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A pair of bills aimed at helping injured motorists recover medical costs was signed into law by Gov. Phil Murphy, effectively overturning the state Supreme Court’s March 2019 ruling in Haines v. Taft.

The first piece of legislation, S-2432, allows injured victims of motor vehicle accidents to seek payment for medical expenses due to the negligent or reckless actions of another driver when those expenses exceed their insurance policies under personal injury protection (PIP) coverage.

The legislation effectively overturns the March 26 decision of the New Jersey Supreme Court in Haines, where the court ruled that a party to an automobile accident may not recover unreimbursed medical expenses in excess of the party’s PIP policy limits from the other driver.

Recognizing that a plausible reading of the state’s no-fault insurance laws could permit such a recovery, the court “invited” the Legislature to clarify the statutory language at issue if lawmakers disagreed with the court’s decision.

S-2432 defines “economic loss” in the New Jersey Automobile Reparation Reform Act (otherwise known as the “no-fault law”) to include uncompensated medical expenses.

“Today’s action overturns a previous Supreme Court ruling which prohibited motor vehicle accident victims from recovering their medical expenses from the defendants that caused those accidents,” Murphy said in the Aug. 15 signing statement.

Sen. Nicholas P. Scutari, D-Middlesex, prime sponsor of S-2432 and chairman of the Senate Judiciary Committee, said in a separate statement: “Today’s action is a clear win for consumers and accident victims in New Jersey allowing them to be made whole if injured by the negligence of others.”

Scutari said the new law will permit a party injured in an automobile accident to recover, as part of the recovery of uncompensated economic loss, all medical expenses that exceed, or are unpaid or uncovered by, any injured party’s automobile insurance medical PIP coverage, regardless of any health insurance coverage.

The no-fault law requires every standard automobile insurance policy to provide PIP coverage, but the amount can range from the minimum of $15,000 up to $250,000 per person per accident.

The default option for standard coverage is $250,000, and drivers must elect to carry less if they so choose. The law also allows basic policies where drivers have a PIP limit of $15,000.

The bill takes immediate effect and applies to causes of action pending as of Aug. 15.

The second piece of legislation, S-3963, revises the law concerning recovery of unreimbursed medical expenses as economic loss in civil actions for damages arising from an automobile accident. Scutari also sponsored this bill. It permits the injured person to recover all unreimbursed medical expenses not covered by his or her own PIP limits. It goes into effect immediately and applies to accidents that occurred on or after Aug. 1.

Murphy said in a release, “I applaud the sponsors of this bill for acting quickly to clarify the state’s laws with regard to the recovery of unreimbursed medical expenses,” adding that the bills “will ensure that low-income drivers, who must settle for lesser PIP coverage options because they cannot afford better coverage, will not be denied the ability to recover their unreimbursed medical expenses from those who caused their injuries.”

The governor said his signing of S-3963 immediately follows that of S-2432 because of his pending concerns with the first bill.

“Although I fully support the immediate reversal of the Haines decision, Senate Bill No. 2432 contains a problematic provision that allows for the recovery of all medical expenses unpaid or uncovered by an injured party’s PIP coverage, including expenses otherwise paid for through health insurance coverage,” the governor said. “This provision appears to undermine the state’s collateral source doctrine, which helps contain the cost of automobile insurance by preventing plaintiffs from recovering damages already paid by another source.”

Added Murphy: “The Legislature’s inclusion of this provision is surprising, as it is unrelated to the bill’s core mission of overturning the court’s decision in Haines. After my administration expressed concerns to the sponsors of Senate Bill No. 2432 that this provision could have a negative impact on automobile insurance rates, the Legislature worked collaboratively with my administration to draft and pass Senate Bill No. 3963.”

Murphy said S-3963 “omits the offending language contained in the prior bill, making clear that the collateral source doctrine still applies to automobile cases.”

In addition, he said S-3963 further protects drivers and contains insurance premium rates by subjecting unreimbursed medical expenses in excess of a driver’s PIP policy limits to the automobile medical fee schedules. The bill also prohibits balance billing of any medical expenses claimed as damages and paid pursuant to the medical fee schedules.

“Together, the two bills adequately protect drivers while ensuring that automobile insurance premium rates remain steady,” Murphy said.

Supporters say S-2432 remedies the state Supreme Court’s ruling that left injured victims of auto accidents with large medical bills and no legal recourse against the tortfeasor.

“The New Jersey Association for Justice and the injured victims of auto accidents our members represent thank Gov. Murphy for signing this important consumer protection bill into law,” said president Kevin M. Costello in a release. “The decision in Haines v. Taft would have left innocent victims of auto accidents with crushing medical bills and no legal right to sue negligent and reckless drivers for recovery of their medical expenses.”

Costello said Haines upended more than 15 years of legal precedent by preventing accident victims who purchased auto insurance policies with limited PIP coverage from being able to seek recovery for their medical expenses above their policy limit.

In Haines, the Supreme Court ruled in a 3-2 decision that motorists who opt for the $15,000 PIP minimum cannot recover medical expenses exceeding that amount.

The justices found no evidence that the Legislature, when it amended the Automobile Insurance Cost Reduction Act to allow motorists to elect smaller amounts of medical coverage, intended to depart from the first-party PIP system.

To rule otherwise would be a return to fault-based suits consisting solely of economic damages claims for medical expenses in excess of an elected, lesser level of PIP coverage, which is not what lawmakers intended, the court said. The ruling reversed an Appellate Division decision that allowed plaintiffs Joshua Haines and Tuwona Little, each involved in an auto accident, to recover medical expenses exceeding their $15,000 PIP limits.

Haines and Little each filed personal injury claims. In each case, the record indicated the plaintiffs’ medical expenses were not subjected to any detailed review to determine if they were reasonable and necessary, the justices said.

A trial court ruled against the plaintiffs in each case and prohibited them from admitting evidence of their medical expenses exceeding their $15,000 limits.

Haines and Little each appealed. The Appellate Division reversed both trial court rulings. The panel ruled that admission of medical expenses above an individual’s PIP policy limit, but below the $250,000 PIP ceiling, was not barred by the statute governing PIP coverage.

Justice Barry Albin, in his dissent, said the majority opinion mandated that “the innocent insured must bear the financial burden caused by the irresponsible wrongdoer.” Albin called on the Legislature to address the inequity created by the ruling and clarify its intent.

“S-2432 did just that by clarifying that the Legislative intent is that a victim injured in an auto accident should not be left with crushing medical bills and no legal recourse against the tortfeasor,” said the New Jersey Association for Justice in the same release.