On March 4, 2015, the New Jersey Appellate Division held that all disputes between insurers arising from motor vehicle accidents, when more than one carrier could be responsible for paying Personal Injury Protection Benefits ("PIP"), must be resolved through arbitration.
In State Farm Indemnity Company v. National Liability & Fire Insurance Co., 439 N.J. Super. 532 (App. Div. 2015), a dispute arose between two insurance carriers as to which one was responsible for paying PIP benefits to an injured party. The victim, who had no insurance, was struck by a car while riding a bicycle. He allegedly lived with his father and cousin, each of whom had insurance policies with separate companies. State Farm paid the PIP benefits, and then filed suit in the Law Division against National for an order to compel arbitration. National argued that the matter was a coverage action that should remain in the trial court, as there were serious factual issues regarding the injured party’s residence. The Appellate Division disagreed and reiterated the arbitration requirements found in N.J.S.A. 39:6A-11 which requires inter-company arbitration.
The decision in State Farm is another example of the New Jersey courts upholding the public policy and purpose of the State’s “no fault” laws which is to expedite PIP disputes. Arguments between insurers that occur when more than one carrier could be responsible for PIP benefits are subject to arbitration. PIP arbitrations cannot be avoided by characterizing claims as “too complex” or “coverage actions”.