New personal injury protection regulations in New Jersey

New personal injury protection laws are in effect in New Jersey after a battle in the state legislature that lasted for over a year. On Nov. 5, regulations began limiting certain medical providers from obtaining PIP coverage for back procedures, among other provisions. PIP is insurance that pays for injuries after a car accident no matter who is at fault. PIP is mandatory in New Jersey, and the state requires at least $15,000 in minimum coverage. Insurance companies must also offer drivers the option to purchase $10,000 of bodily injury liability coverage.

Many New Jersey drivers choose to purchase maximum PIP coverage, which is $250,000. Insurance companies have claimed that this amount is raising costs for PIP payouts and can lead to insurance fraud and abuse.

New Jersey does have the third-highest premiums of any state in the U.S., averaging $1,100 per year per driver. The new regulations aren’t expected to reduce premiums for drivers. Instead, insurance companies intend to use the savings to lessen the chances for rate increases. Insurers pay out $1.30 for PIP coverage for every $1.00 they collect in PIP-related costs.

Insurance disputes

The new law creates a fee schedule for certain medical procedures, meaning many procedures will have caps on the amount a doctor can be paid. In the debate leading up to the legislation, several doctors commented that limiting access to health care could provide incentive for doctors to decline to care for PIP patients. It could also drive certain specialists in the medical community to move to a different state. As a result, the state removed 117 procedures from its price codes after finding more study was needed on the actual costs of these procedures.

The new law also restricts ambulatory surgical centers from performing spinal surgeries. Ambulatory surgical centers provide outpatient surgery and are not connected to a hospital. The state claims it is protecting patients, while ambulatory surgical centers argue there is no evidence of increased patient risk. The new regulations may severely inhibit the practices of ambulatory surgical centers focused on treating back injuries.

Arbitration changes

In addition to the fee scheduling, the new law changed some arbitration provisions for PIP cases. Claims under $1,000 will now not receive an in-person hearing. The new law also limits the amount of attorneys’ fees insurers must provide. If arbitration results in the insurer having to pay a medical provider it denied, then the insurer must pay the medical provider’s insurance fee.

The New Jersey Association for Justice, an advocacy group which represented plaintiff’s attorney viewpoints in the matter, told the New Jersey Star-Ledger it was concerned that the new regulations on arbitration might limit litigation for plaintiff’s in dispute with their insurance companies.