I have been practicing personal injury law in New Jersey for almost 33 years (actually, it will be 33 years on February 15, 2012), and there is no doubt in my mind that one ruling by the New Jersey Supreme Court  has drawn the ire of more of my clients than any other. I am speaking about a case which is known as Roig v. Kelsey, 135 N.J. 500 (1994).

Some background is necessary to allow you to appreciate this court decision. New Jersey is what is known as a “No-Fault” state. That means that it is one of the small number of states that has not abandoned this concept of automobile insurance, which most jurisdictions have concluded is not a successful approach to the issue of the high cost of auto insurance. New Jersey is the most populated state, per capita, of any of the 50 states, meaning that there are more people per square mile in New Jersey than any other state. This dense saturation of humanity is a significant factor in the rate of auto accidents which occur, for obvious reasons. A Wyoming driver might be able to drive his or her vehicle for mile after mile, without seeing another vehicle; while the New Jersey roads contain traffic at virtually every hour of the day and night. It is understandable that the cost of auto insurance in New Jersey will be higher than the cost of similar coverage in Wyoming, because of the greater potential for a claim from the New Jersey vehicle. The rising cost of auto coverage was one reason that the New Jersey legislature adopted “No Fault” insurance. Another important consideration was the reduction in the amount of litigation occurring as a result of auto accidents.

When two No Fault-insured vehicles collide and occupants sustain injury, the cost of their medical care (known as “PIP benefits”) is borne by their own insurance carrier, not the carrier for the at-fault driver. There is “no fault” issue involved in determining which carrier pays the PIP bills. When the law was first passed in 1972, there was no deductible on these payments, and no cap on the amount of coverage available. That changed in 1988, when a mandatory deductible of $250 was instituted, as well as a co-pay of 20%. The amount of coverage available for PIP benefits was capped at $250,000.  That meant that an injured person, regardless of their fault for the accident, would incur a deductible of $250, as well as a co-pay of 20% of the bills, calculated from the end of the deductible up to $5000. An injured person with a $250 deductible who incurred medical expenses of $5000 as a result of an auto accident would be responsible for the first $250, and 20% of the next $4750, or $950, for a total out-of-pocket expenditure of $1200. Imagine that you were injured in an auto accident as a result of someone else’s negligence, and incurred $5000 in medical expenses, and you were required to pay $1200 of these expenses. (Although you are permitted to submit the bills to any other medical coverage you might have available to you.)

You would assume that you would be permitted to recover these costs from the wrong-doer, but you would be wrong. The New Jersey Supreme Court considered this very question in the case of Roig v. Kelsey in 1994, and ruled that the deductible and co-pay are not elements of damages which may be recovered from the wrong-doer. The Court focused on the legislative intent behind the statute, and found 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 wrongdoer 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 substantial number of cases from the calendar. 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.  The court concluded that under no-fault the parties traded lower premiums and prompt payment of medical expenses for a restriction on their right to sue, and noted that if the Legislature disagreed with their interpretation of its intent, it was empowered to enact clarifying legislation. The court issued that ruling 18 years ago, and the legislature has never addressed the issue since.

Every new client I meet is outraged when I explain this ruling and its impact on them, at their initial interview.  No one can believe that such an unjust result – requiring an innocent person to personally bear the cost of medical care necessitated by the negligence of someone else – would be allowed to remain on the books. If the client is able to make a financial recovery for their losses, they might consider the deductible and co-pay to be part of their reimbursement, even though that is not technically correct.  However, many individuals injured in auto accidents are not permitted to bring a claim for money damages for their non-economic losses, because of the Limitation on Lawsuit option, or a number of other legislative initiatives, including Charitable Immunity, Tort Claims Act, or legislatively-enacted immunities, and these individuals have no remedy for their financial loss.  This is patently wrong, and our legislature should not allow this unjust result to continue.

John Sakson is a Shareholder and Co-Managing Direcotr of  Stark & Stark’s in the firm’s Lawrenceville, New Jersey office, specializing in Accident & Personal Injury Law. For more information, please contact Mr. Sakson.