A class action lawsuit in Camden, New Jersey, federal court claims The Travelers Companies and subsidiary St. Paul Protective Insurance are shortchanging New Jersey policyholders who bring personal injury protection claims.
When policyholders bring claims under their PIP coverage with Travelers and St. Paul, the amount of coverage is reduced by the deductible, typically $500, and the co-payment, which varies, the suit claims.
But the complaint cites a March 31 published decision from a New Jersey appellate court that ruled purchasers of PIP coverage from Travelers are entitled to reimbursement for the entire policy amount, without reduction of a deductible or co-payment.
Travelers and St. Paul face claims for breach of contract, violation of the PIP statute and the New Jersey Consumer Fraud Act. The suit was brought by Miller Shah of Hoboken, Popjoy & Kelly of Voorhees, Hoffman DiMuzio of Woodbury and Trimble & Register of Turnersville.
Class representatives include Courtney Thorson, who bought $15,000 in PIP coverage from Travelers. After suffering injuries in an auto accident, Thorson sought coverage in the full policy amount for medical expenses, but she was told she was entitled to only $13,600. Travelers excluded the $500 deductible and a $900 co-payment obligation.
But in the Appellate Division case Birmingham v. Travelers New Jersey Insurance, the court said Travelers must pay PIP claims based on the entire policy amount, and not reduce payouts based on deductibles or co-payments.
In that case, plaintiff Peggy Birmingham had $15,000 in PIP coverage, but she was reimbursed for only $12,000 in medical expenses after she was injured in a car crash, with Travelers applying a $2,500 co-payment and a $500 deductible. But a trial judge said those deductions were illegal, and the appeals court agreed.
The appeals court said “nothing in the policies’ declaration pages, coverage grants, or exclusions clearly communicated to either plaintiff that their statutorily mandated PIP limits of liability in either policy would be reduced by the amount of their chosen deductibles.”
The policy language was ambiguous as to the impact of a deductible or co-payment on the policy limit, the appeals court said.
The appeals court affirmed a ruling by Judge Samuel Ragonese in Gloucester County Superior Court that favored of two Travelers policyholders who sought payouts of the full policy amount without reductions for a deductible or co-payment.
The class action is brought on behalf of all persons who purchased PIP coverage from the defendants for vehicles registered in New Jersey and who received less than the PIP coverage paid for because the deductible or co-payment obligation was excluded from the reimbursement amount.
The suit seeks treble damages under the CFA. It asserts Travelers’s acts and omissions “directly and proximately caused plaintiffs and the class to suffer an ascertainable loss in the form of, inter alia, money spent purchasing coverage by virtue of defendants’ fraudulent conduct, which plaintiffs and the class would not have purchased had they been aware of the true nature of the PIP coverage.”
Travelers did not respond to a message seeking comment about the suit. Lawyers for the plaintiffs and the class also did not respond to messages seeking comment about the suit.