A Reminder about PIP “Subrogation” in New York and New Jersey

We are often asked in trucking cases whether we can settle a personal injury claim and also have the claimant release the “PIP Subrogation” claim, or the “PIP Lien.” In these states, the answer is “No.”

It really isn’t subrogation, or even a “lien.” And it makes a difference. In both states, the right of the PIP carrier to be reimbursed for its payments of medical expenses and lost earnings arises from statute. The right of reimbursement takes life when the first payment is made. Only the PIP carrier has the right of reimbursement, and only the PIP carrier can release the claim. That right of reimbursement is enforced, generally, through arbitration mandated by statute. In this regard, the PIP reimbursement claim is substantively and procedurally different from a worker’s compensation lien, or a physical damage subrogation claim.

In trucking and other commercial automobile claims, the PIP carrier’s right of reimbursement, or “Loss Transfer” in New York, generally stands alongside the injured party’s personal injury claim. When the personal injury claim is being negotiated, there is an impulse to want to include the PIP claim in the discussions with claimant’s counsel. But the claimant cannot release or waive the PIP claim. The claimant does not own that claim, and has no power over his insurance company to require or persuade it to settle or waive the claim.

So when the claim representative settles the personal injury claim, it must be remembered that the PIP carrier’s claim for reimbursement lives on. It must be dealt with separately, either by negotiation or through an arbitration or, infrequently, litigation. As defense counsel, we routinely defend both the personal injury claim and the PIP reimbursement claim, which avoids taking inconsistent positions with the PIP carrier and the personal injury claimant.

On This Date in SCOTUS History – June 13

photo by Jennifer Enberg

​In 1966, the landmark case of Miranda v. State of Arizona, 384 U.S. 436 (1966), was decided.  The 5-4 majority held that a person in custody must be informed of his right to counsel before and during questioning, and the right to not self-incriminate.  It further held that the suspect must not only understand these rights but, should the suspect choose to waive these rights, that it be done voluntarily.  While most are familiar with the case of Miranda v. Arizona, which gave rise to the term “Miranda rights,” did you know that three additional cases fell under this SCOTUS ruling?  Westover v. United States, Vignera v. New York, and California v. Stewart, had been consolidated with Miranda.


In 1967, Thurgood Marshall was nominated to the Court by President Johnson. He was confirmed on August 30, 1967, by a vote of 69-11, becoming the first African American to serve as an Associate Justice.  Justice Marshall, himself, won 29 out of the 32 cases he argued before the Supreme Court, the most famous being Brown v. Board of Education of Topeka, 347 U.S. 483 (1954).

Supreme Court Resolves Maritime Product Duty-to-Warn Issue

The United States Supreme Court is the final arbiter of the Maritime Law, a unique and large body of federal common law, tempered by any controlling Congressional enactments. So, in recently decided Air & Liquid Sys. Corp. v. DeVries, the Court addressed the scope of the duty of a marine product manufacturer to warn of a potential harm from a part that is required to be incorporated into its product. Here, the part to be added contained asbestos, and it allegedly led to the deaths of two Navy sailors. Their families sued the manufacturer of pumps, blowers, and turbines, but not the manufacturer of the asbestos-containing added part that actually caused the harm. The Supreme Court sided with the families.

The families alleged that the first manufacturer had a duty to warn of the ultimate danger, since it knew its product needed the second part, the dangerous one, in order to function, and it knew that the result would create a danger to users and they would not realize the danger. The manufacturer claimed it had no duty to warn, since its equipment was already onboard the ships and it was the Navy which added the asbestos. The Supreme Court imposed that duty to warn. Justice Kavanaugh wrote the majority opinion, while Justices Gorsuch, Thomas, and Alito dissented.

The majority’s reasoning started with basic tort-law principles as expressed in the Restatement of Torts. A manufacturer of a marine product has a duty to warn when it “knows or has reason to know that its product is likely to be dangerous for the use for which it is supplied” and has no reason to believe that the product users will realize the danger. The Court’s adaptation imposes a duty to warn when the manufacturer knows that a dangerous addition must be made to its product in order for it to function. The Court notes the maritime law’s “special solicitude” of those who undertake to “venture upon hazardous and unpredictable sea voyages.”

Justice Gorsuch wrote the dissent. He would revert to a purer common law, with a rule that a manufacturer of a perfectly good product should not have to warn of danger if an asbestos-containing part is later added. He would put the onus – the duty to warn – on the manufacturer of the dangerous product, not the manufacturer of the original product. There is a “silver lining” for the dissent, however, that the majority does not seek to define the proper rule outside the maritime law context.

Finally, we note that neither opinion explains just who is to be warned – the Navy, or all of its sea-going sailors? A commercial shipping company, or all its merchant seamen? Or all its passengers? We suppose that is for another day and another case.

Care, Custody, or Control, Water Damage Exclusion, Dominate Recent New Jersey Insurance Decisions

Mix a safe, a blowtorch, and $4,000,000 in pearls, and you have a dandy insurance coverage fight. Companion Trading Company, a New York business, purchased a safe from Mega Security Company, in New Jersey. Companion used the safe to store semi-precious jewelry, including pearls at its New York location. For some reason the safe door became immovable, and Companion called Mega in to investigate. Mega’s technician could not open the door, and so arranged to ship the safe back to New Jersey for further work. Over several days Mega employees and an outside technician worked on the safe in vain at Mega’s headquarters. Finally, they opened the safe by using a blowtorch. When Companion got it back and checked the contents, they saw that a valuable cache of pearls had been damaged.

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Forum Selection Clause Alive and Well in the Second Circuit

by John C. Lane

This case involves an on-line retailer, E-Commerce China, and the plan of its majority shareholders to buy out the minority owners in a “going private merger.” The company is incorporated in the Cayman Islands. The minority shareholders brought suit in Manhattan federal court, urging that the purchase price was below market value and grossly unfair. The defendants moved to dismiss on the ground of forum non conveniens, claiming that the case should properly be brought in the Cayman Islands, the company’s home of incorporation.

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