Claims

Plaintiff Christopher Ricciardi sued Allstate Insurance Company for underinsured motorist (UIM) coverage.  He was injured in a January 15, 2017 collision with an underinsured motorist while driving his brother’s pickup truck during their move to Florida.  Allstate insured his brother’s pickup truck.  Plaintiff had a personal vehicle insured by GEICO.  The issue in Ricciardi v. Allstate Insurance Co., 2021 N.J. Super. Unpub. LEXIS 2565 (App. Div. Oct. 27, 2021) was whether the plaintiff was entitled to UIM coverage under his brother’s policy as a resident relative. 

The motorist that collided with the pickup truck had a $50,000 bodily injury policy, which was tendered by the driver’s insurance carrier to the plaintiff.  However, the plaintiff sought coverage as a resident relative under his brother’s Allstate policy, which provided up to $250,000 UIM coverage.  Plaintiff had a personal vehicle which was insured by GEICO, which limited UIM coverage for bodily injury claims to $25,000.

Hence, there would not be any UIM coverage available to the plaintiff under his personal policy because the tortfeasor’s policy exceeded his UIM policy limits.  Therefore, the plaintiff pursued his brother’s policy for the higher UIM benefits of $250,000. 

At the time of the accident, the plaintiff and his brothers were en route to Delray Beach, Florida, to move into a new apartment with their lease starting that same day.  For the three months prior to the move, they had lived together in their parents’ Scotch Plains, New Jersey home.  Before moving into his parents’ home, the plaintiff had resided for several years in Brooklyn, New York with his girlfriend.  His driver’s license and the GEICO policy were issued in New York State. 

In response to plaintiff’s claim for UIM coverage, Allstate denied coverage.  It asserted that plaintiff was a non-resident operator of its insured’s vehicle and, thus, its policy’s UIM limits would “step down” to the mandatory minimum specified by the laws of New Jersey, i.e. $15,000.  Allstate had previously denied plaintiff’s claim for personal injury protection benefits, asserting that plaintiff’s GEICO policy was primary.

Nevertheless, plaintiff filed this lawsuit against Allstate, seeking a declaration that he qualified as a “resident relative” of his brother’s household and he should be entitled to UIM benefits from Allstate.  After motion practice, the trial court judge ultimately agreed with Allstate.   

Allstate provided the language in its policy concerning UIM limits, which provided coverage of $250,000 to the named insured or resident relative but not one who is the named insured on another policy.  For someone who was a named insured on another policy, it would only provide $15,000 of coverage.  Because plaintiff was the named insured on his own GEICO policy, Allstate argued that his claim clearly fell within the $15,000 UIM coverage limits.

There was some issue as to the plaintiff’s intention as to his residence and whether he qualified as a resident relative.  However, upon appeal, the Appellate Division noted that “even assuming plaintiff qualified as a resident relative under the Allstate policy, he was not entitled to UIM coverage because he was insured under his own automobile policy.”  The UIM step-down provision was clear and unambiguous.

While the litigation had focused on the residency defense and the Court conceded that Allstate could have pursued its defense that plaintiff’s GEICO coverage precluded full UIM coverage under the step-down provision of Allstate’s policy much sooner, that did not preclude the order for summary judgment in favor of Allstate.

The Appellate Division noted that Allstate had notified plaintiff as early as the day after the accident that it denied his PIP claim because plaintiff was covered by his GEICO policy. Although Allstate had not disclaimed coverage specifically under the step-down provision, in its Affirmative Defenses, it pled the UIM statute and specifically asserted plaintiff was insured by GEICO in its answer to plaintiff’s interrogatory regarding the factual basis for its Affirmative Defenses.

Accordingly, the Appellate Division upheld the trial court’s ruling that plaintiff was not entitled to UIM coverage under the Allstate policy as a resident relative.

This matter arises from an automobile accident on December 21, 2016 when the decedent, Joseph Chandler, was struck by an automobile driven by defendant Todd Kasper.  The decedent suffered significant injuries and passed away six days later.  The decedent’s daughter, Damaris Chandler, obtained an appointment as Administrator Ad Prosequendum but was not appointed as General Administrator of her father’s estate until December 2020.  The issue in Chandler v. Kasper, 2021 N.J. Super. Unpub. LEXIS 2412 (App. Div. Oct. 7, 2021) was whether the Survivors’ Act claim was barred because there was no estate established before the statute of limitations ran. 

Just prior to the statute of limitations running as to the decedent’s and his heirs’ claims, on December 18, 2018, the decedent’s daughter, plaintiff Demaris Chandler, filed a complaint as Administrator Ad Prosequendum of her father’s estate.  The plaintiff sued the motor vehicle driver Todd Kasper, the owner of the vehicle Thomas Kasper, and Kazz, Inc., d/b/a Kasper’s Corner and Kasper Automotive. 

The complaint alleged that Joseph Chandler died intestate and that plaintiff had been appointed as his Administrator Ad Prosequendum.  The First Count pled a claim under the Survivor’s Act for the personal injuries and pain and suffering the decedent suffered prior to his death.  The Second Count asserted a wrongful death action in which his survivors and next of kin claimed entitlement to damages.

The defendants asserted as an affirmative defense that the plaintiff’s claims were statutorily barred under both the wrongful death statute and the Survivor’s Act.  After the parties conducted discovery, the defendants filed a motion for summary judgment, seeking dismissal of the Survivor’s Act claim because plaintiff lacked standing to bring that claim as letters of general administration had never been issued to her. 

Plaintiff opposed that motion, explaining that there was a delay in her being able to seek appointment due to disagreements between her and her siblings.  Moreover, from her discussions with representatives of the county surrogate’s office that, because there were no assets in the estate, it was only necessary for her to be appointed as Administrator Ad Prosequendum to file the lawsuit and later be appointed as General Administrator to distribute any recovery.  Only when the defendants made a small offer at mediation to settle the case in August 2020 was she able to persuade her siblings to agree to her appointment.  It was not until December of 2020 that plaintiff’s siblings renounced and allowed her to proceed to seek letters of administration.  (That appointment was well after the statute of limitations had run on the Survivor’s Act claim.)

At the trial court level, the judge denied the defendants’ motion for summary judgment. Essentially, he found that there was a defect in the plaintiff’s standing but that it would be inequitable to deny a party their day in court because of ignorance and the defendants’ argument was essentially at best a “technical argument.”  He found that the statute of limitations defenses should not be permitted where a mechanical application would inflict an obvious and unnecessary harm on the party who holds the claim.  Moreover, the judge pointed out that the parties participated in an arbitration and discovery for years without defendants raising any issues as to standing.  While there was a defect in standing, the judge did not find that it mandated the sanction of dismissal.

The defendants appealed this ruling to the Appellate Division on an interlocutory basis.  On appeal, the defendants “challenged the judge’s legal conclusion that despite the running of the statute of limitations plaintiff should be allowed to amend the complaint to relate back to its initial filing.” 

The Appellate Division noted that there was an important distinction between the wrongful death action and the Survivor’s Act action.  The Court noted that the former belonged to the individual survivors of the decedent and the latter belonged only to the decedent’s estate.  The Survivor’s Act preserves to the decedent’s estate any personal claims that decedent would have had if he or she would have survived but permits “only an executor, assuming on behalf of an estate, to recover the damages the testator would have had if the testator was living.”  The Court pointed out that a wrongful death action, on the other hand “must be brought in the name of an Administrator Ad Prosequendum of the decedent for whose death or sought, or by an executor where the decedent’s will has been probated.”  The recovery for a wrongful death action belongs to the decedent’s heirs.

Based upon the Survivor’s Act statute and the wrongful death statute, the Administrator Ad Prosequendum is the proper party to bring a wrongful death action but a General Administrator is the proper party to institute a survival action.  Further, the Survivor’s Act includes a provision which tolls a statute of limitations for 6 months following death on a claim belonging to a decedent with the purpose to provide executors and administrators with a limited period of time after death to evaluate potential claims available to the estate. 

The Appellate Division disagreed with the motion judge’s determination that the complaint in this matter could have been amended to correct what was obviously plaintiff’s lack of standing to bring the survivor’s action in her capacity as Administrator Ad Prosequendum.  The Court noted that her reasons for not pursuing letters of general administration “are of no moment.”  The filing of the complaint prior to the establishment of an estate was a “nullity.” 

The Court pointed out that any delay caused by a dispute among the heirs of siblings “could have been avoided with the filing of an appropriate probate action long before the statute of limitations expired for the filing of the Survivor’s Act claim.”  The Appellate Division found that the “plaintiff did not have that legal right as to the Survivor’s Act action at the time the complaint was filed and did not acquire it until after the statute of limitations had run on the estate’s claim under that act.”  Even though the defendants had notice of the claim through service of the original complaint, “that pleading remained a nullity and could not have been asserted once the statute of limitations had run.” 

The Court further noted that while it appreciated that the motion judge endeavor to obtain an equitable result, the “governing law simply does not authorize it.”  Hence, the Appellate Division reversed the trial court’s decision and remanded for an entry of an order dismissing the Survivor’s Act action count of the complaint.

Palisades Insurance Company (“Palisades”) filed a claim for reimbursement against Horizon Blue Cross Blue Shield of New Jersey (“Horizon”) to obtain recoupment for health insurance benefits it paid to 4 insureds who were involved in automobile accidents and received treatment.  Palisades contended that it made those payments in error because the insureds had designated Horizon as the primary for payment of medical expenses incurred as a result of an automobile accident.  In Palisades Insurance Co. v. Horizon Blue Cross Blue Shield of New Jersey, 2021 N.J. Super. LEXIS 104 (App. Div. July 27, 2021), the plaintiff Palisades argued upon appeal that it should be entitled to be reimbursed for the health insurance expenses it paid under its personal injury protection (PIP) coverage for its insureds which should have been paid by the insureds’ health insurance carrier.

Pursuant to N.J.S.A. 39:6A-43(d), plaintiff (Palisades) allows its customers to designate their health insurance company as primary for payment of medical expenses incurred as a result of an automobile accident.  In this case, plaintiff’s insureds had opted to designate the defendant Horizon to provide medical coverage on a primary basis.  Each insured was involved in an automobile accident in which they received treatment.  Despite the designation, each insured and/or their provider requested payment of their medical expenses from Palisades.  With three of the insureds, Palisades sent a letter notifying Horizon that its subscribers had submitted expenses related to injuries suffered during motor vehicle accidents, and under the terms of their policies, Horizon was the primary provider of medical benefits.  Palisades requested confirmation that it would process the claims.  After Horizon failed to respond to the letters, Palisades voluntarily paid the claims of these three the insureds.

In the fourth case involving one of the insureds, Palisades began payment upon receipt of the claim.  Subsequently, it realized that the insured had selected the health care carrier as a primary designation on their automobile policy.  In that case, the insured requested confirmation from Horizon that it would provide primary coverage for their automobile accident related injuries.  Horizon responded with a letter indicating that their insured’s contract permitted only secondary coverage for PIP eligible expenses.  That prompted the fourth insured’s medical provider to send Palisades a letter, requesting that the insured’s coverage designation be changed to PIP’s primary.  Palisades then began to provide primary coverage for the remaining expenses.

Palisades filed a lawsuit requesting reimbursement under a theory of subrogation for the medical expenses it paid on behalf of these insureds.  The defendant Horizon filed for a summary judgment to dismiss the lawsuit. 

On the trial court level, the defendant Horizon argued that the statutory and regulatory schemes which govern the payment of automobile accident-related expenses amongst PIP and health insurers, do not provide any right of recovery to PIP insurers that voluntarily pay claims for which they are not liable.  Plaintiff Palisades contended that the payments were not voluntary because they were made only after its request for confirmation that the insureds held policies with the defendant health insurance carrier and that request went unanswered.  Plaintiff argued that the summary judgment was improper because it was in dispute whether the defendant Horizon properly processed their claims.  The trial court judge granted defendant’s motion for summary judgment, ruling that subrogation did not exist as to PIP–to health insurer reimbursement claims and dismissed the complaint with prejudice.

The plaintiff Palisades appealed that ruling and argued that the judge made a mistake in concluding that there was no subrogation right.  While it acknowledged that the automobile statute “does not expressly permit inter-company reimbursements amongst PIP and health insurers,” it contended that “the insurance industry has developed a practice, which defendant refuses to honor, of voluntarily providing reimbursements when overpayments are made.”  Further, Palisades argued that the No-Fault Act “simply does not contemplate a situation where a health insurer refuses to acknowledge or address a dispute,” Palisades argued that this situation puts PIP insurers “between a rock and a hard place in that PIP providers are subject to penalties if prompt payments are not made.”  Finally, the plaintiff argued that the No-Fault Act does not preclude health insurance–to-PIP reimbursement and it should be permitted to proceed with its claim.

After reviewing the statute and pertinent regulations, the Appellate Division noted that No-Fault requires PIP insurers to make prompt payment of claims.  However, if a PIP insurer provides secondary coverage, the duty to provide primary coverage arises only after it has received notice that the health insurer has determined it will not act as the primary.  When a PIP-as-secondary insurer receives a claim eligible for primary coverage, the Appellate Division noted that it must deny coverage and send the insured a notice advising them to submit the claim to their health insurer.  Health insurers are also required to make prompt payments of claims.  They are required to pay claims within thirty (30) calendar days of receipt if submitted electronically or forty (40) calendar days as submitted by other means.  However its duty to pay does not arise until it has received a claim directly from the insured or a healthcare provider.

The Court noted that reimbursements of payments incorrectly made by auto carriers are permitted by inter-company agreement or arbitration amongst PIP insurers.  However, the Appellate Division stated that health insurers are not subject to PIP arbitration.  Therefore, the No-Fault statutes do not provide an enforcement mechanism that PIP carriers may use against health insurers.  However, the regulatory scheme “depends upon PIP insurers to deny claims falling under primary coverage, in order to notify the healthcare providers that the expenses must be submitted to the health insurer for payment.”  The Appellate Division noted that “[w]hen a PIP carrier voluntarily pays a claim it is only secondarily liable for the [Commissioner of Banking] scheme breaks down, in that the provider remains unaware that the claim was improperly submitted, removing any incentive for the provider to pursue the health insurer.”

More specifically as to the claims of the insureds in which the plaintiff did not receive any response from the health insurer as for coverage, nothing under the No-Fault or Commissioner of Banking laws required the health insurer to respond, or process the alleged claims, until they were properly submitted.

As for the fourth insured in which the plaintiff did receive notice that the healthcare provider was not acting as the primary insurer, the plaintiff Palisades did become obligated to provide primary coverage despite the insureds designation as its health carrier as primary.  The Appellate Division ruled that its recourse “is not reimbursement from defendant, rather, it is to recover the premium reductions the insured saved as electing health as primary on their auto policy.”  The Court further noted that “[i]f plaintiff believed that defendant unreasonably denied coverage, it could have requested that this insured pursued defendant’s internal appeals process, or obtained an assignment of rights from the insured and pursued the appeal itself.” 

The Appellate Division noted that, instead, the plaintiff’s PIP carrier simply paid the claim. However, it has failed to establish any right of subrogation.  It has not provided an assignment of rights executed by its insured, nor is there any statutory right to subrogation under the No-Fault laws.  It may seek reimbursement from the healthcare providers that it paid out of turn or it must obtain an assignment of its insureds’ rights.  The Appellate Division ruled, however, that the PIP carrier may not recover the funds it paid toward expenses eligible for primary coverage directly from the health insurance carrier.

The bottom line is that the Appellate Division ruled that there is no cause of action for subrogation which allows a PIP carrier to pursue a health insurance carrier for reimbursement for claims mistakenly paid by it for injuries suffered in an automobile accident.