NJ could allow drivers with minimal insurance to sue for hospital costs

TRENTON — State lawmakers have moved quickly to restore the ability of people who carry bare-bones auto insurance with $15,000 of coverage for medical expenses to sue the driver responsible for a crash if their unpaid bills exceed that scaled-back figure.

The bill had been dormant nearly a year, then revived after a state Supreme Court decision in March concluding that there wasn’t clear evidence that the Legislature wanted people who elect $15,000 in personal injury protection, rather than the default $250,000, to be able to sue for medical costs.

The bill, S2432, was passed 23-8 by the Senate on May 13 and 55-3 with 10 abstentions last Thursday, meaning it’s now on Gov. Phil Murphy’s desk.

The insurance industry says it could drive up insurance premiums, while trial lawyers and other advocates say it’s a matter of fairness.

Lynne Kizis, president of the New Jersey Association for Justice, said the Supreme Court decision discriminates against people without financial resources.

“The public policy of the state of New Jersey simply cannot be that consumers risk potential bankruptcy or financially devastating medical bills in exchange for lower premiums,” Kizis said.

“We see this legislation as important to protecting consumers from devastating medical debt and preventing people from plunging into poverty,” said Dena Mottola Jaborska, associate director of New Jersey Citizen Action.

Georgia Flamporis, corporate counsel for Allstate Insurance, said the proposed legislation may lead to increased costs, in part because it wouldn’t subject medical bills to a fee schedule that normally applies after car crashes.

“So we are opening the doors to lawsuits over strictly medical bills, which was what no-fault tried to get away from,” Flamporis said.

Assembly Minority Leader Jon Bramnick, R-Union, said he is willing to pass another bill that would ensure the PIP schedule is followed. But he said it wasn’t the Legislature’s intent to block people from seeking to recover unpaid medical bills if they bought a basic policy with $15,000 of PIP coverage.

“When people buy insurance, especially people who don’t have health insurance, people who don’t have the resources to pay their medical bills, those are the people that are going to be hurt here,” Bramnick said.

State Sen. Gerald Cardinale, R-Bergen, said keeping those cases out of court was the intent. He said the legislation on Murphy’s desk would lead to padded medical bills to boost liability recoveries in court.

“And that will raise insurance premiums. Maybe not all at once, but it will raise them,” he said.

Carol Katz, a lobbyist for the Bus Association of New Jersey, a group of private bus carriers, said the legislation encourages people to just carry the smaller medical-expense coverage and that it would increase costs for those who don’t – such as bus companies, which are required to carry $250,000 of coverage per passenger. That could lead to higher fares or fewer routes.

“This bill will disincentivize motorists to buy the appropriate amount of PIP coverage for what they need,” Katz said. “Essentially, it doesn’t give them any incentive to buy more than the $15,000.”

That option might not continue, however. On Friday, state Sen. Nicholas Scutari, D-Union, proposed legislation that would require auto insurance policies to include $250,000 of medical expense benefits, eliminating lower options.

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Michael Symons is State House bureau chief for New Jersey 101.5 and the editor of New Jersey: Decoded. Follow @NJDecoded on Twitter and Facebook. Contact him at michael.symons@townsquaremedia.com