Rutgers School of Law, OAL case ACPE295

98 N.J.L.J. 17
January 9, 1975

ADVISORY COMMITTEE ON PROFESSIONAL ETHICS

Appointed by the New Jersey Supreme Court

OPINION 295

Fee for Personal Injury
Protection in No Fault Insurance

    The inquirer has asked whether a fee may properly be charged a client for legal services rendered in the collection of personal injury protection ("PIP") benefits under the no fault provisions of an automobile liability insurance policy where the attorney was originally engaged by the client under a contingent fee retainer agreement, made pursuant to R. 1:21-7, to handle a tort claim arising out of the accident which gave rise to the PIP claim.
    As further explained by the inquirer,
            During the course of handling the tort claim, issues arise between the insurance carrier covering the clients' claims for PIP Benefits under No Fault coverage; through legal services of the attorney, payment and collection is effected of items that were in issue between clients and insurance company.

    The specific questions asked by the inquirer are whether "counsel [is,] entitled to a fee for the collection of PIP Benefits in controversy; if so, on what basis are the charges to be made?"
    In support of the contention that he is entitled to charge a separate additional fee for the collection of the PIP benefits, the inquirer argues:
            The matter in controversy with the No Fault carrier arises under a contractual obligation between clients and the insurance company and is not a tort claim within R. 1:21-7.

    The inquiry proposes no particular basis for fixing the fee for PIP services should one be properly chargeable.
    The PIP benefits referred to by the inquirer are provided by the New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1, et seq. The section most pertinent to this inquiry is N.J.S.A. 39:6A 1, which reads as follows:
        Every automobile liability insurance policy insuring an automobile as defined in this act against loss resulting from liability imposed by law for bodily injury, death and property damage sustained by any person arising out of ownership, operation, maintenance or use of an automobile shall provide additional coverage, as defined herein below, under provisions approved by the Commissioner of Insurance, for the payment of benefits without regard to negligence, liability or fault of any kind, to the named insured and members of his family residing in his household who sustained bodily injury as a result of an accident involving an automobile, to other persons sustaining bodily injury while occupying the automobile of the named insured or while using such automobile with the permission of the named insured and to pedestrians, sustaining bodily injury caused by the named insured's automobile or struck by an object propelled by or from such automobile. "Additional coverage" means and includes:

        a. Medical expense benefits. Payment of all reasonable medical expenses incurred as a result of personal injury sustained in an automobile accident. In the event of death, payment shall be made to the estate of the decedent.

        b. Income continuation benefits. The payment of the loss of income of an income producer as a result of bodily injury disability, subject to a maximum weekly payment of $100.00 per week. Such sums shall be payable during the life of the injured person and shall be subject to an amount or limit of $5,200.00, on account of injury to any one person, in any one accident.

        c. Essential services benefits. Payment of essential services benefits to an injured person shall be made in reimbursement of necessary and reasonable expenses incurred for such substitute essential services ordinarily performed by the injured person for himself, his family and members of the family residing in the household, subject to an amount or limit of $12.00 per day. Such benefits shall be payable during the life of the injured person and shall be subject to an amount or limit of $4,380.00 on account of injury to any one person in any one accident.

        d. Survivor benefits. In the event of the death of an income producer as a result of injuries sustained in an accident entitling such person to benefits under section 4 of this act [this section], the maximum amount of benefits which could have been paid to the income producer, but for his death, under section 4 b. shall be paid to the surviving spouse, or in the event there is no surviving spouse, then to the surviving children and in the event there are no surviving spouse or surviving children, then to the estate of the income producer.

        In the event of the death of one performing essential services as a result of injuries sustained in an accident entitling such person to benefits under section 4 c. of this act, the maximum amount of benefits which could have been paid such person, under section 4 c., shall be paid to the person incurring the expense of providing such essential services.

        e. Funeral expenses benefits. All reasonable funeral burial and cremation expenses, subject to a maximum benefit of $1,000.00, on account of the death to any one person in any one accident shall be payable to decedent's estate.

    Optional additional PIP coverage is provided by N.J.S.A. 39:6A-l0.
    As stated by the inquirer, there can be no doubt that the PIP claim might involve substantial sums or that the collection thereof might involve considerable time and effort by counsel. See N.J.S.A. 39:6A-13.1, supra, 39:6A-5, 39:6A-6, 39:6A-10, 39:6A-13, 39:6A-13.1 and 39-6A-19, which govern the amount collectible and partially prescribe the practice and procedure for its recovery.
    The only Disciplinary Rule which might be deemed relevant to this inquiry is DR 2-106, "Fees for Legal Services," which provides that "[a] lawyer should charge no more than a reasonable fee," states the conditions under which a fee will be regarded as "excessive," lists certain "Factors to be considered as guides in
determining the reasonableness of a fee" and concludes by providing that "[a] lawyer shall be disciplined if he shall enter into an agreement for, charge, or collect a fee so excessive as to evidence an intent to overreach his client."
    The only other rule of the Supreme Court which might be considered pertinent is R. 1:21-7, cited by the inquirer. Paragraph (c) provides:
        In any matter where a client's claim for damages is based upon the alleged tortuous conduct of another, including products liability claims, and the client is not a subrogee, an attorney shall not contract for, charge, or collect a contingent fee in excess of the following limits: "...[Here follows a series of percentage limits based on a graduated scale.]"

    As the inquirer has said, it would appear that the PIP claim is not based upon the "alleged tortuous conduct of another," R. 1:21-7(c), supra, but upon the contractual no fault provisions of an insurance policy, N.J.S.A. 39:6A-4, supra. However, this is a matter of substantive law which does not involve an ethical determination.
    The only possible ethical question would then be as to the reasons of the fee charged under DR 2-106. From the facts presented, we must assume that any fee charged for the PIP services, taken alone or in conjunction with the contingent fee under the retainer agreement, would be reasonable and would be fixed by due application of the guides laid down in DR 2-106(A). Certainly, we would not be justified in theorizing that the inquirer would charge "more than a reasonable fee," DR 2-106(A), or "enter into an agreement for, charge, or collect a fee so excessive as to evidence an intent to overreach [the] client," DR 2- 106(D).
    Accordingly, the Committee declines to answer this inquiry upon the ground that, as now presented, it involves no question respecting proper conduct for a member of the legal profession cognizable by the Committee. R.1:19-2.
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