(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 February 3, 1998 -- Decided April 20, 1998
PER CURIAM
The issue in this automobile insurance appeal is whether an insurance carrier that pays personal injury protection
(PIP) benefits to claimants injured in an automobile accident is entitled to contribution from other insurance carriers that are
required by N.J.S.A. 39:6A-4 to provide coverage.
This appeal is based on ten consolidated declaratory judgment cases that arise from similar factual patterns. In each
case, the person injured in an automobile accident was either the named insured on a Rutgers policy or was the resident
relative of a named insured on a Rutgers policy. In addition, each victim was injured while he or she was either a pedestrian
or a passenger in a car that he or she did not own. Therefore, each victim was eligible to receive PIP benefits from the
company that insured the automobile. Rutgers paid PIP benefits to each victim because, as named insureds and resident
relatives, the claimants were entitled to receive “primary coverage” from the named insured's carriers.
Rutgers then sought contribution from the carriers that insured the automobile involved in each accident. The
carriers refused to pay and Rutgers instituted suit against them seeking a declaratory judgment of entitlement to contribution.
The parties filed cross-motions for summary judgment. Rutgers maintained that it was entitled to contribution under N.J.S.A.
39:6A-11, which provides that, when two or more insurance companies are liable to pay benefits under N.J.S.A. 39:6A-4, the
company that pays the victim is entitled to recover from each of the other insurers an equitable pro rata share of the benefits
paid. The carriers contended that their policies contained a “follow-the-family” exclusion under which they were not liable
for the payment of PIP benefits to anyone other than its named insured and his otherwise uninsured resident relatives. In
addition, they contended that Rutgers was primarily and exclusively liable for payment to its named insured. The Law
Division ruled in favor of Rutgers and ordered pro rata contribution from the various carriers. The carriers appealed.
In a reported decision, the Appellate Division reversed, finding the “follow-the-family” exclusion to be entirely
consistent with the text of the No-Fault statute and the legislative purpose of allowing insurance companies to avoid the
cumbersome and uneconomic shifting of dollars that results from contribution claims. In addition, the Appellate Division
specifically found that, once the injured party is paid under the “primacy of coverage” section (N.J.S.A. 39:6A-4.2), the
“follow-the-family” provision operates to exclude contribution under N.J.S.A. 39:6A-11.
The Supreme Court granted Rutgers' petition for certification.
HELD: Once an injured party is paid PIP benefits under N.J.S.A. 39:6A-4.2, a “follow-the-family” exclusion operates to
preclude contribution among insurers under N.J.S.A. 39:6A-11.
1. The “follow-the-family” exclusion does not violate N.J.S.A. 39:6A-11 because that section applies only when two or more
insurers are liable to pay benefits. (p.7)
2. Once the injured party is paid under the “primacy of coverage” section, the "follow-the-family" provision operates to
exclude contribution under N.J.S.A. 39:6A-11. (p. 7)
3. The “follow-the-family” provision was meant to act as a bar to contribution after the primary carrier had already paid out
benefits to the claimant. (pp. 7-8)
4. Neither the “follow-the-family” exclusion nor the exclusion set forth in N.J.S.A. 39:6A-7 may be relied on to deny payment
to an uncompensated claimant.
Judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, STEIN and
COLEMAN join in this opinion.
SUPREME COURT OF NEW JERSEY
A-
89 September Term 1997
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
THE OHIO CASUALTY INSURANCE COMPANY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
HCM CLAIM MANAGEMENT CORP., servicing
carrier for THE MARKET TRANSITION FACILITY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff,
v.
NEW JERSEY MANUFACTURERS INSURANCE COMPANY,
Defendant.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
THE WEST AMERICAN INSURANCE COMPANY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
ALLSTATE INSURANCE COMPANY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
PRUDENTIAL PROPERTY & CASUALTY
INSURANCE COMPANY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
COMPUTER SCIENCES CORPORATION, as
servicing carrier for THE MARKET
TRANSITION FACILITY or THE NEW
JERSEY FAIR AUTOMOBILE UNDERWRITING
ASSOCIATION,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
KEYSTONE INSURANCE COMPANY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
LION INSURANCE COMPANY, MARYLAND
CASUALTY INSURANCE COMPANY, and
STATE FARM INSURANCE COMPANY,
Defendants,
and
KEYSTONE INSURANCE COMPANY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
as insurer of JOSEPH JANIK,
Plaintiff-Appellant,
v.
OHIO CASUALTY INSURANCE COMPANY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
as insurer of MARIE & FRANK SCARAFILE,
Plaintiff-Appellant,
v.
KEYSTONE INSURANCE COMPANY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
ALLSTATE INSURANCE COMPANY,
Defendant-Respondent.
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
COMPUTER SCIENCES CORPORATION, as
servicing carrier for THE MARKET
TRANSITION FACILITY OF NEW JERSEY
(MTF) and/or the NEW JERSEY FULL
INSURANCE UNDERWRITING ASSOCIATION
(JUA),
Defendants-Respondents.
Argued February 3, 1998 -- Decided April 20, 1998
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
299 N.J. Super. 249 (1997).
Susan L. Moreinis argued the cause for
appellant.
John R. Gercke argued the cause for
respondents The Ohio Casualty Insurance
Company, Keystone Insurance Company and The
West American Insurance Company (Gercke,
Dumser & Feld, attorneys).
Francis X. Ryan argued the cause for
respondents Allstate Insurance Company and
CSC Insurance Services, servicing carrier for
New Jersey Automobile Full Insurance
Underwriting Association (Green,
Lundgren &
Ryan, attorneys for Allstate Insurance
Company and CSC Insurance Services, servicing
carrier for the New Jersey Automobile Full
Insurance Underwriting Association and Robert
L. Messick, attorney for HCM Claim Management
Corp., servicing carrier for The Market
Transition Facility of New Jersey; Mr. Ryan
and Mr. Messick, on the joint brief).
Randi S. Greenberg submitted a letter in lieu
of brief on behalf of respondent Prudential
Property & Casualty Insurance Company (Robert
A. Auerbach, attorney).
PER CURIAM
The issue in this automobile insurance appeal is whether an
insurance carrier that pays personal injury protection (PIP)
benefits to claimants injured in an automobile accident is
entitled to contribution from other insurance carriers that are
required by N.J.S.A. 39:6A-4 to provide coverage. The appeal is
based on ten consolidated declaratory judgment cases that arise
from similar factual patterns. The plaintiff insurance carrier
in each case is the Rutgers Casualty Insurance Company (Rutgers).
In each case, the person injured in an automobile accident
was either the named insured on a Rutgers policy or was the
resident relative of a named insured on a Rutgers policy. Each
injured person was eligible to receive PIP benefits from Rutgers.
See N.J.S.A. 39:6A-4. In addition, because each victim was
injured while he or she was either a pedestrian or a passenger in
a car that he or she did not own, each victim was eligible to
receive PIP benefits from the company that insured the
automobile. N.J.S.A. 39:6A-4. Because named insureds and their
resident relatives, i.e., the claimants in these cases, are
entitled to receive "primary coverage" from the named insured's
carrier, N.J.S.A. 39:6A-4.2, Rutgers paid PIP benefits to each
victim.
Rutgers then sought contribution from the carriers that
insured the automobile involved in each accident. When these
carriers (defendants) refused to pay, Rutgers instituted suit
against them seeking a declaratory judgment of entitlement to
contribution. On cross-motions for summary judgement, the Law
Division ruled in favor of Rutgers and ordered pro rata
contribution from defendants. Defendants appealed. The
Appellate Division reversed.
299 N.J. Super. 249 (1997).
We affirm the judgment in favor of defendants substantially
for the reasons set forth in the Appellate Division opinion of
Judge King.
Rutgers relied on N.J.S.A. 39:6A-11, which provides that
when two or more insurance companies "are liable to pay benefits"
under N.J.S.A. 39:6A-4, the company that pays the victim is
entitled to recover from each of the other insurers "an equitable
pro rata share of the benefits paid." The defendant carriers
contended that because their policies contained a "follow-the-family exclusion," they were not "liable to pay benefits" within
the intendment of N.J.S.A. 39:6A-11. They also contended that,
under N.J.S.A. 39:6A-4.2, Rutgers was primarily and exclusively
liable for payment to its named insured. Finally, they referred
to an understanding or practice in the insurance industry not to
seek contribution in such cases.
The follow-the-family exclusion provides:
The insurance under this endorsement does not
apply to bodily injury to:
any person other than the named insured or
relative if that person is entitled to New
Jersey personal injury protection coverage as
a named insured or relative under the terms
of another policy;
any relative if that person is entitled to
New Jersey personal injury protection
coverage as a named insured under the terms
of another policy.
The Appellate Division found the follow-the-family exclusion
to be "entirely consistent with the text of the [No-Fault]
statute and the legislative purpose" behind it. 299 N.J. Super.
at 263. The follow-the-family provision "realizes and
coordinates the primacy policy of § 4.2 [and] the equitable
contribution policy of § 11 when two or more PIP coverages
inexorably apply. . . ." Ibid. The follow-the-family exclusion
"does not textually violate" N.J.S.A. 39:6A-11, because the
latter applies only when two or more insurers are "liable" to pay
benefits. Id. at 262. Under the follow-the-family exclusion, a
carrier is not "liable" for the payment of PIP benefits to anyone
other than its named insured and his otherwise uninsured resident
relatives. Ibid.
The Appellate Division also found that the follow-the-family
provision effectuates the legislative goal of "transactional
efficiency" by allowing insurance companies to avoid the
"cumbersome and uneconomic shifting of dollars" that results from
contribution claims. Id. at 263. "Once the injured party is
paid under the 'primacy of coverage' section, N.J.S.A. 39:6A-4.2,
the matter is closed"; the follow-the-family provision operates
to "exclude" contribution under N.J.S.A. 39:6A-11. Id. at 257.
Even though the follow-the-family provision is titled an
"exclusion" and facially purports to exclude from coverage
persons who are merely "eligible" to receive benefits under
another policy pursuant to N.J.S.A. 39:6A-4, the provision
clearly was meant to act as a bar to contribution after the
primary carrier had already paid out benefits to the claimant.
This interpretation is consistent with and is confirmed by
L. 1997, c. 270, the recently enacted amendment to N.J.S.A.
39:6A-7. While the amendment provides on its face that an
insurance carrier may "exclude" from coverage any person who is
"entitled to coverage" as a named insured or resident relative
under the terms of another policy, the explanatory statement
beneath the amendment notes that this "bill eliminates PIP
contribution." N.J.S.A. 39:6A-7b(3). Both the policy exclusion
and the statutory exclusion thus prohibit an insurance carrier
that has paid out PIP benefits pursuant to N.J.S.A. 39:6A-4.2
from receiving contribution from other carriers potentially
liable under N.J.S.A. 39:6A-4, -11. Thus, neither exclusion may
be relied upon to deny payment to an uncompensated claimant. Our
holding is therefore limited to those cases where the injured
claimant has already been compensated or is clearly entitled to
be compensated and the primary carrier is seeking contribution
under N.J.S.A. 39:6A-11 from other potentially liable carriers.
The judgment of the Appellate Division is affirmed.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, STEIN and COLEMAN join in this opinion.
NO. A-89 SEPTEMBER TERM 1997
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
THE OHIO CASUALTY INSURANCE COMPANY,
Defendant-Respondent.
(and other related matters)
DECIDED April 20, 1998
Chief Justice Poritz PRESIDING
OPINION BY PER CURIAM
CONCURRING OPINION BY
DISSENTING OPINION BY