(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).
Argued January 3, 1994 -- Decided May 19, 1994
GARIBALDI, J., writing for a unanimous Court.
The issue on appeal is whether N.J.S.A. 39:6A-12 (section 12) of the New Jersey Automobile
Reparation Reform Act (No-Fault Law) prohibits an injured party from recovering from a tortfeasor the
medical-expense deductible and twenty-percent copayment under a personal-injury-protection (PIP) policy.
On January 15, 1990, David Kelsey was a passenger in a car driven by his sister when it was struck
from behind by an automobile driven by Michael Roig. Kelsey was injured and incurred medical expenses of
$1,769. Kelsey was eligible for PIP medical-expense benefits under his sister's automobile-insurance policy,
which had a $250 medical-expense deductible and a twenty-percent copayment for medical expenses between
$250 and $5,000. Because of the deductible and copayment, $553.80 of Kelsey's medical expenses were not
paid. Kelsey had no other health-insurance policy that would have paid those medical expenses and,
therefore, he sought recovery from Roig.
Roig refused to pay and filed a declaratory-judgment action seeking relief from payment of Kelsey's
outstanding medical expenses. He moved for summary judgment on the ground that section 12 prohibited
recovery of the deductible and copayment. Kelsey cross-moved for summary judgment, asserting that section
12 allowed payment of expenses incurred up to the deductible amount. The trial court granted Roig's
motion, finding that the Legislature's intention to bar recovery of the medical deductible and copayment
under section 12 was so clear that any indication in the statute to contrary must yield to that legislative
intent.
On appeal, the Appellate Division reversed the trial court and remanded the case for further
proceedings. The Appellate Division did hold, however, that only if an injured party qualified to bring suit
for non-economic losses under section 8 of the No-Fault Law, could that party include in that action against
the tortfeasor the amount of the deductible and copayment not otherwise collectible from other insurance
sources.
The Supreme Court granted certification.
HELD: Because the Legislature intended the New Jersey Automobile Reparation Reform Act bar fault-based recovery, N.J.S.A. 35:6A-12 of the Act prohibits a party from recovering from the
tortfeasor the medical-expense deductible and the twenty-percent copayment under a personal-injury-protection policy.
1. The goals of the original No-Fault Law were the elimination of minor personal-injury claims
from the court system, the reduction of insurance premiums, and the provision for prompt payment of
medical expenses to injured parties. Under the No-Fault system, every automobile liability-insurance policy
issued in New Jersey had to provide PIP coverage, including medical-expense benefits, without regard to
fault. The injured person's no-fault insurance was to be that person's exclusive remedy for medical-expense
claims arising out of an automobile accident. The trade-off for this payment of medical expenses, regardless
of fault, was to provide either for a limitation on or the elimination of conventional tort-based personal-injury
lawsuits. (pp. 3-10)
2. Under the 1988 amendments to the No-Fault Law, insureds were given the right to choose
between two tort options for suit under Section 8. The first option allowed recovery for non-economic losses
that fit into one of nine specific categories and was known as the "verbal threshold." The second choice was
an unrestricted right to sue for recovery of non-economic damages known as "zero threshold." The other
significant amendment was to mandate a $250 medical deductible and a twenty percent copayment for
medical expenses between $250 and $5,000. That language was incorporated into the wording of section 12.
Through these amendments, the Legislature guaranteed that in every automobile accident some medical
expenses would not be paid by PIP. (pp. 10-12)
3. The legislative history does not expressly address Kelsey's situation in which an insured, whose
injury is minor, has no alternative health-insurance coverage. The legislative history does indicate, however,
that the Legislature was aware that an insured would have pay the below-deductibles under PIP just as an
insured might pay such below-deductibles under regular health-insurance benefits. In its attempt to contain
insurance costs, the Legislature reached a compromise in the 1988 amendments, part of which was to
guarantee that in every automobile accident some medical expenses would not be paid under PIP. For the
mandatory below-deductibles and copayments, the insured is responsible either through alternative health
insurance or, if none exists, out of his or her own pocket. (pp. 12-15)
4. From the inception of the No-Fault statutory scheme, the Legislature intended to eliminate minor
personal-injury-automobile-negligence cases from the court system. Kelsey's interpretation of section 12
would completely defeat that purpose and would congest the court system with minor personal-injury claims.
Courts can allow recovery for the deductible and the copayment only if the Legislature reinstitutes a fault-based system. Thus, the Appellate Division's holding is also contrary to clear legislative intent. If the
Legislature disagrees with this Court's interpretation of its intent, it can enact clarifying legislation.
(pp. 16-23)
Judgment of the Appellate Division is REVERSED.
CHIEF JUSTICE WILENTZ and JUSTICES CLIFFORD, HANDLER, POLLOCK, O'HERN
and STEIN join in JUSTICE GARIBALDI's opinion.
SUPREME COURT OF NEW JERSEY
A-43/
44 September Term l993
MICHAEL ROIG,
Plaintiff-Respondent
and Cross-Appellant,
v.
DAVID T. KELSEY,
Defendant-Appellant
and Cross-Respondent.
_____________________________
Argued January 3, l994 -- Decided May 19, 1994
On certification to the Superior Court, Appellate
Division, whose opinion is reported at
262 N.J.
Super. 579 (l993).
Vincent Jesuele argued the cause for
appellant and cross-respondent (Kessler,
DiGiovanni and Jesuele, attorneys).
Anthony Bartell argued the cause for
respondent and cross-appellant (McCarter and
English, attorneys; Andrew T. Berry, of
counsel).
Gerald H. Baker argued the cause for amicus
curiae, ATLA-NJ (Baker, Garber, Duffy and
Pedersen, attorneys).
The opinion of the Court was delivered by
GARIBALDI, J.
The issue is whether N.J.S.A. 39:6A-l2 of the New Jersey
Automobile Reparation Reform Act, N.J.S.A. 39:6A-l to -35 (No-Fault Law), prohibits an injured party from recovering from a
tortfeasor the medical-expense deductible and twenty-percent
copayment under a personal-injury-protection (PIP) policy. We
conclude that the Legislature intended the No-Fault Law to bar
that type of fault-based recovery.
On January l5, l990, David Kelsey was a passenger in an automobile driven by his sister when it was struck from behind by an automobile driven by Michael Roig. Kelsey was injured and incurred medical expenses of $l,769. Kelsey, who lived with his sister, was eligible for PIP medical-expense benefits under his sister's automobile-insurance policy, which contained the basic $250 medical-expense deductible and twenty-percent copayment for medical expenses between $250 and $5,000. Because of the deductible and copayment, $553.80 of Kelsey's medical expenses were unpaid. Kelsey had no other health-insurance policy that would have paid those medical expenses, and therefore he sought recovery from Roig.
Roig refused to pay and filed a declaratory-judgment action seeking relief from payment of Kelsey's outstanding medical expenses. He also moved for summary judgment on the ground that N.J.S.A. 39:6A-l2 (section 12) prohibited recovery of the deductible and copayment. Kelsey cross-moved for summary judgment, asserting that section 12 allowed payment of expenses incurred up to the deductible amount. The trial court, concluding that the Legislature's intent to bar recovery of the
medical deductible and copayment under section 12 was so clear
that any indication in the statute to the contrary must yield to
it, granted Roig's motion.
The Appellate Division reversed the trial court and remanded
the case for further proceedings.
262 N.J. Super. 579 (l993).
That court held, however, that only if an injured party qualified
to bring suit for non-economic losses under N.J.S.A. 39:6A-8
could that party include in that action against the tortfeasor
the amount of the deductible and copayment not otherwise
collectible from other insurance sources. Id. at 580-8l.
Kelsey sought certification, and Roig filed a cross-petition
for certification. We granted both petitions, ___ N.J. ___
(1993).
No-Fault Law
The original No-Fault Law enacted in l972, L. l972, c. 70, was largely the work of the Automobile Insurance Study Commission, created in 1970 by a joint resolution of the Senate and General Assembly. L. 1970, J. Res. 4. The adoption of that law was hailed as a major innovation in tort and insurance law that would end high automobile-insurance rates and congestion-causing numbers of personal-injury suits.
The No-Fault Law's goal was "'compensating a larger class of citizens than the traditional tort-based system and doing so with greater efficiency and at a lower cost.'" Oswin v. Shaw, 129 N.J. 290, 295 (1992) (quoting Emmer v. Merin, 233 N.J. Super. 568, 572 (App. Div.), certif. denied, 118 N.J. 181 (1989)). That "new approach" to automobile insurance was to result
in the motoring public's securing protection
at lesser cost, expediting the relief of the
accident victim and his family from a frequently
staggering and intolerable economic
burden, and yet preserving that victim's
right to full and adequate compensation
in cases which involve more serious and
disabling injury.
In addition to bringing about an
intended reduction in insurance premiums,
another major benefit of the proposed
system would be a reduction of the present
court backlog. A substantial percentage
of civil court actions are automobile
accident cases. Under the proposed plan,
it is expected that many of these cases
would be settled outside the court, thereby
permitting other more serious and meritor-
ious causes to be heard with more dispatch.
[Governor's Second Annual Message
(January 11, 1972) (emphasis added).]
Although the movement to adopt no-fault legislation was the
"result of ever-increasing automobile-insurance premiums," Oswin,
supra, l29 N.J. at 295, it also arose from the recognition that
the necessity of determining fault in a lawsuit before recovery
of medical expenses resulted in great hardship for many injured
parties. See Governor's First Annual Message (January l2, l97l)
(stating, "Too many injured persons must wait too long for an
uncertain remedy while enduring physical and financial injury.")
Thus, the proponents of the legislation anticipated that the
elimination of minor personal-injury claims from the court system
not only would reduce insurance premiums but also would provide
prompt payment of medical expenses to injured parties.
To achieve those purposes the Legislature created the no-fault statutory scheme. Under that scheme every automobile
liability-insurance policy issued in New Jersey had to provide
PIP coverage, including medical-expense benefits, "without regard
to negligence, liability or fault of any kind, to the named
insured and members of his family residing in his household who
sustained bodily injury as a result of an automobile accident."
N.J.S.A. 39:6A-4. A person's no-fault insurance was to be an
injured person's exclusive remedy for medical-expense claims
arising out of an automobile accident. See Smelkinson v. Ethel &
Mac Corp., l
78 N.J. Super. 465, 467 (App. Div. l98l) (holding
that right of plaintiff to recover medical expenses directly from
tortfeasor's insurer was to substitute the plaintiff's right to
recover from insured tortfeasor).
As a trade-off for the payment of medical expenses,
regardless of fault, no-fault systems provided for "either a
limitation on or the elimination of conventional tort-based
personal-injury lawsuits." Oswin, supra, 129 N.J. at 295.
N.J.S.A. 39:6A-8 (section 8) provided such a limitation by
holding that an injured person could file a lawsuit only if
medical expenses exceeded a $200 threshold.
Section l2 also was part of the trade-off. In the original
No-Fault Law, it read as follows:
Evidence of the amounts collectible or
paid pursuant to sections 4 and 10 of
this act to an injured person is inad-
missible in a civil action for recovery
of damages for bodily injury by such
injured person.
N.J.S.A. 39:6A-4 (section 4) and N.J.S.A. 39:6A-10 (section 10)
were the provisions allowing for PIP coverage. Section 12
therefore disallowed recovery of PIP benefits "collectible" or
"paid" in a civil suit.
In frequent attempts to lower the cost of insurance and
eliminate minor personal-injury claims, the Legislature amended
the No-Fault Law again in l983, l988, and l990. L. l983, c. 362;
L. l988, c. ll9; L. l990, c. 8. In the l983 amendments, the
insured was presented with a number of options for coverage. The
first choice was between a $200 or a $1,500 medical-expense
threshold before a personal-injury suit could be instituted. The
second choice was the selection of either a $500, $1,000, or
$2,500 medical-expense deductible. Ibid.; Cynthia M. Craig &
Daniel J. Pomeroy, New Jersey Auto Insurance Law §5:2-1b, at 49
(1994) (hereinafter Craig & Pomeroy).
Included in the legislative history for the 1983 amendment,
the New Jersey Automobile Freedom of Choice and Cost Containment
Act of 1984, N.J.S.A. 39:6A-1 to -35, is a sponsor statement that
explains the options available to motorists for no-fault medical
benefits. It states:
There would continue to be unlimited
medical[-]expense benefits but insureds
would have the option to choose, at
reduced premiums stated as a percentage
of the coverage premium, medical expense
deductibles in amounts of $500, $1000
and $2500. This option would permit an
insured to coordinate his automobile[-]
insurance coverage with other forms of
health coverage.
[Sponsor Statement to Assembly Bill No. 3981,
at 26 (1983) (emphasis added).]
The Legislature hoped that those optional deductibles would
reduce the cost of automobile insurance by shifting some of the
rising medical-expense costs to alternative forms of health
insurance. Ibid.
Under the heading "Tort Limitation Option," that same
Sponsor Statement posits that the statutory provision instituting
monetary tort options of $200 or $1,500
would require insurers to offer all
insureds the right to choose to limit
their right to sue for general damages
(pain and suffering) resulting from
bodily injuries incurred in an auto
accident . . . In return for electing the
tort limitation option, an insured would
receive a reduction in his bodily injury
liability premium stated as a percentage
of the coverage premium.
[Id. at 27 (emphasis added).]
Once again, motorists were presented with another trade-off
option: lower premiums in exchange for increased tort
thresholds.
The Legislature also provided that no new automobile-insurance policy could be issued after July l, l984, unless the
application contained a written notice of all available policy
coverages and an identification of which coverages were mandatory
and which were optional, as well as all deductible, exclusion,
set-off and tort-limitation options offered by the insurer. See
N.J.S.A. 39:6A-23. That provision was known as the "buyers
guide." 262 N.J. Super. at 582-83; Craig & Pomeroy, supra, at
50. Although the No-Fault Law did not require that insurance
companies tell prospective policyholders required to choose a PIP
deductible that they could recover their below-deductible
expenses from a third party, it did require the companies to tell
their policyholders that they should consider a high deductible
if they "[were] already covered by a health insurance policy or a
health maintenance organization" because "[i]n most cases, those
plans [would] pay part of the medical bills which auto insurance
[would] not pay." N.J.A.C. ll:3-l5.6.
The only other source of legislative history concerning the
1983 amendment is found in the Sponsor's Statement under the
heading "No-Fault and Related Clean-Up Provisions". It states,
"These provisions mainly are designed to tighten statutory
eligibility requirements for personal injury protection coverage
so as to comport with the original intent of the no-fault law."
Sponsor Statement to Assembly Bill No. 3981, at 27 (l983).
Accordingly, the l983 amendment should be construed in a manner
consistent with the original intent of the no-fault law, which
was: to reduce the cost of insurance, to eliminate minor tort
claims from the judicial system, and to have medical expenses
paid promptly.
As originally enacted, section l2 did not deal with medical
expense-benefit deductibles and copayments because the No-Fault
Law did not offer those options. The Legislature amended section
l2 in l983 to include those items:
Evidence of the amounts collectible or
paid . . . to an injured person, including
the amounts of any deductibles or
exclusions elected by the named in-
sured pursuant to section 13 of this
1983 amendatory and supplementary act,
otherwise compensated is inadmissible
in a civil action for recovery of
damages for bodily injury by such
injured person. (Emphasis added).
Deductibles were therefore specifically excluded from recovery.
A final paragraph was also added:
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.
That paragraph has remained intact through the current 1990
version of the statute. No legislative history specifically
addresses the purpose or intent of that final paragraph of
section 12.
Despite the l983 amendments the cost of automobile insurance
"continued to spiral, however, resulting in New Jersey's near
lead position in the unenviable category of having the highest
automobile insurance premiums in the country. This unenviable
position led to consumer outrage and legislative efforts to enact
legislation with significant premium reducing provisions."
Emmer, supra, 233 N.J. Super. at 573. Hence the Legislature in
1988 again amended the No-Fault Law by enacting "An Act
concerning private passenger automobile insurance and revising
parts of statutory law." Id. at 574. That Act contained a
series of amendments to the No-Fault Law.
In the l988 amendments, "the Legislature gave to the
consumer the choice of a limited right to sue and a lower
premium, or no limitation and a higher premium." Id. at 585.
The insured was given the right to choose between two tort
options under section 8. The first allowed recovery for non-economic losses (pain, suffering, and inconvenience) that fit
into one of nine specified categories, and was known as the
"verbal" or "lawsuit" threshold. The second choice was an
unrestricted right to sue for recovery of non-economic damages.
That option was referred to as a "zero dollar" or "no" threshold.
Id. at 574-75. The other significant change was to mandate a
$250 medical deductible and a 20" copayment for medical expenses
between $250 and $5,000. Id. at 585. Thus, the Legislature
guaranteed that in every automobile accident some medical
expenses would not be paid by PIP.
The 1988 changes incorporated the mandatory copayments and
deductibles into the wording of section 12:
[E]vidence of the amounts collectible or paid
pursuant to [N.J.S.A. 39:6A-4 and N.J.S.A.
39:6A-10] . . . to an injured person,
including the amounts of any deductibles,
copayments or exclusions . . . otherwise
compensated is inadmissible in a civil action
for recovery of damages for bodily injury by
such injured person.
The court shall instruct the jury that, in arriving at a verdict as to the amount of the damages for noneconomic loss to be recovered by the injured person, the jury shall not speculate as to the amount of the medical
expense benefits paid or payable under
section 4 to the injured person.
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.
(Emphasis added.)
That version of the statute forms the basis for Kelsey's claim
for recovery of his PIP medical deductible and copayment.
To curtail costs, the Sponsor Statement for the 1988
amendments stressed the promotion of available and affordable
auto insurance. Sponsor Statement to Senate Bill No. 2637, at 44
(1988). Insureds were required to carry medical-expense coverage
over $75,000 "for one year and by the Unsatisfied Claim and
Judgment Fund or a contract servicer during subsequent years with
payment for coverage made at the time of motor vehicle
registration." Ibid. The Statement reiterated that the purpose
of that amendment was "to shift the costs of medical expenses to
available health insurance which is to become primary coverage
for automobile related medical expenses." Ibid.
The shift from automobile insurance to other forms of health
insurance for auto-accident medical expenses was not enacted
without notice to the public. At the public hearings on the
proposed amendments, Dr. Steven Lamazow, co-chair of More
Educated Doctors in Courts and Legislation (MEDICAL), voiced his
objections to an earlier, harsher version of the amendment that
would have eliminated PIP:
If some cost saving is necessitated within
the PIP portion of the premium . . . there
should be at very least a minimum mandatory
benefit, enough to cover the large majority
of medical bills and a provision for
catastrophic injury. The gap between these
coverages would be taken up by alternative
forms of health coverage, or the liability
portion of the premium -- should the person
be the one who was injured in the accident
and not be at fault.
[Senate Labor, Industry and Professions Committee
on Auto Insurance Reform, Public Hearing,
at 54-55 (June 15, 1988) (emphasis added).]
Dr. Lamazow's concern for potential unmet costs was focused on
cases involving catastrophic injury or medical expenses that
might exceed upper limits on insurance. His concern for the
"innocent" victim seems to have been quelled by the availability
of alternative forms of health coverage beyond PIP. The
legislative history does not address Kelsey's situation,
involving an insured whose injury is minor and not catastrophic,
and who has no alternative health insurance coverage.
During the public hearings before the 1988 amendments,
Senator Cardinale and Richard Anderson of the Commerce and
Industry Association of New Jersey discussed the business
community's concerns about its increased contributions toward
health care under the proposed legislation.
Senator Cardinale: . . . Suppose there were
a compromise somewhere reached . . .that
the first "X" dollars would continue to
be covered under PIP, and that there would
then be some kind of gap that would be
covered by health insurance, and that then
we would have the catastrophic fund as we
have today. No change, essentially, in the
catastrophic fund . . . Would you oppose
that. . .?
Mr. Anderson: Well, I would say probably
generally not. I'd have to see it specifi-
cally, obviously. But there might be some-
thing that might be compromised on that.
There's a possibility of that.
Senator Cardinale: If we also included in
that compromised portion a deductible and
co-payment, which would bring it into line
with what we have in Blue Cross and Blue
Shield in many instances, or with other
health policies, would that even more bring
you on board with respect to that particular
item?
Mr. Anderson: Well, let's take a look
specifically at what we're talking about.
I think we're open to any suggestions along
that line, but we're opposed to just arbi-
trarily shifting the entire burden.
[Id. at 69-70 (emphasis added).]
The suggestion of the incorporation of deductibles and copayments
"to bring [PIP] into line with what we have in Blue Cross and
Blue Shield" indicates that the Legislature was aware that an
insured would have to pay the below-deductibles under PIP just as
an insured must pay such below-deductibles under Blue Cross and
Blue Shield.
In its attempt to contain insurance costs, the Legislature
reached a compromise in the 1988 amendments. PIP would provide
for the prompt payment of most medical expenses, and the
Unsatisfied Claim and Judgment Fund would provide payment for
excessive amounts of medical expenses in the case of catastrophic
injury. See N.J.S.A. 39:6A-4 (providing that insurer should pay
reasonable medical expenses in excess of $75,000 but not in
excess of $250,000 "in consultation with the Unsatisfied Claim
and Judgment Fund Board and shall be reimbursable to the insurer
from the Unsatisfied Claim and Judgment Fund"). However, by
mandating the $250 deductible and the twenty-percent copayment,
the Legislature guaranteed that in every automobile accident some
medical expenses would not be paid under PIP. For those below-deductibles and copayments, the insured was responsible, either
though the insured's other insurance coverage, or, if the insured
had no other insurance, as in this case, out of the insured's own
pocket.
In l990, the Legislature once again amended the law. That
amendment, L. 1990, c. 8, entitled "Fair Automobile Insurance
Reform Act of 1990," still emphasized "economy" as one of the
"principal goals" of the no-fault system. The Act noted that
that goal had not yet been achieved. L. l990, c. 8, § 2d.
Kelsey's accident, however, occurred before the l990 amendments,
and therefore, this case is governed by the l988 version of the
law.
Governor Thomas Kean expressed in his Veto Message to Senate
Bill No. 2637 his interpretation of the intent of the Legislature
in enacting the l988 amendments to the No-Fault Law. In his
statement, the Governor noted that "a viable 'no fault' insurance
system requires a significant limitation on lawsuits."
Governor's Veto Message to Senate Bill No. 2637 (Aug. 4, 1988).
Further the Governor declared that "the bill's essential purpose
of closing the courthouse door to all lawsuits except those
involving bona fide serious injuries will be diluted and the
bill's effectiveness will be greatly diminished." Ibid.
Although emphasizing the importance of the prompt payment of
medical costs, the Governor nonetheless stated:
I do agree, however, that medical benefits
should be subject to reasonable cost
containment. Accordingly I support the
deductibles, co-payments and medical fee
schedule set forth in Senate Bill No. 2637
(3rd Reprint), except that the co-payment
shall apply only to the first $5000 of
coverage. Superimposing these traditional
health system cost-containment mechanisms on
PIP coverage will reduce fraud and over-utilization while maintaining the essential
ingredient of providing adequate and complete
health coverage without regard to fault.
The Governor obviously did not believe that the Legislature
intended that every insured could go to court to recover below-deductible expenses, the maximum, assuming that the insured had
incurred medical expenses of $5,000, being $3,000 (if the insured
had chosen a $2,500 deductible), or $1,200 (if the insured had
chosen a $250 deductible). See also Governor's First Annual
Message, supra (stating, "The minor automobile negligence case,
which ultimately results in a judgment of settlement under $3000,
is a significant contributing factor to the backlog in the civil
courts.") Hence, from the inception of the no-fault statutory
scheme, the Legislature intended to eliminate minor personal-injury-automobile-negligence cases from the court system.
Kelsey's interpretation of section l2 would completely defeat
that purpose and would produce congestion in the court system
once again with minor personal-injury claims, which here total
$538.80.
No-Fault Case Law
Although we have not previously addressed this specific section 12 issue, both this Court and the lower courts have interpreted various other provisions of the No-Fault Law. An examination of those cases indicates that our courts have consistently recognized that the No-Fault Law was intended to be a trade-off between the prompt payment of medical expenses, regardless of fault, and a restriction on the right of an injured party to sue a tortfeasor for minor personal injuries stemming from automobile accidents. Legislators had hoped that that trade-off would result in lower premiums and the elimination of a substanial number of cases from the calendar.
One of the earliest cases interpreting the No-Fault Law was Pennsylvania Manufacturers' Ass'n Insurance Co. v. Government Employees Insurance Co., 136 N.J. Super. 491 (1975), aff'd o.b., 72 N.J. 348 (1977). In that personal-injury case, the Appellate Division stated that the original legislation had been enacted to create an efficient and inexpensive method to reimburse victims for out-of-pocket expenses and to eliminate recovery for minor injury claims that did not involve more than the $200 threshold. Id. at 499. Thus, the court recognized as major goals of the Legislature the elimination of minor claims and prompt aid to injured parties.
In Smelkinson, supra, 178 N.J. Super. at 467, the Appellate Division reversed an order of the trial court that had barred
plaintiff from recovering $4,500 worth of medical expenses. The
court held that the plaintiff was entitled to recover PIP
benefits, including medical expenses, because
[i]t is . . . clear that the right thus afforded
plaintiff by the No-Fault Law to recover her
medical expenses directly from [the tortfeasor's
insurer] was in substitution of her former
right to recover them from the insured tort-
feasor himself and constituted, moreover, the
exclusive remedy insofar as the medical expense
claim arose out of the automobile accident.
[Id. at 469.]
Thus, the court recognized the significance of the trade-off
between the right to sue the tortfeasor for direct payment of
medical expenses and direct payment by the insurer under the No-Fault Law.
In Sotomayor v. Vasquez,
109 N.J. 258 (1988), this Court
stated that mandatory automobile insurance providing basic PIP
benefits for the occupants of each car and the owner of the car's
family had been "designed to provide quick and easy reimbursement
for the basic personal costs most people incur when they are
involved in an automobile accident." Id. at 261. The Court
stated that PIP's goal was the "early payment of bills without
regard to a driver's fault" to serve three interconnected goals:
controlling the increasing spiral of automobile-negligence cases,
curtailing rising auto-insurance premiums, and easing court
congestion. Ibid.
In Aetna Insurance Co. v. Gilchrist Brothers, Inc.,
85 N.J. 550 (1981), the liability-insurance carrier, Aetna, initiated a
suit against the tortfeasor seeking reimbursement of sums paid
under the PIP endorsement. Citing to section 12, we interpreted
the prohibition of the introduction of evidence of PIP payments
as one that would "thereby prevent double recovery." Id. at 564.
The fear of double recovery, i.e., collecting PIP benefits and
recovering through a civil action, had been the earliest concern
about cost control before the cost of PIP itself became an issue
in 1988.
Fears of double recovery resurfaced in Amaru v. Stratton,
209 N.J. Super. 1 (1985), another personal-injury action. There,
the Appellate Division cited section 12 and Smelkinson, supra,
for the proposition that the Legislature intended no-fault
insurance to be the exclusive remedy for claims arising out of an
automobile accident. Id. at 8. The Appellate Division also
reiterated the point made in Aetna, supra, and Cirelli v. Ohio
Casualty Insurance Co.,
72 N.J. 380, 387 (1977), that evidence of
PIP benefits collectible or paid to an injured party was
inadmissible under the statute to prevent that party from being
"unduly enriched by double recovery of [medical] expenses."
Ibid.; see also Wilson v. Unsatisfied Claim & Judgment Fund Bd.,
109 N.J. 271, 281 (l988) (stating, "If there is one definite
principle that emerges from our PIP law, policy, and precedent,
it is that there shall be no double recovery of PIP benefits");
Lattimer v. Boucher,
189 N.J. Super. 33, 38 (Law Div. 1983)
(stating that New Jersey strongly disapproves of double recovery
by accident victims); Bernick v. Aetna Life & Casualty,
158 N.J.
Super. 574, 582 (Cty. Ct. 1978) (stating same).
In sum, courts have held that PIP benefits are strictly
excluded from a civil suit by the injured party to serve a
variety of goals: easing court congestion, lowering automobile-insurance premiums, and prohibiting double recovery of PIP
expenses. Although Kelsey's case does not involve double
recovery, we conclude that under no-fault the parties have traded
lower premiums and prompt payment of medical expenses for a
restriction on their right to sue.
Arguments of the Parties
Kelsey's main argument is that the plain language of section 12 "specifically and unequivocally provides that the injured party's right of recovery of uncompensated loss from the tortfeasor should not be limited * * *." Also, Kelsey points to the plain language of section 8 to refute the Appellate Division's argument that the recovery of economic loss hinges on the ability to recover non-economic loss, defined in N.J.S.A. 39:6A-2 as "pain, suffering and inconvenience."
Kelsey's final argument in support of his reading of the No-Fault Law is an equitable one. According to Kelsey, the third paragraph of section 12 demonstrates that the Legislature intended that an innocent victim should not suffer financially. Roig contends, on the other hand, that Kelsey's position conflicts with the terms and the purposes underlying the No-Fault Law. He argues that the Legislature's purpose in enacting that
law was to eliminate from an overburdened court system minor
bodily-injury claims arising from automobile accidents and to
reduce insurance premiums inflated by those claims. Roig warns
that Kelsey's interpretation would completely defeat those goals
and would bring every single one of those minor claims back into
the court system.
If an insured chooses a $1,000 or $2,500 deductible in
exchange for a premium reduction, the Legislature, clearly, did
not intend that that insured would be able to sue the tortfeasor
for the below-deductibles. Under that logic, insureds choosing
the highest deductible would have the best deal: the lowest
premium and the right to recover the excluded expenses in court
against the tortfeasor. Although not as evident in the case of
an insured like Kelsey's sister who had to take the mandatory
deductible and copayment as in the case of an insured who chose a
higher deductible, the economic reality for both insureds is the
same. Kelsey's sister, like all New Jersey motorists, paid a
lower annual insurance premium because of the mandatory PIP
medical deductible and copayment. To allow a claim for the
deductible and the copayment would be antithetical to the entire
No-Fault statutory scheme. That kind of recovery could be
available only if the Legislature reinstituted a fault-based
system.
As further support for his position, Roig refers to the No-Fault Laws of Kentucky and Florida, which prohibit an injured
party from recovering below-deductible expenses from a third
party. These comparsions are unpersuasive. Neither of those
statutes is authoritative in the interpretation of the New Jersey
No-Fault Law.
Although no express provision to compensate under-insured
victims for their out-of-pocket expenses incurred through
deductibles and copayments exists, we agree with Kelsey that the
plain language of section 12 does suggest that the amount of the
deductible and copayment "otherwise compensated" is inadmissible.
We disagree, however, with Kelsey's further assertion that the
statute therefore permits recovery from the "tortfeasor" of the
injured party's unpaid medical expenses due to those deductibles
and copayments. Such an interpretation is contrary to the clear
legislative intent of the No-Fault Law.
Likewise, we conclude that the Appellate Division's
determination, which sought a middle ground between the positions
of the parties, is contrary to the manifest intent of the
Legislature. We believe that the Appellate Division's
interpretation must yield to the overriding theme evidenced in
the legislative history of the No-Fault Law, especially in the
1988 amendments.
Legislative Intent Controls Over Plain Language
In the interpretation of a statute our overriding goal has consistently been to determine the Legislature's intent in enacting a statute. Lesniak v. Budzash, l33 N.J. l (l993). We
are convinced that the Legislature did not intend that the
insured could sue the tortfeasor for the minor amounts of unpaid
deductibles and copayments.
Our conclusion is reinforced by Judge Learned
Hand's classic admonition that "[t]here is no
surer way to misread any document than to
read it literally." Guiseppi v. Walling, l
44 F.2d 608, 624 (2d Cir. l944). As we observed
in Schierstead v. Brigantine, supra,
"statutes are to be read sensibly rather than
literally and the controlling legislative
intent is to be presumed as 'consonant to
reason and good discretion.'" 29 N.J. at
230, l
48 A.2d 59l (quoting Morris Canal &
Banking Co. v. Central R.R. Co., l
5 N.J. Eq. 4l9, 428 (Ch. l863)).
134 N.J. 393, 418 (l993).]
As noted by the trial judge in the instant matter, we posited in Kimmelman v. Henkels & McCoy, Inc., that "[i]n discerning that [legislative] intent we consider not only the particular statute in question, but also the entire legislative scheme of which it is a part." 108 N.J. 123, 129 (1987). See also New Jersey Builders, Owners, & Managers Ass'n v. Blair, 60 N.J. 330, 338 (1972) (stating, "In reading and interpreting a statute, primary regard must be given to the fundamental purpose for which the legislation was enacted . . ."); Wollen v. Fort Lee, 27 N.J. 408, 416 (1958) (stating, "The inquiry [into statutory meaning] in the ultimate analysis is [to determine] the true intention of the law; and, to this end, the particular words are to be made responsive to the essential principle of the law. It is not the words but the internal sense of the law that controls . . ."). We cannot lose sight of the overwhelming goals
of reducing court congestion and lowering the cost of automobile
insurance.
We are satisfied that the Legislature never intended to
leave the door open for fault-based suits when enacting the No-Fault Law. If we adopted Kelsey's reading of the statute, courts
would again feel the weight of a new generation of congestion-causing suits, and automobile-insurance premiums would again
rise. If the Legislature disagrees with our interpretation of
its intent, it is, of course, empowered to enact clarifying
legislation.
We reverse the judgment of the Appellate Division.
Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, and Stein join in this opinion.