(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
BONNIE INGERSOLL, ET AL. V. AETNA CASUALTY AND SURETY COMPANY, ET AL. (A-21-94)
Argued September 13, 1994 -- Decided December 13, 1994
PER CURIAM
The New Jersey Automobile Reparation Reform Act (No-Fault Law) contains an "anti-stacking"
provision (section 4.2) that prohibits recovery of personal-injury-protection (PIP) benefits under more than
one automobile-insurance policy for injuries sustained in any one accident. The issue on appeal is whether
the statutory prohibition against stacking is limited to basic PIP benefits or whether it also forecloses
recovery of extended medical-expense benefits under two policies when the stacking would not result in
double recovery of medical expenses.
Brian Lihou was the owner of an automobile insured with the New Jersey Full Automobile
Insurance Underwriting Association (JUA). In October 1987, Brian, riding his brother's motorcycle, collided
with an automobile operated by Lisa Hamilton. As a result of that accident, Brian sustained catastrophic
injuries and incurred medical bills in excess of $35,000.
Because Brian was riding a motorcycle when the accident occurred, he was not eligible to recover
his medical expenses under the basic PIP coverage of his automobile policy with JUA. However, pursuant to
a regulatory mandate of the Commissioner of Insurance (Commissioner), Brian's JUA policy contained an
extended-medical-expense-benefits provision that furnished coverage for medical expenses resulting from a
broader scope of accidents, including those incurred while driving a motorcycle under certain circumstances.
The limit of coverage for that provision was $10,000, which the JUA paid to Brian.
At the time of his accident, Brian was living with his mother, Bonnie Ingersoll. She owned an
automobile that was insured by Aetna Casualty and Surety Company (Aetna). The Aetna insurance policy
extended coverage to Brian because he was a relative of and resident in the same household as the named
insured. The Aetna policy also contained an extended-medical-expense-benefits provision with a limit of
$10,000. Brian sought recovery under that provision, which Aetna denied on the ground that section 4.2
prohibited the stacking of PIP benefits and that the extended-medical-expense-benefit constituted PIP
benefits for purposes of the statute.
Brian filed suit to recover the $10,000 under Aetna's extended-medical-expense-benefits provision.
The trial court granted summary judgment in favor of Aetna. The Appellate Division affirmed, relying not
only on the anti-stacking provision of section 4.2 but also on the language in Aetna's policy.
HELD: Extended-medical-expense-benefits coverage is not included in the anti-stacking provision of The
New Jersey Automobile Reparation Reform Act. Therefore, Brian Lihou is not foreclosed from
recovering extended-medical-expense-benefits under two policies when the stacking would not
result in double recovery of medical expenses.
1. Extended medical benefits coverage was created not by statute but by regulation promulgated under legislative authority by the Commissioner. The regulation requires that every automobile policy include excess medical payments coverage corresponding to Section II, Extended Medical Expense Benefits Coverage of the personal automobile policy. The regulation's reference to "Section II" refers to Section II of the standard personal automobile policy of the type included in Craig & Pomeroy. Section II of Aetna's policy and of the JUA policy correspond to Section II defined in the regulation. Under Section II, the motorcycle
fits the definition of "highway vehicle." In addition, the policy makes the extended coverage of Section II
unavailable to an insured person who is entitled to basic PIP benefits. Moreover, Section II coverage does
not apply to loss or expense to the extent that benefits are payable or are required to be provided under any
other automobile No-Fault Law. (pp. 4-6)
2. The arrangement of the standard policy form might be viewed as creating some vague ambiguity
because it sets forth its extended-medical-expense-benefits coverage in Section II of an endorsement entitled
"Personal Injury Protection Endorsement," Section I of which is labeled "Basic Personal Injury Protection."
However, that arrangement is not critical to a determination. There is a significant functional difference
between basic PIP coverage and Section II coverage, especially in light of the disallowance of Section II
benefits when the insured is entitled to basic PIP coverage. Thus, the differences in the coverage furnished
by the basic PIP and Section II of the policy are sufficient to satisfy the Court that the Legislature did not
intend to include the extended-medical-expense-benefits coverage in section 4.2's prohibition against stacking.
(pp. 6-8)
3. The language "to the extent that benefits are payable" in Section II acts as a creditor's set-off, it does
not act as a disqualifier. It does nothing more than prohibit an insured from recovering twice for the same
medical expenses. (pp. 8-9)
4. The Court's determination is supported by sound public-policy considerations that are best illustrated
by the circumstances of this case. Requiring Aetna to pay its $10,000 limit will not result in a windfall to
Brian nor will he obtain a double recovery of any medical expenses. Thus, public policy, legislative intent or
the Commissioner's exercise of administrative authority are not offended by the Court's result. If the
Legislature believes the Court has erred, it can correct that mistake. (p. 9)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Law
Division for entry of judgment for Brian Lihou and Bonnie Ingersoll.
CHIEF JUSTICE WILENTZ and JUSTICES CLIFFORD, HANDLER, POLLOCK, O'HERN,
GARIBALDI and STEIN join in this opinion.
SUPREME COURT OF NEW JERSEY
A-
21 September Term 1994
BONNIE INGERSOLL,
Plaintiff,
and
BRIAN LIHOU,
Plaintiff-Appellant,
v.
AETNA CASUALTY AND SURETY
COMPANY, a/k/a AETNA LIFE AND
CASUALTY, a/k/a AETNA,
Defendant-Respondent,
and
THE NEW JERSEY AUTOMOBILE FULL
INSURANCE UNDERWRITING ASSOCIATION,
HERBERT E. GASKILL INSURANCE
AGENCY, HERBERT E. GASKILL, JR.,
and JOHN DOE(S), A through Z,
fictitious name(s), person(s) or
underwriter(s), individually jointly,
severally and in the alternative,
Defendants.
Argued September 13, 1994 -- Decided December 13, 1994
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
269 N.J. Super. 192 (1993).
Gary D. Ginsberg argued the cause for
appellant (Mr. Ginsberg, attorney; Brian P.
O'Connor, on the brief).
John J. Dwyer argued the cause for respondent
(Cozen and O'Connor, attorneys).
PER CURIAM
The New Jersey Automobile Reparation Reform Act, N.J.S.A.
39:6A-1 to -35 (No-Fault Law), contains what is commonly known as
an anti-stacking provision, N.J.S.A. 39:6A-4.2 (section 4.2).
That statute prohibits recovery of personal-injury-protection
(PIP) benefits under more than one automobile-insurance policy
for injuries sustained in any one accident. The question posed
by this appeal is whether that statutory prohibition against
"stacking" is limited to basic PIP benefits or whether it
forecloses as well recovery of extended medical-expense benefits
under two policies when the "stacking" would not result in double
recovery of medical expenses.
The trial court ruled that under the statutory bar such
"stacking" was not permitted. The Appellate Division affirmed,
269 N.J. Super. 192 (1993), and we granted certification,
135 N.J. 299 (1994). We reverse.
Plaintiff Brian Lihou was the owner of an automobile insured with New Jersey Full Automobile Insurance Underwriting Association (JUA). In October 1987, Brian was riding his brother's motorcycle when it collided with an automobile operated by one Lisa Hamilton. As a result of that accident Brian
sustained catastrophic injuries and incurred medical bills in
excess of $35,000.
Because he was riding a motorcycle when the accident
occurred, Brian was not eligible to recover his medical expenses
under the basic PIP coverage of his automobile policy with JUA.
See N.J.S.A. 39:6A-4, -2a. However, in keeping with the
regulatory mandate of the Commissioner of Insurance, see N.J.A.C.
11:3-7.3(b), Brian's JUA policy contained an extended-medical-expense-benefits provision, which furnished coverage for medical
expenses resulting from a broader scope of accidents, including
those incurred while driving a motorcycle under certain
circumstances. The limit of that coverage was $10,000, which JUA
paid to Brian.
At the time of the accident, Brian was living with his
mother, plaintiff Bonnie Ingersoll. (References hereinafter to
"plaintiff" are to Brian.) Ingersoll owned an automobile that
was insured by Aetna Casualty & Surety Co. (Aetna), whose policy
extended coverage to Brian as well inasmuch as he was a
"relative" of the named insured, defined in the standard policy
as "a person related to the named insured by blood, marriage or
adoption * * * who is a resident of the same household as the
named insured." See Cynthia M. Craig & Daniel J. Pomeroy, New
Jersey Auto Insurance Law app. C-1 at 561 (1995).
Like the JUA policy, the Aetna policy also contained an
extended-medical-expense-benefits provision with a limit of
$10,000. When plaintiff sought recovery under that provision,
Aetna denied coverage on the ground that section 4.2 prohibited
the "stacking" of PIP benefits and that the extended medical-expense benefits constituted PIP benefits for purposes of that
statute. Plaintiff sued to recover the $10,000 under Aetna's
extended-medical-expense-benefits provision.
In affirming the trial court's summary judgment for Aetna,
the Appellate Division relied not only on the anti-stacking
provision of section 4.2 but also on the language in Aetna's
policy. 269 N.J. Super. at 196-98.
The No-Fault Law prohibits the stacking of PIP benefits.
Section 4.2 provides, in pertinent part, as follows:
[T]he personal injury coverage of the named
insured shall be the primary coverage of the
named insured and any relative of the named
insured's household who is not a named
insured under an automobile insurance policy
of his own. No person shall recover personal
injury protection benefits under more than
one automobile insurance policy for injuries
sustained in any one accident.
The Legislature enacted the foregoing section as part of the New Jersey Automobile Insurance Freedom of Choice and Cost
Containment Act of 1984, L. 1983, c. 362, § 12. The sparse
legislative history indicates that the no-fault provisions of the
act were structured to "tighten statutory eligibility
requirements for personal injury protection coverage so as to
comport with the original intent of the no fault law."
Introductory Statement to Assembly Bill No. 3981 (1983). We note
too that when the accident giving rise to this suit occurred, the
No-Fault Law provided for unlimited medical expenses, a
circumstance that continued until 1990, when L. 1990, c. 8, put a
$250,000 cap on medical expenses compensable under PIP. See
Craig & Pomeroy, supra, at § 7:7 (discussing stacking of PIP
benefits).
The question is whether the extended-medical-expense-benefits provision of the Aetna policy is beyond plaintiff's
reach because of section 4.2's anti-stacking provision. We think
not. The extended medical benefits are a creature not of statute
but of a regulation promulgated under legislative authority by
the Commissioner of Insurance. That regulation, N.J.A.C. 11:3-7.3(b), requires that every automobile policy "include excess
medical payments coverage, corresponding to Section II, Extended
Medical Expense Benefits Coverage of the personal automobile
policy."
The regulation's reference to "Section II" is to Section II of the standard personal automobile policy, of the type included
in Craig & Pomeroy, supra, Appendix C-1 at 565-66. Section II of
the Aetna policy follows in every significant respect the sample
provided in Craig & Pomeroy. Although we do not have the JUA
policy before us, we are told that in respects relevant to this
case, it is the same as Aetna's.
Under the heading "Extended Medical Expense Benefits
Coverage" the Aetna policy binds the carrier to
pay medical expense benefits not to exceed
the total aggregate amount stated in the
schedule [($10,000)] * * * with respect to
bodily injury sustained by an injured person,
caused by an accident * * * and arising out
of the ownership, maintenance or use * * * of
an insured automobile or of a highway vehicle
not owned by or furnished or available for
the regular use of the named insured or any
relative of the named insured.
A motorcycle fits Section II's definition of "highway vehicle."
The policy makes the extended coverage furnished by Section II
unavailable to an insured person who is entitled to basic PIP
benefits. Finally, the Section II coverage "does not apply to
loss or expense to the extent that benefits are payable or are
required to be provided therefore under any other automobile no-fault law."
Although the matter is by no means without doubt, as we understand the statutory scheme, the Commissioner's implementation thereof, and the insurance industry's accommodation thereto, the extended-medical-expense-benefits
provision represents a very narrow window of coverage to a
limited class of persons who, like plaintiff in this case, are
ineligible for basic PIP benefits. Recognizing the
unavailability of basic PIP's unlimited (now $250,000) medical
coverage but wishing nevertheless to address in some small
measure the medical-expense disaster that can befall those
injured by use of a "highway vehicle" (as distinguished from an
automobile), the Commissioner, acting under legislative
authorization, has mandated first-party coverage of up to $10,000
in medical expenses. The Aetna policy, which follows the
standard form, recognizes the difference between that coverage
and basic PIP by declaring the extended coverage inapplicable if
the insured person is entitled to basic PIP benefits.
We recognize that the arrangement of the standard policy form might be viewed as creating some ambiguity: it sets forth its extended-medical-expense-benefits coverage in Section II of an endorsement entitled "Personal Injury Protection Endorsement," Section I of which is labeled "Basic Personal Injury Protection." To the extent that that arrangement bears on the substantive question of policy interpretation, it tends to support Aetna's argument: (1) both section 4.2 and the policy prohibit the stacking of PIP benefits; (2) extended medical-expense benefits are PIP benefits; therefore, (3) plaintiff may not stack extended medical-expense benefits. On the other hand, that same arrangement points up the industry's recognition of a significant
functional difference between basic PIP coverage and Section II
coverage -- a difference that is underscored by the disallowance
of Section II benefits when the insured person is entitled to
basic PIP coverage. On balance, we view the insurance-policy
arrangement as hardly critical to our determination. The
differences in the coverages furnished by basic PIP and Section
II of the policy are sufficient to satisfy us that the
Legislature did not intend to include the extended-medical-expense-benefits coverage in section 4.2's prohibition against
stacking.
As an alternative basis for its holding the Appellate
Division relied on the Aetna policy's condition of coverage that
the extended-medical-expense-benefits provision "does not apply
to loss or expense to the extent that benefits are payable or are
required to be provided therefor under any other automobile no-fault law or under any other automobile medical payments
insurance." The court below concluded that because plaintiff had
received $10,000 under the extended-medical-expense-benefits
coverage of his JUA policy, he was foreclosed by the foregoing
language from recovering under the same coverage provided by
Aetna. 269 N.J. Super. at 196.
That reading misperceives the purpose of the quoted "other insurance" condition of coverage. Had the policy said that the Section II benefits would not apply if other described benefits
were payable, the court below would of course be correct. But
the language of "to the extent that benefits are payable" acts as
no more than a prohibition against an insured recovering twice
for the same medical expenses. The "to the extent" language
provides for a credit or set-off; it does not act as a
disqualifier.
Supporting our determination are sound public-policy
considerations, perhaps best illustrated by the circumstances of
this case. Plaintiff's medical expenses exceed $35,000. He has
no access to the formerly-unlimited basic PIP coverage for those
expenses. His own automobile insurer, JUA, has paid $10,000
under its extended-medical-expense-benefits coverage. Against
the total expense of $35,000, the JUA's $10,000 payment must be
credited, leaving a balance of $25,000. Requiring Aetna to pay
its $10,000 limit -- the maximum that the carrier can provide
under the Commissioner's regulation -- will result in no windfall
to plaintiff, no double recovery of any medical expense, and
indeed plaintiff will be left with a balance of over $15,000 in
uncompensated expenses. We do not believe that public policy,
legislative intent, or the Commissioner's exercise of
administrative authority are offended by our result. And if we
have erred, our mistake is correctable with little more than the
stroke of the legislative pen.
Judgment reversed. The cause is remanded to the Law
Division for entry there of judgment for plaintiff.
Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi, and Stein join in this opinion.
NO. A-21 SEPTEMBER TERM 1994
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
BONNIE INGERSOLL,
Plaintiff,
and
BRIAN LIHOU,
Plaintiff-Appellant,
v.
AETNA CASUALTY AND SURETY
COMPANY, a/k/a AETNA LIFE AND
CASUALTY, a/k/a AETNA,
Defendant-Respondent,
and
THE NEW JERSEY AUTOMOBILE FULL
INSURANCE UNDERWRITING ASSOCIATION,
et al.,
Defendants.
DECIDED December 13, 1994
Chief Justice Wilentz PRESIDING
OPINION BY Per Curiam
CONCURRING OPINION BY
DISSENTING OPINION BY