Governor Murphy Signs Bill into Law Re-Opening the Doors to Excess Medical Expenses at the Time of Trial with Some Limitations

On August 15, 2019, New Jersey Governor Phil Murphy signed Senate Bill S2432, which overrules the New Jersey Supreme Court opinion in the consolidated matters of Haines v. Taft/Little v. Nishimura, in which the Court held that plaintiffs could not seek to board medical expenses at trial as part of their damages for amounts less than the the standard PIP limit of $250,000, even if they selected a minimum PIP limit of $15,000. 

Effective immediately, under Senate Bill S2432, plaintiffs can now board their medical bills at the time of trial to that extent that they exceed their applicable PIP limit, whether it is $250,000 or something less.

The legislation adds:

All medical expenses that exceed, or are unpaid or uncovered by any injured party’s medical expense benefits personal injury protection limits, regardless of any health insurance coverage, are claimable by any injured as against all liable parties, including any self-funded health care plans that assert valid liens.

In the “Governor’s Statement Upon Signing for Senate Bill No. 2432 (First Reprint) and Senate Bill No. 3963,” Governor Murphy states  this clause in Senate Bill No. 2432 appears to undermine the state’s collateral source rule.   The collateral source rule stands for the proposition that plaintiffs are not entitled to get paid twice for expenses that were previously paid for by another source (i.e., health insurance) for which they are not legally required to pay back.   Governor Murphy takes the position that in conjunction with Senate Bill No. 3963, the law is clear that the collateral source rule still applies to automobile cases because the above-mentioned provision in Senate Bill no. S2432 was omitted from Senate Bill no. S3963.   So the bottom line is although a plaintiff can board medical expenses above the PIP limit, the expenses are subject to post-verdict reduction if the plaintiff is not required to pay them back.

The bill left untouched a plaintiff’s case law requirement to prove the amounts of the medical expenses billed are reasonable.   The NJ PIP fee schedule would by default constitute evidence of a reasonable amount, but the legislature and governor apparently chose not to limit plaintiffs to the PIP fee schedule amounts.

Senate Bill no. S2432 takes effect immediately and applies to all causes of action pending as of August 15, 2019 or filed after August 15, 2019.   Read in conjunction with Senate Bill No. S3963 (discussed below), it appears that claims governed by Senate Bill No. S2432 apply to all claims pending (i.e. in suit) on August 15, 2019 and also those arising from a motor vehicle accident date up to and including July 31, 2019.  

Now onto the companion bill, Senate Bill No. S3963:

All provisions in this bill apply to claims arising from motor vehicle accidents taking place on or about August 1, 2019.

First the statute provides allows plaintiffs to make claims for

….all unreimbursed medical expenses not covered by the personal injury protection limits applicable to the injured party and sustained by the injured party, including the value of any deductibles and copayments incurred through a driver’s secondary insurance coverage and medical liens asserted by a health insurance company related to the treatment of injuries sustained in the accident. ….

Second, all unpaid medical bills are limited to the amounts set forth in the NJ PIP fee schedule.   But remember the amounts of any paid bills would be limited to the amounts paid for by the third-party payer, i.e., Medicaid, Medicare, and self-funded ERISA plans and the plaintiff’s co-pays and deductibles.

Third, for unpaid bills, the plaintiff-patient cannot be balance-billed by the provider for amounts exceeding the PIP fee schedule.

Fourth, the attorneys suing for medical expenses only “shall be entitled to reasonable and necessary attorneys’ fees incurred by the prevailing claimant in the collection of such medical expenses.”   “Prevailing claimant” is undefined but would likely mean to the point of obtaining a judgment against the defendant. 

So, if you’re an insurer or litigator and you have unpaid medical expenses, you will need to retain a vendor who can apply the NJ PIP fee schedule to any unpaid bills.  

It is still possible that the insurance industry will respond to this legislation by stopping the issuance of the small PIP premium amounts and reverting back to the standard $250,000 amount.

Frank Caruso is a partner with the firm in its General Liability department.  Please feel free to contact him at (732) 545-4717 or fcaruso@hoaglandlongo.com with any questions or issues.