(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).
(A-60/61/62-96)
Argued November 18, 1996 -- Decided February 3, 1997
Stein, J., writing for a majority Court.
In this appeal, the Court addresses the proper interpretation and constitutionality of New Jersey's
“deemer statute” (N.J.S.A. 17:28-1.4), which deems New Jersey's “verbal threshold” to apply to the policies
of out-of-state residents using their automobiles in New Jersey if their insurers are authorized to do business
in New Jersey. Assuming that the deemer statute is constitutional and applies to the Whitakers' claim, a
secondary issue is whether the injuries sustained by Louis Whitaker (Whitaker) satisfy the verbal threshold,
which allows automobile accident tort recovery only for bodily injury of a type or degree within one of the
nine defined categories set forth in N.J.S.A. 39:6A-8a.
On June 29, 1992, Louis and Laura Whitaker's automobile was struck in the rear by a vehicle driven
by Ronald DeVilla (DeVilla). The accident occurred in Montgomery Township, New Jersey. The
Whitakers, both Pennsylvania residents, were insured under a Pennsylvania automobile insurance policy
issued by Prudential Property and Casualty Insurance Company, an insurer authorized to do business in New
Jersey. The Whitakers had elected the full tort option on their automobile insurance policy.
As a result of the accident, Whitaker sustained soft tissue injuries to his cervical, dorsal and lumbar
regions, causing him to miss several hours of work and requiring him to undergo medical treatment over a
seventeen-month period. Whitaker's treating chiropractor determined that Whitaker's cervical range of
motion was restricted and that he experienced muscle spasms in the cervical, dorsal, and lumbar regions.
Although he described Whitaker's condition as permanent, he observed that his long-term prognosis was
good with proper care.
When Whitaker was deposed in August 1994, he acknowledged that he was able to participate in all
of the activities in which he had participated prior to the accident, but noted that he experienced pain and
discomfort while engaging in specific activities. Following the deposition, DeVilla filed a motion for
summary judgment, claiming that Whitaker had not adequately supported a claim for relief under the verbal
threshold, which applied to Whitaker under the deemer statute.
In opposition to the motion for summary judgment, Whitaker relied on the report of his treating
chiropractor, as well as a report from his experts, indicating that Whitaker continued to experience muscle
spasms in his neck and back and that he displayed physical limitations such as decreased flexion and
extension. The report concluded that the prognosis for improvement was limited in that Whitaker's injuries
were “precursors to progressive traumatic arthritis in the areas injured.”
The trial court granted DeVilla's motion for summary judgment, determining that the deemer
statute applied to Whitaker's suit and upholding the statute's constitutionality. The trial court further
concluded that Whitaker had not adequately supported a claim for relief under the verbal threshold, noting
that the experts' findings that Whitaker had sustained permanent injuries were inadequately supported by
the record.
The Appellate Division agreed with the trial court's conclusion that Whitaker had failed to satisfy the verbal threshold, but, nevertheless, reversed the trial court's grant of summary judgment, concluding that
the language of the deemer statute was “inadvertently overbroad and was not intended to restrict the rights
of persons such as the present plaintiffs,” who had paid for full tort coverage.
The Supreme Court granted the State's and DeVilla's petitions for certification, and the
Whitakers' cross-petition challenging both the constitutionality of the deemer statute and the lower court's
conclusion that Whitaker's injuries did not satisfy the verbal threshold.
HELD: The deemer statute does not violate the Equal Protection Clause of the United States or the New
Jersey Constitutions; the Legislature expressly intended the deemer statute to impose the verbal threshold on
all out-of-state insureds that sustain automobile accident injuries in New Jersey and whose policies were
issued by insurers authorized to transact business in New Jersey; although the finding of muscle spasms by
Whitaker's medical experts may constitute an objective medical finding, the conclusion of both lower courts
that the reports do not offer adequate evidence to overcome the verbal threshold will not be disturbed.
1. The deemer statute assures that, if a vehicle is operated in New Jersey, the policy issued by an insurer
authorized to transact business in New Jersey will provide the minimum liability coverage, uninsured motorist
coverage, and personal injury protection coverage that the insurer would be obligated to provide to a New
Jersey resident. (pp. 7-8)
2. Prior to the Appellate Division decision under review, courts confronted with challenges to the deemer
statute have applied it literally and upheld its constitutionality. (pp. 10-18)
3. The legislative decision to impose the verbal threshold only on the class of non-resident insureds,
inrecognition of the substantial benefits conferred on those insureds by the deemer statute, constitutes a
thoroughly rational and intelligible legislative classification. (pp. 18-21)
4. Because the deemer statute's application to Whitaker does not implicate any fundamental constitutional
right or any suspect or quasi-suspect classification, Whitaker's constitutional challenge is evaluated on the
basis of the third tier of equal protection analysis, rational basis review. (pp. 21-22)
5. If a statutory distinction has some reasonable basis, a State does not violate the Equal Protection Clause
merely because the classifications made by its laws are imperfect. (pp. 22-23)
The judgment of the Appellate Division is REVERSED.
JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI and COLEMAN join in JUSTICE
STEIN's opinion. CHIEF JUSTICE PORITZ did not participate.
SUPREME COURT OF NEW JERSEY
A-60/61/
62 September Term 1996
LOUIS SCOTT WHITAKER and LAURA
WHITAKER, his wife,
Plaintiffs-Respondents
and Cross-Appellants,
v.
RONALD A. DeVILLA, ROMEO A.
DeVILLA,
Defendants-Appellants
and Cross-Respondents,
and
JOHN DOE Nos. 1-10 (fictitious
persons) and ABC Corp. Nos. 1-10
(fictitious entities),
Defendants,
and
ATTORNEY GENERAL OF NEW JERSEY,
Intervenor-Appellant
and Cross-Respondent.
Argued November 18, 1996 -- Decided February 3, 1997
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
287 N.J. Super. 370 (1996).
Karen L. Suter, Deputy Attorney General,
argued the cause for intervenor-appellant and
cross-respondent, Attorney General of New
Jersey (Peter G. Verniero, Attorney General,
attorney; Joseph L. Yannotti, Assistant
Attorney General, of counsel; Carla D.
Williams, Deputy Attorney General, on the
briefs).
Michael D. Blythe argued the cause for
appellants and cross-respondents Ronald A.
DeVilla and Romeo A. DeVilla (Michael D.
Blythe & Associates, attorneys; Lisa A.
Miller, on the briefs).
Eugene M. Purcell argued the cause for
respondents and cross-appellants Louis Scott
Whitaker and Laura Whitaker, etc. (Purcell,
Ries, Shannon, Mulcahy & O'Neill, attorneys;
Mr. Purcell and Kathleen J. Devlin, on the
briefs).
Thomas P. Weidner argued the cause for amicus
curiae, State Farm Indemnity Company
(Jamieson, Moore, Peskin & Spicer, attorneys;
Mr. Weidner and Ross A. Lewin, of counsel;
Mr. Weidner, Ross A. Lewin and Michael G.
Petrone, on the brief).
The opinion of the Court was delivered by
STEIN, J.
The critical issues in this appeal concern the proper
interpretation, as well as the constitutionality, of N.J.S.A.
17:28-1.4, New Jersey's so-called "deemer" statute. That statute
deems New Jersey's "verbal threshold," which allows automobile
accident tort recovery for non-economic losses only for bodily
injury of a type or degree within one of the nine defined
categories set forth in N.J.S.A. 39:6A-8a, to apply to the
policies of out-of-state residents using their automobiles in New
Jersey if their insurers are authorized to do business in New
Jersey. A secondary issue, assuming that the deemer statute is
constitutional and applies to plaintiffs' claim, is whether the
injuries sustained by plaintiff Louis Whitaker satisfy the verbal
threshold.
In a reported opinion,
287 N.J. Super. 370 (1996), the
Appellate Division agreed with the trial court that plaintiff's
injuries did not satisfy the requirements of the verbal
threshold. Id. at 372. However, the Appellate Division reversed
the trial court's grant of summary judgment and remanded for
further proceedings, concluding that the language of the deemer
statute inadvertently was overbroad and was not intended to
restrict plaintiff's right to recover for non-economic damages.
Id. at 374. The Appellate Division declined to address the
constitutionality of the deemer statute as applied to plaintiff.
Id. at 373.
We granted the State's and defendants' petition for
certification, and plaintiffs' cross-petition challenging both
the constitutionality of the deemer statute and the lower courts'
conclusion that plaintiff's injuries did not satisfy the verbal
threshold.
145 N.J. 373 (1996). We reverse.
On June 29, 1992, plaintiff stopped his automobile behind a
car making a left turn from the eastbound lane of Route 518 in
Montgomery Township, a Somerset County municipality. Defendant
Ronald Devilla was driving a vehicle owned by defendant Romeo
Devilla eastbound on Route 518. That automobile collided with
the rear of plaintiff's automobile.
Plaintiff and his wife reside in Pennsylvania and are
insured under a Pennsylvania automobile insurance policy issued
by Prudential Property and Casualty Insurance Company, an insurer
authorized to do business in New Jersey. Pursuant to
Pennsylvania law, which requires automobile insurance companies
to provide both "full tort" and verbal threshold options, 75 Pa.
Cons. Stat. Ann. § 1705(a)(1), plaintiff elected the full tort
option in his automobile insurance policy.
As a result of the accident plaintiff experienced stiffness
in his shoulders, neck, and back, causing him to miss seventeen
hours of work during the week following the accident. He was
treated initially with pain medication and a cervical collar. On
the advice of an orthopedist plaintiff received physical therapy
treatments from June to August of 1992. From October 1992 to
November 1993, plaintiff was seen regularly by Dr. Daniel
Brainum, a chiropractor. He determined that plaintiff's cervical
range of motion was restricted, and that plaintiff experienced
muscle spasms in the cervical, dorsal, and lumbar regions. He
concluded that plaintiff's injuries were attributable to
lumbosacral sprain/strain, sacroiliac instability, cervical
myofascitis, and cervical hypo-lordosis. He described
plaintiff's condition as permanent, observing that his long-term
prognosis was good with proper care. Plaintiff's last visit with
Dr. Brainum occurred in November 1993.
When plaintiff was deposed in August 1994, he complained of
back pain after physical exertion, and back and neck stiffness
after driving for extended periods. He acknowledged that there
were no activities that he engaged in prior to the accident in
which he was then unable to engage, but noted that he experienced
pain and discomfort when engaging in heavy lifting, or in other
specific activities such as waterskiing, snow skiing, and digging
holes. Plaintiff stated his intention to participate in a
basketball league beginning in October 1994.
In opposition to defendants' motion for summary judgment,
plaintiff relied on Dr. Brainum's final report and on the October
1994 report of plaintiff's experts, Drs. William Tevlin and David
Meyers. That report, based on an examination in September 1994,
indicated that plaintiff continued to experience tenderness and
muscle spasm in the posterior cervical musculature and in the
lumbar area, that plaintiff has decreased flexion in the head,
decreased extension during bending and twisting, and decreased
ability to raise his legs. The report concluded that the
prognosis for plaintiff's improvement was limited because his
injuries "are precursors to progressive traumatic arthritis in
the areas injured."
The trial court granted defendants' motion for summary
judgment, determining that the deemer statute applied to
plaintiff's suit and upholding the statute's constitutionality,
citing Taylor-Segan v. Rajagopal,
275 N.J. Super. 286 (App. Div.
1994). The court also concluded that plaintiff had not
adequately supported a claim for relief under the verbal
threshold, observing that plaintiff relied primarily on the
report of his experts rather than on the determination of his
treating physician, and noting that the medical experts' finding
that plaintiff's injuries were permanent was inadequately
supported by the record.
The Appellate Division agreed with the trial court's
conclusion that plaintiff had failed to satisfy the verbal
threshold. 287 N.J. Super. at 372. Nevertheless, the panel
reversed the trial court's grant of summary judgment, concluding
that the language in the deemer statute was "inadvertently
overbroad and was not intended to restrict the rights of persons
such as the present plaintiffs." Id. at 374. The court
observed:
There is no basis shown in the present case
to distinguish between a New Jersey resident
who pays a New Jersey insurance company for
"no threshold" coverage and an out-of-state
resident who opts for substantially the same
coverage with the same insurance company.
In any event, the result would be
anomalous. Consider next-door neighbors
living just over the border in a contiguous
state. One pays for "no threshold" coverage
with an insurance company authorized to do
business in New Jersey, while his neighbor
obtains his insurance from a company not so
authorized, and does not pay for the greater
coverage. If the Deemer provision is
interpreted as applying to the first, he
cannot recover for non-economic damages if he
is injured in an automobile accident
occurring here, but his neighbor, who has not
paid the greater premium can recover
non-economic loss without regard to the
verbal threshold. We can not attribute so
absurd and unnecessary an intention to our
Legislature, particularly where the New
Jersey authorized insurance company can
probably control the optional premium for the
"no threshold" coverage just as easily as it
does with a New Jersey resident.
The deemer statute, first enacted in 1985, L. 1985, c. 520,
§ 18, and subsequently amended in 1988, L. 1988, c. 119, § 1
(codified as amended at N.J.S.A. 17:28-1.4), provides as follows:
Any insurer authorized to transact or
transacting automobile or motor vehicle
insurance business in this State, or
controlling or controlled by, or under common
control by, or with, an insurer authorized to
transact or transacting insurance business in
this State, which sells a policy providing
automobile or motor vehicle liability
insurance coverage, or any similar coverage,
in any other state or in any province of
Canada, shall include in each policy coverage
to satisfy at least the liability insurance
requirements of section 1 of P.L. 1972, c.
197 (C. 39:6B-1) or section 3 of P.L. 1972,
c. 70 (C. 39:6A-3), the uninsured motorist
insurance requirements of subsection a. of
section 2 of P.L. 1968, c. 385 (C.
17:28-1.1), and personal injury protection
benefits coverage pursuant to section 4 of
P.L. 1972, c. 70 (C. 39:6A-4) or of section
19 of P.L. 1983, c. 362 (C. 17:28-1.3),
whenever the automobile or motor vehicle
insured under the policy is used or operated
in this State.
Any liability insurance policy subject
to this section shall be construed as
providing the coverage required herein, and
any named insured, and any immediate family
member as defined in section 14.1 of P.L.
1983, c. 362 (C. 39:6A-8.1), under that
policy, shall be subject to the tort option
specified in subsection a. of section 8 of
P.L. 1972, c. 70 (C. 39:6A-8).
By its terms the statute requires insurers authorized to transact
motor vehicle insurance business in New Jersey to include in
motor vehicle liability policies sold in any other state or in
Canada policy coverage for the insured vehicle such as to assure
that if that vehicle is operated in New Jersey the policy will
provide the minimum liability coverage, uninsured motorist
coverage, and personal injury protection coverage that the
insurer would be obligated to provide to a New Jersey insured.
Thus, irrespective of the minimum insurance requirements of the
insured's state, the deemer statute guarantees that if the
insured's vehicle is operated in New Jersey the insurer will
provide liability coverage of not less than $15,000 on account of
injury to, or death of, one person in any one accident, coverage
of not less than $30,000 on account of injury to or death of more
than one person in any one accident, and coverage of not less
than $5000 for damage to property in any one accident. See
N.J.S.A. 39:6B-1, 39:6A-3. In addition, the deemer statute
guarantees the out-of-state insured uninsured motorist coverage
in the same limits as are required for liability coverage. See
N.J.S.A. 17:28-1.1a. Finally, the deemer statute guarantees that
out-of-state insureds driving in New Jersey and insured by
companies authorized to transact insurance business in New Jersey
have available up to $250,000 in personal injury protection (PIP)
benefits, see N.J.S.A. 39:6A-4, irrespective of the comparable
benefits mandated by the insured's home state.
When the deemer statute was enacted in 1985, N.J.S.A. 39:6A-8 required New Jersey insureds to elect one of two tort options.
Subsection (a) of that statute described the less restrictive
tort option that limited the right of insureds to recover non-economic losses for soft tissue bodily injuries arising from
automobile accidents to those injuries for which the reasonable
and necessary medical expenses for treatment exceeded $200.
Subsection (b) of N.J.S.A. 39:6A-8 defined the more restrictive
tort option, which required that the reasonable and necessary
medical expenses for treatment of such soft tissue bodily
injuries exceed $1500 before the right to sue for non-economic
damages would accrue. See L. 1983, c. 362, § 14. In its
original form, the deemer statute provided that all policies
issued to out-of-state residents by insurers subject to the
statute would be deemed to include the more restrictive tort
option defined in N.J.S.A. 39:6A-8b. See L. 1985, c. 520 § 18.
Because the $200 and $1500 alternative monetary thresholds
for soft-tissue injury suits did not succeed in containing the
rising cost of automobile insurance, see Oswin v. Shaw,
129 N.J. 290, 296 (1992), the Legislature in 1988 enacted the current
statute, L. 1988, c. 119, § 6 (codified at N.J.S.A. 39:6A-8),
which affords motorists the option of electing a "verbal
threshold," allowing recovery for non-economic losses resulting
only from those automobile accident personal injuries that fit
into one of nine specified categories, N.J.S.A. 39:6A-8a. The
alternative choice is the traditional fault liability system that
allows unrestricted recovery of non-economic damages, an option
for which insureds pay a higher premium than they would pay for a
policy subject to the verbal threshold. N.J.S.A. 39:6A-86. If
no election is made, the insured is deemed subject to the verbal
threshold. Oswin, supra, 129 N.J. at 297.
The statute that authorized insureds to choose between the
full tort option and the verbal threshold also amended the deemer
statute. See L. 1988, c. 119, § 1 (codified at N.J.S.A. 17:28-1.4). That amendment provided that automobile insurance policies
sold to out-of-state residents by insurers authorized to transact
insurance business in New Jersey would be deemed to be subject to
the verbal threshold if the automobile were operated in New
Jersey. N.J.S.A. 17:28-1.4.
Prior to the Appellate Division decision under review,
courts confronted with challenges to the deemer statute have
applied it literally and upheld its constitutionality. Murphy v.
Allstate Ins. Co.,
252 N.J. Super. 280 (App. Div. 1991), although
not directly implicating the deemer statute, applied and upheld
the constitutionality of an analogous provision of the verbal
threshold statute then in effect. The plaintiffs, who neither
owned an automobile nor resided in the household of an immediate
family member who owned an automobile, sustained minor injuries
in an automobile accident in March, 1989. Id. at 283. At the
time of the accident, N.J.S.A. 39:6A-8 and -8.1 provided that
persons who neither owned an automobile nor lived in the
household of an immediate family member that owned one would be
deemed to have elected the verbal threshold option for purposes
of determining their right to recover noneconomic damages for
injuries sustained in automobile accidents. See L. 1988, c. 119,
§ 6. Plaintiffs challenged those statutory provisions, alleging
that they denied plaintiff equal protection of the law because,
unlike automobile owners that could elect the full tort option,
plaintiffs were eligible only for the verbal threshold option.
Murphy, supra, 252 N.J. Super. at 283. The Law Division held
that the challenged provisions were unconstitutional. Ibid.
Reversing, the Appellate Division concluded that the statutory
provisions in question were rationally related to a comprehensive
state interest:
We identify a more comprehensive state
interest. In our view the state interest was
to make no-fault PIP benefits available to
all people injured in automobile accidents
without raising the general level of
automobile insurance premiums. The
Legislature attempted to accomplish this goal
by relieving insurers from having to pay
noneconomic damages to people not seriously
injured. Insureds who elect to recover for
minor injuries have to pay an added premium
for themselves and household members of their
immediate family. PIP beneficiaries such as
plaintiffs cannot make such an election
because they do not buy automobile insurance
and are not part of the household of an
immediate family member who does. Although
the Legislature probably could devise a means
for people in plaintiffs' class to buy
no-threshold coverage, as a matter of
administrative convenience the Legislature
instead deemed them subject to the verbal
threshold.
Imperfect classifications that are part
of a reasonable legislative scheme do not
violate the equal protection clause.
In Adams v. Keystone Ins. Co.,
264 N.J. Super. 367 (App.
Div. 1993), Adams, a Delaware resident, was driving his Ford van
in New Jersey and sustained injuries in an accident with a
tractor-trailer. Id. at 369. Adams was the named insured on the
Ford's liability policy issued by Keystone Insurance Company, an
insurer authorized to transact business in New Jersey. Ibid.
Relying on the deemer statute, Adams demanded that Keystone pay
him PIP benefits in excess of the $15,000 provided for in the
Delaware policy. When Keystone refused, Adams instituted suit.
Ibid. Keystone moved for summary judgment, contending that
N.J.S.A. 17:28-1.4 should not be construed to require Keystone to
pay additional PIP benefits to non-resident insureds, and also
challenging the constitutionality of the deemer statute. Id. at
370. The Law Division granted Keystone's summary judgment
motion. The Appellate Division reversed, concluding that the
plain language of the deemer statute authorized plaintiff to
receive PIP coverage up to the limits afforded to New Jersey
insureds. Id. at 371. The Appellate Division also rejected
Keystone's due process challenge to the validity of the deemer
statute:
The rationale of these cases is that a
state, like New Jersey, has a legitimate
interest in its insurance scheme. The
Legislature has made a policy judgment to
solve the insurance crisis, and the
legislation strikes an appropriate balance.
Non-resident insureds must meet a reasonable
threshold in order to receive payment for
non-economic loss. In return, non-residents
insured by companies transacting business in
New Jersey who are injured in New Jersey
receive the benefits necessary to provide for
their medical treatment. In addition, New
Jersey has an interest in ensuring that
persons injured in this state receive prompt
and proper medical care and in assuring that
the medical care facilities and practitioners
who provide such care will be paid. The
subject statute, designed to lower automobile
insurance premiums while ensuring generous
PIP benefits, simply furthers the policy
objective of N.J.S.A. 39:6A-1 to -35, which
is both fair and rational.
Watkins v. Davis,
259 N.J. Super. 482 (Law Div. 1992),
aff'd,
268 N.J. Super. 211 (App. Div. 1993), was the first case
to challenge the deemer statute's application of the verbal
threshold to a non-resident plaintiff. Id. at 485-86. Watkins,
a Pennsylvania resident, was operating his vehicle in New Jersey
and sustained personal injuries when his vehicle was struck in
the rear by defendant's automobile. Watkins was insured through
a Pennsylvania liability policy issued by Aetna Life and Casualty
Company, an insurer authorized to transact business in New
Jersey. Id. at 486. When Watkins sued to recover damages for
his injuries, defendant asserted Watkins' failure to satisfy the
verbal threshold as a separate defense. Ibid. Watkins then
moved to strike that defense, asserting that the deemer statute
was unconstitutional under the Equal Protection Clause, U.S.
Const. amend. XIV, §1, because non-residents whose insurance
companies are unauthorized to transact business in New Jersey are
not subject to the verbal threshold. Id. at 486-88. The Law
Division upheld the statute's constitutionality:
N.J.S.A. 17:28-1.4 not only subjects the
class in question to the "verbal threshold"
of N.J.S.A. 39:6A-8.1(a), it construes the
"out-of-state" policy as providing the more
expansive coverage required under New Jersey
No-Fault Law (ie. [sic] liability insurance
requirements, uninsured motorist insurance
requirements, and personal injury protection
benefits coverage). There is a rational
basis for imposing upon this class the verbal
threshold, even though they do not have the
opportunity to elect the "no-threshold", as
these individuals are receiving the benefit
of a more comprehensive series of benefits
without regard to fault under New Jersey law.
Plaintiff's argument that the statute
does not affect out-of-state drivers whose
insurance companies do not transact business
in New Jersey, while accurate, does not
dictate a finding that the classification in
question is unconstitutional. While still
having the ability to pursue their
noneconomic losses in the New Jersey courts,
these out-of-state drivers do not receive the
benefit of New Jersey No-Fault Law outlined
above. Moreover, imperfect classifications
that are part of a reasonable legislative
scheme do not violate the equal protection
clause.
Other Appellate Division panels have also rejected
constitutional challenges to the provision of the deemer statute
imposing the verbal threshold on non-resident insureds. In
Taylor v. Rorke,
279 N.J. Super. 63 (App. Div.), certif. denied,
141 N.J. 99 (1995), the Appellate Division rejected the out-of-state plaintiff's contention that the deemer statute violated the
Privileges and Immunities Clause of the United States
Constitution, U.S. Const. art. IV, § 2, because non-residents are
denied the opportunity to elect the full tort option afforded to
New Jersey residents. Noting that the right to sue for non-economic damages is not an activity "basic to the livelihood of
the nation," Taylor, supra, 279 N.J. Super. at 71, the court
determined that the constitutional challenge was meritless
because the deemer statute was "closely related to the
advancement of a substantial state interest" in containing the
cost of automobile insurance. Ibid. Similarly, in Taylor-Segan
v. Rajagopal, supra, the Appellate Division rejected an equal
protection challenge to the deemer statute asserted by a
Pennsylvania resident who had elected the full tort option in her
Pennsylvania automobile liability policy and was confronted in
her suit for non-economic damages arising out of a New Jersey
collision with a summary judgment motion based on the verbal
threshold. Reversing the Law Division's denial of defendant's
summary judgment motion, the Appellate Division upheld the
constitutionality of the deemer statute against the assertion
that it discriminated against out-of-state residents insured by
companies authorized to transact business in New Jersey:
"`[I]imperfect classifications that are part of a reasonable
legislative scheme do not violate the equal protection clause.'"
Taylor-Segan, supra, 275 N.J. Super. at 292 (quoting Watkins,
supra, 259 N.J. Super. at 491).
The Third Circuit Court of Appeals has also upheld the
deemer statute against an equal protection challenge to its
constitutionality. In Dyszel v. Marks,
6 F.3d 116 (1993),
plaintiffs in consolidated cases contended that the deemer
statute's automatic assignment of the verbal threshold option to
out-of-state insureds solely on the basis that the insurer is
authorized to transact business in New Jersey is not rationally
related to the statutory purpose and violates the out-of-state
insureds' right to equal protection of the law. Id. at 119. In
the first case Rose and Michele Dyszel, Pennsylvania residents
whose insurer was licensed to transact business in New Jersey,
were injured in a New Jersey automobile accident. Id. at 121.
Relying on the deemer statute, the defendant moved for summary
judgment contending that the plaintiffs' claim for damages was
barred by the verbal threshold. Ibid. The district court
sustained the constitutionality of the statute, and after a
hearing determined that the claim of Rose Dyszel satisfied the
verbal threshold but that the claim of Michele Dyszel for non-economic damages was barred by the verbal threshold, directing a
verdict against her. Ibid. In the second case, the district
court granted defendant's motion for summary judgment on the
ground that the personal injury claim of Daniel Tumolo, a
Pennsylvania resident whose insurer transacted business in New
Jersey, was barred by the verbal threshold. Id. at 121-22. On
appeal, both appellants challenged the deemer statute on equal
protection grounds. Ibid.
The Third Circuit determined preliminarily that because the
statute's application to the appellants involved "neither a
fundamental constitutional right nor a suspect or quasi-suspect
classification, [the constitutionality of the statute] is
evaluated under the third tier of equal protection analysis --rational basis review." Id. at 125. In sustaining the statute,
the court first noted the benefits that the deemer statute
conferred on non-resident insureds:
Under the deemer statute, residents of other
states who have insurance with companies
doing business in New Jersey receive
significant benefits as well as certain
limitations, such as losing the cause of
action for non-economic injuries. For
example, the deemer statute ensures that most
out-of-state drivers who become involved in
accidents in New Jersey receive uninsured
motorist protection and $250,000 of personal
injury protection. In return for this
protection, out-of-state residents who have
insurance with companies doing business in
New Jersey are required to meet the standards
of New Jersey's verbal threshold law in order
to sue for non-economic injuries.
emphasis omitted).]
In addition, the court observed that a rational basis
supported the legislative decision to apply the statute only to
non-residents whose insurers were authorized to transact business
in New Jersey:
This plan is rational. The Legislature
chose insurance companies licensed to do
business in New Jersey because New Jersey has
the greatest amount of control over such
companies. Since this group includes the
largest auto insurers (such as State Farm),
the legislation can reasonably be expected to
have the desired effect.
Finally, the court concluded that the Legislature acted rationally in determining that out-of-state residents insured by licensed New Jersey insurers should not be allowed to recover
non-economic damages for automobile accident injuries unless they
satisfied the verbal threshold:
There is also a clear rational basis to
support the Legislature's determination that
out-of-state residents who operate autos in
New Jersey should be precluded from
recovering for non-economic loss unless the
verbal threshold is satisfied. Inherent in
the no-fault system is a statutory right to
recover damages without the need to satisfy a
threshold. The cost of such recovery must be
paid out of the auto insurance system.
Appellants, and those who would fall into
their category, are not New Jersey insured.
As such, they are not in a position to
finance the cost of non-threshold coverage.
Given this situation and the Legislature's
desire to reduce or contain the cost of auto
insurance, the legislative judgment was
rationally consistent with the purpose of the
statute. Furthermore, if the broadest
coverage (no threshold) was provided to
persons who did not pay for it, then the
added cost to the insurer would have to be
borne by others, namely consumers who
purchase auto insurance. The Legislature
reasonably concluded that such a situation
would not foster reduced auto insurance
premiums.
We first address the Appellate Division's conclusion that the Legislature did not intend the deemer statute to impose the verbal threshold on out-of-state insureds that paid for full tort coverage, 287 N.J. Super. at 374, and plaintiff's contention that the deemer statute as applied to him violates the Equal Protection Clauses of the United States and New Jersey
Constitutions. We deem pertinent to both those issues the
assertion in the amicus brief of State Farm Indemnity Company,
corroborated by correspondence from the Attorney General to the
Court, that in excess of sixty percent of all Pennsylvania
private automobile insurance policyholders have elected the full
tort option, which imposes no restrictions on their ability to
sue for non-economic damages in Pennsylvania. That statistic
strongly suggests that the deemer statute would be likely to
exert a significant limiting effect on the ability of
Pennsylvania insureds to recover non-economic damages for
injuries sustained in New Jersey automobile accidents. We also
attach substantial significance to the Legislature's inclusion in
the statute that enacted the verbal threshold, L. 1988, c. 119,
§ 6, amending N.J.S.A. 39:6A-8, of a provision amending the
deemer statute to impose the verbal threshold on all out-of-state
insureds whose automobile policies were issued by insurers
authorized to transact business in New Jersey. Accordingly, we
disagree with the Appellate Division's conclusion, 287
N.J. Super. at 374, that the language used by the Legislature in
the deemer statute "was inadvertently overbroad and was not
intended to restrict the rights of persons such as the present
plaintiffs." We are convinced that the Legislature expressly
intended that the deemer statute, as amended, would impose the
verbal threshold on all out-of-state insureds that sustain
automobile accident injuries in New Jersey and whose policies
were issued by insurers authorized to transact business in New
Jersey.
Nor do we consider it anomalous that the deemer statute
would not impose the verbal threshold on non-residents insured by
carriers not authorized to transact business in New Jersey.
Those insureds, if involved in an automobile accident in New
Jersey, would not receive the benefit of New Jersey's minimum
mandatory liability coverage, uninsured motorist coverage, or
personal injury protection coverage that the deemer statute
mandates for non-residents insured through New Jersey authorized
insurers. The legislative decision to impose the verbal
threshold only on the latter class of non-resident insureds, in
recognition of the substantial benefits conferred on those
insureds by the deemer statute, constitutes a thoroughly rational
and intelligible legislative classification.
The Legislature undoubtedly assumed that it could not compel
insurers not authorized to transact business in New Jersey to
provide non-resident insureds injured in New Jersey the minimum
liability, uninsured motorist, and personal injury protection
benefits mandated by the deemer statute, and absent the ability
to provide those benefits to such non-resident insureds the
Legislature may have perceived that the imposition of the verbal
threshold would be unfair, inappropriate or unlawful. Although
we express no view concerning the wisdom of that legislative
judgment, we are persuaded that it constitutes a rational and
understandable determination by the Legislature to attempt to
contain the cost of automobile insurance premiums for New Jersey
residents. Because non-resident insureds do not contribute to
the costs incurred by New Jersey insurers in defending full tort
option claims, the Legislature obviously recognized that allowing
non-residents the benefit of the full tort option for damages
incurred in New Jersey accidents inevitably would increase the
liability exposure of New Jersey insurers and generate pressure
for increased premiums. See Dyszel, supra, 6 F.
3d at 127. The
deemer statute is a pragmatic legislative response to that
concern.
That conclusion is also dispositive of plaintiff's equal
protection claims. Because the deemer statute's application to
plaintiff does not implicate any fundamental constitutional right
or any suspect or quasi-suspect classification, plaintiff's
constitutional challenge is evaluated on the basis of the third
tier of equal protection analysis, rational basis review. Id. at
125; Barone v. Department of Human Servs.,
107 N.J. 355, 365-67
(1987). Although equal protection analysis under the New Jersey
Constitution "`is not a mirror image of the United States
Constitution,'" id. at 368 (quoting Greenberg v. Kimmelman,
99 N.J. 552, 568 (1985)), our equal protection decisions have
"`always required a real and substantial relationship between the
classification and the government purpose which it purportedly
serves.'" Ibid. (quoting Taxpayers Ass'n. v. Weymouth Township,
80 N.J. 6, 43 (1976), cert. denied sub nom. Feldman v. Weymouth
Township,
430 U.S. 977,
97 S. Ct. 1672,
52 L. Ed.2d 373 (1977)).
Whether we apply the rational basis standard to plaintiff's federal equal protection challenges or assess the relationship between the statutory classification and the underlying governmental purpose in evaluating the state equal protection challenge, we entertain no doubt that the constitutionality of the statute must be upheld. As noted, the Legislature's determination to contain the cost of New Jersey automobile insurance premiums by imposing the verbal threshold on non-resident insureds injured in this state and insured by companies authorized to do business here is obviously a rational and reasonable legislative judgment and one likely to assist in accomplishing the legislative objective. Moreover, a substantial relationship obviously exists between the underlying governmental purpose and the deemer statute's application only to non-resident insureds whose policies are issued by companies authorized to transact business in New Jersey. Because those carriers could be compelled to offer their non-resident insureds the benefits of New Jersey's minimum liability, uninsured motorist, and personal injury protection benefit coverages, the Legislature determined that it could appropriately impose the verbal threshold on those insureds. A statute does not violate the Equal Protection Clause merely because in practice it may result in some inequality. If a statutory distinction has some reasonable basis, "a State does not violate the Equal Protection Clause merely because the classifications made by its laws are imperfect." Dandridge v. Williams, 397 U.S. 471, 485, 90 S. Ct. 1153, 1161, 25 L. Ed 2d
491, 501, (1970). Because we are convinced of the reasonableness
of the statutory classification reflected in the deemer statute,
we hold that it does not violate the Equal Protection Clause of
the United States or the New Jersey Constitutions.
Finally, we will not disturb the conclusion of both lower
courts that plaintiff's medical reports do not offer adequate
objective, credible evidence to enable plaintiff to overcome the
verbal threshold. Although the finding of muscle spasm by
plaintiff's medical experts may constitute an objective medical
finding, the Law Division concluded that that finding was not
sufficiently connected to one of the statutory classifications,
see N.J.S.A. 39:6A-8a, to satisfy the verbal threshold. We agree
with that conclusion. See Oswin, supra, 129 N.J. at 320; Chalef
v. Ryerson,
277 N.J. Super. 22, 37 (App. Div. 1994).
We reverse the judgment of the Appellate Division.
JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI and COLEMAN
join in JUSTICE STEIN's opinion. CHIEF JUSTICE PORITZ did not
participate.
NO. A-60/61/62 SEPTEMBER TERM 1996
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
LOUIS SCOTT WHITAKER and LAURA WHITAKER, his wife,
Plaintiffs-Respondents
and Cross-Appellants,
v.
RONALD A. DeVILLA, ROMEO A. DeVILLA,
Defendants-Appellants
and Cross-Respondents,
and
JOHN DOE Nos. 1-10 (fictitious persons) and ABC
Corp. Nos. 1-10 (fictitious entities),
Defendants,
and
ATTORNEY GENERAL OF NEW JERSEY,
Intervenor-Appellant
and Cross-Respondent.
DECIDED February 3, 1997
Justice Handler PRESIDING
OPINION BY Justice Stein
CONCURRING OPINION BY
DISSENTING OPINION BY