Sep 29, 2021

September 2021 Client Litigation Alert

By Brian R. Lehrer, Esq.

A. Personal Injury Protection Reimbursement – No Reimbursement for Mistaken Payments

In a case involving the interplay between responsibility for payments for automobile related injuries, the Appellate Division recently held that a personal injury protection carrier who voluntarily makes payments where the health carrier is designated primary, does not have a right of reimbursement from the health carrier. Palisades Insurance Company v. Horizon Blue Cross, - N.J. Super. – (App. Div. 2021).

Plaintiff, Palisades Insurance Company, insured various persons who were injured in automobile accidents. Pursuant to N.J.S.A. 39:6A-4.3(d), plaintiff allowed them to designate their health insurer as primary for payment of medical expenses.

Despite the designation, each person sought payment of their medical expenses from plaintiff instead of the health insurer. Palisades made payments on behalf of its customers and then sought reimbursement from the health insurer, Horizon Blue Cross Blue Shield, for payments made. 

The trial Court granted summary judgment to Horizon Blue Cross and the Appellate Division affirmed. The Appellate Division held that no cause of action for subrogation exists to allow a PIP carrier to pursue reimbursement for claims mistakenly paid out of turn.

Insureds are allowed to choose to have their health insurer primarily responsible for automobile accidents. Choosing the healthcare insurance as primary reduces car insurance premiums. Health insurers in turn are prohibited from including any provision in their plans which restricts coverage for expenses arising out of automobile accidents. See, N.J.S.A. 11:3-37.3(d).

To facilitate the orderly resolution of insurance claims arising from automobile accidents, the State Department of Banking implemented the Coordination of Benefits (COB) scheme under N.J.S.A. 11:3-37.1-14, which provides a mechanism for the resolution of disputes between the health insurer and the auto insurer. In fact, when a PIP-as-secondary insurer receives a claim eligible for primary coverage, it must deny coverage and send the insured a notice advising them to submit the claim to their health insurer. Health insurers are required to make prompt payment of claims pursuant to N.J.A.C. 11:22-1.5, and a PIP or health insurer’s failure to comply with the COB subchapter may result in the assessment of penalties.

Reimbursements of payments incorrectly made by auto carriers are permitted by intercompany agreement or arbitration amongst PIP insurers under N.J.S.A. 39:6A-11. However, health insurers are not subject to PIP arbitration under the statute. See generally, NJM v. Horizon Blue Cross, 403 N.J. Super. 518 (App. Div. 2008).

The Appellate Division concluded that the PIP statute does not provide an enforcement mechanism that PIP carriers may use against health insurers. Rather, the COB regulations are enforced by the Commissioner of Banking and Insurance through the assessment of penalties and the COB scheme depends upon PIP insurers to deny claims falling under primary coverage in order to notify the health care providers that the expenses must be submitted to the health insurer for payment.

B.        Premises Liability and Tort Claims – Claim Barred by Lack of Duty and Statutory Immunities

In consolidated cases involving injuries from automobile accidents at an allegedly dangerous jug handle, the Appellate Division recently held that Wawa owed no duty to the plaintiffs and that the State of New Jersey was immune under various Tort Claims Act defenses. Buddy v. Napp, et al., - N.J. Super. – (App. Div. 2021).

Napp involved a consolidated case wherein two plaintiffs were injured in automobile accidents at a jug handle. In addition to the automobile defendants, plaintiffs sought recovery from Wawa which operated a convenience store in the area of the jug handle and also the State of New Jersey.

The trial Court concluded that Wawa did not owe a duty of care to the injured parties and that the State was immune from plaintiffs’ claims under the Tort Claims Act. The Appellate Division affirmed. With regard to the claim against Wawa, plaintiffs alleged that Wawa knew or should have known that a dangerous condition – a driveway entrance that attracted illegal left turns from the roadway – existed in the State’s right of way and posed a danger to its customers. Plaintiffs had produced an expert report that Wawa had a legal duty to provide customers with a safe driveway entrance or to warn them of the dangers of making an illegal turn from the roadway to enter the parking lot – which the Appellate Division rejected on the grounds that Courts are not bound by the opinion of experts that the recognition of a legal duty is required. The Court then noted that Wawa owed no duty to plaintiffs because their injuries did not occur on Wawa’s premises. The Court did note that there are cases were premises owners owe duties for off-premises injuries but saw no basis to extend it to the instant matter. The Court concluded that Wawa did not have a duty of care to plaintiffs to prevent illegal u-turns on State roadways – which plaintiffs had alleged caused the accident.

Importantly, the Appellate Division reiterated an earlier holding that the fact that Wawa may have obtained an economic benefit from customers making illegal turns into its driveway entrances created a legal duty. See generally, Pote v. City of Atlantic City, 411 N.J. Super. 354 (App. Div. 2010) (rejecting the argument that economic benefit automatically translates into a corresponding duty to protect defendant’s patrons from the hazards of a public thoroughfare).

With regard to the claims against the State, the Appellate Division upheld the dismissal noting that the State was immune from suit under various Tort Claims provisions. Specifically, plaintiffs alleged that the State was liable because of its alleged inaction in enforcing its regulations related to access violations from public roadways to Wawa’s driveway entrances. As the conduct related to the State’s alleged omissions, rather than affirmative acts, the Appellate Division agreed with the trial Court that N.J.S.A. 59:2-4 (failure to enforce regulations) barred the claim. The Appellate Division then also held that the State could not be liable for damages for its alleged failure to apply existing or past regulatory requirements to Wawa’s driveway entrances under N.J.S.A. 59:2-5. The Court further concluded that the State was not subject to liability due to a dangerous condition of its property created by the driveway entrances under N.J.S.A. 59:4-2 because it was the absence of due care by the automobile defendants in using the driveway entrances which caused the accident.

C.        Vicarious Liability – Employer Not Liable for Employee’s Intentional Act

In a case arising out of the sexual assault of a landlord’s tenants by the landlord’s employee, the Appellate Division recently held that the employer landlord could not be held vicariously liable for the employee’s criminal conduct. E.S., et al. v. Brunswick Investment, LP, et al., - N.J. Super. – (App. Div. 2021).

Plaintiffs resided in a two-unit residential structure in New Brunswick. Defendant was a property management company that owned and managed the residential property. The defendant’s employee, Fred, was a handyman who ultimately committed a sexual assault against two of the tenants. 

Suit was filed. The trial Court dismissed the plaintiffs’ claim based on the New Jersey Supreme Court’s decision in Davis v. Devereux Foundation, 209 N.J. 269 (2012). The Appellate Division affirmed but for different reasons that held in Davis.

The Appellate Division noted that Davis, which involved an autistic plaintiff who had scalding water thrown on him by a counselor at a counseling facility involved questions as to whether the defendant facility could be found to have a “non-delegable duty” to prevent the counselor’s assault and whether a rational factfinder could find that the counselor’s violent conduct was within the scope of her employment under the Restatement Section 219(1). However, the instant matter involved Restatement Section 219(2) which provides that a master is not subject to the liability for the torts of his servants acting outside the scope of their employment unless the master was negligent or reckless or the servant purported to act or speak on behalf of the principal and there was reliance upon apparent authority, or he was aided in accomplishing the tort by the existence of the agency relation. 

The Court noted that there were no published New Jersey decisions adopting Section 219(2)(b) of the Restatement to impose direct liability on an employer for the tortious conduct of an employee outside the scope of his employment other than in the context of claims brough pursuant to remedial legislations such as the Law Against Discrimination (LAD), the Conscientious Employee Protection Act (CEPA), or the Child Sexual Abuse Act (CSAA).

The Court noted that an employer’s liability for torts committed by its employee outside of the scope of his employee stems from general doctrines of tort law not limited in their applicability to relationships of agency. There must be a foreseeable likelihood that harm will result from the conduct and when a principal conducts an activity through another person, the nature of the task to be performed and the conduct required for performance are relevant to whether the principal acted negligently, either in selecting the actor or in instructing, supervising or otherwise controlling the actor.

There was no evidence to suggest that when defendants authorized Fred to make repairs and improvements, that it was foreseeable that he would engage in criminal conduct. The court rejected a claim that defendant was “aided-by-agency” under the Restatement, noting that New Jersey has never applied this exception to employer non-liability in any circumstance other than those remedial statutes designed to eradicate workplace discrimination and harassment, to protect conscientious employees, or to protect children from abuse by those in loco parentis.


DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.