e)) must be reasonable and “medically necessary.” To be “medically necessary,” the no-fault statute provides “that the treatment is consistent with the symptoms or diagnosis, and treatment of the injury (1) is not primarily for the convenience of the injured person or provider, (2) is the most appropriate standard or level of service which is in accordance with standards of good practice and standard professional treatment protocols…, and (3) does not involve unnecessary diagnostic testing.” N.J.S.A. 39:6A-2(n).
Under the “standard” coverage, a claimant may be eligible for income continuation benefits, which pay for lost wages of $100 or more per week for fifty-two (52) weeks. The amount and time period of payments may be greatly increased depending upon the selection of the insured. The benefits, however, cannot exceed the net income of the injured worker and are subject to a setoff of certain specified collateral sources.
Essential Services Benefits
As provided for in the Act, essential services benefits are to be made in reimbursement of necessary and reasonable expenses incurred for substitute essential services typically performed by the injured individual for themself or members of their household, such as housework, child care, shopping, food preparation or transportation. These benefits are subject to a limit of $12.00 per day, but higher coverage limits are available.
In the tragic event of a death resulting from an auto accident, two (2) types of lump-sum death benefits are available. The first type is income continuation benefits, where the decedent was the income provider. Their survivors are entitled to payment of the maximum benefit the income provider would have been entitled (typically $5,200). Second, where the decedent was the provider of essential services in the household, his survivors are entitled to payment of the maximum essential service benefit (typically $4,380). Significantly, it is not required that the survivors prove actual loss of income or actual loss of services. Instead, all that is required is proof of death of an eligible insured.
Funeral benefits are straightforward and pay up to $1,000 for funeral bills unless higher limits were purchased.
When and to Whom Are PIP Benefits Available?
PIP benefits are available in virtually every auto accident in New Jersey. All that is required is that there be a valid policy providing PIP benefits, that the injured individual be a member of one of the covered classes, and that the injuries resulted from an accident involving an automobile.
Under N.J.S.A. 39:6A-4, automobile insurers must provide PIP benefits to the following: “the named insured and members of his family residing in his household who sustain a bodily injury as a result of an accident while occupying, entering into, alighting from or using an automobile, or as a pedestrian, caused by an automobile or by an object propelled by or from an automobile, and to other persons sustaining a bodily injury while occupying, entering into, alighting from or using the automobile of the named insured, with permission of the named insured.”
As you can see, the language is extremely broad, covering any accident involving an automobile, even where the individual was a pedestrian. Further, courts have construed the language to cover cases where you typically may not expect to see coverage. See e.g. Stevenson v. State Farm, 311 N.J. Super. 363 (App. Div. 1998) (finding PIP coverage for an individual shot during a carjacking); Ohio Casualty Corp. v. Gray, 323 N.J. Super. 338 (App. Div. 1999) (finding PIP coverage for an individual injured by a shopping cart that rolled into him while he was inspecting his car for damage).
What is an “automobile”?
Likewise, the definition of “automobile” is quite expansive. The Act defines it as: “ a private passenger automobile of a private passenger or station wagon type that is owned or hired and is neither used as a public or livery conveyance for passengers nor rented to others with a driver; and a motor vehicle with a pickup body, a delivery sedan, a van, or a panel truck or a camper type vehicle used for recreational purposes owned by an individual or by husband and wife who are residents of the same household, not customarily used in the occupation, profession or business of the insured other than farming or ranching. An automobile owned by a farm family copartnership or corporation, which is principally garaged on a farm or ranch and otherwise meets the definitions contained in this section, shall be considered a private passenger automobile owned by two or more relatives resident in the same household.” N.J.S.A. 39:6A-2.
Vehicles Excluded from Coverage
Some vehicles, however, are never eligible for PIP benefits. These include motorcycles and dune buggies due to their more dangerous nature. Likewise, busses are typically excluded, but passengers on certain private buses are covered, while passengers on school buses are never afforded PIP coverage.
General Exclusions from Coverage
Several exclusions are provided under N.J.S.A. 39:6A-7.
An insurer is not obligated to pay PIP benefits where the claimant contributed to his/her personal injuries or death in the following ways: “(1) while committing a high misdemeanor or felony or seeking to avoid lawful apprehension or arrest by a police officer; or (2) while acting with specific intent of causing injury or damage to himself or others.” Id.
Additionally, coverage may be disclaimed if the claimant was “culpably uninsured,” meaning they were was the owner or registrant of an automobile required to maintain PIP coverage, which was uninsured at the time of the accident. Significantly, the statute uses the phrase “owner or registrant.” This again is expansive language and would encompass an uninsured vehicle not involved in the accident.
Finally, coverage may likewise be disclaimed where the claimant was occupying or operating an automobile without the permission of the owner or other named insured.
Multiple Policies and Primacy
Under N.J.S.A. 39:6A-4.2, “PIP coverage of the named insured shall be the primary coverage for the named insured and any resident relative in the named insured’s household who is not a named insured under an automobile policy of his own.” Consequently, the injured claimant is to look to their own policy, if they have one. In the case that they do not, the claimant then looks to the policy of a resident relative. Where there is no policy in the household, the injured claimant then looks to the policy that covered the vehicle they were operating or occupying. In the case of a pedestrian, PIP may be provided through the New Jersey Property-Liability Insurance Guaranty Association (NJPLIGA).
Notice of Claim
N.J.S.A. 39:6A-5 provides that the insurance company “may require written notice as soon as practicable after an accident.” Nevertheless, no set deadline is provided by the statute. In practice, however, if the insurance company receives a medical bill that indicates that it is for treatment of an insured as a result of a car accident, notice has been provided.
Once notice has been provided, it is typical that the insurance company will next forward the claimant a PIP application to be completed. Said application will request various information from the claimant, including the claimant’s residency, relation to the named insured, the date of the accident and how it occurred, the injuries sustained, and treatment sought.
Treatment providers are charged with providing notice of commencement of treatment to the insurance company within twenty-one (21) days of the first office visit. Failure to provide notice of commencement entitles the insurance company to a reduction in the cost of treatment. On the other hand, the insurance company must pay an eligible bill within sixty (60) days of receipt but may request an extension of up to forty-five (45) days if needed. Otherwise, interest may be charged.
How Are PIP Payment Disputes Resolved?
If an automobile insurance company refuses to pay for treatment or underpays the bills of an insured, the claimant may either seek to compel payment through either binding arbitration or the filing of a lawsuit with the New Jersey Superior Court.
With respect to arbitration, the PIP statute required the Commissioner of Insurance to designate an organization to handle disputes as to PIP claims. That organization is the National Arbitration Forums (NAF), which employs full-time, professional arbitrators. The PIP Arbitration Rules, as approved by the New Jersey Department of Banking and Insurance (NJDOBI), are available online on Forthright's website.
Where a claim for PIP benefits is $1,000 or greater, the arbitration will proceed to an oral hearing. Where the claim is for less than $1,000, there is no oral hearing, and the case is instead heard “on the papers.”
When filing with Forthright, there is a $250.00 filing fee for in-person hearings and a $200.00 filing fee for claims to be heard on the papers. Additionally, the documents that must be filed include: an Assignment of Benefits (“AOB”) signed and dated by the patient; Appeals sent to the insured’s insurance company concerning denials or underpayments; and applicable treatment records. Following the filing of a Demand for Arbitration, an arbitrator will be appointed, and a hearing will be scheduled typically within four (4) to six (6) months.
A claimant may also elect to file directly with the Superior Court. However, a lawsuit is typically a slower process than Arbitration, and defendants will often file a motion to dismiss and ask the court to compel Arbitration. Where a matter proceeds in the Superior Court, the typical discovery and court rules apply.
While the purpose of New Jersey’s no-fault system is to provide claimants with speedy compensation of medical bills, the system still has many complicated factors. As such, you should contact a New Jersey personal injury attorney who has experience navigating the first-party system. If you wish to discuss your legal options, Farrell & Thurman, P.C., offers a variety of convenient ways to schedule a free, no-pressure consultation. You may do so directly on our website (Schedule A Consult), via phone (609-924-1115), or by email (Contact Us).