Insurance Carrier Barred From Seeking Reimbursement of PIP Benefits After Failing to Demand Arbitration Within 2 Years

By: Gina M. Zippilli, Esq.

Personal Injury Protection insurance (“PIP”) is part of New Jersey’s no-fault motor vehicle insurance system and is the primary source of coverage for the medical bills of people injured in motor vehicle collisions.  New Jersey requires motorists to carry PIP as part of their motor vehicle insurance policy. The no-fault legislation from which PIP derives is designed to provide a minimum amount of protection to the public for injuries caused by automobiles.  In New Jersey, PIP carriers have no subrogation rights against tortfeasors who injure their insureds.  Under certain circumstances though, they have a direct statutory right of action to be reimbursed for benefits paid.  The time and method by which to do so is limited and specific, however.  This was the lesson unfortunately learned the hard way in Artwell v. Sea Scape Landscaping, LLC, 2014 N.J. Super. Unpub. LEXIS 679, a case decided on March 27, 2014.

The facts in Artwell are simple.  Artwell was a passenger in a parked car that was struck by a commercial vehicle.  In January 2010, Artwell, who had suffered injuries in the collision, submitted a PIP claim to her insurance carrier, Metropolitan.  The next month, Metropolitan wrote to Farm Family, the carrier for the commercial vehicle, inquiring as to the status of reimbursement.  Farm Family immediately denied coverage, which resulted in Metropolitan informing Farm Family of its right to reimbursement under the provisions of the NJ No-Fault PIP law.  That correspondence went unanswered.  In December 2011, Artwell sued both carriers.  In April 2012, more than two years after Artwell first submitted her PIP claim to Metropolitan, Metropolitan answered the complaint and asserted a cross-claim for reimbursement against Farm Family. Farm Family ultimately settled its claim with Artwell and raised the statute of limitations as a defense to Metropolitan’s reimbursement claim.

As properly noted by the Appellate Division, the PIP statute provides two, and only two, means of securing reimbursement for PIP payments: agreement between the parties and arbitration.  The statute further provides that an insurer has within “two years of the filing of the claim” to recover payments.  The Artwell court made clear that the statute begins to run from the date of filing of the formal PIP application, which in this case was January 2010.  Equally important, the court reinforced that that a formal request for arbitration was required.  Thus, the letters to Farm Family were insufficient and Metropolitan’s cross-claim, which would have been construed as a formal demand, was filed outside the two year period.