Summary of Fernandez v. Nationwide Mutual Fire Insurance

Facts:

On February 4, 2004, Sebastian Fernandez was critically injured in a car accident when the automobile he was driving was struck by a commercial vehicle. After winning an award at arbitration, Mr. Fernandez instituted an action for a declaratory judgment regarding his entitlement to the funds. Both he and Nationwide, his insurer, filed motions for summary judgment. The trial judge directed that the funds be paid to Fernandez. Nationwide appealed and the Appellate Division reversed. Eventually, the New Jersey Supreme Court agreed to hear the case.

Holding:

The New Jersey Supreme Court ruled, “The Appellate Division’s decision correctly held that the insurer of the responsible party, and not the injured victim’s insurer, was liable for the expense of PIP benefits for the victim.” Fernandez v. Nationwide Mut. Fire Ins. Co., 199 N.J. 591, 593 (2009). The Court noted that the statute regarding payment of personal injury protection (PIP) benefits, N.J.S.A. 39:6A-9.1, is remedial legislation that is given a liberal construction. In coming to its conclusion, the Court explained that requiring the tortfeasor’s PIP carrier, rather than the injured accident victim’s insurer, to be liable for the expense of PIP benefits advances stability in the insurance marketplace and does not produce an unjust result. The Court also noted that its result has been the controlling application of the No-Fault Law in New Jersey for more than a decade.

Legislative History of N.J.S.A. 39:6A-9.1:

The New Jersey Automobile Reparation Reform Act (“No Fault Act”) was enacted in order to address four major concerns: 1) reparation, 2) cost, 3) availability, and 4) judicial economy. According to the Commission Report, the reparation objective was viewed as the primary purpose of an automobile insurance system and was given priority in formulating the proposals that served as the basis for the PIP statute. Moreover, the failure of many automobile accident victims to receive adequate reimbursement for their injuries was considered a major deficiency in the tort liability system that existed prior to the institution of the no-fault law and an unwarranted hardship upon unfortunate victims. In short, N.J.S.A. 39:6A-9.1 was enacted to guard against these problems.

The Takeaway:

· A tortfeasor’s insurer is liable for the expense of PIP benefits, not the accident victim’s insurer.

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