Defense Digest

What The New Jersey Legislature Really Meant When It Passed AICRA In 1998: No Serious Life Impact Standard Imposed On Plaintiffs

The New Jersey Supreme Court decided what will become the seminal case on automobile negligence on June 14, 2005. In DiProspero v. Penn, et al., the Court ruled that the Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. §39:6A-8(a) "does not contain a serious life impact standard." Barring any Legislative amendments to the contrary, this means that the nebulous serious life impact standard no longer applies. A plaintiff now need only show credible, objective medical evidence of a permanent injury to satisfy the limitation on lawsuit threshold.

Automobile negligence law has been a source of much debate and constant flux in New Jersey, since the original No-Fault Acts were passed some 30 years ago. The Legislature has attempted, in various manners, to fight the escalating costs of automobile insurance premiums.

AICRA Is Enacted in 1998, and The Debate Begins

The Legislature created AICRA in 1998 to contain costs, prevent and identify fraud, and ensure a fair rate of return for investors. N.J.S.A. 39:6A-1.1(b). AICRA created a new lawsuit threshold, which allowed recovery only for injury that resulted in death, dismemberment, significant disfigurement or significant scarring, displaced fracture, loss of a fetus, or a permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement. A permanent injury was defined as an injury where the "body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment." N.J.S.A. §39:6A-8(a).

Prior to AICRA, the Supreme Court had decided Oswin v. Shaw, 129 N.J. 290, 318 (1992), which stood for the proposition that a plaintiff had to prove an injury that fell within one of the (then nine) categories of recovery and that "the injury had a serious impact on the plaintiff and her life." Oswin, 129 N.J. at 318 (internal citations omitted).

Following Oswin, New Jersey courts began their struggle with applying the serious life impact test to the innumerable factual scenarios arising from automobile accident cases. One appellate decision went as far to state that "it was difficult to find an analytical thread unifying subsequent judicial treatment of what constitutes a 'serious impact' upon a plaintiff's life." James v. Torres, 354 N.J.Super. 586, 588 (App. Div. 2002), cert. denied., 175 N.J. 547 (2003).

Despite no explicit incorporation of the serious life impact standard into the language of AICRA, the Appellate Division rule that the Oswin standard applied to the limitation on lawsuit threshold. James, 354 N.J.Super. at 596; Rios, 354 N.J.Super. at 580. Plaintiffs were forced to demonstrate a serious life impact as a result of their injuries, although the courts struggled with applying the serious life impact standard.

The serious life impact standard body of law contained some of the law's most glaring inconsistencies, and understandably so, due to the detailed, fact-specific nature of the analysis.

Seven Years Later, DiProspero Explains What the Legislature Meant When It Enacted AICRA.

The New Jersey Supreme Court decided DiProspero v. Penn, et al. on June 14, 2005, ruling that the Legislature never intended the Oswin serious life impact test to apply to AICRA's limitation on lawsuit threshold.

The issue before the Supreme Court was whether the serious life impact standard was meant to be part of AICRA, despite no explicit incorporation into the plain language of the statute. Therefore, the Court attempted to divine the Legislature's intent. Generally, a court's analysis of legislative intent begins with the statutory language itself. The serious life impact standard is nowhere to be found in the plain language of AICRA. The Court could have ended its analysis at that point but gave due consideration to the unique statutory history of AICRA and prior case law.

The Legislature specifically incorporated one of Oswin's holdings (the objective medical evidence standard) into AICRA while not specifically incorporating the other holding (the serious life impact standard). Bearing this in mind, the Court ruled that the Legislature could not have intended the serious life impact standard to be part of AICRA. Simply put, "[A]n affirmative expression ordinarily implies a negation of any other." Moses v. Moses, 140 N.J. Eq. 575, 583 (E.&A. 1947).

Ultimately, the Court decided the issue on the plain language of the statute, which did not contain a serious life impact standard. The Court was unimpressed by the extrinsic evidence used to support the argument that the serious life impact standard was meant to be part of AICRA.

The Practical Effects of The Court's Decision

While not directly addressing the issue of retroactivity, the DiProspero holding could be construed to imply some retroactivity in its application. Specifically, the Court held that the plain language of AICRA did not include a serious life impact standard. If the serious life impact standard was never meant to be part of the statute, any case involving the limitation on lawsuit option brought between the enactment of AICRA and June 14, 2005, should logically hinge upon the objective medical evidence of serious, permanent injury prong only.

This would hold true for cases won on summary judgment, where the plaintiff's life impact was not legally enough to vault the threshold, or for cases where the jury returned a defense verdict based upon the plaintiff's failure to meet the serious impact standard. The Supreme Court did not explicitly rule on this issue but, as we shall see, left it to the Appellate Division.

The DiProspero Decision Will Have "Pipeline Retroactivity"

On July 11, 2005, the Appellate Division decided the Beltran v. Delima, et al. and Imerman v. Munoz, et al. consolidated matters (herein referred to as Beltran). The issue before the Appellate Division in Beltran was whether the holding in DiProspero would have "pipeline retroactivity," i.e. would the DiProspero holding apply to all prejudgment matters pending in the trial courts and to those matters on direct appeal. The Appellate Division held that DiProspero's holding had pipeline retroactivity. The Court did not consider the issue of retroactivity to cases that have been disposed of, or which were no longer pending in the trial courts or on appeal, because that issue was not before the Court.

The Appellate Division reviewed the language of the DiProspero decision in coming to its determination. Due to the fact that the Supreme Court held that the plain language of AICRA did not include the serious life impact standard and that nothing in the legislative history suggested to the contrary, the Appellate Division ruled that pipeline retroactivity would apply.

The Appellate Division also noted that the Supreme Court's DiProspero decision clearly places the burden on the New Jersey Legislature's doorstep to decide whether AICRA, as enacted, is an effective vehicle to deal with the rising costs of automobile insurance. As Justice Rivera-Soto noted in the concurring opinion in DiProspero, "Principled arguments can be marshaled to support the proposition that AICRA implicitly incorporates Oswin's serious life impact requirement," with which Justice Rivera-Sota "would prefer to agree." But as Justice Rivera-Soto noted in the concurring opinion and as Justice Weissbard noted in the dissenting opinion in DiProspero, this issue now "lies where it properly belongs: before the Legislature."

Conclusion

These cases could escalate the number of automobile negligence claims brought in the State in the future. Where objective evidence of a permanent injury exists, such as a herniation or a radiculopathy, plaintiffs' attorneys will no longer hesitate to bring claims where there appears to be limited life impact. Plaintiffs' attorneys will no longer have to gamble on their clients' lifestyles, or on which judges are assigned to their cases.

By nullifying the second prong, the Supreme Court effectively eliminated much uncertainty in this area of the law. The serious impact standard was a fuzzy line at best, and the immense body of contradictory case law often left litigants in a state of uncertainty. The Court has left us with, if not a bright line, at least a "brighter" line.

While the number of claims brought may rise, costs of defending these cases may decline. Without the uncertainty of the serious impact standard acting as a "cog" in the wheel, many of these claims may be settled more quickly, without the need for extensive discovery. Where liability is not contested and where there is objective evidence of a permanent injury related to the automobile accident, the need for an extensive deposition may be obviated.

But given the lengthy, evolving history of this area of the law, we will surely experience more changes in the future. Now, we await the Legislature's reaction to the Supreme Court's June 14, 2005, decision.

*Brian is an associate in our Cherry Hill, NJ office. He can be reached at (856) 414-6314 or borourke@mdwcg.com.