SUBCHAPTER 37. ORDER OF BENEFIT DETERMINATION

SUBCHAPTER 37. ORDER OF BENEFIT DETERMINATION BETWEEN AUTOMOBILE PERSONAL

INJURY PROTECTION AND HEALTH INSURANCE

11:3-37.1 Purpose and scope

The purpose of this subchapter is to establish guidelines for the order of benefit determination between a

plan of health insurance and personal injury protection provided through an automobile policy pursuant to N.J.S.A.

39:6A-4, when a named insured elects to have his or her personal injury protection become secondary coverage for

the provision of benefits for medical expenses incurred due to injuries sustained in an automobile accident. This

subchapter also sets forth the requirements for the order of benefit determination between a plan of health insurance

and personal injury protection provided pursuant to N.J.S.A. 39:6A-4 or 39:6A-3.1, when personal injury protection

is primary coverage. The provisions of this subchapter shall apply to all automobile policies, as that term is defined

at N.J.S.A. 39:6A-2a, issued to New Jersey residents, or renewed on or after January 1, 1991, and to all health

benefits plans which have been or will be delivered or issued for delivery in this State.

11:3-37.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context

clearly indicates otherwise.

"Actual benefits" means those benefits determined to be payable for allowable expenses.

"Allowable expense" means a medically necessary, reasonable and customary item of expense covered by an

insured's health benefits plan(s) or PIP plan as an eligible expense, at least in part. When a plan provides benefits in

the form of services, the reasonable monetary value of each such service shall be considered as both an allowable

expense and a paid benefit.

"Benefits" means the provision of the following in consideration of payment of premiums or fees on a prepaid or

postpaid basis:

1. Services, including supplies;

2. Payment of expenses incurred;

3. A combination of 1 and 2 above; or

4. An indemnification.

"Eligible expense" means:

1. In the case of health benefits plans, that portion of the medical expenses incurred for treatment of

an injury which is covered under the terms and conditions of the plan, without application of the deductible(s) and

copayment(s), if any.

2. In the case of PIP plans, that portion of the medical expenses incurred for treatment of an injury

which, without considering any deductible and copayment, shall not exceed:

i. The percent or dollar amounts specified on the medical fee schedules, or the actual billed

expense, whichever is less; or

ii. The reasonable amount, as determined by the automobile insurer, considering the medical

fee schedules for similar services or equipment in the region where the service or equipment was provided, when an

incurred medical expense is not included on the medical fee schedules.

"Health benefits provider" means any person, whether subject to the regulation of the New Jersey Department of

Banking and Insurance, Department of Health and Senior Services, or both, or not otherwise subject to such

regulation, who contracts to provide health services, provide reimbursement for the cost of health services in whole

or in part, or to provide for indemnity in the event health services are used, in return for a prepaid or postpaid

premium or fee or other consideration, including, but not limited to:

1. Insurers, as defined at N.J.S.A. 17B:17-2;

2. Hospital service corporations, as defined at N.J.S.A. 17:48-1;

3. Medical service corporations, as defined at N.J.S.A. 17:48A-1;

4. Health service corporations, as defined at N.J.S.A. 17:48E-1;

5. Health maintenance organizations, as defined at N.J.S.A. 26:2J-2;

6. Dental service corporations, as defined at N.J.S.A. 17:48C-2;

7. Dental plan organizations, as defined at N.J.S.A. 17:48D-2;

8. Medicare;

9. Medicaid;

10. State Employees Health Benefits Plan;

11. CHAMPUS;

12. Self-insured programs; and

13. An entity organized under the laws of any other state or jurisdiction which delivers certificates to

residents of New Jersey evidencing coverage under a contract issued and delivered in a state or jurisdiction other

than New Jersey.

"Hospital expenses," when used by the automobile insurance PIP plan, means those expenses defined at N.J.S.A.

39:6A-2f.

"Injury" means bodily injury sustained by an insured as a result of an accident while occupying, entering into,

alighting from or using an automobile, or as a pedestrian, caused by an automobile or by an object propelled by or

from an automobile.

"Insured" means a person eligible for coverage, at least in part, for medical expenses incurred for treatment of

injuries, under an automobile policy PIP medical expense provision, and who meets the definition of a named

insured or family member.

1. Named insured means the person or persons identified as the insured in the automobile policy and

if an individual, that person's spouse, if the spouse is a resident of the same household, except that if the spouse

ceases to be a resident of the household of the named insured, coverage for that spouse shall continue until the

expiration of full term of any policy period in effect at the time of the cessation of residency.

2. Family member means any relative of the named insured or the named insured's spouse who:

i. Is related to the named insured or named insured's spouse by blood, marriage, adoption or

guardianship;

ii. Resides in the household of the named insured or spouse of the named insured; and

iii. Is not a named insured under another automobile policy.

"Medical expenses" is as defined in N.J.A.C. 11:3-4.2.

"Medical fee schedule" means that list of services, procedures and supplies to which have been assigned a

maximum fee or percentage of a fee payable by an automobile insurer for expenses incurred as a result of the

rendering to an insured any of those specific services, procedures or supplies for injuries, which list is set forth at

N.J.A.C. 11:3-29.

"Out-of-State automobile insurance coverage" or "OSAIC" means any coverage for medical expenses under an

automobile insurance policy other than PIP, as PIP is defined herein, including automobile insurance policies issued

in another state or jurisdiction.

"PIP" means personal injury protection coverage provided as part of an automobile insurance policy pursuant to

N.J.S.A. 39:6A-4 or 39:6A-3.1, issued in New Jersey, specifically those provisions for medical expenses coverage.

"Plan" means any policy, contract, certificate, booklet, evidence of enrollment, program, or other such term which

evidences the existence of a relationship between a health benefits provider or PIP carrier and an insured with

respect to the provisions of hospital, medical, surgical, dental and/or other health care related benefits, at least in

part.

"Primary coverage" means coverage by any plan which determines its actual benefits payable on allowable

expenses incurred by an insured for treatment of injuries without taking into consideration the existence of any

coverage for which the insured may be eligible provided secondary in accordance with this subchapter. There may

be more than one plan providing the insured primary coverage.

"Secondary coverage" means coverage by any plan which determines its actual benefits payable on all allowable

expenses incurred by an insured for treatment of injuries after all plans providing primary coverage have considered

expenses incurred and paid actual benefits.

11:3-37.3 Health benefits providers

(a) Nothing in this subchapter shall be construed as requiring any health benefits provider to offer, provide, or

continue coverage to or for any individual or group, except as may be set forth by other laws of this State, or of the

Federal government.

(b) Nothing in this subchapter shall be construed as requiring any health benefits provider to provide coverage for

any treatment or service not otherwise covered under the terms of the applicable health benefits plan.

converted on or after January 1, 1991, shall contain any provision, rider, waiver of endorsement or other instrument

which restricts, limits or excludes coverage, directly or indirectly, of services or expenses otherwise eligible under

the policy or contract on the grounds that such expenses or services would be covered under an automobile policy

PIP provision for which the insured would be eligible had the named insured on the automobile policy not selected

the PIP-as-secondary coverage option.

(d) No health benefits contract or policy delivered or issued for delivery in this State, or renewed, continued or

converted on or after January 1, 1991, shall contain any provision, rider, waiver or endorsement, or other instrument

which restricts, limits or excludes coverage, directly or indirectly, of services or expenses otherwise eligible under

the policy or contract on the grounds that:

1. Such expenses arise from an automobile-related injury;

2. Such expenses are covered or paid by PIP; or

3. Such expenses are covered or paid by OSAIC except for reductions in benefits when the health benefits

contract provides secondary coverage as defined in and permitted by this rule.

(e) A health benefits contract or policy may provide that it is always primary to OSAIC, or may provide that it will

determine its benefits as if it were secondary to any OSAIC. If the health benefits contract or policy provides that it

will determine its benefits as if it were secondary to OSAIC and the OSAIC either contains a provision that it is

always excess or secondary, or refuses to cooperate in determining the amount of benefits payable by the health

benefits plan as secondary coverage provider, the health benefits plan shall provide primary coverage.

11:3-37.4 Application of the PIP-as-secondary coverage option

(a) When a named insured elects the PIP option, whereby the named insured intends that medical expenses incurred

for treatment of an injury are to be covered by a health benefits provider or providers, as evidenced on the Coverage

Selection Form, then the medical expense provisions of the PIP coverage shall be considered to be secondary

coverage for the purposes of the order of benefit determination, and all health benefits plans of an insured subject to

the PIP option elected shall be considered to be primary coverage.

(b) The election by the named insured to make PIP medical expense provisions secondary coverage shall apply to

only the named insured and family members of the named insured who reside in the named insured's household and

are not named insureds under other automobile policies.

in force as to subsequent renewal or replacement policies until the automobile policy insurer or its authorized

representative receives a properly executed written request revoking the selection of this option.

(d) In the event that an insured is ineligible for health plan coverage of medical expenses, or is eligible for coverage

under a dental expense or dental service plan only when an injury occurs, despite the selection of the PIP-as-

secondary coverage option by the named insured, benefits shall be provided to the insured through PIP coverage in

accordance with N.J.A.C. 11:3-37.8.

11:3-37.5 Health benefit plan standards and the PIP premium reduction

(a) An automobile insurer may eliminate the premium reduction on the base rate applicable to the amount of

medical expense benefit chosen in conjunction with the PIP-as-secondary coverage option election if the automobile

insurer complies with (b) below, and verifies that the coverage specified by the named insured:

1. Excludes the provision of benefits for treatment of injuries of an eligible insured when expenses incurred

in relation to treatment of those injuries are eligible expenses under an automobile policy's PIP provisions; or

2. Provides that it is always secondary, or otherwise will not be a primary provider of benefits;

3. Provides benefits only for dental expenses or dental services; or

4. Provides benefits only for prescription drugs.

(b) An automobile carrier shall notify a named insured if the automobile insurer determines that the health benefits

plan(s) specified by the named insured contain exclusionary or restrictive coverage provisions as set forth in (a)

above, or if the automobile insurer determines that one or more of the insureds covered under the automobile

insurance policy is not provided coverage by at least one of the health benefit plan(s) specified by the named

insured, and, therefore, the named insured's premium reduction for PIP medical expense benefits will be eliminated.

1. The notice shall be in writing and shall specify the reasons why the automobile insurer believes the named

insured's health plan coverage is not in compliance with this subchapter.

2. The automobile insurer may include in the notice a demand for payment of the premium reduction difference

with an explanation that failure to pay the indicated premium reduction difference may result in early cancellation of

the automobile policy in accordance with (c) below.

3. The notice shall be sent no later than 30 days prior to the date of cancellation as calculated in accordance with

(c) below. A notice which is sent 30 days prior to the date of cancellation shall either contain a statement that it is a

notice of cancellation, or be attached to a notice of cancellation, setting forth the effective date of cancellation.

prior to the last full day of which premium received by the company, prior to the date of preparation of the

cancellation notice, would pay for coverage on a pro rata basis. In calculating the effective date of the cancellation,

the premium applicable to the coverage provided by the policy and the premium received by the company at or prior

to the time the cancellation notice was prepared shall be the premium used for the calculation and determination of

such effective date.

1. No cancellation in accordance with (c) above shall be effective unless prior thereto, the automobile

insurer shall have notified the named insured that the premium reduction difference had to be paid to avoid

cancellation, as specified in (b)2 above.

2. No cancellation notice shall be mailed prior to 30 days in advance of its effective date.

(d) If the insured provides payment of the full premium amount and subsequently provides proof that coverage is

not restricted in the manner set forth in accordance with (a) above, or that all insureds under the automobile policy

were provided coverage by a health benefits plan at the time notification of noncoverage was sent, and that such

coverage continues and is not restricted in the manner set forth in accordance with (a) above, the automobile insurer

shall refund the monies paid in excess of the full reduction, or shall credit any excess paid on the reduced premium

to the extent any premium payment is still unpaid on the policy.

11:3-37.6 Order of benefits determination when PIP is secondary coverage

(a) When the named insured of an automobile policy has selected the PIP-as- secondary coverage option, all health

benefits plans for which the insured is eligible shall provide coverage for the allowable expenses incurred by the

insured due to an automobile-related injury prior to any benefits for medical expenses being paid by a PIP plan.

(b) If the insured is eligible for coverage under more than one group health benefits plan, the group health benefits

plans shall coordinate benefits with one another in accordance with the rules set forth for such plans at N.J.A.C.

11:4-28.

for which the insured is eligible have paid benefits towards those allowable expenses.

(d) The PIP plan shall continue to be liable for expenses related to the same occurrence as the expenses are

incurred, whether or not the health benefits plan(s) in force at the time of the accident terminate(s) coverage, or

benefits provided under the health benefits plan(s) are exhausted subsequent to the occurrence of the accident, up to

the maximum PIP benefits available to the insured under the terms of the automobile policy.

(e) Total benefits paid by an insured's health benefits and PIP plans shall not exceed the amount of total allowable

expenses.

11:3-37.7 Determination of PIP medical benefits payable when PIP is secondary coverage

(a) In calculating the actual benefits to be paid by the automobile insurer when the PIP-as-secondary coverage

option has been selected, the automobile insurer shall first determine the amount of eligible expenses which would

have been paid after application of the deductible and copayment limitations had the PIP-as-secondary coverage

option not been selected.

1. In the event the remaining allowable expenses are less than the benefits calculated pursuant to (a) above,

the automobile insurer shall pay actual benefits equal to the remaining allowable expenses, without reducing the

remaining allowable expenses by its deductible or copayments.

2. In the event the remaining allowable expenses are greater than the benefits calculated pursuant to (a)

above, the actual benefits paid by the automobile insurer shall be the benefits calculated pursuant to (a) above,

without reducing the remaining allowable expenses by its deductible or copayments.

(b) In paying actual benefits, the automobile insurer shall not:

1. Reduce its actual benefits payable on account of any deductibles or copayments of the health benefits

plans which have provided benefits ahead of the PIP plan due to the selection of the PIP-as-secondary coverage

option; or

2. Reduce its actual benefits payable for any allowable expense remaining uncovered which item of

expense otherwise would not be an eligible expense under the PIP plan, except as set forth by (c) below.

for items of expense which exceed the dollar or percent amounts recognized by the medical fee schedules

promulgated pursuant to N.J.S.A. 39:6A-4.6.

(d) The total amount of benefits to be provided through the PIP medical expense provisions for each insured per

accident or occurrence shall not exceed the maximum PIP benefits as provided for by the terms of the policy.

11:3-37.8 Health benefits plan coverage ineligibility

(a) When, subsequent to the selection of the PIP-as-secondary coverage option by a named insured, it is determined

that an insured did not have health coverage in effect at the time of an injury, or had health coverage in effect at the

time of any injury which is such that the PIP-as-secondary coverage option selection could have been invalidated by

the automobile insurer and elimination of the premium reduction amount effected in accordance with N.J.A.C. 11:3-

37.5(a), but was not, then the insured shall be provided benefits for incurred medical expenses through the PIP

medical expense provision.

1. Benefits payable shall be subject to a per accident deductible equalling the total of $750.00 plus the PIP

deductible selected by the named insured of the policy.

2. Benefits payable shall be subject to a 20 percent copayment for amounts less than $5,000 after the

deductible has been satisfied.

3. Determination of the amount of benefits payable shall be made in accordance with medical fee schedules

promulgated pursuant to N.J.S.A. 39:6A-4.6 and set forth at N.J.A.C. 11:3-29, or on a reasonable basis, as

determined by the automobile insurer, considering the medical fee schedules for similar services or equipment in the

region where the service or equipment was provided, when an item of expense is not included on the medical fee

schedules.

4. Total benefits paid for each insured eligible for benefits in any one accident shall not exceed the

maximum PIP benefits provided for by the terms of the policy.

(b) All items of medical expense incurred by the insured for treatment of an injury shall be eligible expense to the

extent the treatment or procedure from which the expenses arose is recognized on the medical fee schedules, or are

reasonable medical expenses in accordance with N.J.S.A. 39:6A-4.

injury occurred, the difference between the reduced premiums paid on the policy and the amount of premium which

would have been due on the policy had the named insured not selected the PIP-as- secondary coverage option, and

no premium reduction shall be provided on that policy for the PIP-as-secondary coverage option during the

remainder of that current contract period.

11:3-37.9 Determination of benefits when PIP is primary coverage

(a) When no election has been made by a named insured to make his or her health benefits plan(s) primary coverage

provider(s), so that the PIP plan will provide primary coverage for medical expenses incurred for treatment of

injuries, the PIP plan shall provide benefits to the insured without consideration of any benefits for which the

insured may be eligible under any health benefits plan.

(b) Actual benefits paid by the PIP plan shall be medical expenses, subject to the policy limits and the application of

any deductible and copayment provided for by the terms of the automobile policy, approved by the Commissioner

pursuant to N.J.S.A. 39:6A-4 or 39:6A-3.1, and any rules promulgated thereunder.

expenses incurred for treatment of injuries, shall be the lesser of the remaining uncovered allowable expenses or the

actual benefits that would have been payable had the health benefits plan been providing coverage primary to the

PIP plan.

1. Actual benefits payable may be reduced by the deductible(s) and copayment requirements applicable by

the terms of the health benefits plan, and shall not exceed the amount of actual benefits that would have been

payable had the health benefits plan been providing coverage primary to the PIP plan.

2. Allowable expenses remaining uncovered, which the health benefits plan(s) shall consider when the PIP

plan is providing primary coverage, include:

i. Any PIP deductible(s);

ii. Any PIP copayment amounts;

iii. Any expenses which exceed the medical expense coverage limits of the PIP plan per person per

accident, as set forth by the terms of the automobile policy; and

iv. Any expenses not covered by the PIP plan when such expense was determined to be in excess

of the reasonable charge for an item of expense not listed on the medical fee schedules, but for which the automobile

insurer determined a reasonable charge based on the medical fee schedule for a similar item of expense in the region

where the service or equipment was provided.

(d) When a health benefits plan provides hospital expense or service benefits only, or medical expense or service

benefits only, and is not otherwise a part of a basic health benefits package, all allowable expenses remaining

uncovered shall be considered by that health benefits plan for the provision of benefits, without regard as to whether

the expenses are hospital-related or medical- related expenses. Actual benefits paid by that health benefits plan for

the allowable expenses remaining uncovered shall not exceed the total actual benefits which would have been

payable had the health benefits plan been providing coverage primary to the PIP plan.

(e) When there is one health benefits plan providing insureds hospital expense or service benefits and another health

benefits plan providing insureds medical expense or service benefits as two separate parts of one basic health

benefits plan package, the hospital benefits plan and the medical benefits plan shall both consider all allowable

expenses remaining uncovered and shall apportion such allowable expenses between the two plans on a pro-rata

basis without regard as to whether the expenses are hospital-related or medical-related expenses. Actual benefits

paid by each plan of the health benefits plan package shall not exceed the total actual benefits which would have

been payable by each plan had the health benefits plan package been providing primary coverage.

(f) No insured shall be liable to a health care provider for any fees for services or supplies which exceed the dollar

or percentage amounts recognized for those services or supplies on the medical fee schedules.

(g) No health benefits plan shall seek repayment from or withhold payment to an insured for amounts paid to the

insured in consideration of charges which were in excess of the amounts set forth in the medical fee schedules.

(h) If there is more than one group health benefits plan providing secondary coverage to an insured, these plans may

coordinate their benefits with one another in accordance with N.J.A.C. 11:4-28.

11:3-37.10 Explanation of benefits

(a) Automobile insurers shall develop and utilize an explanation of benefits form to be provided with the payment

of benefits for expenses incurred for treatment of injuries which clearly identifies and explains the following:

1. Each procedure for which a claim has been made;

2. Eligible expense related to each procedure with an indication of whether the eligible expense is based on

the medical fee schedules or is the reasonable charge as determined by the automobile insurer;

3. Actual benefits paid;

4. Any deductible or copayment applied;

5. A concise explanation why any item of expense is considered an ineligible expense, when this occurs;

and

6. A statement to insureds that no health care provider may demand or request any payment from any

person in excess of those permitted by N.J.A.C. 11:3- 29, and that no person is liable to any health care provider for

any amount of money which results from the charging of fees in excess of those permitted by N.J.A.C. 11:3-29

pursuant to N.J.S.A. 39:6A-4.6.

11:3-37.11 Dispute as to primacy of coverage

(a) If, subsequent to the selection of the PIP-as-secondary coverage option by the named insured, injuries are

sustained by an insured eligible for health benefits plan coverage, but a dispute exists between the health benefits

provider and the automobile insurer, then the health benefits provider shall provide benefit as if it were the primary

coverage provider and no PIP benefits were available to the insured. In no event shall the provision of benefits be

unreasonably delayed by either a health benefits provider or an automobile insurer.

(b) If the health benefits provider asserts that it is not subject to N.J.A.C. 11:3-37.3, and thus, will not act as the

primary coverage provider then the automobile insurer shall assume the role of primary coverage provider, and

provide its benefits in accordance with N.J.A.C. 11:3-37.8. The automobile insurer shall be entitled to recover

premium reductions in accordance with N.J.A.C. 11:3-37.8(c).

11:3-37.12 Eligibility under two or more automobile policies

(a) If an insured is eligible for coverage of medical expenses under more than one automobile policy, the

determination as to which automobile policy will assume coverage responsibility for that insured shall be as follows:

1. A named insured shall receive benefits for medical expenses under the terms of the automobile policy on

which he or she, or his or her spouse, is identified as the named insured.

2. A family member who is a child of a named insured or the named insured's spouse shall receive benefits

for medical expenses under the automobile policy of the named insured, subject to the following:

i. If the child is a child of more than one named insured or of more than one spouse of a named

insured, the child shall receive benefits under the terms of the automobile policy of the named insured who has legal

custody of that child or whose spouse has legal custody of that child.

ii. If the child is a child of more than one named insured or of more than one named insured's

spouse, and legal custody of that child has either never been awarded, or has been awarded jointly, then the child

shall receive benefits under the terms of the automobile policy of the named insured whose birthday occurs earliest

in the calendar year.

iii. If the child is a named insured or the spouse of a named insured, (a)1 above shall apply.

3. If neither (a)1 nor (a)2 above apply to an adult or child family member, then that family member shall

receive benefits for medical expenses under the terms of the automobile policy of the named insured whose birthday

occurs earliest in the calendar year.

4. If an automobile policy identifies more than one person as a named insured on the automobile policy, the

birthday of the named insured whose birthday occurs earliest in the calendar year shall be considered the

determinant birthday on that automobile policy.

(b) An insured shall not receive benefits for medical expenses under more than one automobile policy.

medical expense benefits under more than one automobile policy PIP plan, the automobile insurer of the paying PIP

plan may seek equitable pro rata contributions from the other automobile policy PIP plan(s) for the benefits actually

paid by the paying PIP plan.

11:3-37.13 Penalties

Each automobile policy or health benefits plan subject to the terms of this subchapter which fails to comply with the

terms herein shall be in violation of this subchapter. Failure to comply with the terms of this subchapter may result

in the assessment of any and all penalties in accordance with the laws of this State.

11:3-37.14 Severability

If any provision of this subchapter or application thereof to any person or circumstance is held invalid, the

remainder of the subchapter and the application of such provision to other persons or circumstances shall not be

affected thereby.