Wilson v. Unsatisfied Claim and Judgment Fund Bd.

Citation536 A.2d 752,109 N.J. 271
Parties, 44 Ed. Law Rep. 417 Gaynelle WILSON, individually, and as Guardian ad Litem for Frederick Wilson, a minor, Plaintiff-Respondent, v. UNSATISFIED CLAIM AND JUDGMENT FUND BOARD, Defendant-Appellant.
Decision Date26 January 1988
CourtNew Jersey Supreme Court
William R. Hopkin, Jr., Haddonfield, for defendant-appellant (Tomlin, Clark & Hopkin, attorneys; John P. Montemurro, of counsel)
by the Township of Moorestown. As we stated in Sotomayor, under the provisions of N.J.S.A. 39:6A-4 each private automobile is expected to provide coverage for its own passengers with respect to PIP expenses. Once again, however, we have an uninsured vehicle. The bus, not being required to maintain PIP insurance, has none, and in any event, a vehicle's PIP coverage does not extend to injured passengers in another vehicle. See Sotomayor v. Vasquez, supra, 109 N.J. at 265-66, 536 A.2d 746

Hence, the passenger in the uninsured car seeks to recover from the Unsatisfied Claim and Judgment Fund (hereafter UCJF or the Fund) under N.J.S.A. 39:6-86.1. The Fund denies recovery on the theory that there is another source for payments in this case, i.e., the third-party liability of the owner and operator of the bus, the Township of Moorestown. We shall discuss in Part III, infra at 279-281, whether "PIP-type" damages are recoverable from such a tortfeasor. In fact, the plaintiff here has already settled his liability insurance claims against the uninsured driver of the car and against the Township.

I

The procedural posture of this case is that the five-year-old plaintiff was a passenger in his uncle's uninsured car when it was involved in an automobile accident on September 28, 1983, with a Township of Moorestown Board of Education school bus. 1 Plaintiff filed parallel claims against [536 A.2d 754] the Township and against the Unsatisfied Claim and Judgment Fund Board. Plaintiff settled his suit against the Township for $20,000. The record is silent, however, on whether that settlement was expressly made exclusive of damages for "PIP-type" benefits.

In the companion UCJF action, both parties moved for summary judgment. The issue presented to the trial court was "whether a passenger in an uninsured automobile, struck by an insured vehicle, may recover medical expenses from the [UCJF] without first obtaining and exhausting efforts to collect the expenses from the insured driver or owner." Wilson v. Unsatisfied Claim & Judgment Fund Bd., 213 N.J.Super. 594, 595, 517 A.2d 1236 (1985), aff'd, 213 N.J.Super. 520, 517 A.2d 1197 (1986), certif. granted, 107 N.J. 76, 526 A.2d 157 (1987)

Initially, the trial court analyzed the comparable provisions of the New Jersey Automobile Reparation Reform Act ("No-Fault" Law), N.J.S.A. 39:6A-4, and the Unsatisfied Claim and Judgment Fund Law (Fund Law), N.J.S.A. 39:6-86.1. We summarize its holding: it placed special emphasis on the report of the Automobile Insurance Study Commission entitled Reparation Reform for New Jersey Motorists (1971) [hereinafter Reparation Reform], which was the basis of our 1972 "No-Fault" Law. The Commission specifically recommended the creation of PIP coverage, compulsory insurance, the limited tort exemptions, and various other changes in insurance laws, including the "no-fault" concept. Wilson, supra, 213 N.J.Super. at 598, 517 A.2d 1236. At the same time, the Commission also recommended a change in the Fund Law to provide PIP benefits for occupants of uninsured vehicles. This provision was ultimately adopted in 1972.

The trial court also referred to certain "paramount policy goals" of the Commission: namely, (1) that all automobile accident victims should receive reimbursement for the "PIP-type" expenses without regard to collateral sources--that is, PIP benefits shall be primary; (2) that subrogation should be limited to inter-company agreements and that the injured person should not be permitted to offer evidence that "PIP-type" damages were paid or payable. Wilson, supra, 213 N.J.Super. at 598-99, 517 A.2d 1236. The court also noted that the purpose of the latter proviso was to reduce costs by eliminating dual recoveries, i.e., recoveries under both first- and third-party settlements. Moreover,

it was the Commission's hope that personal injury protection coverage would "absorb many claims which would otherwise flow into the higher-cost tort benefit system," and thus would carry "all injury victims, without regard to fault, a fair and reasonable distance toward their reparation objectives." Wilson, supra, 213 N.J.Super. at 599, 517 A.2d 1236 (quoting Reparation Reform at 90, 99 (1971))

Reasoning that the Commission had "stressed again and again" the requirement that PIP benefits be paid promptly without regard to fault, the trial court then analyzed N.J.S.A. 39:86.1 and concluded that the language of the UCJF and "No-Fault" Laws, as well as their "obvious mutuality, point to a clear legislative intent that the Fund is not to withhold PIP payments until insured drivers, potentially liable for injuries resulting from an accident, have been so found." Wilson, supra, 213 N.J.Super. at 599, 602, 517 A.2d 1236.

The Appellate Division affirmed the judgment of the trial court. Wilson v. Unsatisfied Claim & Judgment Fund Bd., 213 N.J.Super. 520, 517 A.2d 1197 (1986). It specifically disapproved of the reported decision in Pearman v. Unsatisfied Claim & Judgment Fund Bd., 185 N.J.Super. 397, 401, 448 A.2d 1043 (Law Div.1982), which held that to recover PIP benefits from the Fund a claimant must comply with all of the elements of the Fund statute, including those requiring that the individual have no cause of action against an insured defendant. In the Appellate Division's view, eligibility for PIP benefits under the Fund did not include the requirement that a qualified person comply with [536 A.2d 755] the entire Fund Law; rather, a claimant need meet only the specific qualifications noted in the PIP provisions of the Fund Law. The court reasoned that the contrary view requiring exhaustion of all third-party claims would destroy PIP's primary goal of providing prompt payment of necessary medical expenses incurred in auto accidents. Wilson, supra, 213 N.J.Super. at 523, 517 A.2d 1197. We granted the Fund's petition for certification, 107 N.J. 76, 526 A.2d 157 (1987), and now affirm that judgment.

II

The Fund contends that it was never intended to be a source of PIP benefits when a financially responsible third party is involved in an accident; rather, the Fund was created as a trust fund to be available as a payment resource only when all others have been exhausted. The Fund maintains that this has been its consistent administrative policy since the Fund's PIP provisions were established as part of the "No-Fault" Law in 1972. It points to a series of unreported Appellate Division decisions supporting this interpretation and argues that this decision departs from prior interpretations of Fund liability.

By equating the eligibility requirements for PIP benefits with those for liability claim benefits, the Fund reaches the conclusion that PIP benefits under the Fund cannot be paid if there is any other available source of payments. At this point it should be reiterated that PIP benefits are equivalent to the common-law special damages recoverable in a personal injury tort action. PIP benefits, however, may be recovered without regard to fault, and are unlimited in amount and duration.

The Fund bases its argument on the following syllogism:

1. The opening sentence of its enabling act, N.J.S.A. 39:6-86.1, states that the Fund will provide PIP benefits only when a "person qualified to receive payments under the provisions of the [1972] Unsatisfied Claim and Judgment Fund Law" sustains damages as a result of an accident as the occupant or user of an automobile that does not have PIP coverage in effect.

2. To be "qualified to receive payments" under the provisions of N.J.S.A. 39:6-86.1, one must meet all the requirements of the Fund Law, including N.J.S.A. 39:6-70 and N.J.S.A. 39:6-71, which require, among other things, that the claimant has an unsatisfied judgment against a responsible party, and has not made a settlement of any such cause of action without giving credit therefor and that all steps have been taken to collect the amounts claimed.

3. Since by definition the claimant in this case cannot state that there is any unsatisfied judgment and since, in fact, there was a settlement, he cannot meet the eligibility requirements of the Fund and thus must be denied benefits.

Conversely, the plaintiff contends that although the Fund's argument is facially plausible, its logic conflicts with the internal structure of N.J.S.A. 39:6-86.1 and the public policy that underlies PIP. Plaintiff notes that the Fund's enabling act sets forth specific qualifications that only partially embrace the general qualifications for recovery of unsatisfied judgments under the Fund. The 1972 enabling act, N.J.S.A. 39:6-86.1, required specifically (but without attempting to paraphrase it with exactitude) that for benefits to be paid under the PIP section the applicant had to demonstrate that: (1) the accident was not covered by workers' compensation; (2) the claimant was not a member of the household of the uninsured motorist involved in the accident [repealed in part by L.1983, c. 362, § 2 (limiting disqualification to owner or registrant of an uninsured motor...

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