STATE OF NEW JERSEY
PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION
Assemblyman GARY R. CHIUSANO
District 24 (Sussex, Hunterdon and Morris)
Requires "permanent injury" under limitation on lawsuit threshold to seriously impact life of injured person to pierce threshold.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act concerning automobile insurance and amending P.L.1998, c.21 and P.L.1972, c.70.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 1 of P.L.1998, c.21 (C.39:6A-1.1) is amended to read as follows:
1. a. This act shall be known and may be cited as the "Automobile Insurance Cost Reduction Act."
b. The Legislature finds and declares:
Whereas, While New Jersey's automobile insurance no-fault law, enacted twenty-six years ago, has provided valuable benefits in the form of medical benefits and wage replacement benefits, without regard to fault, to New Jersey residents who have been injured in an automobile accident; and
Whereas, Medical benefits paid by no-fault policies over those years amount to billions of dollars, which would otherwise have been paid by health insurance, thus raising the cost of health insurance for everyone; and
Whereas, While medical benefits under no-fault insurance were unlimited under the law enacted in 1972, the rapidly escalating cost of those benefits made it necessary for the Legislature to reduce those benefits to a limit of $250,000 in 1990; and
Whereas, Since the enactment of the verbal threshold in 1988, the substantial increase in the cost of medical expense benefits indicates that the benefits are being overutilized for the purpose of gaining standing to sue for pain and suffering, thus undermining the limitations imposed by the threshold and necessitating the imposition of further controls on the use of those benefits, including the establishment of a basis for determining whether treatments or diagnostic tests are medically necessary; and
Whereas, The present arbitration system has not sufficiently addressed the Legislature's goal of eliminating payment for treatments and diagnostic tests which are not medically necessary, leading to the belief that a revised dispute resolution mechanism needs to be established which will accomplish this goal; and
Whereas, The principle underlying the philosophical basis of the no-fault system is that of a trade-off of one benefit for another; in this case, providing medical benefits in return for a limitation on the right to sue for non-serious injuries; and
Whereas, While the Legislature believes that it is good public policy to provide medical benefits on a first party basis, without regard to fault, to persons injured in automobile accidents, it recognizes that in order to keep premium costs down, the cost of the benefit must be offset by a reduction in the cost of other coverages, most notably a restriction on the right of persons who have non-permanent or non-serious injuries to sue for pain and suffering; and
Whereas, The high cost of automobile insurance in New Jersey has presented a significant problem for [many-lower income] many lower-income residents of the [state] State, many of whom have been forced to drop or lapse their coverage in violation of the State's mandatory motor vehicle insurance laws, making it necessary to provide a lower-cost option to protect people by providing coverage to pay their medical expenses if they are injured; and
Whereas, To meet these goals, this legislation provides for the creation of two insurance coverage options, a basic policy and a standard policy, provides for cost containment of medical expense benefits through a revised dispute resolution proceeding, provides for a revised lawsuit threshold for suits for pain and suffering which will eliminate suits for injuries which are not serious or permanent, and which do not result in a serious life impact, including those for soft tissue injuries, would more precisely define the benefits available under the medical expense benefits coverage, and establishes standard treatment and diagnostic procedures against which the medical necessity of treatments reimbursable under medical expense benefits coverage would be judged; and
Whereas, It is generally recognized that fraud, whether in the form of inappropriate medical treatments, inflated claims, staged accidents, falsification of records, or in any other form, has increased premiums, and must be uncovered and vigorously prosecuted, and while the pursuit of those who defraud the automobile insurance system has heretofore been addressed by the State through various agencies, it has been without sufficient coordination to aggressively combat fraud, leading to the conclusion that greater consolidation of agencies which were created to combat fraud is necessary to accomplish this purpose; and
Whereas, With these many objectives, the Legislature nevertheless recognizes that to provide a healthy and competitive automobile insurance market, insurers are entitled to earn an adequate rate of return through the ratemaking process, which shall reflect the impact of the cost-saving provisions of this act and other recent legislative insurance reforms; and
Whereas, The Legislature has thus addressed these and other issues in this comprehensive legislation designed to preserve the no-fault system, while at the same time reducing unnecessary costs which drive premiums higher.
(cf: P.L.1998, c.21, s.1)
2. Section 8 of P.L.1972, c.70 (C.39:6A-8) is amended to read as follows:
8. Tort exemption; limitation on the right to noneconomic loss.
One of the following two tort options shall be elected, in accordance with section 14.1 of P.L.1983, c.362 (C.39:6A-8.1), by any named insured required to maintain personal injury protection coverage pursuant to section 4 of P.L.1972, c.70 (C.39:6A-4):
a. Limitation on lawsuit option. Every owner, registrant, operator or occupant of an automobile to which section 4 of P.L.1972, c.70 (C.39:6A-4), personal injury protection coverage, section 4 of P.L.1998, c.21 (C.39:6A-3.1), medical expense benefits coverage, or section 45 of P.L.2003, c.89 (C.39:6A-3.3) regardless of fault, applies, and every person or organization legally responsible for his acts or omissions, is hereby exempted from tort liability for noneconomic loss to a person who is subject to this subsection and who is either a person who is required to maintain personal injury protection coverage pursuant to section 4 of P.L.1972, c.70 (C.39:6A-4), medical expense benefits pursuant to section 4 of P.L.1998, c.21 (C.39:6A-3.1) or benefits pursuant to section 45 of P.L.2003, c.89 (C.39:6A-3.3), or is a person who has a right to receive benefits under section 4 of P.L.1972, c.70 (C.39:6A-4), section 4 of P.L.1998, c.21 (C.39:6A-3.1) or section 45 of P.L.2003, c.89 (C.39:6A-3.3), as a result of bodily injury, arising out of the ownership, operation, maintenance or use of such automobile in this State, unless that person has sustained a bodily injury which results in death; dismemberment; significant disfigurement or significant scarring; displaced fractures; loss of a fetus; or a permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement, and the injury also causes a serious impact on the life of the person which prevents or significantly inhibits the person from engaging in substantially all of the material activities constituting that person's usual and customary daily routine. An injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment. For the purposes of this subsection, "physician" means a physician as defined in [section 5 of P.L.1939, c.115 (C.45:9-5.1)] R.S.45:9-5.1.
In order to satisfy the tort option provisions of this subsection, the plaintiff shall, within 60 days following the date of the answer to the complaint by the defendant, provide the defendant with a certification from the licensed treating physician or a board-certified licensed physician to whom the plaintiff was referred by the treating physician. The certification shall state, under penalty of perjury, that the plaintiff has sustained an injury described above. The certification shall be based on and refer to objective clinical evidence, which may include medical testing, except that any such testing shall be performed in accordance with medical protocols pursuant to subsection a. of section 4 of P.L.1972, c.70 (C.39:6A-4) and the use of valid diagnostic tests administered in accordance with section 12 of P.L.1998, c.21 (C.39:6A-4.7). Such testing may not be experimental in nature or dependent entirely upon subjective patient response. The court may grant no more than one additional period not to exceed 60 days to file the certification pursuant to this subsection upon a finding of good cause.
A person is guilty of a crime of the fourth degree if that person purposefully or knowingly makes, or causes to be made, a false, fictitious, fraudulent, or misleading statement of material fact in, or omits a material fact from, or causes a material fact to be omitted from, any certification filed pursuant to this subsection. Notwithstanding the provisions of subsection e. of N.J.S.2C:44-1, the court shall deal with a person who has been convicted of a violation of this subsection by imposing a sentence of imprisonment unless, having regard to the character and condition of the person, the court is of the opinion that imprisonment would be a serious injustice which overrides the need to deter such conduct by others. If the court imposes a noncustodial or probationary sentence, such sentence shall not become final for 10 days in order to permit the appeal of such sentence by the prosecution. Nothing in this subsection a. shall preclude an indictment and conviction for any other offense defined by the laws of this State. In addition, any professional license held by the person shall be forfeited according to the procedures established by section 4 of P.L.1997, c.353 (C.2C:51-5); or
b. No limitation on lawsuit option. As an alternative to the basic tort option specified in subsection a. of this section, every owner, registrant, operator, or occupant of an automobile to which section 4 of P.L.1972, c.70 (C.39:6A-4), personal injury protection coverage, section 4 of P.L.1998, c.21 (C.39:6A-3.1), medical expense benefits coverage, or section 45 of P.L.2003, c.89 (C.39:6A-3.3), regardless of fault, applies, and every person or organization legally responsible for his acts or omissions, shall be liable for noneconomic loss to a person who is subject to this subsection and who is either a person who is required to maintain the coverage mandated by P.L.1972, c.70 (C.39:6A-1 et seq.) or is a person who has a right to receive benefits under section 4 of that act (C.39:6A-4), as a result of bodily injury, arising out of the ownership, operation, maintenance or use of such automobile in this State.
The tort option provisions of subsection b. of this section shall also apply to the right to recover for noneconomic loss of any person eligible for benefits pursuant to section 4 of P.L.1972, c.70 (C.39:6A-4), section 4 of P.L.1998, c.21 (C.39:6A-3.1) or section 45 of P.L.2003, c.89 (C.39:6A-3.3) but who is not required to maintain personal injury protection coverage pursuant to section 4 of P.L.1972, c.70 (C.39:6A-4), medical expense benefits coverage pursuant to section 4 of P.L.1998, c.21 (C.39:6A-3.1) or benefits pursuant to section 45 of P.L.2003, c.89 (C.39:6A-3.3) and is not an immediate family member, as defined in section 14.1 of P.L.1983, c.362 (C.39:6A-8.1), under a standard automobile insurance policy or basic automobile insurance policy.
The tort option provisions of subsection a. of this section shall also apply to any person subject to section 14 of P.L.1985, c.520 (C.39:6A-4.5) and to every named insured and any other person to whom the benefits of the special automobile insurance policy provided in section 45 of P.L.2003, c.89 (C.39:6A-3.3) or the medical expense benefits of the basic automobile insurance policy pursuant to section 4 of P.L.1998, c.21 (C.39:6A-3.1) apply whether or not the person has elected the optional $10,000 liability coverage insuring against loss resulting from liability imposed by law for bodily injury or death provided for in subsection c. of section 4 of P.L.1998, c.21 (C.39:6A-3.1).
The tort option provisions of subsections a. and b. of this section as provided in this 1998 amendatory and supplementary act shall apply to automobile insurance policies issued or renewed on or after the effective date of P.L.1998, c.21 (C.39:6A-1.1 et al.) and as otherwise provided by law.
The tort option provisions of subsection a. as provided in this 2008 amendatory act shall apply to automobile insurance policies issued or renewed on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) and as otherwise provided by law.
(cf: P.L.2003, c.89, s.52)
3. This act shall take effect on the 180th day following enactment.
This bill requires that a "permanent injury," as defined within the limitation on lawsuit threshold set forth in section 8 of P.L.1972, c.70 (C.39:6A-8), as revised by the 1998 “Automobile Insurance Cost Reduction Act” (AICRA), must also cause a serious life impact to the person in order for that person to pierce the threshold and maintain a cause of action for noneconomic damages (including, inter alia, pain and suffering). As provided in the bill, a permanent injury resulting in a serious life impact is one "which prevents or significantly inhibits the person from engaging in substantially all of the material activities constituting that person's usual and customary daily routine."
The additional serious life impact requirement would not be applicable to the other five categories of injuries designated as piercing the threshold, 1) death; 2) dismemberment; 3) significant disfigurement or significant scarring; 4) displaced fractures; and 5) loss of a fetus, as these injuries sufficiently define themselves to result in a serious life impact.
The bill responds to the New Jersey Supreme Court opinions of DiProspero v. Penn, 183 N.J 477 (2005), and its companion case, Serrano v. Serrano, 183 N.J. 508 (2005). In both cases, the Supreme Court declined to apply the serious life impact test for piercing the limitation on lawsuit threshold first established by the court in Oswin v. Shaw, 129 N.J. 290, 318 (1992), a decision addressing then existing statutory "verbal threshold" limitations, to the subsequently enacted AICRA and presently applicable limitation on lawsuit threshold. See P.L.1998, c.21.