LLEDON JAMES VS. STATE FARM INSURANCE COMPANY (L-5051-15, ESSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4761-15T2
LLEDON JAMES and LURLINE
JAMES,
APPROVED FOR PUBLICATION
Plaintiffs-Appellants,
January 18, 2019
v. APPELLATE DIVISION
STATE FARM INSURANCE
COMPANY,
Defendant-Respondent.
_______________________________
Argued September 20, 2017 – Decided January 18, 2019
Before Judges Fuentes, Koblitz and Suter.
On appeal from Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-5051-15.
Jeffrey A. Rizika argued the cause for appellant
(Javerbaum, Wurgaft, Hicks, Kahn, Wikstrom &
Sinins, attorneys; Jeffrey A. Rizika, of counsel and on
the brief).
Thomas W. Matthews argued the cause for respondent
(Soriano, Henkel, Biehl & Matthews, attorneys;
Thomas W. Matthews, on the brief).
David J. Karbasian argued the cause for amicus curiae
New Jersey Association for Justice (Law Offices of
David J. Karbasian, attorneys; David J. Karbasian, on
the brief).
The opinion of the court was delivered by
FUENTES, P.J.A.D.
Lynval James and plaintiff Lurline James are husband and wife. Their
household includes their adult son plaintiff Lledon James, who was a licensed
driver at all times relevant to this case.1 Lynval purchased an automobile policy
from defendant State Farm Insurance Company (State Farm) listing his wife and
son as additional insureds. Plaintiffs claim that when Lynval purchased this
policy from State Farm, he requested the maximum Personal Injury Protection
(PIP) benefits of $250,000, and designated PIP as primary for medical expenses.
After Lledon and his mother Lurline were involved in a car accident, plaintiffs
claimed they discovered that the State Farm policy provided only $15,000 in PIP
coverage and designated a private health insurance provider as the primary for
PIP benefits.
Plaintiffs filed a verified complaint and an order to show cause seeking to
reform the State Farm policy to provide the maximum $250,000 PIP benefits.
Plaintiffs argued that the insurance policy as written was invalid because Lledon
was covered by Medicaid, not by a private health insurance carrier. Plaintiffs
1
Because plaintiffs have the same last name, we will refer to them by their first
names. No disrespect is intended.
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also alleged that State Farm's actions were willful, wanton, intentional, grossly
negligent and in reckless disregard of their legal rights.
State Farm filed a responsive pleading in which it argued it was immune
from civil liability as a matter of law pursuant to N.J.S.A. 17:28-1.9(a).
Alternatively, State Farm claimed the PIP benefits coverage in the policy is the
coverage Lynval requested at the time he purchased the policy. Plaintiffs filed
a motion for partial summary judgment, requesting judicial reformation of the
policy to reflect $250,000 in PIP coverage. State Farm cross-moved for
summary judgment relying on the immunity provided by the Legislature in
N.J.S.A. 17:28-1.9(a).
The Law Division judge assigned to this case granted summary judgement
in favor of State Farm, finding it was immune from liability in this case under
N.J.S.A. 17:28-1.9(a). The judge found the record indisputably showed Lynval
signed the coverage selection form that contained a $15,000 limitation on PIP
benefits coverage and designated the health insurance provider as primary. The
motion judge also found that at the time Lynval requested this automobile policy
from State Farm, he presented his private health insurance card and his
declarations page from his previous automobile insurance policy with Geico,
which provided coverage that "was exactly the same as what was selected from
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State Farm in this case." Finally, the judge noted that Lynval renewed the State
Farm automobile policy multiple times over a two-year period without objection
or modification.
In light of these undisputed facts, the judge concluded plaintiffs had not
presented evidence that shows State Farm's conduct in this case was willful,
wanton, or grossly negligent. The judge held State Farm did not have a legal
obligation to determine whether each member of an insured's household is
covered by private health insurance at the time the insured signs the coverage
selection form. The motion judge granted State Farm's cross-motion for
summary judgment and dismissed plaintiffs' verified complaint with prejudice
pursuant to the immunity provisions in N.J.S.A. 17:28-1.9(a).
In this appeal, plaintiffs argue the Law Division erred when it found State
Farm immune from liability under N.J.S.A. 17:28-1.9(a). The New Jersey
Association for Justice, appearing as amicus curiae, argues that plaintiffs' policy
should be reformed to reflect the maximum PIP benefits available because State
Farm's policy violates both State administrative regulations and the federal
Medicare Secondary Payer Act. We reject these arguments and affirm
substantially for the reasons expressed by the motion judge. We gather the
following facts from the record developed before the Law Division.
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I
On October 11, 2012, Lynval obtained an auto insurance policy from
Joseph Adamo's State Farm Insurance Office in North Arlington. This policy
covered Lynval, his wife Lurline, and his adult son Lledon. Lynval gave the
insurance agent: (1) a copy of the declarations page from an automobile
insurance policy he had with Geico, which contained $15,000 in PIP coverage
and a $2,500 deductible; and (2) his private health insurance card. Lynval's
private health insurance did not cover his adult son or his wife. Lurline had her
own health insurance through United Healthcare/Oxford; Lledon had health
insurance with New Jersey Family Care, otherwise known as Medicaid.
During this initial encounter, Lynval claims he told the State Farm agent
that he wanted standard PIP coverage of up to $250,000 and a $2,500 deductible.
With respect to the primary coverage for payment of medical expenses, Lynval
claims he told the agent he did not want his private health insurance to be the
primary medical coverage provider for PIP. According to Lynval, the coverage
selection form document was blank when he signed it. He claims he was
presented with only the fifth page of the coverage selection form which
contained only an area for signatures. He signed the form accordingly. Lynval
also claims the remaining pages of the coverage selection form were filled out
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by the State Farm agent after he signed the form and returned to work.
Specifically, Lynval claims the handwriting on the top of the second page of the
coverage selection form is not his handwriting; he also did not see this
handwriting or the selections contained therein at the time he applied for
insurance. Finally, Lynval claims he did not date the document that afternoon
and the date reflected at the bottom of page five of the coverage selection form,
(which is directly beneath his signature), is not in his handwriting.
State Farm refutes these allegations. According to State Farm, its agent
provided Lynval with the New Jersey Standard Policy Coverage Selection form
that outlines the various types of coverage available for an insured to select. The
record shows Lynval signed the coverage selection form and selected $15,000
in PIP coverage with a $2,500 deductible, the same coverage he had previously
with Geico. The coverage selection form also shows Lynval selected his
personal health insurance policy as the primary for PIP by name and policy
number. Lynval authorized this coverage arrangement, effective October 2012.
State Farm emphasizes that this policy was automatically renewed several times
from October 2012 to September 2014. The automatic renewal documents
stated that the PIP medical expense benefit limit was $15,000 with a $2,500
deductible. The documents also included language instructing insureds that "[i]f
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the above information is incomplete or inaccurate, or if you want to confirm the
information we have in our records please contact your agent." Plaintiffs did
not take any action to correct or modify this information.
On September 10, 2014, Lurline and Lledon were both injured in a car
accident. Lynval reported the accident to State Farm and submitted a claim for
PIP benefits. Although Lynval acknowledged that the policy's declarations page
indicated he had selected the option with a $2,500 deductible and a $15,000 PIP
limit, he refuted the accuracy of these limitations. Lynval alleged he actually
selected $250,000 in PIP coverage. As provided by plaintiffs' automobile
policy, State Farm initially referred medical expenses related to the accident to
their private health insurance carriers. Later on, a State Farm representative
learned that Lledon did not have private health insurance but was covered
through New Jersey Family Care, or Medicaid. As required by N.J.S.A. 39:6A-
4.3(f), State Farm thereafter provided Lledon with PIP benefits and processed
his claims as though he did not have private health insurance at the time of the
accident. State Farm applied a deductible of $3,250, comprised of the $2,500
deductible included in the policy and a $750 statutory penalty because Lledon
did not have private health insurance. Ibid.
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II
The trial court must grant a motion for summary judgment when "the
pleadings, depositions, answers to interrogatories and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any
material fact challenged and that the moving party is entitled to a judgment or
order as a matter of law." Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins.
Co., 224 N.J. 189, 199 (2016) (quoting R. 4:46-2(c)). To determine whether
there is a genuine issue of material fact in dispute, we must consider "whether
the competent evidential materials presented, when viewed in the light most
favorable to the non-moving party, are sufficient to permit a rational factfinder
to resolve the alleged disputed issue in favor of the non-moving party." Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). We apply these same
standards and review a trial court's order granting State Farm's motion for
summary judgment de novo. Globe Motor Co. v. Igdalev, 225 N.J. 469, 479
(2016).
After reviewing the record developed before the trial court against this
standard of review, we conclude State Farm is entitled to summary judgment as
a matter of law. N.J.S.A. 17:28-1.9 states in pertinent part:
. . . . no . . . insurer . . . shall be liable in an action for
damages on account of the election of a given level of
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motor vehicle insurance coverage by a named insured
as long as those limits provide at least the minimum
coverage required by law or on account of a named
insured not electing to purchase underinsured motorist
coverage, collision coverage or comprehensive
coverage. Nothing in this section shall be deemed to
grant immunity to any [insurer] causing damage as the
result of [its] willful, wanton or grossly negligent act of
commission or omission.
b. The coverage selection form required pursuant to
. . . [N.J.S.A. 39:6A-23] shall contain an
acknowledgement by the named insured that the limits
available to him for uninsured motorist coverage and
underinsured motorist coverage have been explained to
him and a statement that no . . . insurer . . . shall be
liable in an action for damages on account of the
election of a given level of motor vehicle insurance
coverage by a named insured as long as those limits
provide at least the minimum coverage required by law
or on account of a named insured not electing to
purchase underinsured motorist coverage, collision
coverage or comprehensive coverage, except for that
[insurer] causing damage as the result of [its] willful,
wanton or grossly negligent act of commission or
omission.
This statute was enacted "to abrogate prior judicial decisions holding
insurers . . . liable for failing to advise their customers of the availability of
additional underinsured and uninsured motorist coverage[,]" and to control the
"explosion of litigation by providing blanket immunity except in cases of
willful, wanton, or gross negligence." Strube v. Travelers Indem. Co., 277 N.J.
Super. 236, 237, 242 (App. Div. 1994). To obtain immunity under N.J.S.A.
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17:28-1.9, an insurer must demonstrate that (1) the named insured had at least
the minimum coverage required by law; (2) the insurer did not cause the
insured's alleged damages by any willful, wanton or grossly negligent act of
commission or omission; and (3) the insurer complied with the coverage
selection requirements of N.J.S.A. 17:28-1.9(b). Baldassano v. High Point Ins.
Co., 396 N.J. Super. 448, 453-54 (App. Div. 2007). The insurer must also have
obtained the insured's acknowledgement that the available coverage limits were
explained to him or her, and that the insurer will not be liable for the insured's
selection of coverage that was chosen in accordance with subsection (a) of the
immunity statute. N.J.S.A. 17:28-1.9(b).
Here, State Farm has met the requirements for immunity under N.J.S.A.
17:28-1.9. Plaintiffs received the minimum coverage required by law, which
was the same coverage they had with Geico. State Farm did not act in a willful,
wanton, or grossly negligent manner and complied with the coverage selection
requirements of N.J.S.A. 17:28-1.9(b).
N.J.S.A. 39:6A-23 sets forth the coverage selection requirements
referenced in N.J.S.A. 17:28-1.9(b), which mandates that when an insured
applies for a new policy, a "written notice identifying [all coverage information]
and containing a buyer's guide and a coverage selection form" be provided to
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the insured. Baldassano, 396 N.J. Super. at 454 (citing N.J.S.A. 39:6A-23(a),
(c)). If an insured is applying for a new policy, the insured must select from the
options available on the coverage selection form, and sign and return the form
to the insurer. N.J.S.A. 39:6A-23(a); N.J.A.C. 11:3-15.7(a). It is immaterial
which party physically completed the coverage selection form, as long as the
coverage selection form was signed and returned by the insured. Baldassano,
396 N.J. Super. at 457. A completed and executed coverage selection form is
"prima facie evidence of the named insured's knowing election or rejection of
any option." N.J.S.A. 39:6A-23(e).
Although it remains in dispute what coverage Lynval actually requested
from State Farm, as the Supreme Court noted in Puder, self-serving assertions
or conclusory statements in certifications are insufficient to overcome a motion
for summary judgement. Puder v. Buechel, 183 N.J. 428, 440-41 (2005). Here,
plaintiffs presented only Lynval's assertions in the form of a deposition and
certifications as evidence that Lynval chose the maximum PIP coverage
available. By contrast, State Farm produced the completed coverage selection
form, its insurance application page, the subsequent policy renewal documents
of the policies issued from 2012 through 2014, its payment log, and Adamo's
certification showing Lynval requested the $15,000 PIP coverage with a $2,500
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deductible.
Plaintiffs contend that Lynval presented the Geico declarations page only
in response to the State Farm agent's request to see what type of insurance policy
he had at the time. However, Lynval claims he specifically told the agent that
he did not want a policy similar to the original Geico policy. State Farm claims
that at this initial meeting, Lynval requested the same coverage he had under his
then-current insurance policy with Geico. The State Farm agent alleges that to
avoid any misunderstanding, Lynval presented a copy of the declarations page
of the Geico policy, which included a $15,000 PIP limit and a $2,500 deductible.
During this meeting, Lynval signed the blank coverage selection form, but he
did not personally select his coverage on the form because he was on his lunch
break and had to quickly return to work. However, even if Lynval did not
receive the coverage he allegedly requested, it is not disputed that he did not
review the documents State Farm sent him that contained his insurance policy
and automatic renewal forms. The only explanation Lynval offered for his
failure to review these documents is that he is not "astute enough to go through"
the forms.
Willful blindness is not a defense. Insureds are under a duty to examine
their insurance documents and to notify the insurer if there is a discrepancy
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between what they initially requested and what the insurer has actually provided.
Millhurst Milling & Drying Co. v. Auto. Ins. Co., 31 N.J. Super. 424, 435 (App.
Div. 1954). Lynval had an affirmative duty to review his insurance policy
obtained from State Farm. The "legislative and regulatory design [behind
N.J.S.A. 39:6A-23] 'was to create a milieu in which New Jersey insureds would
inform themselves about available coverage from the written notice and buyer's
guide and make intelligent choices based on that information . . . .'" Strube, 277
N.J. Super. at 240 (quoting Avery v. Arthur E. Armitage Agency, 242 N.J.
Super. 293, 305 (App. Div. 1990)). The insured is expected to act as "a
conscientious policyholder, [who] upon receiving the policy, . . . examine[s] the
declaration page to assure himself that the coverages and their amounts . . .
accord with his understandings of what he is purchasing." Lehrhoff v. Aetna
Cas. and Sur. Co., 271 N.J. Super. 340, 346-47 (App. Div. 1994).
Reviewing the facts in the light most favorable to plaintiffs, it is
undisputed that a review of the documents would have revealed that State Farm
did not provide the coverage Lynval allegedly requested. Lynval had multiple
opportunities to correct this alleged error long before the 2014 accident by
reviewing the automatic renewal pages and other documents State Farm
provided to him. These documents were specifically designed to apprise
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consumers like Lynval about the content of their insurance policy and the
coverages available. Stated differently, Lynval was obligated to alert State Farm
of the inconsistencies between what he allegedly requested and what the policy
provided. As observed by the Supreme Court, the Legislature intended that
N.J.S.A. 17:28-1.9 confer immunity:
in circumstances relating to an insured's election of
UIM coverage when the insured attempts to later shift
the blame for a decision to opt for any level of coverage
less than the maximum back onto the insurer, as long as
the insurer has complied with its obligations to make
known the availability of all possible limits as required
by the statute.
[Pizzullo v. N.J. Mfrs. Ins. Co., 196 N.J. 251, 268
(2008).]
Here, the first two requirements for immunity under N.J.S.A. 17:28-1.9 have
been met. Plaintiffs were provided with the minimum coverage required by law,
and defendant has complied with the coverage selection requirements under
N.J.S.A. 17:28-1.9(b).
Plaintiffs also argue that State Farm is not immune from liability because
its actions were willful, wanton, or grossly negligent because: (1) its agent
deliberately completed the coverage selection form with coverages that Lynval
did not select; and (2) State Farm did not take measures to determine whether
plaintiffs had private health insurance. In response, State Farm argues that the
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burden is on the insured to provide proof of adequate health insurance. We agree
with State Farm's argument.
This court has defined "willful" conduct under N.J.S.A. 17:28-1.9 to refer
to a "deliberate or intentional act. An insurer will be held liable for its 'willful'
conduct, if it deliberately misrepresents the scope of available coverage in a
given policy." Pizzullo v. N.J. Mfrs. Ins. Co., 391 N.J. Super. 113, 125 (App.
Div. 2007), rev'd on other grounds, 196 N.J. 251 (2008). Similarly, wanton acts:
encompass conduct showing an extreme indifference or
reckless inattention to material details that result in
damages to the insured . . . a wanton act nevertheless
connotes an utter disregard for the rudimentary
responsibility of providing complete and accurate
information to the insured regarding the available
coverage under a particular policy of insurance.
[Id. at 125-26.]
Finally, gross negligence includes acts that are a "deviation from the standard
of reasonable professional conduct expected from an insurance carrier." Id. at
126. An insured must prove that:
(1) he or she sustained damages resulting from the
election of a given level of coverage; (2) the alleged
improper election of coverage was caused by an act of
commission or omission by the insurer; and (3) this act
of commission or omission was the result of a gross
negligence; that is, a high level of incompetence,
inattention, or indifference that involves more than
simple negligence.
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[Id. at 126-27.]
Plaintiffs have not offered any evidence to conclude that State Farm owed
a duty to Lynval to affirmatively investigate whether each member of the family
had private health insurance. Plaintiff relies on Gallagher v. New England Mut.
Life Ins. Co., 19 N.J. 14, 22 (1955), for the proposition that an insurer has a duty
to investigate when information obtained during the application process reveal s
facts that "seriously impair the value of . . . the application." However, the Court
also explained in Gallagher that this duty arises only after an insured fully
discloses all facts in an application when such information is requested. Ibid.Furthermore, it is the insured:
who has the necessary complete knowledge of such
facts, and his statements and answers in the application
are the determinant qualitative factor in the equation of
insurability which the insurer has to resolve before
issuing a policy. It is only when the independent
investigation of the company discloses sufficient facts
to seriously impair the value of this determinant factor
that a further duty rests upon the insurer to investigate
the statements and admissions in the application.
[Ibid.]
Thus, the duty to investigate only arises when information is received that
would trigger the need for an investigation. Plaintiffs nevertheless argue that
the State Farm agent who interacted with Lynval during the initial meeting had
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the opportunity to ask Lynval to identify the type of health insurance carried by
each member of his household. Plaintiffs note that the agent asked Lynval about
each potential insured's previous driving history and requested information
about each vehicle that would be covered under the policy. The record shows,
however, that in response to the agent's request for information about Lynval's
health insurance, Lynval presented his private health insurance card.
Furthermore, questions about personal health insurance are not among the
questions State Farm agents are required to ask potential insureds. At the time
plaintiffs acquired the State Farm policy, there was no reasonable basis that
would have prompted State Farm to investigate plaintiffs' health insurance
status. The State Farm agent did not have a legal obligation to investigate each
potential insured's personal health insurance. The Law Division correctly
granted State Farm's motion for summary judgment pursuant to the immunity
provisions in N.J.S.A. 17:28-1.9.
Affirmed.
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