Opinion
DOCKET NO. A-4244-12T2
08-25-2014
KARON K. JOHNSON, Plaintiff-Appellant/Cross-Respondent, v. ROSELLE EZ QUICK LLC, L & J LIQUOR & DELI, HARSHIRA PATEL, SURESH PATEL, GREGORY PARISI, INTREPID INVESTIGATIONS, Defendants, and GEICO INSURANCE COMPANY, Defendant-Respondent/Cross-Appellant, and GEICO INSURANCE COMPANY, Third-Party Plaintiff, v. ONE BEACON INSURANCE and THE CAMDEN FIRE INSURANCE ASSOCIATION, Third-Party Defendants.
James C. Mescall argued the cause for appellant/cross-respondent (Mescall & Acosta, PC, attorneys; Mr. Mescall, on the brief). Curtis J. Turpan argued the cause for respondent/cross-appellant GEICO Insurance Company (Harwood Lloyd, LLC, attorneys; Paul E. Kiel and Mr. Turpan, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Yannotti, Ashrafi and Leone. On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4845-11. James C. Mescall argued the cause for appellant/cross-respondent (Mescall & Acosta, PC, attorneys; Mr. Mescall, on the brief). Curtis J. Turpan argued the cause for respondent/cross-appellant GEICO Insurance Company (Harwood Lloyd, LLC, attorneys; Paul E. Kiel and Mr. Turpan, on the brief). PER CURIAM
Plaintiff Karon K. Johnson appeals from an order granting summary judgment to defendant and third-party plaintiff GEICO Insurance Company, which paid personal injury protection (PIP) benefits to plaintiff. The order allowed GEICO to obtain PIP reimbursement from the insurer of the alleged tortfeasors. GEICO appeals from an order partially granting plaintiff's cross-motion for summary judgment requiring GEICO to pay income continuation (IC) benefits to plaintiff. We affirm.
I.
GEICO and plaintiff agreed to the following facts for purposes of summary judgment. On December 16, 2009, plaintiff went to L&J Liquor & Deli, allegedly owned or operated by Roselle EZ Quick, LLC, Harshira Patel and Suresh Patel (collectively the L&J defendants). Although he was only twenty- years old, he purchased a bottle of vodka and was not asked for identification. He drank the vodka, drove in an impaired condition, and crashed his mother's car into a tree, resulting in serious injuries.
On August 8, 2010, plaintiff filed a claim form seeking PIP benefits from GEICO, his mother's auto insurer. By August 20, 2010, GEICO paid $250,000, exhausting the policy limits for PIP medical expenses.
On June 10, 2011, plaintiff filed a complaint against the L&J defendants, their investigators Gregory Parisi and Intrepid Investigations, and GEICO. Plaintiff alleged that the L&J defendants negligently served him alcohol, that he suffered a loss of income, and that GEICO failed to pay IC benefits.
In December 2011, GEICO filed a cross-claim seeking PIP reimbursement under N.J.S.A. 39:6A-9.1 from all other defendants. On February 22, 2012, GEICO filed a third-party complaint seeking the same relief from the L&J defendants' insurer, One Beacon Insurance, trading as the Camden Fire Insurance Association.
On August 9, 2012, plaintiff entered into a release and settlement agreement with the L&J defendants and their insurer. The settling defendants agreed to pay $1,000,000, representing the full liability limit under the One Beacon policy. The settling defendants paid $251,449.50 to plaintiff's attorneys, $483,970.10 to his special-needs trust, and $264,580 into court. In the agreement, plaintiff acknowledged that the L&J defendants "have not admitted any liability," and that plaintiff assumed responsibility for all PIP reimbursement claims GEICO had against the settling defendants.
In an August 15, 2012 order, the trial court approved the settlement agreement. The order stated the $264,580 was interpleaded so plaintiff and GEICO could litigate whether GEICO was entitled to reimbursement for the $250,000 PIP benefits, and whether plaintiff was entitled to $5,200 in IC benefits. The claims against the L&J defendants were dismissed with prejudice.
GEICO moved for summary judgment. Plaintiff cross-moved for summary judgment. On March 14, 2013, the trial court granted summary judgment to GEICO on all issues except the IC benefits, on which it granted summary judgment to plaintiff for $5,200. Having dismissed the claims against the investigators, the court issued an April 23, 2013 "final order" stating that GEICO had the right to $250,000 plus interest.
II.
GEICO and plaintiff appeal the court's summary judgment rulings. Summary judgment must be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). "[A]ppellate courts 'employ the same standard [of review] that governs the trial court.'" Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (citations omitted). Here, there are no disputed issues of fact, only issues of law, which we review de novo. Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 382 (2010). We must hew to our standard of review.
III.
Plaintiff argues the January 2011 amendment to N.J.S.A. 39:6A-9.1 applies and bars GEICO's attempt to get PIP reimbursement from the settlement amount. The trial court correctly ruled that the amendment did not apply retroactively.
Since 1983, N.J.S.A. 39:6A-9.1 in the New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 to -35 (No-Fault Law), has provided that an insurer paying PIP benefits under N.J.S.A. 39:6A-4 or -10 as a result of an accident has the right to recover the amount of its PIP payments from any tortfeasor lacking PIP coverage for drivers. Prior to January 28, 2011, N.J.S.A. 39:6A-9.1 provided for recovery from the torfeasor's insurer as follows:
In the case of an accident occurring in this State involving an insured tortfeasor, the determination as to whether an insurer, health maintenance organization or governmental agency is legally entitled to recover the amount of payments and the amount of recovery, including the costs of processing benefit claims and enforcing rights granted under this section, shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration.
We interpreted this language in Fernandez v. Nationwide Mutual Fire Insurance Co., 402 N.J. Super. 166 (App. Div. 2008) (Fernandez I). We held "that where a PIP carrier has paid benefits to its insured, it is entitled to reimbursement of those benefits from the insurance proceeds of a third-party tortfeasor, pursuant to N.J.S.A. 39:6A-9.1, even if the limits of the tortfeasor's insurance policy are insufficient to make the insured whole." Id. at 168-69. We relied on Knox v. Lincoln General Insurance Co., 304 N.J. Super. 431 (App. Div. 1997), and David v. Government Employees Insurance Co., 360 N.J. Super. 127 (App. Div.), certif. denied, 178 N.J. 251 (2003). Fernandez I, supra, 402 N.J. Super. at 168, 172-76.
An equally-divided Supreme Court affirmed our ruling. Fernandez v. Nationwide Mut. Fire Ins. Co., 199 N.J. 591, 592 (2009) (Fernandez II). The opinion supporting affirmance, citing Knox and David, stated that the rule followed in Fernandez I "has been the controlling application of the No-Fault Law in this state for more than a decade, undisturbed by any legislative disapproval." Id. at 593. The opinion "recognize[d] that the Legislature may decide that a different policy is preferable and may alter the law; that is its province. Until that occurs, we affirm the Appellate Division's application of settled law in this matter." Ibid.
In 2011, the Legislature decided that a different policy would be preferable. It amended the law by passing Senate Bill No. 191, which was signed by the Governor on January 28, 2011. L. 2011, c . 11, § 1. The amendment added the following language to the end of the discussion of recovery from the tortfeasor's insurer:
Similar bills had been introduced but not passed in the prior legislative session. See Fernandez II, supra, 199 N.J. at 599 n.2 (Long, J., dissenting).
Any recovery by an insurer, health maintenance organization or governmental agency pursuant to this subsection shall be subject to any claim against the insured tortfeasor's insurer by the injured party and shall be paid only after satisfaction of that claim, up to the limits of the insured tortfeasor's motor vehicle or other liability insurance policy.It is undisputed that GEICO's request for reimbursement is barred if the amendment applies, and is proper if the pre-amendment law applies.
[N. J.S.A. 39:6A-9.1(b).]
In considering whether the amendment applies retroactively, we are guided by the Supreme Court's recent opinion in James v. N.J. Manufacturers Insurance Co., 216 N.J. 552 (2014). There, the Legislature passed an act reversing Pinto v. N.J. Manufacturers Insurance Co., 183 N.J. 405 (2005), which had enforced a limitation on auto insurance coverage. James, supra, 216 N.J. at 555-56. "Applying established rules of statutory construction and the retroactivity of new legislation," the Court in James held that the new act did not apply retroactively. Id. at 556-57.
"It is well established that 'statutes generally should be given prospective application.' Settled rules of statutory construction favor prospective rather than retroactive application of new legislation. The preference for prospective application of new legislation 'is based on our long-held notions of fairness and due process.'" Id. at 563 (quoting Cruz v. Cent. Jersey Landscaping, Inc., 195 N.J. 33, 45 (2008) (other citations omitted)). To conclude a statute applies retroactively, we must find that one of three exceptions applies, id. at 556, namely: "(1) when the Legislature expresses its intent that the law apply retroactively, either expressly or implicitly; (2) when an amendment is curative; or (3) when the expectations of the parties so warrant." Id. at 563.
A.
"The Legislature may demonstrate its intent to apply a statute retroactively either by stating so 'in the language of the statute or in the pertinent legislative history . . . or [such intent may be] implied.'" Id. at 564 (alteration in original). Here, the amendment provided: "This act shall take effect immediately." L. 2011, c. 11, § 2. There is nothing in "the directive that the act 'shall take effect immediately' to suggest retroactivity. On the contrary, these words bespeak an intent contrary to, and not supportive of, retroactive application." Cruz, supra, 195 N.J. at 48; see State v. Parolin, 171 N.J. 223, 233 (2002). "[H]ad the Legislature intended an earlier date for the law to take effect, that intention could have been made plain in the very section directing when the law would become effective." James, supra, 216 N.J. at 568. For example, Phillips v. Curiale, 128 N.J. 608, 618 (1992), addressed an act which provided: "'This act shall take effect immediately and shall be applicable to all actions and proceedings that accrue, are pending or are filed after June 1, 1986.'" Id. at 618 (quoting L.1987, c. 217, § 6).
The legislative history similarly shows no legislative intent to apply the amendment retroactively. When Senate Bill No. 191 was introduced on January 12, 2010, the accompanying Sponsor's Statement provided "[t]his bill is in response to the decision in [Fernandez I]." After recounting our holding, the Statement concluded: "The amendment made by this bill would reverse that outcome." Those comments were repeated in the statements issued upon the favorable reporting of the bill from the Senate Commerce Committee on October 7, 2010, and from the General Assembly Financial Institutions and Insurance Committee on December 9, 2010.
In James, the sponsor's statement similarly provided: "'This bill is in response to the [Pinto] decision,'" and "'[t]his bill reverses the effect of the Pinto decision.'" James, supra, 216 N.J. at 562. The Court noted that nothing in the statement "expresses that the law was to have operative effect before its stated effective date." Id. at 568. The same is true here.
Plaintiff relies on oral comments by legislative sponsors before legislative committees. However, "'statements of individual legislators are not generally considered to be a reliable guide to legislative intent.'" Bedford v. Riello, 392 N.J. Super. 270, 279 (App. Div. 2007), aff'd as modified, 195 N.J. 210 (2008). The oral comment of a sponsor to a legislative committee is not the equivalent of a formal written sponsor's statement available to all legislators, "but rather, [is] testimonial in nature," and not entitled to "any interpretive weight." State ex rel. Hayling v. Corr. Med. Servs., Inc., 422 N.J. Super. 363, 373 (App. Div. 2011).
In any event, the oral comments do not express any intent of the Legislature to apply the amendment retroactively. At the October 7, 2010 Senate committee meeting, the bill's sponsor, Senator Nicholas P. Scutari, remarked that the bill "just sets out the priority of claims." Hearings on S. 191 Before the Senate Commerce Comm., (October 7, 2010), at 2 (Statement of Senator Scutari). After insurance industry witnesses expressed concern that the bill might cause an increase in auto insurance premiums, and requested delay of the "immediately" effective date for twelve months or until policy renewal, Senator Scutari responded:
The reason why the legislative effect date doesn't make any difference [is] because this is a judicially determined ranking of plaintiffs, essentially. So, . . . it's not a policy language issue, it is just reranking the primacy in which we allow claims. . . . All this says is that the injured party should be made whole first[,]Thus, in discussing the effective date, the bill's sponsor did not suggest that the amendment would apply retroactively to PIP claims filed before the effective date.
and that's all it is[,] a reranking of the primacy of the claims.
[Id. at 19-20.]
Assemblyman Jon M. Bramnick, the sponsor of the identical Assembly bill, similarly discussed the effective date. At the December 9, 2010 Assembly committee meeting, when asked if it was unusual that the amendment would take effective immediately, he responded:
Why do [the insurance companies] want it delayed for a year. That's a big concern to me because those individuals are not fully compensated. They won't be compensated until next year for what reason. Why would we delay the implementation. The court, Fernandez, didn't delay their decision, they interpreted the law, there was a case. Now, what we're saying is Fernandez said A, that was immediate and — immediate and now we have somebody say no, Fernandez, we agree with the justices here, new policy is needed. So we're just turning around Fernandez as quickly as Fernandez made the decision.Again, the Assembly sponsor did not express the intent that the amendment should be retroactive rather simply taking effect immediately. Although the Assemblyman mentioned that unidentified individuals would not be fully compensated if the effective date were postponed for a year, that discussion "does not appear in a discussion of retroactivity — and, indeed, retroactivity is never discussed directly by the Assemblyman." See State ex rel. Hayling, supra, 422 N.J. Super. at 372.
[Hearings on A. 793 Before the General Assembly Fin. Insts. & Ins. Comm., (December 9, 2010) at 15-16 (statement of Assemblyman Bramnick).]
Plaintiff claims that the Assembly sponsor said that the prevailing opinion in Fernandez II was "not what the legislature intended." In fact, the Assemblyman observed: "And this was a specific case, Fernandez, and if you read the opinion, the dissenting justices . . . all said, Look, this is not what the legislature intended." Hearings on A. 793, supra, at 4. Thus, he was merely summarizing the position of the dissenting justices. See Fernandez II, supra, 199 N.J. at 594 (Long, J., dissenting). He was not purporting to express in 2010 the legislative intent of a provision that had been enacted in 1983.
The Assemblyman was first elected to the General Assembly in 2003. http://www.njleg.state.nj.us/members/bio.asp?Leg=222.
Indeed, the Assembly sponsor went on to explain that "[s]imply because the statute when written and the regs as written somehow gave a preference to the insurance company" did not mean the amendment would disadvantage the insurance companies. Hearings on A. 793, supra, at 5-6. "It's just a quirk in the law that the Supreme Court has recognized should be addressed[.]" Id. at 7. These comments reflect the understanding of the Assembly sponsor, like the Senate sponsor, that the amendment was a change from the prior law.
In the absence of a clear expression of retroactive intent in the amendment's language or legislative history, plaintiff must show that such an intent must be implied. Implied retroactivity may be found if it is "necessary to make the statute workable or to give it the most sensible interpretation." Gibbons v. Gibbons, 86 N.J. 515, 522 (1981); see James, supra, 216 N.J. at 564. Here, the amendment is workable prospectively, and retroactivity is not the most sensible interpretation, as set forth below.
B.
"A statutory provision also may be afforded retroactive application if it is 'curative,' that is, designed to 'remedy a perceived imperfection in or misapplication of a statute.'" James, supra, 216 N.J. at 564. "[A]n amendment is curative if it does 'not alter the act in any substantial way, but merely clarifie[s] the legislative intent behind the [previous] act.'" Ibid. (alterations in original).
Here, the amendment altered in a substantial way N.J.S.A. 39:6A-9.1, which had been in operation for close to three decades. This statute was added by the New Jersey Automobile Insurance Freedom of Choice and Cost Containment Act of 1984, L. 1983, c. 362, the purpose of which "was to 'bring about long sought after reductions in premiums for New Jersey motorists.'" State Farm Mut. Auto. Ins. Co. v. Licensed Bev. Ins. Exch., 146 N.J. 1, 9, 14 (1996) (quoting Governor Thomas H. Kean's Statement to L. 1983, c. 362). "The legislative intent behind [N. J.S.A. 39:6A-9.1] was . . . reducing the cost of insurance for automobile owners [by] allowing automobile insurers to recover PIP" payments by seeking reimbursement from the insurers of non-PIP-covered tortfeasors, such as commercial vehicles or taverns. Ibid.
The statute was thus intended to "ensure that the cost of PIP benefits 'will be borne by . . . the individuals responsible for the injury who, in good conscience, ought to pay them.'" Id. at 14 (quoting Aetna Ins. Co. v. Gilchrist Bros., Inc., 85 N.J. 550, 568 n.2 (1981) (Sullivan, J., dissenting)); see Liberty Mut. Ins. Co. v. Selective Ins. Co., 271 N.J. Super. 454, 459 (App. Div. 1994) ("To shift financial responsibility to the wrongdoers' insurance providers ultimately shifts the costs to the wrongdoers themselves."). "'Allowing recoupment simply ensures that the private-passenger automobile insurers do not subsidize other insurers and that those savings are passed on to consumers - the same consumers the No Fault Law was designed to protect.'" Gov't Emps. Ins. Co. v. Cmty. Options, Inc., 420 N.J. Super. 546, 551-52 (App. Div.) (quoting Unsatisfied Claim & Judgment Fund Bd. v. N.J. Mfrs. Ins. Co., 138 N.J. 185, 205 (1994)), certif. denied, 208 N.J. 370 (2011).
Fernandez applied this legislative intent to the unfortunate situation where an accident caused damages and PIP payments totaling in excess of the tortfeasor's insurance coverage. Fernandez I "correctly" confirmed that "the insurer of the responsible party, and not the injured victim's insurer, was liable for the expense of PIP benefits for the victim." Fernandez II, supra, 199 N.J. at 593. Fernandez I was not a misapplication or an interpretative anomaly. Rather, it followed the rule established by Knox and David, which had been the settled interpretation of N.J.S.A. 39:6A-9.1 for more than a decade. Fernandez II, supra, 199 N.J. at 592. The Fernandez II dissent "recognize[d] that the panels in Knox and David reached a different conclusion." Id. at 599-600 (Long, J., dissenting). Fernandez merely "interpreted and enforced" the statute consistent with prior case law. James, supra, 216 N.J. at 572-73.
The amendment changed the result so the cost of PIP benefits would be borne by the victim's insurer, to avoid "diminish[ing] the total amount available to the victim from the tortfeasor's policy of insurance." See Fernandez II, supra, 199 N.J. at 593. The amendment thus departs from the statute's original legislative intent by shifting the cost of the PIP benefits it addresses from tortfeasors' insurers to victims' auto insurers. The amendment thus "did not cure a judicial misinterpretation of the law," but instead creates a different result "[b]ased on public policy considerations." See James, supra, 216 N.J. at 572-73.
Accordingly, the amendment was "not curative" for retroactivity purposes. Id. at 573. Presumably, the Legislature amended the statute to improve it, but "'[i]f this was all that was required in order to meet the curative exception, every amendment would automatically be subject to retroactive application and the exception would engulf the rule of prospectivity.'" Olkusz v. Brown, 401 N.J. Super. 496, 505 (App. Div. 2008). Such an interpretation would contravene "'the fundamental [principle] of fairness that new laws should not affect situations which predated them.'" Ibid.
C.
"The expectation of retroactive application should be strongly apparent to the parties in order to override the lack of any explicit or implicit expression of intent for retroactive application." James, supra, 216 N.J. at 573. Here, there is "no basis for concluding that the expectations of the parties justify retroactive application." See ibid.
Fernandez I was the governing legal principle at the time of the accident, as well as when plaintiff claimed and GEICO paid the PIP benefits. As noted previously, that principle had been applied for over ten years. Thus, when GEICO paid PIP benefits to plaintiff, the reasonable expectation was that GEICO could obtain reimbursement from the tortfeasor's insurer. If the amendment were to apply retroactively, GEICO would be irrevocably barred from recovering its PIP expenditures, to its detriment. See Innes v. Innes, 117 N.J. 496, 511 (1990).
Plaintiff cites the Fernandez II dissent's argument that the insurer "is entitled to reimbursement out of what should be Fernandez's recovery, the premium [for PIP coverage] was paid for the satisfaction of medical bills that was not provided." Fernandez II, supra, 199 N.J. at 599 (Long, J., dissenting). Plaintiff argues that such a result would be contrary to the expectations of auto insurance purchasers. Even if that had been plaintiff's expectation, such an expectation was contrary to the then-governing law, which authorized such PIP reimbursement. Where the insurer "had a reasonable basis to believe" that it had a right of reimbursement, while the "plaintiff's prospect for success was dependent upon overturning a published decision of this court," "it cannot be said that the reasonable expectations of the parties at the time of the accident favor retroactive application." See Olkusz, supra, 401 N.J. Super. at 506.
D.
Thus, none of the exceptions to the rule of prospective application apply. We therefore need not examine "'whether retroactive application of that statute will result in either an unconstitutional interference with vested rights or a manifest injustice.'" James, supra, 216 N.J. at 563. We hold that the 2011 amendment to N.J.S.A. 39:6A-9.1 must be applied prospectively.
E.
The parties also disagree whether it would be a retroactive application to apply the amendment to GEICO's request for reimbursement of the PIP payments it made for plaintiff. James ruled that "the new law did not retroactively alter . . . claims that arose before the legislation took effect." James, supra, 216 N.J. at 556; see Cruz, supra, 195 N.J. at 49. We must therefore examine when a claim arises for PIP reimbursement under N.J.S.A. 39:6A-9.1.
The statute sets two preconditions for a claim for reimbursement. The first precondition, the nature of the tortfeasor's insurance, is determined "at the time of the accident." Ibid. The second precondition is "paying [PIP] benefits," which by definition occurs before the victim's insurer can seek "to recover the amount of payments." Ibid. Once that second precondition is fulfilled, a claim accrues for reimbursement under the statute.
Indeed, the statute provides that the auto insurer's "right to recover the amount of [PIP] payments" arises "within two years of the [victim's] filing of the claim" for PIP benefits. N.J.S.A. 39:6A-9.1(a). Based on that language, we have held "that it is the [victim's] submission of the PIP claim form that triggers the two-year limitations period contained in N.J.S.A. 39:6A-9.1." N.J. Manufacturers Insurance Group/Garrison Lange v. Holger Trucking Corp., 417 N.J. Super. 393, 400 (App. Div. 2011); see N.J. Auto. Full Ins. Underwriting Ass'n v. Liberty Mut. Ins. Co., 270 N.J. Super. 49, 53 (App. Div. 1994) (holding "a formal demand for arbitration must be filed within two years of the filing of the PIP claim in order to satisfy N.J.S.A. 39:6A-9.1"). Furthermore, the timing of the filing of a PIP claim form approximates the timing of the payments made. GEICO therefore asserts that its cause of action for PIP reimbursement accrued when plaintiff submitted a PIP claim form to GEICO in August 2010.
Plaintiff instead argues that the claim accrued when GEICO filed its third-party complaint against the insurer of the L&J defendants on February 22, 2012, after the amendment's January 28, 2011 effective date. However, the statute "requires that the claims be resolved by intercompany agreement or arbitration." Martin v. Home Ins. Co., 141 N.J. 279, 288 (1995); N.J.S.A. 39:6A-9.1(a). The statute's goal was to require disputes to be settled by arbitration rather than by court actions between insurers. Unsatisfied Claim & Judgment Fund Bd., supra, 138 N.J. at 205-06; Fireman's Fund Ins. Co. v. N.J. Mfrs. Ins. Co., 341 N.J. Super. 528, 533 (App. Div. 2001). As a result, reimbursement suits between insurers "are relatively rare." State Farm Mut. Auto. Ins. Co., supra, 146 N.J. at 14-15. We decline to hinge the accrual of the claim on an unusual event the statute was designed to avoid.
Furthermore, by the time the victim's insurer files a complaint in court against the tortfeasor's insurer, the parties' rights and expectations have been fixed, as both statutory preconditions for the right to seek reimbursement were fulfilled when the victim's insurer made payment. Indeed, the insurer's payment of PIP benefits will usually be complete before a complaint is filed, because PIP benefits must be promptly paid. PIP payments are "overdue if not paid within 60 days after the insurer is furnished written notice" from the victim, which notice may be required "as soon as practicable after an accident" or "no later than 21 days following the commencement of treatment." N.J.S.A. 39:6A-5(a), (g). To change the statutory rules to bar recovery after the victim's insurer has made PIP payments defeats the expectations of the parties and threatens the injustice and interference with rights which prospective application is intended to avoid. We therefore reject plaintiff's argument.
Our dissenting colleague agrees that GEICO had a claim against One Beacon as of August 2010, but asserts that it did not have a right to be reimbursed until August 2012, when plaintiff settled with the L&J defendants. However, the statute provides that the auto insurer's "right to recover the amount of [PIP] payments" arises when the victim files the claim for PIP benefits. N.J.S.A. 39:6A-9.1(a). In any event, under James and Cruz, "we understand the Legislature's direction that the amendment take effect immediately to mean that [the amendment] will apply to claims that arise immediately after the effective date of the amendment to the Act." Cruz, supra, 195 N.J. at 49; see James, supra, 216 N.J. at 556.
Furthermore, the triggering event chosen by the dissent has no place in the statutory scheme. The statute provides that "the determination as to whether an insurer . . . is legally entitled to recover the amount of payments and the amount of recovery . . . against the insurer of the tortfeasor . . . shall be by agreement of the involved parties or, upon failing to agree, by arbitration." N.J.S.A. 39:6A-9.1(b). Thus, under the statute, intercompany arbitration decides any disputes over whether the non-PIP insurer's insured was a tortfeasor, whether the PIP insurer is legally entitled to reimbursement, and the amount of reimbursement. Fireman's Fund Ins. Co., supra, 341 N.J. Super. at 533; Nat'l Consumer Ins. Co. v. U-Haul of Cent. Pa., Inc., 340 N.J. Super. 358, 363 (App. Div.), certif. denied, 170 N.J. 87 (2001). Intercompany arbitration is independent of, and usually much faster than, an action brought by the victim. E.g., Fernandez II, supra, 199 N.J. at 595 (intercompany arbitration award preceded the plaintiff's settlement with the tortfeasor). Because the statute was designed to resolve these issues by intercompany arbitration without the need of any action by the victim, we cannot agree that a victim's settlement against the tortfeasor provides an appropriate or even workable effective date for the amendment.
In ascertaining the date the claim arises to trigger the statute of limitations, we determined that the statute's reference to "the claim" referred to "a single, definite event" for each accident, and that "the triggering event" was the victim's filing of a PIP claim form, rather than his first or last claim for PIP benefits. N.J. Mfrs. Ins. Grp., supra, 417 N.J. Super. at 397-401. For purposes of clarity and consistency, we hold the same event determines when a claim arises for PIP reimbursement.
Accordingly, we hold that, applied prospectively, the amendment applies when a victim's "submission of the claim form or application requested by the insurer" occurred on or after the amendment's effective date of January 28, 2011. See id. at 401. Here, the amendment is inapplicable because plaintiff submitted his PIP claim form, and indeed received all of his PIP payments, before the effective date of the amendment.
In N.J. Mfrs. Ins. Grp., we expressed concern that "that the policy in question and perhaps others like it do not require that an insured ever submit a PIP claim form; nor do the no-fault laws compel such a 'filing.'" Id. at 401. Thus, "the event we have assumed to be the triggering event for the time within which a reimbursement suit must be commenced may be something that, in many cases, may never occur." Ibid. In situations where payments have been made without the victim ever submitting a PIP claim form, the amendment shall apply if "the insured's first request for PIP benefits" occurred on or after January 28, 2011. See id. at 399.
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IV.
Plaintiff argues that GEICO's recovery of its PIP payments should be reduced by up to one-third to compensate him for his costs and attorney's fees in obtaining the settlement. Plaintiff cites statutes that explicitly permit such a reduction. E.g., N.J.S.A. 30:4D-7.1(b); N.J.S.A. 34:15-40(b). However, here N.J.S.A. 39:6A-9.1 provides for no such reduction, "and we are without power to include a provision that the Legislature omitted." Klumb v. Bd. of Educ., 199 N.J. 14, 34 (2009).
Plaintiff also argues that such a reduction is required by the equitable principles limiting subrogation. See Werner v. Latham, 332 N.J. Super. 76, 83 (App. Div. 2000). "Rather than reviving the difficulties of subrogation," however, the Legislature enacted N.J.S.A. 39:6A-9.1 to create "a new right of reimbursement that was primary and not linked to any purported subrogation right." State Farm Mut. Auto. Ins., supra, 146 N.J. at 9.
V.
GEICO's cross-appeal challenges the award of $5,200 in IC benefits. This issue is less substantial given our holding that GEICO can obtain reimbursement of its PIP payments under N.J.S.A. 39:6A-9.1, because PIP benefits include "income continuation benefits." N.J.S.A. 39:6A-4(b). After the trial court reached the same holding, it incorporated in its final order the parties' agreement that GEICO would be entitled to reimbursement for the $5,2 00 from the interpleaded funds, resulting in a "net wash"; that, because the court awarded IC benefits, GEICO owed plaintiff $1,000 in counsel fees; and that GEICO could appeal the IC benefits issue. Because deciding that issue determines whether the counsel fees were properly awarded, the appeal of the IC benefit issue is not moot. Zuckerman v. Nat'l Union Fire Ins. Co., 194 N.J. Super. 206, 211 n.1 (App. Div. 1984), aff'd, 100 N.J. 304 (1985).
IC benefits represent "[t]he payment of the loss of income of an income producer as a result of bodily injury disability." N.J.S.A. 39:6A-4(b). "'Income producer' means a person who, at the time of the accident causing personal injury or death, was in an occupational status, earning or producing income." N.J.S.A. 39:6A-2(d).
In Gambino v. Royal Globe Insurance Cos., 86 N.J. 100 (1981), the Supreme Court interpreted "income producer" broadly. "Rather than myopically focusing upon isolated segments of a person's existence or the details of an artificial and unnaturally narrow 'slice of life' in order to determine if that person has, on a particular day, produced income," the Court held that "recovery is available to those persons who, as part of their normal and prevailing way of life are gainfully engaged in work that generates income." Id. at 108-09. Accordingly, "all persons meaningfully and concretely engaged in or committed to an occupational way of life, one that regularly and normally involves working for pay, would be 'income producer[s]' entitled to benefits under the law." Id. at 109. The Court added:
Contrariwise, those individuals who, either by choice or disability unrelated to the accident, would not have desired or been capable of employment even if they had not been injured, may not recover. The completely retired, the unemployable and those who have never been or planned to be a part of the workforce or have permanently removed themselves from the ranks of the gainfully employed are excluded from coverage.
[Id. at 110.]
Thus, "the Supreme Court has defined an income producer as one who is part of the work force although not necessarily actively working at the time. It includes the unemployed as well as the employed — as long as they retain a substantial interest in employment." Langley v. Allstate Ins. Co., 206 N.J. Super. 365, 369 (App. Div. 1985). "The burden of establishing entitlement is on the plaintiff." Id. at 368. In Langley we found an eighteen-year old could be an income producer because "[h]is "successful graduation from high school and relatively prompt employment [until two months before his death] bespeak an intention to be part of the work force." Id. at 369.
Here, plaintiff had worked at six jobs, before and after his 2007 high school graduation, while attending college, and thereafter. He was employed in nineteen months of the twenty-two-month period of April 2007 through February 2009, after which he collected unemployment benefits of $700 per month. Though plaintiff was unemployed for the ten months preceding the accident, he testified he was actively seeking employment. Cf. Sikking v. Selected Risks Ins. Co., 210 N.J. Super. 229, 234 (Law Div. 1985), aff'd o.b., 217 N.J. Super. 569 (App. Div.), certif. denied, 108 N.J. 577 (1987). There was no evidence that he was retired, disabled, or unemployable, was no longer committed to an occupational way of life, or had permanently removed himself from the ranks of the gainfully employed. Cf. Funk v. Allstate Ins. Co., 169 N.J. Super. 226, 229 (Law Div. 1979), aff'd o.b., 172 N.J. Super. 458 (App. Div. 1980).
Of course, a claimant who establishes that he is an "income producer" within Gambino's broad definition must also show "the loss of income" as a result of the disabling accident. N.J.S.A. 39:6A-4(b). GEICO argues that plaintiff failed to prove the exact amount of his lost income. However, plaintiff alleges without contradiction that the accident left him partially paralyzed and in a wheelchair. "Mere common sense suggests that he lost some income resulting from this total inability to pursue his employment." Greenberg v. Great Am. Ins. Co., 158 N.J. Super. 223, 231 (App. Div. 1978), aff'd o.b., 79 N.J. 399 (1979). Nor is it difficult to imagine that, in the thirty-five months between the accident and the trial court's order, plaintiff's lost income could total $5,200, the limit under N.J.S.A. 39:6A-49(b). In any event, GEICO is not seeking a remand for a more precise calculation of an amount, which in any event will "wash out."
We affirm the trial court's orders in both appeals. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION
ASHRAFI, J.A.D., dissenting.
I respectfully dissent because N.J.S.A. 39:6A-9.1 as amended in 2011 should be applied in this case.
Plaintiff was injured in an automobile accident on December 16, 2009. GEICO, the automobile insurance carrier, paid the maximum amount of personal injury protection (PIP) benefits by August 20, 2010. On both those dates, N.J.S.A. 39:6A-9.1, as interpreted in Fernandez v. Nationwide Fire Insurance Co., 402 N.J. Super. 166 (App. Div. 2008), aff'd by an equally divided court, 199 N.J. 591 (2009), permitted GEICO to recover its PIP payments from the third-party tortfeasor's insurance carrier, One Beacon Insurance, even if plaintiff would be deprived of full compensation for all his damages from One Beacon's policy.
Whether or not the judicial interpretation of the statute was correct is irrelevant. The Legislature disagreed with that interpretation and amended the statute in 2011 to provide that the injured party's claim must first be resolved and paid before the auto insurance carrier is reimbursed from the tortfeasor's insurance policy. One fact that is absolutely clear from the majority's discussion of the legislative history and the language of the amending legislation is that the Legislature did not agree to any delay and wanted the amendment to be effective immediately, as of January 28, 2011.
The amendment simply re-ordered who as between the auto insurance carrier and the injured party must be compensated first once the liability of the tortfeasor's insurance policy is determined. Both GEICO and plaintiff had claims against One Beacon as of August 2010, but, even under the pre-amendment statute, neither had a right to be compensated until One Beacon agreed it was required to cover the claim or the tortfeasor's liability was established by judicial or other proceedings. In this case, GEICO's right to reimbursement did not exist until August 2012, when plaintiff and the tortfeasor settled plaintiff's claim. At that time, the amended statute was in effect, and it required that plaintiff's claim be paid before GEICO could be reimbursed from One Beacon's policy. The trial court was bound to apply the amended statute when it decided the summary judgment motions in March 2013. It should have placed plaintiff ahead of GEICO, as the Legislature intended.
James v. New Jersey Manufacturers Insurance Co., 216 N.J. 552 (2014), does not require a different result. There, the statutory amendment of N.J.S.A. 17:28-1.1 required reformation of existing insurance policies. Id. at 571. The Court reasoned that the parties' "legal obligations" under existing policies were fixed as of the date of the accident. Ibid. In addition, the three-part retroactivity analysis described in our case law, see Cruz v. Cent. Jersey Landscaping, Inc., 195 N.J. 33, 46 (2008); Gibbons v. Gibbons, 86 N.J. 515, 522-23 (1981), did not require application of the new statute to accidents that had occurred before the statute's effective date. James, supra, 216 N.J. at 571-74.
Despite holding that the new legislation would not apply retroactively to prior accidents, id. at 574-75, the Court in James did not conclude that the amended statute would apply prospectively in all respects. The Court held the new statute, N.J.S.A. 17:28-1.1(f), would apply partially retroactively to existing insurance policies, albeit only on their coverage for future accidents. James, supra, 216 N.J. at 568-69, 571-72, 574. The insurance carriers that had issued existing policies had no opportunity to revoke those policies or to modify their coverage for future accidents that would be compensated under the terms of existing policies issued on the basis of prior law.
Here, application of the 2011 amendment of N.J.S.A. 39:6A-9.1 is less disruptive of contractual arrangements between insurance carriers and the insured. The amendment requires no reformation of existing policies and brings about no change in the GEICO policy and its coverage.
Moreover, as previously stated, at the time of the accident in 2009 and the PIP payments in 2010, there had been no determination of GEICO's "legal entitle[ment]" to reimbursement — to use the phrasing of the pre-amendment N.J.S.A. 39:6A-9.1. GEICO only gained that legal entitlement when One Beacon agreed to pay its policy limit in August 2012. Because the amendment in this case, unlike that in James, affected only the relative rights of plaintiff and GEICO to be paid first, the relevant event for purpose of applying the 2011 amendment was the coming into existence of each party's right to compensation, not just each party's claim against One Beacon.
The statements of the Senate and Assembly sponsors of the amending bill, which are quoted in the majority opinion, ante at ___ (slip op. at 11-12), leave no doubt in my mind of a clear expression of legislative intent to apply the amendment to claims that had not yet been resolved and paid as of January 28, 2011.
Furthermore, the amendment was "curative" in that it "clarified the legislative intent behind" the previous version of the reimbursement statute. See James, supra, 216 N.J. at 564 (quoting 2nd Roc-Jersey Assocs. v. Town of Morristown, 158 N.J. 581, 605 (1999)). It corrected, from the Legislature's point of view, the judicial interpretation of the reimbursement statute that placed the PIP insurer ahead of the injured party.
Finally, applying the amended statute does not deprive GEICO of any vested right, or of any expectation that is legally significant in a retroactivity analysis. GEICO had no choice but to pay the PIP benefits when plaintiff became entitled to them, whether or not GEICO would be reimbursed for those payments. GEICO could not adjust its actions in making the PIP payments based on the state of the law that applied to its right of reimbursement. The right of reimbursement was controlled by the statute, and the statute was subject to amendment. Just as judicial decisions can affect rights and liabilities after the relevant events have already occurred, legislative enactments can similarly enhance or diminish rights and liabilities. "In a highly regulated industry, such as insurance, businesses have no contractual expectation that a naturally fluid regulatory scheme, subject to change at any time, will remain in an unalterably fixed state." Id. at 569 (quoting Farmers Mut. Fire Ins. Co. v. N.J. Prop. Liab. Ins. Guar. Ass'n, 215 N.J. 522, 547 (2013)).
I dissent because the Legislature has spoken clearly regarding its intent that N.J.S.A. 39:6A-9.1 as amended should apply after January 2011. The trial court should have ordered that plaintiff be paid from the fund deposited into court before GEICO is reimbursed for its PIP payments. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION