Choice of law – and the deemer statute – it is just the beginningMarch 22, 2009

Careplus Med. Supply, Inc. v Selective Ins. Co. of Am., 2009 NYSlipOp 29109 (App. Term 2d Dept. 2009)

I think someone out there knew it would be a matter of time before a “Trans-Hudson” (a term involving a New Jersey policy and New York loss) no-fault case would find its way into the court system. It just did. Not surprisingly, the court ruled New Jersey law would apply.

Factually, the case involved a New Jersey policy, New Jersey insured and a New York accident. There is a legion of case law out there that made this result preordained. There are, however, broader issues that this case represents. Arguably, a case predicated upon New Jersey law must be brought within two years of the last payment or two years fromthe date of loss, which ever is greater (New Jersey PIP Law). Stranger pedestrians, consistent with NJ Pip law, are exempted from coverage, upon the presentation of a proper policy endorsement. Furthermore, a provider must make a prima face case of medical necessity and causation to be entitled to no-fault benefits under New Jersey law.

But under New Jersey law, there are pre-certification requirements and sizable deductibles. While the standard New Jersey policy offers $250,000 in first-party benefits, the New Jersey fee schedule rules, in accordance with New Jersey’s 1998 Automobile Insurance Cost Reduction Act (AICRA), do not allow certain services to be compensable. Case and point: CPT services and video fluoroscopy services are per se not compensable under New Jersey law. We all know this is not the case in New York. I will leave the policy determination as to whether these tests should be compensable to somebody else.

But, the deemer statute (Ins Law 5107) adds some wrinkles to this paradigm.

In fact, wouldn’t the deemer statute mandate that the injured person (or his assignee) receive the benefit of the vast array of services, without the co-pays and pre-certs, that the New York fee schedule offers? Otherwise, the deemer statute is without force.

Consider the hypothetical no-fault statute that allows unlimited benefits, yet charges a 90% co-pay up to some indeterminate sum. Clearly, the deemer statute would mandate New York style benefits up until the first $50,000 that is paid out under the policy.

Therefore, it follows that in these “Trans-Hudson” cases, benefits up until the first $50,000 should be paid in accordance with the greater of the New Jersey or New York fee schedule. Should the sister-state’s policy allow for first-party no-fault benefits in excess of $50,000 (this includes only New Jersey and Michigan), then that state’s fee schedule rules would be in effect from dollar $50,0001 up until the policy limit. But, if the sister state’s fee schedule rules are more beneficial to the Claimant that New York’s fee schedule rules, then it would follow that the sister state’s fee schedule rules would need to be followed.

But you can see that we have just touched the surface with these Trans Hudson cases… The details will need to be filled in at a later time.