Allstate Ins. Co. v. Coven

• Citation: 624 A.2d 594,264 N.J.Super. 240
• Parties: ALLSTATE INSURANCE CO. and the Unsatisfied Claim and Judgment Fund, Plaintiffs-Appellants, v. Roger COVEN, M.D., Valley Hospital, John Doe, M.D., Richard Roe, M.D., Jane Doe, M.D., Mary Roe, M.D., Robert Smith, M.D., Jane Smith, R.N., Karen Black, R.N., Jane Doe, R.N., Mary Jones, R.N. (all being fictitious names), Betty Coyle, an infant by his g/a/l, Richard Coyle, and Richard Coyle, individually and Arlene Coyle, Defendants-Respondents.
• Decision Date: 29 April 1993
• Court: New Jersey Superior Court – Appellate Division

Page 240

264 N.J.Super. 240

624 A.2d 594

ALLSTATE INSURANCE CO. and the Unsatisfied Claim and Judgment Fund, Plaintiffs-Appellants, v. Roger COVEN, M.D., Valley Hospital, John Doe, M.D., Richard

Roe, M.D., Jane Doe, M.D., Mary Roe, M.D., Robert Smith,

M.D., Jane Smith, R.N., Karen Black, R.N., Jane Doe, R.N.,

Mary Jones, R.N. (all being fictitious names), Betty Coyle,

an infant by his g/a/l, Richard Coyle, and Richard Coyle,

individually and Arlene Coyle, Defendants-Respondents.

Superior Court of New Jersey,

Appellate Division.

Argued March 23, 1993.

Decided April 29, 1993.

John G. Tinker, Jr., Cedar Knolls, argued the cause for plaintiffs-appellants (Leary, Bride, Tinker & Moran, attorneys; Mr. Tinker on the brief).

Scott T. Heller, Morristown, argued the cause for defendant-respondent Roger Coven, M.D. (Giblin & Combs, attorneys; E. Burke Giblin, of counsel, Mr. Heller on the brief).

Peter R. Feehan, Hackensack, argued the cause for defendant-respondent Valley Hospital (Feehan & Feehan, attorneys).

Michael B. Zerres, Newark, argued the cause for defendant-respondent Richard Coyle (Blume Vazquez Goldfaden Berkowitz & Donnelly, attorneys; Mr. Zerres, on the brief).

Timothy L. Barnes, Chatham, argued the cause for defendant-respondent Arlene Coyle (Barnes & Barnes, attorneys; Mr. Barnes on the brief).

Before Judges DREIER, SKILLMAN, VILLANUEVA.

The opinion of the court was delivered by

DREIER, J.A.D.

Plaintiffs, Allstate Insurance Company and the Unsatisfied Claim and Judgment Fund, appeal from a July 6, 1992 judgment dismissing their claims for subrogation or for reimbursement of benefits paid or to be paid to or for the benefit of Arlene Coyle and Brett Coyle. In addition, Allstate filed a Morris County action on November 13, 1991, discussed infra. Arlene Coyle and Brett Coyle (through his guardian ad litem, Richard Coyle), earlier brought companion suits against defendants Roger Coven, M.D., and Valley Hospital alleging medical malpractice.

On October 7, 1987, Arlene Coyle was involved in a one-car automobile accident while eight and one-half months pregnant. When her car hit a flagpole, her abdomen was forced against the steering wheel. She was taken by ambulance to Valley Hospital in Ridgewood, New Jersey, where her son, Brett Coyle, was delivered by caesarean section. Brett was born with severe brain damage, requiring that he continue to receive constant medical and attendant care. As the insurer of Arlene Coyle's vehicle, Allstate Insurance Company has paid over $1,000,000 ¹ in medical expenses pursuant to personal injury protection ("PIP") coverage.

Count four of Brett's complaint, dated September 20, 1988, claimed medical expenses incurred as a result of the infant's injuries. ² The parties in the malpractice case reached a tentative settlement for $1,200,000, $100,000 of which was to be paid by Allstate, a non-party to the action. We assume Allstate made such payment in its capacity as liability carrier for Arlene Coyle, rather than as her PIP insurer.

During an October 18, 1991 appearance before Judge Sciuto to approve the overall settlement of $1,200,000, Allstate notified the court of its pursuit of its legal remedies in the Morris County action seeking subrogation to the Coyles' rights to collect PIP benefits. The court suggested that Allstate file a new complaint for declaratory relief to determine all of its rights. Allstate filed the complaint on November 13, 1991 also seeking arbitration against Dr. Coven and Valley Hospital. Judge Sciuto entered a conditional settlement order on December 1, 1991 which memorialized the agreement. On January 24, 1992, the judge consolidated the Coyles' cases with Allstate's Morris County action. On cross motions for summary judgment, Judge Sciuto on July 6, 1992 ruled in favor of defendants Coven and Coyle in the declaratory judgment action, and dismissed plaintiffs' complaint.

In reaching his decision, the judge concluded that Allstate and the UCJF possessed no subrogation rights. He further determined that Allstate had no direct rights of action against the malpractice tortfeasors. The latter conclusion was premised upon three findings: First, plaintiffs' claim was time-barred by the two year limitation stated in N.J.S.A. 39:6A-9.1. Second, allowance of a direct action for reimbursement against the tortfeasors in this case would "substantially interrupt the settlement process" between malpractice insurers and victims and would have a ripple effect on all automobile accident/medical malpractice claims. Third, the bases for Allstate's payment of PIP benefits and the claims settled in the Coyles' medical malpractice settlement were factually distinguishable.

Initially, we agree with the trial judge's assessment of Allstate's subrogation rights. In Aetna Ins. Co. v. Gilchrist Brothers, Inc., 85 N.J. 550, 428 A.2d 1254 (1981), the Supreme Court traced the history of a PIP carrier's right of subrogation. It ruled that N.J.S.A. 39:6A-12 precluded the possibility of any subrogation action by a PIP benefits insurer against an insured tortfeasor. Id. at 562, 567, 428 A.2d 1254. The Court noted that N.J.S.A. 39:6A-12 (in its pre-1983 language) mandated the inadmissibility of evidence of losses collectible under personal injury protection coverage. The statute stated: "Evidence of the amounts collectible or paid pursuant to [PIP coverage] ... to an injured person is inadmissible in a civil action for recovery of damages for bodily injury by such injured person." (emphasis added). Aetna thus reasoned that the absence of an insured's right to introduce such evidence in another New Jersey legal action precluded the existence of any right of subrogation with respect to such a New Jersey claim ³ because subrogation merely allows an insurer to step into the shoes of the insured. Aetna, 85 N.J. at 567, 428 A.2d 1254 ("Since the named insured had no right to which Aetna could be subrogated, its claim must be denied").

Subsequent to the Aetna decision, the Legislature enacted N.J.S.A. 39:6A-9.1, which conferred a statutory right of recovery for PIP insurers from certain tortfeasors.

An insurer ... paying ... personal injury protection benefits ... as a result of an accident occurring within this State, shall, within two years of the filing of the claim, have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain personal injury protection or medical expense benefits coverage.... In the case of an accident occurring in this State involving an insured tortfeasor, the determination as to whether an insurer ... is legally entitled to recover the amount of payments and the amount of recovery, including the costs of processing benefit claims and enforcing rights granted under this section, shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration.

This provision provides a new direct right of action against certain tortfeasors for reimbursement of PIP benefits, but it does not establish any subrogation rights for the PIP insurer, through its insured. ⁴ Sherman v. Garcia Const., Inc., 251 N.J.Super. 352, 356, 598 A.2d 242 (App.Div.1991) ("The enactment of section 9.1 granted anew a right of reimbursement to PIP providers. That right is primary and not linked to any purported subrogation rights of the beneficiary of the PIP benefits"); accord Buoni v. Browning Ferres Industries, 219 N.J.Super. 96, 98-101, 529 A.2d 1044 (Law Div.1987). It appears, therefore, that while Allstate may have its § 9.1 claim, the blanket prohibition of subrogation rights announced in Aetna, supra, is still applicable. ⁵ See e.g., Range v. McLarty, 246 N.J.Super. 196, 200, 586 A.2d 1364 (Law Div.1990); see also Hanover Ins. Co. v. Lewis, 260 N.J.Super. 380, 389, 616 A.2d 963 (Law Div.1992) (courts apply the statute to effect a direct right of reimbursement against a tortfeasor's insurer).

Thus, we determine that plaintiffs in the present case possess no right of subrogation through their insured. The fact that the alleged tortfeasors in the present case are not operators of an automobile, but a physician and hospital, is of no consequence under N.J.S.A. 39:6A-9.1. Plaintiffs' claims are limited to their statutory right of direct action against the alleged insured medical tortfeasors.

As quoted earlier, N.J.S.A. 39:6A-9.1 confers a direct right under the law to effect reimbursement from non-PIP-carrying tortfeasors "within two years of the filing of the claim...." We must determine the meaning of this quoted language. Plaintiffs filed their November 1991 complaint for a declaratory judgment and April 1992 direct complaint against Coven and Valley Hospital for reimbursement of PIP payments over three years after plaintiff Allstate began paying PIP benefits to its insured on January 11, 1988.

Plaintiffs assert that their claims are unaffected by the two-year limitation because they relate back to Brett Coyle's medical malpractice claim, which was filed in a timely fashion on or about September 20, 1988. The fourth count of Brett Coyle's complaint sought damages for Richard Coyle's expenditure of "large sums of money for medical and other care...." This count of Brett's complaint cannot be a basis for plaintiffs' claim. If the expenses are not those claimed under PIP, the insurer certainly has no interest in them. If such expenses were those paid by the PIP carrier, they would be inadmissible in Brett's later action. N.J.S.A. 39:6A-12. ⁶ As Allstate cannot stand in the shoes of its insured, it must assert an individual claim in a timely manner. In light of the Supreme Court ruling forbidding PIP insurers from "stand[ing] in the shoes of the insured....", Aetna, 85 N.J. at 567, 428 A.2d 1254, for the purpose of reimbursement actions, we will not permit plaintiffs to bootstrap their arguably late claims into the original...