New Jersey PIP Schedule Can Be Implemented After Appellate Ruling

After more than two years in waiting, a personal injury protection medical fee schedule is cleared for use with a recent ruling by the New Jersey Superior Court, Appellate Division.

"This long-awaited ruling will enable New Jersey to move forward with an important reform to the PIP reimbursement system, which is expensive, inefficient and anti-consumer," said Richard Stokes, counsel for the Property Casualty Insurers Association of America, in a statement. "Implementation of the PIP medical fee schedule is an important component in controlling costs in New Jersey."

The schedule has long been opposed by the New Jersey Medical Society. Medical professional proponents believe the fees listed in the fee schedule are too low, while insurance industry advocates said the proposed fees are too high. The latest ruling is in favor of the New Jersey Department of Banking and Insurance, which adopted the schedule early in 2007. Stokes said the new schedule "remains very generous to medical providers" but it will "move the system forward with more effective cost controls than currently exist."

In May, then-DOBI Commissioner Steve Goldman told A.M. Best he wanted to see the schedule implemented. Higher automobile insurance rates in New Jersey are being driven by medical costs, he said (BestWire, May 29, 2009). To the extent rates are being driven somewhat higher, injury costs are a principal cause. Allstate New Jersey Insurance Co. received approval from DOBI to raise auto rates nearly 9% for about 300,000 customers. The insurer said PIP costs, which increased 67% since 2003, were a factor in the increase (BestWire, May 7, 2009).

The top five writers of private passenger auto in New Jersey, according to A.M. Best state/line data for 2008 were: Allstate Insurance Group, with 15.4% market share; Berkshire Hathaway Insurance Group, with 14.1%; NJM Insurance Group, with 13.1%; Palisades Group, with 10.7%; and State Farm Group, with 9.0%.