Mr. Jerinsky had automobile liability insurance from Liberty Mutual Insurance Company. Mr. Kika was employed by CEVA Freight, LLC, and CEVA owned and self-insured the truck driven by Mr. Kika. CEVA did not maintain and was not required to maintain no-fault PIP coverage because the truck was a commercial vehicle.

After the accident, Mr. Jerinsky received medical treatment and applied to Liberty for PIP benefits. Liberty opened a PIP claims file and began paying Mr. Jerinsky's medical providers. Mr. Jerinsky also applied for automobile property damage benefits. Liberty paid both types of benefits on behalf of Mr. Jerinsky.

In August 2017, Liberty requested reimbursement from CEVA for the PIP benefits it had paid on behalf of Mr. Jerinsky. Liberty also informed CEVA that if it would not agree to provide reimbursement, Liberty demanded arbitration of its right to reimbursement of the PIP benefits.

CEVA denied Liberty's request and refused to arbitrate the issue, contending that Mr. Kika had not been at fault for the accident.

In September 2017, Liberty and Mr. Jerinsky sued CEVA and Mr. Kika. Liberty demanded reimbursement of the PIP benefits it had paid on behalf of Mr. Jerinsky. Liberty also demanded arbitration of its claim for reimbursement of the PIP benefits. In addition, Liberty and Mr. Jerinsky sought automobile property damages directly from CEVA and Mr. Kika for the alleged total loss of Mr. Jerinsky's vehicle.

Liberty again requested CEVA to consent to arbitration, but CEVA continued to refuse to arbitrate Liberty's PIP benefits claim. Liberty, therefore, filed a motion to compel CEVA to arbitrate the PIP benefit reimbursement claim, citing N.J.S.A. 39:6A-9.1.

CEVA opposed that motion, contending that its driver, Mr. Kika, was not a tortfeasor and the question of Mr. Kika's fault for the accident should be decided in a court proceeding and not at arbitration.

The trial court denied Liberty's motion to compel arbitration, and Liberty appealed.

Liberty argued that because CEVA's status as a self-insured entity brought it within the ambit of Section 9.1, CEVA had to arbitrate the issue of whether Mr. Kika had been negligent and, therefore, a “tortfeasor,” to determine whether Liberty was “legally entitled” to reimbursement of PIP benefits paid on behalf of Mr. Jerinsky.

For its part, CEVA contended that Mr. Kika's alleged negligence was a legal issue to be determined in a court proceeding and that Section 9.1 did not apply to it until Mr. Kika's status as a tortfeasor had been established.

The Appellate Court's Decision

The appellate court reversed, holding that Section 9.1 of New Jersey's no-fault law compelled arbitration as to whether a party was a tortfeasor when that issue was disputed.

In its decision, the appellate court explained that Section 9.1 provided that an insurer that paid PIP benefits as a result of an accident in New Jersey had a right to recover those benefits from any “tortfeasor” not required to maintain PIP protection or that did not maintain PIP protection.

The appellate court then ruled that the language of Section 9.1(b) was “clear on its face” when it stated that “the determination as to whether an insurer” was “legally entitled to recover the amount of payments and the amount of the recovery” shall be by agreement, or, “upon failing to agree, by arbitration.”

The appellate court concluded that interpreting Section 9.1 to include arbitration of factual disputes over whether an insured was a tortfeasor was consistent with and helped promote the goal of the no-fault law to “avoid excessive litigation related to accidents and insurance[.]”

The case is Liberty Mutual Ins. Co. v. Penske Truck Leasing, Co., No. A-5624-17T3 (N.J. Ct. App. May 23, 2019). Attorneys involved include: Clark & Di Stefano, PC, attorneys for appellants (Robert P. Clark, on the briefs). Marks O'Neill O'Brien Doherty & Kelly PC, attorneys for respondents (Michael J. Notartomas, on the brief).