The New Jersey Supreme Court recently handed down its decision in the case of Haines v. Taft, an important decision that affects a Plaintiff’s ability to plead, prove and recover for outstanding medical expenses in New Jersey. In order to fully understand the Court’s decision, we first need to briefly review the legal history that led up to this landmark decision.
The passage of the Automobile Cost Reduction Act (AICRA) of 1999 afforded Plaintiffs in New Jersey their first opportunity to choose to reduce their PIP limits below $250,000.00 (before AICRA, that was the standard no-fault benefits amount available to everyone). AICRA allowed for PIP limits as low as $15,000.00 for payment of medical bills. This resulted in a substantially increased number of plaintiffs who incurred medical bills above their reduced PIP limits, i.e., they exhausted their PIP policies. The issue became whether or not the medical bills incurred BEYOND PIP exhaustion were allowed to be claimed by plaintiffs as economic damages at Trial in a third party setting.
The most recent prior precedent – Wise v. Marienski (Appellate Division) – indicated that Plaintiffs who chose reduced limits, and then exhausted those reduced PIP limits, WERE allowed to plead, prove and recover at trial the medical bills that exceeded their exhausted limits. For example, a plaintiff with a $15,000.00 PIP policy, who exhausted those PIP benefits, and then incurred an additional $50,000.00 in medical bills above and beyond their PIP exhaustion, would be allowed to claim that $50,000.00 as economic damages, and were allowed to present evidence of those amounts “on the Board” at the time of Trial. This added significant value to the claims of plaintiffs who had reduced PIP limits. In the example above, a case that might potentially have a pain and suffering value of $10,000.00 could become a case that had a value of $60,000.00 if the $50,000.00 in economic damages were added for outstanding medical bills above and beyond the PIP exhaustion.
The Wise case essentially turned PIP into a partial FAULT system (as opposed to the “No Fault” system that PIP was intended to be). Furthermore, the Wise case allowed plaintiffs to circumvent AICRA’s procedural design to monitor plaintiffs’ treatment (with the intent to prevent excessive treatment) by requiring pre-Certification of all treatment, and providing Statutory Fee Schedules to keep medical providers from over-charging. Put another way, once plaintiffs exhausted their reduced PIP limits, the insurance companies could no longer control plaintiffs’ treatment, i.e., plaintiff’s did not need to pre-certify, and argued that the statutory Fee Schedules no longer applied (although we have been able to negotiate with SOME plaintiffs’ attorneys to reduce the bills pursuant to the Fee Schedule).
This Supreme Court’s decision in the Haines case changes the situation. In Haines, the New Jersey Supreme Court has now ruled that plaintiffs cannot recover economic damages from a tortfeasor for medical bills incurred between their reduced PIP limits (such as $15,000.00) and $250,000.00. The most logical interpretation of the Court’s ruling is that outstanding medical bills are NO LONGER boardable at Trial as economic damages, at least until a plaintiff exhausts a their full $250,000.00 PIP policy. PIP has, again, become a “No Fault” system.
Given the immediate reaction by most in the legal community, including some in the defense bar, that this ruling is particularly harsh on plaintiffs of lower socioeconomic means, and represents too much of a swing of the pendulum from what Wise represented, it should be anticipated that the plaintiffs’ Bar/Lobby will take immediate action in attempts to force the New Jersey legislature to respond to this ruling.
In the meantime, this Supreme Court case should benefit the defendants. There should now be a disincentive for plaintiffs’ attorneys to have their clients with reduced PIP coverage over-treat. Consequently, we expect that Haines should also curb the valuation of cases, because, plaintiffs, by law, can no longer claim the excess medical/economic loss portion of their cases presentation previously available to them under Wise.
For any further discussion or if you have questions about this, please contact Marc Deitch at (732) 781-1309, or Mdeitch@kentmcbride.com