LLEDON JAMES VS. STATE FARM INSURANCE COMPANY (L-5051-15, ESSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4761-15T2

LLEDON JAMES and LURLINE
JAMES,
APPROVED FOR PUBLICATION
Plaintiffs-Appellants,
January 18, 2019

v. APPELLATE DIVISION

STATE FARM INSURANCE
COMPANY,

Defendant-Respondent.
_______________________________

Argued September 20, 2017 – Decided January 18, 2019

Before Judges Fuentes, Koblitz and Suter.

On appeal from Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-5051-15.

Jeffrey A. Rizika argued the cause for appellant
(Javerbaum, Wurgaft, Hicks, Kahn, Wikstrom &
Sinins, attorneys; Jeffrey A. Rizika, of counsel and on
the brief).

Thomas W. Matthews argued the cause for respondent
(Soriano, Henkel, Biehl & Matthews, attorneys;
Thomas W. Matthews, on the brief).

David J. Karbasian argued the cause for amicus curiae
New Jersey Association for Justice (Law Offices of
David J. Karbasian, attorneys; David J. Karbasian, on
the brief).
 The opinion of the court was delivered by

FUENTES, P.J.A.D.

Lynval James and plaintiff Lurline James are husband and wife. Their

household includes their adult son plaintiff Lledon James, who was a licensed

driver at all times relevant to this case.1 Lynval purchased an automobile policy

from defendant State Farm Insurance Company (State Farm) listing his wife and

son as additional insureds. Plaintiffs claim that when Lynval purchased this

policy from State Farm, he requested the maximum Personal Injury Protection

(PIP) benefits of $250,000, and designated PIP as primary for medical expenses.

After Lledon and his mother Lurline were involved in a car accident, plaintiffs

claimed they discovered that the State Farm policy provided only $15,000 in PIP

coverage and designated a private health insurance provider as the primary for

PIP benefits.

Plaintiffs filed a verified complaint and an order to show cause seeking to

reform the State Farm policy to provide the maximum $250,000 PIP benefits.

Plaintiffs argued that the insurance policy as written was invalid because Lledon

was covered by Medicaid, not by a private health insurance carrier. Plaintiffs

1
Because plaintiffs have the same last name, we will refer to them by their first
names. No disrespect is intended.
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also alleged that State Farm's actions were willful, wanton, intentional, grossly

negligent and in reckless disregard of their legal rights.

State Farm filed a responsive pleading in which it argued it was immune

from civil liability as a matter of law pursuant to N.J.S.A. 17:28-1.9(a).

Alternatively, State Farm claimed the PIP benefits coverage in the policy is the

coverage Lynval requested at the time he purchased the policy. Plaintiffs filed

a motion for partial summary judgment, requesting judicial reformation of the

policy to reflect $250,000 in PIP coverage. State Farm cross-moved for

summary judgment relying on the immunity provided by the Legislature in

N.J.S.A. 17:28-1.9(a).

The Law Division judge assigned to this case granted summary judgement

in favor of State Farm, finding it was immune from liability in this case under

N.J.S.A. 17:28-1.9(a). The judge found the record indisputably showed Lynval

signed the coverage selection form that contained a $15,000 limitation on PIP

benefits coverage and designated the health insurance provider as primary. The

motion judge also found that at the time Lynval requested this automobile policy

from State Farm, he presented his private health insurance card and his

declarations page from his previous automobile insurance policy with Geico,

which provided coverage that "was exactly the same as what was selected from

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State Farm in this case." Finally, the judge noted that Lynval renewed the State

Farm automobile policy multiple times over a two-year period without objection

or modification.

In light of these undisputed facts, the judge concluded plaintiffs had not

presented evidence that shows State Farm's conduct in this case was willful,

wanton, or grossly negligent. The judge held State Farm did not have a legal

obligation to determine whether each member of an insured's household is

covered by private health insurance at the time the insured signs the coverage

selection form. The motion judge granted State Farm's cross-motion for

summary judgment and dismissed plaintiffs' verified complaint with prejudice

pursuant to the immunity provisions in N.J.S.A. 17:28-1.9(a).

In this appeal, plaintiffs argue the Law Division erred when it found State

Farm immune from liability under N.J.S.A. 17:28-1.9(a). The New Jersey

Association for Justice, appearing as amicus curiae, argues that plaintiffs' policy

should be reformed to reflect the maximum PIP benefits available because State

Farm's policy violates both State administrative regulations and the federal

Medicare Secondary Payer Act. We reject these arguments and affirm

substantially for the reasons expressed by the motion judge. We gather the

following facts from the record developed before the Law Division.

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 I

On October 11, 2012, Lynval obtained an auto insurance policy from

Joseph Adamo's State Farm Insurance Office in North Arlington. This policy

covered Lynval, his wife Lurline, and his adult son Lledon. Lynval gave the

insurance agent: (1) a copy of the declarations page from an automobile

insurance policy he had with Geico, which contained $15,000 in PIP coverage

and a $2,500 deductible; and (2) his private health insurance card. Lynval's

private health insurance did not cover his adult son or his wife. Lurline had her

own health insurance through United Healthcare/Oxford; Lledon had health

insurance with New Jersey Family Care, otherwise known as Medicaid.

During this initial encounter, Lynval claims he told the State Farm agent

that he wanted standard PIP coverage of up to $250,000 and a $2,500 deductible.

With respect to the primary coverage for payment of medical expenses, Lynval

claims he told the agent he did not want his private health insurance to be the

primary medical coverage provider for PIP. According to Lynval, the coverage

selection form document was blank when he signed it. He claims he was

presented with only the fifth page of the coverage selection form which

contained only an area for signatures. He signed the form accordingly. Lynval

also claims the remaining pages of the coverage selection form were filled out

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by the State Farm agent after he signed the form and returned to work.

Specifically, Lynval claims the handwriting on the top of the second page of the

coverage selection form is not his handwriting; he also did not see this

handwriting or the selections contained therein at the time he applied for

insurance. Finally, Lynval claims he did not date the document that afternoon

and the date reflected at the bottom of page five of the coverage selection form,

(which is directly beneath his signature), is not in his handwriting.

State Farm refutes these allegations. According to State Farm, its agent

provided Lynval with the New Jersey Standard Policy Coverage Selection form

that outlines the various types of coverage available for an insured to select. The

record shows Lynval signed the coverage selection form and selected $15,000

in PIP coverage with a $2,500 deductible, the same coverage he had previously

with Geico. The coverage selection form also shows Lynval selected his

personal health insurance policy as the primary for PIP by name and policy

number. Lynval authorized this coverage arrangement, effective October 2012.

State Farm emphasizes that this policy was automatically renewed several times

from October 2012 to September 2014. The automatic renewal documents

stated that the PIP medical expense benefit limit was $15,000 with a $2,500

deductible. The documents also included language instructing insureds that "[i]f

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the above information is incomplete or inaccurate, or if you want to confirm the

information we have in our records please contact your agent." Plaintiffs did

not take any action to correct or modify this information.

On September 10, 2014, Lurline and Lledon were both injured in a car

accident. Lynval reported the accident to State Farm and submitted a claim for

PIP benefits. Although Lynval acknowledged that the policy's declarations page

indicated he had selected the option with a $2,500 deductible and a $15,000 PIP

limit, he refuted the accuracy of these limitations. Lynval alleged he actually

selected $250,000 in PIP coverage. As provided by plaintiffs' automobile

policy, State Farm initially referred medical expenses related to the accident to

their private health insurance carriers. Later on, a State Farm representative

learned that Lledon did not have private health insurance but was covered

through New Jersey Family Care, or Medicaid. As required by N.J.S.A. 39:6A-

4.3(f), State Farm thereafter provided Lledon with PIP benefits and processed

his claims as though he did not have private health insurance at the time of the

accident. State Farm applied a deductible of $3,250, comprised of the $2,500

deductible included in the policy and a $750 statutory penalty because Lledon

did not have private health insurance. Ibid.

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 II

The trial court must grant a motion for summary judgment when "the

pleadings, depositions, answers to interrogatories and admissions on file,

together with the affidavits, if any, show that there is no genuine issue as to any

material fact challenged and that the moving party is entitled to a judgment or

order as a matter of law." Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins.

Co., 224 N.J. 189, 199 (2016) (quoting R. 4:46-2(c)). To determine whether

there is a genuine issue of material fact in dispute, we must consider "whether

the competent evidential materials presented, when viewed in the light most

favorable to the non-moving party, are sufficient to permit a rational factfinder

to resolve the alleged disputed issue in favor of the non-moving party." Brill v.

Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). We apply these same

standards and review a trial court's order granting State Farm's motion for

summary judgment de novo. Globe Motor Co. v. Igdalev, 225 N.J. 469, 479

(2016).

After reviewing the record developed before the trial court against this

standard of review, we conclude State Farm is entitled to summary judgment as

a matter of law. N.J.S.A. 17:28-1.9 states in pertinent part:

. . . . no . . . insurer . . . shall be liable in an action for
damages on account of the election of a given level of

A-4761-15T2
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 motor vehicle insurance coverage by a named insured
as long as those limits provide at least the minimum
coverage required by law or on account of a named
insured not electing to purchase underinsured motorist
coverage, collision coverage or comprehensive
coverage. Nothing in this section shall be deemed to
grant immunity to any [insurer] causing damage as the
result of [its] willful, wanton or grossly negligent act of
commission or omission.

b. The coverage selection form required pursuant to
. . . [N.J.S.A. 39:6A-23] shall contain an
acknowledgement by the named insured that the limits
available to him for uninsured motorist coverage and
underinsured motorist coverage have been explained to
him and a statement that no . . . insurer . . . shall be
liable in an action for damages on account of the
election of a given level of motor vehicle insurance
coverage by a named insured as long as those limits
provide at least the minimum coverage required by law
or on account of a named insured not electing to
purchase underinsured motorist coverage, collision
coverage or comprehensive coverage, except for that
[insurer] causing damage as the result of [its] willful,
wanton or grossly negligent act of commission or
omission.

This statute was enacted "to abrogate prior judicial decisions holding

insurers . . . liable for failing to advise their customers of the availability of

additional underinsured and uninsured motorist coverage[,]" and to control the

"explosion of litigation by providing blanket immunity except in cases of

willful, wanton, or gross negligence." Strube v. Travelers Indem. Co., 277 N.J.

Super. 236, 237, 242 (App. Div. 1994). To obtain immunity under N.J.S.A.

A-4761-15T2
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17:28-1.9, an insurer must demonstrate that (1) the named insured had at least

the minimum coverage required by law; (2) the insurer did not cause the

insured's alleged damages by any willful, wanton or grossly negligent act of

commission or omission; and (3) the insurer complied with the coverage

selection requirements of N.J.S.A. 17:28-1.9(b). Baldassano v. High Point Ins.

Co., 396 N.J. Super. 448, 453-54 (App. Div. 2007). The insurer must also have

obtained the insured's acknowledgement that the available coverage limits were

explained to him or her, and that the insurer will not be liable for the insured's

selection of coverage that was chosen in accordance with subsection (a) of the

immunity statute. N.J.S.A. 17:28-1.9(b).

Here, State Farm has met the requirements for immunity under N.J.S.A.

17:28-1.9. Plaintiffs received the minimum coverage required by law, which

was the same coverage they had with Geico. State Farm did not act in a willful,

wanton, or grossly negligent manner and complied with the coverage selection

requirements of N.J.S.A. 17:28-1.9(b).

N.J.S.A. 39:6A-23 sets forth the coverage selection requirements

referenced in N.J.S.A. 17:28-1.9(b), which mandates that when an insured

applies for a new policy, a "written notice identifying [all coverage information]

and containing a buyer's guide and a coverage selection form" be provided to

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the insured. Baldassano, 396 N.J. Super. at 454 (citing N.J.S.A. 39:6A-23(a),

(c)). If an insured is applying for a new policy, the insured must select from the

options available on the coverage selection form, and sign and return the form

to the insurer. N.J.S.A. 39:6A-23(a); N.J.A.C. 11:3-15.7(a). It is immaterial

which party physically completed the coverage selection form, as long as the

coverage selection form was signed and returned by the insured. Baldassano,

396 N.J. Super. at 457. A completed and executed coverage selection form is

"prima facie evidence of the named insured's knowing election or rejection of

any option." N.J.S.A. 39:6A-23(e).

Although it remains in dispute what coverage Lynval actually requested

from State Farm, as the Supreme Court noted in Puder, self-serving assertions

or conclusory statements in certifications are insufficient to overcome a motion

for summary judgement. Puder v. Buechel, 183 N.J. 428, 440-41 (2005). Here,

plaintiffs presented only Lynval's assertions in the form of a deposition and

certifications as evidence that Lynval chose the maximum PIP coverage

available. By contrast, State Farm produced the completed coverage selection

form, its insurance application page, the subsequent policy renewal documents

of the policies issued from 2012 through 2014, its payment log, and Adamo's

certification showing Lynval requested the $15,000 PIP coverage with a $2,500

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deductible.

Plaintiffs contend that Lynval presented the Geico declarations page only

in response to the State Farm agent's request to see what type of insurance policy

he had at the time. However, Lynval claims he specifically told the agent that

he did not want a policy similar to the original Geico policy. State Farm claims

that at this initial meeting, Lynval requested the same coverage he had under his

then-current insurance policy with Geico. The State Farm agent alleges that to

avoid any misunderstanding, Lynval presented a copy of the declarations page

of the Geico policy, which included a $15,000 PIP limit and a $2,500 deductible.

During this meeting, Lynval signed the blank coverage selection form, but he

did not personally select his coverage on the form because he was on his lunch

break and had to quickly return to work. However, even if Lynval did not

receive the coverage he allegedly requested, it is not disputed that he did not

review the documents State Farm sent him that contained his insurance policy

and automatic renewal forms. The only explanation Lynval offered for his

failure to review these documents is that he is not "astute enough to go through"

the forms.

Willful blindness is not a defense. Insureds are under a duty to examine

their insurance documents and to notify the insurer if there is a discrepancy

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between what they initially requested and what the insurer has actually provided.

Millhurst Milling & Drying Co. v. Auto. Ins. Co., 31 N.J. Super. 424, 435 (App.

Div. 1954). Lynval had an affirmative duty to review his insurance policy

obtained from State Farm. The "legislative and regulatory design [behind

N.J.S.A. 39:6A-23] 'was to create a milieu in which New Jersey insureds would

inform themselves about available coverage from the written notice and buyer's

guide and make intelligent choices based on that information . . . .'" Strube, 277

N.J. Super. at 240 (quoting Avery v. Arthur E. Armitage Agency, 242 N.J.

Super. 293, 305 (App. Div. 1990)). The insured is expected to act as "a

conscientious policyholder, [who] upon receiving the policy, . . . examine[s] the

declaration page to assure himself that the coverages and their amounts . . .

accord with his understandings of what he is purchasing." Lehrhoff v. Aetna

Cas. and Sur. Co., 271 N.J. Super. 340, 346-47 (App. Div. 1994).

Reviewing the facts in the light most favorable to plaintiffs, it is

undisputed that a review of the documents would have revealed that State Farm

did not provide the coverage Lynval allegedly requested. Lynval had multiple

opportunities to correct this alleged error long before the 2014 accident by

reviewing the automatic renewal pages and other documents State Farm

provided to him. These documents were specifically designed to apprise

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consumers like Lynval about the content of their insurance policy and the

coverages available. Stated differently, Lynval was obligated to alert State Farm

of the inconsistencies between what he allegedly requested and what the policy

provided. As observed by the Supreme Court, the Legislature intended that

N.J.S.A. 17:28-1.9 confer immunity:

in circumstances relating to an insured's election of
UIM coverage when the insured attempts to later shift
the blame for a decision to opt for any level of coverage
less than the maximum back onto the insurer, as long as
the insurer has complied with its obligations to make
known the availability of all possible limits as required
by the statute.

[Pizzullo v. N.J. Mfrs. Ins. Co., 196 N.J. 251, 268
(2008).]

Here, the first two requirements for immunity under N.J.S.A. 17:28-1.9 have

been met. Plaintiffs were provided with the minimum coverage required by law,

and defendant has complied with the coverage selection requirements under

N.J.S.A. 17:28-1.9(b).

Plaintiffs also argue that State Farm is not immune from liability because

its actions were willful, wanton, or grossly negligent because: (1) its agent

deliberately completed the coverage selection form with coverages that Lynval

did not select; and (2) State Farm did not take measures to determine whether

plaintiffs had private health insurance. In response, State Farm argues that the

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burden is on the insured to provide proof of adequate health insurance. We agree

with State Farm's argument.

This court has defined "willful" conduct under N.J.S.A. 17:28-1.9 to refer

to a "deliberate or intentional act. An insurer will be held liable for its 'willful'

conduct, if it deliberately misrepresents the scope of available coverage in a

given policy." Pizzullo v. N.J. Mfrs. Ins. Co., 391 N.J. Super. 113, 125 (App.

Div. 2007), rev'd on other grounds, 196 N.J. 251 (2008). Similarly, wanton acts:

encompass conduct showing an extreme indifference or
reckless inattention to material details that result in
damages to the insured . . . a wanton act nevertheless
connotes an utter disregard for the rudimentary
responsibility of providing complete and accurate
information to the insured regarding the available
coverage under a particular policy of insurance.

[Id. at 125-26.]

Finally, gross negligence includes acts that are a "deviation from the standard

of reasonable professional conduct expected from an insurance carrier." Id. at

126. An insured must prove that:

(1) he or she sustained damages resulting from the
election of a given level of coverage; (2) the alleged
improper election of coverage was caused by an act of
commission or omission by the insurer; and (3) this act
of commission or omission was the result of a gross
negligence; that is, a high level of incompetence,
inattention, or indifference that involves more than
simple negligence.

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 [Id. at 126-27.]

Plaintiffs have not offered any evidence to conclude that State Farm owed

a duty to Lynval to affirmatively investigate whether each member of the family

had private health insurance. Plaintiff relies on Gallagher v. New England Mut.

Life Ins. Co., 19 N.J. 14, 22 (1955), for the proposition that an insurer has a duty

to investigate when information obtained during the application process reveal s

facts that "seriously impair the value of . . . the application." However, the Court

also explained in Gallagher that this duty arises only after an insured fully

discloses all facts in an application when such information is requested. Ibid.

Furthermore, it is the insured:

who has the necessary complete knowledge of such
facts, and his statements and answers in the application
are the determinant qualitative factor in the equation of
insurability which the insurer has to resolve before
issuing a policy. It is only when the independent
investigation of the company discloses sufficient facts
to seriously impair the value of this determinant factor
that a further duty rests upon the insurer to investigate
the statements and admissions in the application.

[Ibid.]

Thus, the duty to investigate only arises when information is received that

would trigger the need for an investigation. Plaintiffs nevertheless argue that

the State Farm agent who interacted with Lynval during the initial meeting had

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the opportunity to ask Lynval to identify the type of health insurance carried by

each member of his household. Plaintiffs note that the agent asked Lynval about

each potential insured's previous driving history and requested information

about each vehicle that would be covered under the policy. The record shows,

however, that in response to the agent's request for information about Lynval's

health insurance, Lynval presented his private health insurance card.

Furthermore, questions about personal health insurance are not among the

questions State Farm agents are required to ask potential insureds. At the time

plaintiffs acquired the State Farm policy, there was no reasonable basis that

would have prompted State Farm to investigate plaintiffs' health insurance

status. The State Farm agent did not have a legal obligation to investigate each

potential insured's personal health insurance. The Law Division correctly

granted State Farm's motion for summary judgment pursuant to the immunity

provisions in N.J.S.A. 17:28-1.9.

Affirmed.

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