Defense Digest

New Jersey Uninsured Drivers Are Out Of Luck
By Michael Lombardi, Esq.*

On February 19, 2004, the New Jersey Supreme Court issued a unanimous decision, Caviglia v. Royal Tours of America, 842 A.2d 125 (N.J. 2004), barring uninsured drivers from suing for noneconomic injuries of any kind pursuant to N.J.S.A. 39:6A-4.5(a).  The statute, enacted by the Legislature and signed into law in 1997, bars a "cause of action for recovery of economic or noneconomic loss" to the driver of an uninsured vehicle who is injured in an automobile accident.  N.J.S.A. 39:6A-4.5(a).      

The case arises from an accident that occurred in North Bergen, New Jersey on October 13, 1997.  The plaintiff, Jorge Caviglia sustained serious injuries when a bus operated by Hector Mundo and owned by Royal Tours of America, Inc. crossed over into Caviglia’s lane of traffic and caused the collision.  On October 8, 1999, Caviglia filed suit against Mundo and Royal Tours of America. 

Completely absolved of any liability for the accident, Caviglia was exposed to a mandatory fine between $300 and $1,000, a period of community service, and a one-year license forfeiture for failing to carry automobile liability insurance under N.J.S.A. 39:6B-2.  For reasons not disclosed in the record, Caviglia’s automobile insurance had been cancelled, and he was either unable or unwilling to obtain additional insurance. There is no mention of any attempts on Caviglia’s part to procure additional insurance coverage, and it does not appear that such efforts would have made any difference to the New Jersey Supreme Court.

Although the trial court initially dismissed Caviglia’s suit on summary judgment, it later reversed itself on reconsideration, finding that the statute’s absolute bar of a cause of action for uninsured drivers seriously injured in an automobile accident did not bear “a real and substantial relationship” to the Legislature’s objective in enacting N.J.S.A. 39:6A-4.5(a) and that an absolute bar arbitrarily discriminated against uninsured drivers.  The Appellate Division affirmed on those grounds.  Id.   Subsequently, the New Jersey Supreme Court granted the defendants’ motion for leave to appeal and reversed.

In reversing the Appellate Division, the Supreme Court demonstrated that there have always been limits on the rights of uninsured motorists to sue in New Jersey.  In New Jersey, each motorist with a car registered or principally garaged in the state must carry insurance, which, at a minimum, provides liability insurance for bodily injury, death, and property damage caused by their vehicles.  Every insurance policy must also provide personal injury protection, or “PIP” benefits, which cover, without regard to fault, the medical expenses of the named insured and his or her family members in the event they are injured in an automobile accident. 

Commonly referred to as “no-fault” insurance, the Legislature intended this system of first-party self-insurance to serve as the exclusive remedy for payment of out-of-pocket medical expenses arising from an automobile accident.  Although successful in reimbursing victims of automobile accidents for medical expenses and lost wages, the Act did little to curb the increasing cost of automobile insurance.  Beginning in 1985, the Legislature initiated a policy of cost containment to ensure that uninsured motorists injured in automobile accidents did not deplete the “no-fault” insurance funds when they did not contribute to such funds. 

In 1985, the Legislature enacted N.J.S.A. 39:6A-4.5 to preclude uninsured motorists from suing for noneconomic damages if the motorist did not first demonstrate medical expenses in excess of $1,500.  In 1988, the Legislature enacted a "verbal threshold" under N.J.S.A. 39:6A-8a, to restrict personal injury litigation arising from automobile accidents to those involving only "serious" injuries.   The Legislature intended the "verbal threshold" to essentially close the courthouse door to all lawsuits, except those involving serious injury, in order to maintain the substantial benefits of no-fault insurance coverage at an affordable price. 

The "verbal threshold" did not seem to achieve its stated objective, however, and in 1998, the Legislature adopted the Automobile Insurance Cost Reduction Act, L. 1998, c. 21 ("AICRA"). Originally, an uninsured motorist could only sue for noneconomic losses upon demonstrating an injury as severe as death, dismemberment, significant disfigurement or significant scarring, displaced fractures, loss of a fetus, or a permanent injury within a reasonable degree of medical probability.  The Legislature later discarded the previous categories and replaced them with the single category of a permanent injury within a reasonable degree of medical probability, other than scarring or disfigurement.

Nevertheless, the cost of automobile insurance in New Jersey continued to rise.  The legislative record on this issue attributes the rising cost of automobile insurance to lawsuits over personal injuries and, in part, to lawsuits involving uninsured motorists.  

In 1997, therefore, the Legislature comprehensively amended N.J.S.A. 39:6A-4.5 to preclude three classes of people from suing for injuries sustained in automobile accidents:  (1)  persons who operate automobiles without insurance; (2) persons who drive while under the influence of alcohol or drugs; and (3) persons who act with the intent to injure others while driving.  Only the first class of plaintiff was at issue in Caviglia . 

According to the New Jersey Supreme Court, the Legislature may preclude an uninsured motorist from filing a suit for economic or noneconomic damages without violating the uninsured motorist's equal protection or due process rights under the state or federal constitution.  In enacting an absolute bar on uninsured motorists’ suits for injuries sustained in automobile accidents, the Legislature articulated a legitimate government interest in protecting the limited pool of resources available to insured motorists injured in automobile accidents and curbing the rising cost of automobile insurance in New Jersey.

The court stated that procedural preconditions on filing lawsuits are relatively common. As an example, the court observed that plaintiffs’ suits against public employees or entities are subject to dismissal for failing to meet the 90-day notice requirement under the Tort Claims Act, N.J.S.A. 59:8-8. 

In upholding the Legislature's restriction on an uninsured motorist's right to sue for personal injuries under N.J.S.A. 39:6A-4.5(a), the court held that the statute did not violate Caviglia's due process rights "because the statute does not implicate a fundamental right and it is rationally related to, and suitably furthers, a legitimate state interest."  As for Caviglia's equal protection argument, the court held that since the statute did not burden a fundamental right and uninsured motorists are not a protected or suspect classification, the Legislature's distinction between uninsured and insured motorists need only be rationally related to the stated purpose of the statute.  The court found compelling the Legislature's desire to protect the pool of resources available to compensate insured motorists for injuries under New Jersey's No Fault insurance scheme and to compel compliance with New Jersey's mandatory insurance laws.   

At first glance, the New Jersey Supreme Court's ruling may appear harsh.  In reaching its conclusion, however, the court relied upon a substantial body of legislative history indicating that available funds to compensate persons injured in automobile accidents continue to dwindle as a result of increased personal injury suits.  The purpose of New Jersey's No Fault insurance laws is to ensure that persons injured in automobile accidents are compensated within the limits of the law without the need for protracted litigation.  The Legislature barred uninsured motorists from filing suit under N.J.S.A. 39:6A-4.5(a) to promote compliance with the State's compulsory insurance laws and to protect the financial integrity of New Jersey's No Fault payment system. 

As the court observed, "the more drivers who purchase insurance, the more resources [will be] available to provide medical benefits to persons injured in accidents."    The Legislature is well within its right to limit the class of persons eligible for such compensation to those who comply with relevant State laws requiring automobile liability insurance. 

According to the Associated Press, as of February 2004, an estimated 600,000 New Jersey motorists do not have insurance.  See Home News Tribune , February 20, 2004, "N.J. Supreme Court Bars Uninsured Drivers From Suing."  It is inequitable to allow such a large number of drivers to collect on damages from a payment system to which they do not contribute.  The New Jersey Supreme Court's decision is a bold step, which we should all hope additional state supreme courts will support and follow suit.

Finally, please note that, although the New Jersey Supreme Court's decision only directly applies to an uninsured motorist's claims for non-economic damages, a separate panel of the Appellate Division found that N.J.S.A. 39:6A-4.5(a) precludes suits for economic or property damage as well.  See Rogers v. Carchesio, 2004 WL 169803 (App. Div. Jan. 29, 2004).   The State Supreme Court cited the Rogers decision with approval in Caviglia.  Moreover, the language of N.J.S.A. 39:6A-4.5(a) plainly precludes suits of uninsured motorists for "economic or noneconomic losses."  As the State Supreme Court found the statute constitutional, there is no reason to believe it would not survive another challenge merely because the uninsured plaintiff seeks recovery for economic damages rather than pain and suffering.

*  Michael is an associate in the Roseland, NJ office and can be reached at 973) 618-4110 or mlombardi@mdwcg.com.