The evolution of transportation from the horse and buggy to the automobile did more than revolutionize our mode of travel. It fueled and accelerated bodily injury claims as the demolition derbies continue on our public streets and highways. State legislatures have attempted to deal with the crush of auto-related litigation by passing varioius “no fault” schemes designed to reduce the number of lawsuits for minor, soft tissue injuries in return for the prompt payments of the injured party’s medical bills under PIP.
New Jersey is no different. Its latest version of a tort limitation was modeled on the New York statute that required a “serious injury” as a condition to suit. Known informally as the “verbal threshold,” the New Jersey statute bars suit for injuries sustained in an automobile accident unless the plaintiff falls into at least one of six categories of injury. Unlike New York’s statute, the policyholder makes an election at the time he purchases an auto policy: in exchange for a higher premium, he is not subject to the verbal threshold. Most policyholders select the limitation to suit and pay a lower premium. What happens if an out of state driver gets in an auto accident in New Jersey? What if both drivers are from out of state? Is the plaintiff subject to New Jersey’s verbal threshold in either situation?
In Zalilowicz v. Kelsey, both plaintiff and defendant were out of state drivers from Pennslyvania. Under the New Jersey No Fault scheme, a plaintiff is subject to the tort limitation unless a specific selection is made when he purchases his policy. However, the Deemer statute provides that an out of state driver is presumed to have selected the tort limitation if his insurer is authorized to underwrite insurance in the state of New Jersey. Simple enough if the plaintiff has an accident with a New Jersey driver. What about if both the plaintiff and defendant are from out of state?
The New Jersey Supreme Court held that the defendant does not get the benefit of the limitation-on-lawsuit where the defendant is from out of state and his insurer is not admitted in New Jersey. The Supreme Court reasoned that since such a nonresident driver is not eligible for PIP/No Fault benefits because his insurer is not admitted in New Jersey — and not subject to the Deemer Statute– then he does not get the benefit of the tort limitation. According to the court, if the defendant’s insurer is not part of the No Fault scheme for PIP purposes, he’s outside the statute for all purposes including the ability to use the tort threshold as a defense. Of interest, the Supreme Court almost invited the legislature to close this loophole and cited language that would achieve that goal.
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