DIGEST: Evidence that insurance carrier paid PIP benefits is not admissible in a UIM case to prove that the accident was the proximate cause of the insured’s injuries.

CASE NOTE: Plaintiff, John Bardis, was injured in an automobile accident on February 13, 1997. He settled his claim with the tortfeasor and filed suit against First Trenton, his personal automobile insurance carrier, for underinsured (UIM) benefits. Bardis claimed that he sustained a herniated lumbar disc in the accident that required a laminectomy and fusion surgery. First Trenton claimed that the herniation and the surgery were caused by a combination of a pre-existing degenerative disc disease and a subsequent automobile accident.

The case was tried on damages only. The jury found that the plaintiff’s injuries were not proximately caused by the February 1997 automobile accident. The plaintiff appealed. He argued that his medical bills were paid by First Trenton under his PIP coverage and, accordingly, he should have been entitled to a directed verdict on the issue of causation during the UIM trial.

The plaintiff had a long prior and subsequent medical history. He was involved in an automobile accident in 1991 in which he injured his back and was treated for about a year; however, he testified that he was symptom-free.

During the February 1997 accident, he was struck in the rear while stopped to make a turn. He went to the emergency room the next day with complaints of pain in his neck, back and left shoulder. His x-rays were substantially negative, but he did have a preexisting degenerative disc disease in his low back.

Bardis did not lose any time from work but he started to treat with Dr. Brian Halpern several weeks after the accident. An MRI performed in April 1997 showed a cervical disc herniation at C4-5. The lumbar MRI did not show any herniations but did reveal a bulging disc at L4-5 as well as some desiccation and stenosis at various levels. The left shoulder disclosed a torn rotator cuff.

Bardis was involved in a subsequent accident, a head-on collision, on September 11, 1997. He had a new set of MRI’s in October 1997 that showed a herniated disc at L4-5 (which had previously been a bulge), a cervical bulge (which had previously been a herniation) and a tear of the rotator cuff.

In 1999, Bardis was involved in another subsequent accident. An MRI performed in August 2001 showed degenerative disc disease at L4-5 with a small posterior herniated disc.

Bardis underwent spinal surgery in 2003 including an L4-5 laminectomy and a fusion. Dr. Halpern testified on behalf of the plaintiff that the herniated lumbar disc and the spinal fusion were caused by the February 1997 automobile accident. He agreed that the degenerative disc disease (desiccation and stenosis) were unrelated to the accident and that the herniated disc at C4-5 had reabsorbed.

The defendant produced Dr. Douglas Noble, a neuroradiologist, as an expert witness. Dr. Noble testified that the herniated lumbar disc was not related to the February 1997 accident. He noted that the herniation was not present on the April 1997 MRI and did not appear until the October 1997 MRI, which was one month after the subsequent September 1997 accident. He agreed that the herniated cervical disc had reabsorbed.

At the time of the accident, the plaintiff was insured by the defendant, First Trenton, and his policy provided personal injury protection (PIP) benefits. He submitted his medical bills for payment and the bills were reviewed by Susan Wetherell, a claims representative. She testified at her deposition that she would review the medical records and reports to determine if the treatment was reasonable, necessary and related to the accident. In this case, she authorized the payment of the medical bills for the 2003 back surgery based upon the medical reports submitted by the treating doctors and doctors who examined Bardis for the company.

At the time of trial, the plaintiff sought to present Wetherell as a witness on the issue of causation. He contended that, by paying PIP benefits, First Trenton had conceded that the herniated lumbar disc and spinal surgery were caused by the February 1997 accident. The judge agreed to permit her to testify that she decided to pay the bills but not to state the opinions of the doctors whose reports she read. The parties then stipulated that the “medical bills were all paid by Susan Wetherell, a representative of the defendant after her determination that they were causally related to the February 13, 1997 motor vehicle accident.”

At the close of the plaintiff’s case, he moved for a directed verdict on the issue of causality. He again argued that he was entitled to a judgment on causation because First Trenton, as the PIP carrier, had already determined that the medical bills for the surgery were causally related. The trial court held that the stipulation simply contained facts that the jury could accept or reject along with the other evidence presented by the defendant.

The Appellate Division affirmed the final judgment in favor of the defendant for both evidentiary and public policy reasons. With respect to the evidence, the Court noted that “UIM cases are tried as if they are third-party tort actions” with the UIM carrier substituted for the tortfeasor. Under the No Fault Act, the payment of PIP benefits is not admissible in a third party liability action. Thus, an insurance carrier’s decision to pay PIP benefits is “similarly inadmissible in the UIM trial.”

In addition, the Court noted that the carrier’s decision to pay PIP benefits was based upon the interpretation of the medical reports by Wetherell, a claims representative. The Court found that she was not competent to testify since the jury would have heard “a medical opinion of a lay witness, formed from reports of experts who were not witnesses at trial.”

With respect to public policy, the Court explained that one of the purposes of the No Fault Act was to provide for the prompt payment of PIP benefits. Nonetheless, it would “complicate” a carrier’s decision to pay those benefits if they were bound in a subsequent UIM action to its determination of causation. “An insurer may think twice about paying even relatively small PIP claims if it anticipates a potential UIM claim in the future, which at the very least could delay the payment of benefits, frustrating the public policy of expeditious payment of medical expenses.”

 

Thus, the Appellate Division held that “for evidentiary and public policy reasons…evidence that an insurance carrier paid PIP payments on an insured’s behalf is not admissible in a UIM case to establish that the accident was a proximate cause of the insured’s injuries.”

COMMENT: The Court recognized that the findings of a PIP arbitrator with respect to causation may be binding in both a subsequent third-party action against a tortfeasor and a subsequent UIM action. If the arbitrator decides the issue of proximate cause based upon proper medical proofs, the parties may be collaterally estopped from re-litigating the same issue in a subsequent proceeding. In this case, however, the issue of causation was never litigated in a prior proceeding but was merely determined by a claims representative based upon a layman’s review of the medical records.

Most importantly, the Court noted that “though plaintiff could have called the doctors who examined him in conjunction with his PIP applications as witnesses, he did not do so.” The opinion does not include the reports of the doctors who examined the plaintiff for the PIP carrier; however, it is reasonable to assume that they did find that the herniated lumbar disc and the spinal surgery were causally related to the February 1997 automobile accident. The result of this case might have been different if the plaintiff had called these doctors (who examined him at the request of the defendant) rather than rely upon a stipulation from a claims representative.

There was another issue raised by this appeal. Prior to jury selection, the plaintiff asked the court to tell the jury that “the insurance company, not the driver of the vehicle who caused the February 1997 accident, was the defendant.” The court refused to name the insurance company as the defendant but, instead, told the jury that the defendant was the driver of the car, Joseph Bologna.

The Appellate Division found that it was within the discretion of the trial judge to determine whether to advise the jury that the defendant was an insurance company; however, the Court questioned “the general wisdom of not telling the jury the truth about who the defendant is.” Under the circumstances of this case, the Court noted that “it would have been better” to tell the jury that the carrier was the defendant. If so, the jury should have been instructed that the fact that the defendant is an insurance company “has no relevancy on the issue of damages and that the value of those damages must be measured by the evidence of those damages presented during trial, unaffected by the fact that plaintiff seeks recovery from his insurer.”

 

LINK: http://www.judiciary.state.nj.us/opinions/a1470-06.pdf