Pennsylvania Mfrs.' Ass'n Ins. Co. v. Government Emp. Ins. Co. (GEICO)
| Citation | 347 A.2d 5,136 N.J.Super. 491 |
| Parties | PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY, a corporation, Plaintiff-Respondent, v. GOVERNMENT EMPLOYEES INSURANCE COMPANY (GEICO), a corporation, Defendant- Appellant, and David H. ROMBERGER, Defendant. |
| Decision Date | 14 October 1975 |
| Court | New Jersey Superior Court – Appellate Division |
Roy D. Cummins, Pennsauken, for defendant-appellant (C. Kennon Hendrix, Pennsauken, on the brief).
Alan R. Schmoll, Camden, for plaintiff-respondent (Capehart & Scatchard, Camden, attorneys).
Before Judges LYNCH, ACKERMAN and LARNER.
The opinion of the court was delivered by
LARNER, J.A.D.
This appeal involves a determination of the subrogation rights of an insurance carrier under the New Jersey Automobile Reparation Reform Act (No Fault Law) (N.J.S.A. 39:6A--9) for personal injury protection payments (PIP) arising out of an accident which occurred during the viable period of the subrogation feature of the statute.
Pursuant to N.J.S.A. 39:6A--4 and the terms of the PIP endorsement on its policy, plaintiff (Pennsylvania) paid in excess of $60,000 for medical expenses incurred by a passenger in the vehicle of its assured, Robert M. Alexander, as a result of an accident with the vehicle of Kenneth T. Stoner. Stoner was covered by a liability policy which also contained a PIP endorsement issued by defendant Government Employees Insurance Company (GEICO). The liability feature of the policy was written with limits of $20,000/$40,000. The basic PIP endorsements of both policies were written in accord with the statutory requirements and provided for payment of all medical expenses to eligible claimants without limitation of amount. See Cirelli v. Ohio Cas. Ins. Co., 133 N.J.Super. 492, 337 A.2d 405 (Law Div.1975).
The injured passenger sustained very severe permanent injuries, with a projected probable recovery against the tortfeasor, GEICO's assured, far in excess of the policy limit of $20,000. Similarly, the subrogation claim of Pennsylvania exceeds the policy limit of GEICO's liability policy and will continue to increase in unpredictable fashion in the future. As a consequence, Pennsylvania instituted this suit for declaratory judgment to determine the extent of its right of subrogation recovery against GEICO and for injunctive relief restraining the settlement by GEICO of the passenger's claim against its assured. Jurisdiction of the controversy was accepted by the trial court on the theory that the issues were not arbitrable under section 9 of the statute.
With the facts undisputed, the trial judge considered the matter on briefs and entered judgment in favor of Pennsylvania, declaring that its right of subrogation against GEICO extended to all PIP payments made to the injured passenger without regard to limits of the liability provision of GEICO's policy. The judge held, in effect, that the statutory PIP endorsement on the tortfeasor's GEICO policy constituted unlimited 'additional coverage' over and above the liability limits so as to satisfy the subrogated PIP claim in full.
It should be noted that there are no published opinions in this State dealing with the subrogation rights of insurance carriers under the No Fault Law, except for Cirelli v. Ohio Casualty, supra, decided after the trial court's determination herein. Furthermore, research in other states which have adopted no fault laws has developed no judicial interpretation in aid of the solution of the issue on appeal.
After mature analysis we determine that the trial judge arrived at an erroneous conclusion based upon a misconception of the impact of the PIP provisions of the No Fault Law upon the responsibility of a tortfeasor's insurance carrier for payment of a PIP subrogation claim.
The involvement of GEICO in the claim of the injured passenger or the carrier subrogated to that passenger is measured exclusively by its undertaking within the ambit of the liability feature of the policy which it wrote on behalf of the tortfeasor. Nothing in the no fault law can be construed to expand the liability of GEICO in its capacity as an insurer of the tortfeasor with respect to third-party injury claims.
It is true, of course, that GEICO's policy also included a PIP endorsement pursuant to section 4 of the act. However, that section and the endorsement provide for basic PIP payments to a limited category of claimants. In order for an injured person to make a claim under PIP coverage he must be within one of the following classifications: (1) the named insured and members of the insured's family residing in his household; (2) passengers in the automobile of the insured; (3) operator of insured's automobile with his permission; (4) pedestrians injured by the insured's automobile or by an object propelled from that authomobile. N.J.S.A. 39:6A--4.
The injured person as a passenger in the Alexander car covered by Pennsylvania was one of the eligible persons entitled to PIP payments from Pennsylvania. But that person has no eligible status vis-a -vis the Stoner vehicle and therefore would have no PIP claim against GEICO as Stoner's insurance carrier. N.J.S.A. 39:6A--4, upon which the trial judge relied, does provide mandatory 'additional coverage' beyond the coverage of the standard liability policy, but it does not impose such additional coverage on the carrier of the tortfeasor where the claimant does not have the eligible status vis-a -vis the tortfeasor-insured.
It is evident, therefore, that the injured person herein has no right of action against GEICO for PIP payments because of any provision of the No Fault Law or the PIP endorsement on its policy. Her right of recovery, if any, is circumscribed by the tort liability of GEICO's assured, and her right of satisfaction of a judgment against the assured is circumscribed by the provisions and limitations of the liability feature of GEICO's policy.
If that is so, can the subrogation rights of Pennsylvania rise any higher than those of its subrogor? Under the legal principles applicable to traditional subrogation the subrogee steps into the shoes of the subrogor with no greater rights. Standard Accident Ins. Co. v....
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