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2008 PIANJ legislative wrap-up
Resource kit 29002
By Campbell H. Wallace, Esq.
The 212th (2006-2007) New Jersey Legislative Session has come to a close. Here’s a look at some of the noteworthy bills passed during this session:
PIANJ-supported producer bill. This PIANJ-backed bill (A-3863) deletes the requirement for insurance agents to provide each automobile insurance applicant with premium quotations from every insurer represented. PIANJ and the IIABNJ worked together to secure introduction of the bill, which was sponsored by Assemblymen Neil M. Cohen, John Wisniewski, Christopher Bateman and Assemblywoman Charlotte Vandervalk.
PIANJ told lawmakers that the requirement for agents to quote every company, placed an unnecessary obligation on them and did not serve consumers because it failed to take into account all factors that agents consider when offering coverage options to consumers.
The law also deletes the requirement for insurers to provide each applicant seeking automobile insurance, and each insured upon request, with three premium scenarios demonstrating the effect of different coverage choices.
PIANJ explained that this requirement offered very little benefit to consumers, who disregard these hypothetical coverage scenarios that are often not based on the individual’s circumstances. Signed Jan. 3, 2008, and takes effect immediately.
PIANJ-backed bill prohibiting step-down clauses. A PIANJ-supported measure that prohibits the use of step-down provisions in motor vehicle liability insurance policies issued to business entities was signed into law on Sept. 10, 2007 and takes effect immediately. The legislation (S-1666) also reverses the effect of the Supreme Court’s decision in Pinto v. New Jersey Manufacturers Insurance Co., 183 N.J. 205 (2005).
In Pinto, the Supreme Court held that step-down provisions in business auto policies are enforceable. Step-down provisions allow insurance companies to reduce the coverage available to employees that are not individually named on their employer’s business auto policy. Instead of receiving the uninsured and underinsured motorist limits stated on their employer’s policy, an employee injured while occupying a business vehicle receives the lesser coverage limits of his own personal auto policy or that of a family member if he does not have his own policy. New Jersey is unique in being the only state that uses these types of provisions to limit coverage.
The Pinto decision was particularly troublesome for insurance producers because the court also imposed upon insurance agents and brokers in our state a new duty that is impossible to achieve. This impractical duty had substantially increased the risk of litigation against insurance producers and placed them in an untenable position with their customers.
The court held that insurance producers have a duty to inform employers that if they want to avoid imposition of a step-down provision, it was necessary to elevate the status of their employees to that of named insureds on the business auto policy. The court felt having these facts would enable an employer to make an informed decision about whether to include employees as named insureds on their business policy. In reality employers had no choice in the matter because most insurance companies did not allow employees to be included as named insureds on a business auto policy. Therefore, producers were required to inform employers about how to avoid application of a step-down provision, when there was no way to do this.PIANJ lobbied tirelessly for passage of this legislation, testifying before both Senate and Assembly committees. The new law is crucial because it reverses the effects of the Pinto decision and the impractical duty it imposed on insurance producers. In doing so, it will avoid countless lawsuits against insurance producers that are based upon an insurance company’s limitation of coverage, a limitation over which the producer has no control. The legislation also was necessary to protect employees injured in work-related accidents. These employees are entitled to the full protection afforded under their employer’s policy. PIANJ commends the bill's sponsors, Sens. Nicholas Scutari (D-22) and Nia Gill (D-34) and Assemblyman Neil M. Cohen (D-20).
Worker misclassification. Chapter 114 (A-4009) criminalizes the misclassification of construction workers as independent contractors for purposes of the New Jersey Prevailing Wage Act; Unemployment Compensation Law; Temporary Disability Benefits Law; New Jersey Gross Income Tax Act and New Jersey State Wage and Hour Law. The penalties for misclassifying workers include: immediate suspension of a contractor’s registration, issuance of a stop-work order for second and subsequent violations and debarment from contracting for public works. Unlike other states that have recently passed similar legislation, this new law does not apply to workers’ compensation misclassifications. The original bill had included workers’ compensation, but it was deleted from the bill when a workers’ compensation judge noted that the employment test set forth in the bill differs from the test used to determine workers’ compensation eligibility. Under the law, a working relationship shall be deemed to be employment unless and until it is shown to the satisfaction of the Department of Labor and Workforce Development that:
- the individual has been and will continue to be free from control or direction over the performance of that service, both under his contract of service and in fact; and
- the service is either outside the usual course of the business for which the service is performed or the service is performed outside of all the places of business of the employer for which the service is performed; and
- the individual is customarily engaged in an independently established trade, occupation, profession or business.
The failure to withhold federal or state income taxes or to pay unemployment compensation contributions or workers’ compensation premiums with respect to an individual’s wages will not be considered in making an employment determination. Signed July 13, 2007, and takes effect immediately.
Towing companies. Chapter 193 (A-4053) known as “The Predatory Prevention Act,” regulates the removal of vehicles that are on private property without proper authorization. This law is intended to stop the practice of predatory towing, where a vehicle is removed without the owner’s notice or consent and the owner is charged an exorbitant fee for the vehicle’s return. All tow truck operators must be registered with the Division of Consumer Affairs in the Department of Law and Public Safety. The law limits the towing fees that can be charged and the instances in which a vehicle may be towed. It also requires towing companies to maintain liability insurance. The insurance requirements are the same as provided for in current motor vehicle law. For light- to medium-duty tow trucks, personal injury and property damage liability insurance in the amount of $750,000 combined single limit. For heavy-duty tow trucks the limit is $1 million combined single limit. State agencies or political subdivisions contracting with towing companies may require additional or higher limits. The law also contains a problematic provision which requires that the director of consumer affairs be named as an additional insured under each policy and that each policy provide for notice of cancellation to be given to the director. PIANJ will work in the upcoming sessions to have this requirement deleted, since it would be impossible to fulfill. Signed Oct. 24, 2007, and takes effective 360 days following enactment. Section 4 to be inoperative for an additional 180 days following enactment.
Contractor insurance requirements. A new law, Chapter 211 (A-1016) establishes the State Board of Examiners of Heating, Ventilating, Air Conditioning and Refrigeration (HVAC) Contractors. It requires HVAC contractors to carry a policy of general liability (GL) insurance in a minimum amount of $500,000. PIANJ spotted a problem in the original bill that would have caused problems for producers when issuing certificates of insurance. The original bill required that every certificate of insurance required to be filed with the board provide that cancellation of the insurance not be effective unless and until at least 10 days' notice of intention to cancel had been received in writing by the Board of Examiners. PIANJ explained that it would be impossible for insurance producers to provide such a certificate without unlawfully misrepresenting the terms of the policy. The original bill was conditionally vetoed due in part because of the problematic insurance requirements, which were removed from the bill that was signed into law. Signed Dec. 20, 2007, and takes effect immediately. Section 7 is effective 360 days following creation of the board.
Suspended license penalties. Chapter 187 (S-2330) provides that a person whose driver's license has been suspended for failure to comply with a time payment order or for failure to respond to or pay a parking judgment is not subject to the same penalties as a person whose license has been suspended for a driving-related offense. Under current law, failure to comply with a time payment order and failure to respond to or pay a parking judgment are codified as serious driving-related offenses and offenders are subject to fines that are not commensurate with the offense. The law provides for a maximum fine of $100 for these less serious suspensions. Signed Oct. 12, 2007, and is effective on the first day of the third month after enactment.
Registration for new state residents. Chapter 178 (S-2087) expressly requires new state residents to register their vehicles within 60 days of becoming a resident. Although the New Jersey Motor Vehicle Commission has interpreted the current law to require registration within 60 days of becoming a resident, the law expressly provides for this. Violators would be punished by a fine up to $250 for a first offense and up to $500 for a second or subsequent offense. In addition, the vehicle would be impounded for a minimum of 96 hours for third or subsequent offenses. Signed Sept. 27, 2007, and takes effect immediately.
Cell phones while driving. Chapter 198 (S-1099) makes it a primary motor vehicle offense to use a hand-held wireless telephone or electronic communication device while driving, including using these devices to send a text message. Current law prohibits the use of a hand-held wireless telephone while operating a motor vehicle, but this law may only be enforced as a secondary offense. Under this bill, motorists could be stopped and ticketed solely for illegally using a hand-held wireless telephone or electronic communication device. Signed Nov. 2, 2007, and is effective on the first day of the fourth month following enactment.
Insurance company investments. Chapter 252 (A-3280/S-803) is a new law that will provide greater flexibility for domestic property and casualty insurance companies with respect to their investments. Signed Jan. 4, 2008, and effective immediately.
Polluter liability. Chapter 131 (S-1712) eliminates the statute of limitations for criminal offenses arising from violations of certain environmental criminal statutes and violations. It applies to violations of the crime of causing or risking widespread injury or damage under the “Solid Waste Management Act,” the “Comprehensive Regulated Medical Waste Management Act,” the “Air Pollution Control Act”, the asbestos law and the “Water Pollution Control Act". Signed Aug. 6, 2007, and effective immediately.Assignment of benefits for ambulance services. Chapter 194 (A-439) requires that health insurance carriers or their agents honor an assignment of benefits made by covered persons to providers of emergency ambulance services, whether or not the provider is under contract with the carrier. Signed Oct. 26, 2007, and effective 90 days after enactment.
Handicapped parking violators. Chapter 164 (S-1810) clarifies that the penalties for unauthorized parking in a handicapped parking space are to be imposed even if the penalties are not posted or are improperly posted on the handicapped parking sign. Signed Sept. 10, 2007, and effective immediately.
Exemption from standard fire policy provisions; hold harmless. Chapter 324 (A-3408) was signed into law Jan. 13, 2008. This law exempts commercial lines insurance policies for risks which produce minimum annual premiums in excess of $10,000 from the requirement that they include the language of the standard fire insurance policy, which provisions were developed in 1954. (Promoted under the banner of providing greater “flexibility” in insurance products, this law means that affected fire coverage forms will need to be reviewed for possible exclusions and other nonstandard language. Beginning with the events of 9/11, insurers sought the ability to exempt from state standard fire policy laws throughout the country claims in which fires were caused by terrorist acts. Absent this ability, the insured may turn down the offer of terrorism coverage that must be made under the Terrorism Risk Insurance Act; however, there is no way for them to exclude coverage for fire claims caused by terrorism.) PIANJ successfully secured an amendment to the original bill to provide that no person, including, but not limited to, an insurance producer shall be liable in an action for damages on account of an applicant or insured purchasing a commercial lines insurance policy that does not include the language provisions of the standard fire insurance policy. Signed Jan. 13, 2008, and effective immediately.
New Jersey School Boards Association can take part in joint insurance funds. Gov. Corzine signed into law A-2078 on Jan. 13, 2008 (P.L.2007, c.312). This law authorizes the New Jersey School Boards Association to participate in joint self-insurance funds. Although the New Jersey School Boards Association is supported by dues paid by every school district in the state, under former law the association was not allowed to participate in joint self-insurance arrangements entered into by school districts. Effective immediately.
Temporary disability benefits. A-3022 was signed into law Jan. 13, 2008 (P.L.2007, c.322). This law modifies the provisions for the payment of temporary disability benefits by prohibiting the payment of benefits to any person who was injured during the commission of a fourth degree crime or who has been fired for gross misconduct connected with the job. Prior to this enactment, the Temporary Disability Benefits Law only prohibited payments for disabilities incurred during the commission of a crime of the first, second or third degree. Effective immediately; applies to benefit claims filed on and after the enactment date.
Discrimination in employment. A-3451 (2nd Reprint) was signed into law Jan. 13, 2008 (P.L.2007, c.325). The new law makes it illegal for an employer, employment agency or labor organization to discriminate on the basis of civil union status, gender identity or expression. It also prohibits the imposition of conditions of employment that would violate a person’s religious beliefs. Contains provisions allowing employers to impose some standards regarding dress or appearance; and provisions that balance the employer’s and employee’s rights with respect to accommodation of religious observance. Effective immediately.
Wrongful death claims payments. S-68 was signed into law Jan. 13, 2008 (P.L.2007, c.261). It clarifies that changes made in 2004 to the Probate Law affecting interstate decedents were not intended to affect recovery in wrongful death actions. Effective immediately but retroactive to the date of the 2004 law.
New Jersey False Claims Act. S-360 was signed into law Jan. 13, 2008 (P.L.2007, c.265). It authorizes a person to bring a civil action in New Jersey Superior Court against any other person who knowingly causes the state to pay a false claim. According to its statement, “this act is not intended to disrupt a good faith offer or a good faith counter offer made during contract or claims negotiation. The [bill] also provides that acts occurring by mistake or as a result of mere negligence are not covered ... and that the act shall not abrogate or modify any existing statutory or common law privileges or immunities.” Also, “This act shall be liberally construed to effectuate its remedial and deterrent purposes. If any provision of this act or its application to any particular person or circumstance is held invalid, that provision or its application is severable and does not affect the validity of other provisions or applications of this act.” Effective 60 days after signature.
Reporting of motor vehicle accidents. S-721 was signed into law Jan. 13, 2008 (P.L.2007, c.266). It adds to the current law, which holds that the driver of a motor vehicle involved in an accident “shall be presumed to have knowledge that he was involved in such accident, and such presumption shall be rebuttable in nature” a provision saying that there shall be a permissive inference that the driver of any motor vehicle involved in an accident resulting in injury or death to any person or damage in the amount of $250 or more to any vehicle or property has knowledge that he was involved in such accident. In cases where the vehicle is owned by a rental car company or leased, the permissive inference applies to the renter, authorized driver or lessee, not the owner.
The law also provides that any person who suppresses, conceals or destroys any evidence relating to a reportable motor vehicle accident or who suppresses the identity of a driver involved in a reportable motor vehicle accident is subject to a fine of not less than $250 or more than $1,000.
(The provisions of the bill are consistent with State v. Walten, 241 N.J.Super. 529 [App. Div. 1990], which held that the rebuttable presumption in R.S.39:4-129 offended constitutional principles of due process by improperly shifting the burden to prove knowledge to the defendant, and that a court could afford the statutory presumption no greater weight than that of a permissive inference.) Effective immediately.
Underage drivers—BAC testing. S-781 (1st Reprint) was signed into law on Jan. 13, 2008 (P.L.2007, c.267). This law amends the implied consent statute, to establish that persons under the age of 21 are deemed to have given their consent to a test of their blood alcohol concentration when requested by a police officer who has reasonable grounds to believe they have operated a motor vehicle with a blood alcohol content of 0.01 percent or more, but less than 0.08 percent, in violation of C.39:4-50.14, the drunk driving statute applicable to underage persons. The penalties imposed under this bill are the same as the penalties for refusal to submit to a blood alcohol concentration test. For a first offense, those penalties include a driver’s license suspension of seven months to one year and a fine of $300 to $500. Effective the first day of the second month following enactment.
Motor vehicle registration suspension. S-2326 (1st Reprint) was signed into law on Jan. 13, 2008 (P.L.2007, c.280). It provides a judge and the Motor Vehicle Commission with greater flexibility when dealing with a person who has failed to respond to a failure to appear notice or who has not satisfied outstanding parking fines or penalties. Under current law, a judge or the commission may suspend the person’s driver’s license. Under the provisions of this bill, a judge or the commission will be permitted to suspend either the person’s motor vehicle registration or driver’s license. In determining whether to suspend the person’s driver’s license or the motor vehicle registration, the judge and the commission shall take into consideration the area where the person resides and whether or not the person has access to off-street parking. Effective on the first day of the sixth month after enactment.
New Jersey Automobile Merit Rating Plan. S-2331 was signed into law on Jan. 13, 2008 (P.L.2007, c.282). This bill amends the current law creating the New Jersey Merit Rating Plan to change the name of the plan to the Motor Vehicle Violations Surcharge System to make the terminology of the statute establishing the surcharge regime more closely reflect its character. In addition, a driver failing to pay a surcharge under the surcharge system may, by paying at least 5 percent of each outstanding surcharge assessment owed, remove the driver’s suspension for failure to pay. Currently the Motor Vehicle Commission may authorize payment of surcharges on an installment basis for a period not to exceed 12 months for assessments under $2,300, or not exceeding 24 months for assessments of $2,300 or more. The law provides that the commission may, for good cause, authorize installment payments for a period not exceeding 36 months irrespective of the surcharge assessment. The other permissible installment periods are 12 and 24 months. The law further provides that a surcharged driver against whom a certificate of debt has been filed for nonpayment of a surcharge shall not be eligible for the restoration of his driving privilege until at least 5 percent of each outstanding surcharge assessment that his resulted in the suspension, including interests and costs, if any, has been paid to the commission. Effective on the first day of the sixth month after enactment.
Motor vehicle fines. S-2332 (1st Reprint) was signed into law Jan. 13, 2008 (P.L.2007, c.283). It permits the court to waive certain unpaid portions of court-imposed time payment orders for certain defendants and impose other requirements in lieu of the remaining unpaid amount. Specifically, for a defendant who is indigent or is participating in a government-based income maintenance program, the court may waive an unpaid portion, up to $200, of any court-imposed time-payment order, as a result of a conviction for a motor vehicle traffic violation or a parking offense and, in lieu of the remaining unpaid amount, require the defendant to perform community service for a period of time to be determined by the court, or participate in any program authorized by law or satisfy any other aspect of a sentence imposed. The law excludes persons convicted of driving while intoxicated or refusing to take a breathalyzer test from being eligible for the waiver. Effective on the first day of the sixth month after enactment.
Access to youthful drivers’ motor vehicle records. S-2480 (Senate Committee Substitute) was signed into law Jan. 13, 2008 (P.L.2007, c.285). It provides that, upon request, the Motor Vehicle Commission shall provide the parent or guardian of a special learner's permit holder, an examination permit holder or a provisional license holder under 18 years of age with information pertaining to the driving privilege status and any vehicular accident or violation information on the minor's driving record. Effective immediately.
Commission payments (excludes insurance sales). S-2733 (1st Reprint) was signed into law Jan. 13, 2008 (P.L.2007, c.289). It imposes treble damages on principals who fail to pay commissions to sales representatives within 30 days of the time the payment is due or within 30 days of the termination of the sales representative. However, these provisions do not apply to insurance carriers and insurance agents, real estate sales and securities brokers and advisers. (Amendments made to this bill in November 2007 excluded these activities not only from this bill but also from the entire section of law regarding commission payment to sales representatives.) Effective immediately.
Pay to Play law. S-3025 was signed into law Jan. 13, 2008 (P.L.2007, c.304). It clarifies that certain political contribution disclosures that must be made in connection with accepting public contracts apply only to for-profit business entities, not to not-for-profit entities. Effective immediately.Benefits for orthotic and prosthetic appliances. S-502 (1st Reprint) was signed into law Jan. 13, 2008 (P.L.2007, c.345). The law requires health insurers, including health, hospital and medical service corporations, commercial individual and group health insurers, health maintenance organizations and health benefits plans issued pursuant to the New Jersey Individual Health Coverage and Small Employer Health Benefits Programs, and the State Health Benefits Program, to provide health benefits coverage for expenses incurred in obtaining an orthotic or prosthetic appliance from any licensed orthotist or prosthetist, or any certified pedorthist, as determined medically necessary by the covered person's physician. The law requires reimbursement for the orthotic and prosthetic appliances at the same rate as the federal Medicare reimbursement schedule. Effective on the 90th day after enactment. 3/08
