Progressive Garden State Insurance Company v. Allstate NJ Insurance Company, 2025 WL 2327776 (N.J. Super. August 13, 2025)
The Longstanding Debate Over Med Pay Subrogation in New Jersey
For years, New Jersey attorneys, insurers, and claims professionals have debated whether Medical Payments (“Med Pay”) benefits in auto insurance policies can be subrogated against third-party tortfeasors. While there has been no published appellate authority directly addressing the issue in the context of tort recoveries, competing arguments have been advanced in support of and against such recoveries. That debate shifted significantly with the recent, unpublished Appellate Division decision in Progressive Garden State Insurance Company v. Allstate New Jersey Insurance Company. In this case, the court came down squarely on the side of those who argue that Med Pay subrogation is prohibited in New Jersey.
Although unpublished and therefore not precedential under R. 1:36-3, the opinion will likely be highly persuasive in trial courts and arbitration forums throughout the state. More importantly, it signals how New Jersey’s appellate courts are likely to rule when the issue inevitably reaches them in a precedential posture.
Med Pay Coverage and the Progressive Garden Case
In New Jersey auto insurance, Med Pay coverage typically provides up to $10,000 in medical expense coverage in certain situations where Personal Injury Protection (“PIP”) does not apply—often in accidents involving motorcycles, non-PIP vehicles, or certain classes of passengers. Med Pay is distinct from PIP and Excess Medical Benefits (“EMB”) coverage. Whereas EMB operates as an excess layer after PIP limits are exhausted, Med Pay pays immediately, regardless of fault and without the threshold requirements of PIP. Med Pay is not directly provided for in N.J.S.A. § 39:6A-4 or N.J.S.A. § 39:6A-10, but instead is authorized by N.J.A.C. § 11:3-7.3(b), promulgated by the Commissioner of Insurance, arguably pursuant to the authority in those statutes.
The Progressive Garden case arose when Allstate sought reimbursement from Progressive for Med Pay benefits it had paid to its insureds in connection with accidents where Progressive’s insureds were alleged to be at fault. Both insurers were signatories to a Medical Payment Subrogation Arbitration Agreement administered by Arbitration Forums, Inc. Arbitrators awarded Allstate recovery despite Progressive’s objection that New Jersey law bars Med Pay subrogation.
Progressive filed a motion in the Law Division to vacate the arbitration awards, arguing that such subrogation claims are prohibited by the state’s collateral source statute, N.J.S.A. § 2A:15-97, and related case law. The trial court agreed, vacating the awards. Allstate appealed, but the Appellate Division affirmed, holding that Med Pay benefits are subject to the collateral source rule and therefore not recoverable from a tortfeasor or their insurer absent legislative authorization.
The Court’s Reasoning and Legal Framework
The Appellate Division began by emphasizing the statutory framework. N.J.S.A. § 2A:15-97, New Jersey’s collateral source statute, provides in relevant part:
“In any civil action brought for personal injury or death, except actions brought pursuant to the provisions of P.L.1972, c.70 (C.39:6A-1 et seq.), if a plaintiff receives or is entitled to receive benefits for the injuries allegedly incurred from any other source other than a joint tortfeasor, such benefits shall be disclosed to the court and the amount thereof which duplicates any benefit contained in the award shall be deducted from any award recovered by the plaintiff….”
The court noted that Med Pay is not a benefit provided “pursuant to the provisions of P.L.1972, c.70,” i.e., it is not PIP. Rather, as the Supreme Court held in Ingersoll v. Aetna Casualty & Surety Co., 138 N.J. 236 (1994), Med Pay is a distinct coverage not encompassed by the anti-stacking provisions applicable to PIP. Likewise, in Warnig v. Atlantic County Special Servs., 363 N.J. Super. 563 (App. Div. 2003), the court found Med Pay is not recoverable under N.J.S.A. § 39:6A-6’s workers’ compensation reimbursement provision because that statute’s language is limited to PIP and certain other enumerated medical expense benefits.
Given these precedents, the Appellate Division concluded that Med Pay payments are “benefits from any other source” under the collateral source statute, and absent a statutory exception, an insurer paying them has no subrogation rights against a tortfeasor. The fact that industry arbitration agreements contemplate Med Pay subrogation was immaterial; such agreements cannot override statutory prohibitions. The court held that any change to permit Med Pay subrogation must come from the Legislature, not the judiciary.
Competing Legal Arguments and Related Cases
Before this decision, New Jersey law on Med Pay subrogation was unsettled. There were arguments in favor of Med Pay subrogation, and there were arguments against it.
Argument Against Subrogation of Med Pay:
Opponents argued that Med Pay is not referenced in N.J.S.A. § 39:6A-9.1, the statute that allows PIP insurers to seek reimbursement from tortfeasors. They pointed to Warnig and Ingersoll as evidence that Med Pay is treated differently from PIP and therefore falls under the collateral source statute’s prohibition. N.J.S.A. § 2A:15-97, as interpreted by Perreira v. Rediger, 169 N.J. 399 (2001), broadly bars subrogation for medical expenses covered by insurance, with limited statutory exceptions. Under this view, any policy provision or regulation allowing Med Pay subrogation is invalid if it conflicts with N.J.S.A. § 2A:15-97.
Argument in Favor of Subrogation of Med Pay:
Proponents argued that Med Pay subrogation was expressly permitted before the collateral source statute, citing NJ Circular Letter Automobile No. 9 (Feb. 22, 1973), which mandated at least $1,000 of subrogable Med Pay coverage. They contended that because Med Pay was adopted by the Commissioner of Insurance under authority from the PIP statutes, and because courts defer to agency interpretations consistent with statutory policy (Perreira, 169 N.J. at 415–16), Med Pay subrogation should be considered an action “brought pursuant to” the PIP statute and thus exempt from N.J.S.A. § 2A:15-97. This argument also emphasized that the insurance industry has long assumed a right to Med Pay subrogation, incorporating it into pricing and maintaining dedicated arbitration forums for such claims.
The reasoning in Knight v. AAA Midatlantic Ins. Co., 394 N.J. Super. 333 (App. Div. 2007), though involving Extended Medical Expense Benefits (EMB) under N.J.A.C. § 11:3-7.3(b) rather than Transportation Network Company (TNC) medical payments, supports the position that TNC med-pay should be treated as part of New Jersey’s broader statutory no-fault benefits scheme. In Knight, the Appellate Division held that claims to compel EMB benefits are sufficiently analogous to PIP and Mandatory Medical Expense Benefits (MEB) for bus passengers to justify an award of attorney’s fees under Rule 4:42-9(a)(6). The court emphasized that these benefits serve the same purpose as PIP—providing no-fault coverage for necessary medical expenses when PIP is unavailable—and that their policy rationale is aligned.
TNC medical payments under N.J.S.A. § 39:5H-10(c)(2) operate in the same functional space as EMB in Knight, filling a gap in coverage where PIP may not apply due to the livery use exclusion. Because this coverage is mandated by statute and serves the same remedial purpose as PIP, there is a strong argument that it should be treated similarly for subrogation purposes. The Knight court’s willingness to analogize EMB to PIP and other statutory medical benefits bolsters the argument that TNC med-pay should be considered statutory no-fault coverage exempt from the collateral source rule’s bar on subrogation. This functional equivalence can be leveraged to contend that recovery rights similar to those in N.J.S.A. § 39:6A-9.1 should apply.
Implications and Unpublished Status
The Progressive Garden is unpublished. Why? That is anyone’s guess. In New Jersey, appellate decisions are designated as “published” or “unpublished” under Rule 1:36-2 and Rule 1:36-3. A decision is published only if the court believes it meets certain criteria—such as announcing a new rule of law, modifying or clarifying an existing rule, resolving an apparent conflict, or being of general public interest.
If the panel views the case as applying settled law to the facts, without creating new precedent or clarifying an unsettled issue in a way they think warrants binding authority, they may designate it unpublished. In the Progressive Garden case, the court may have considered that:
It was applying existing statutes (N.J.S.A. §§ 2A:15-97, 39:6A-4, and 39:6A-10) and prior cases (Ingersoll, Warnig, Perreira),
The decision did not, in their view, create a new legal principle, and
The panel may not have wanted to issue a binding ruling on a question that has significant policy implications without a fully developed legislative or Supreme Court directive.
So, while the case addresses an issue that’s been debated in the industry, the court treated it as a straightforward application of established law—hence its unpublished status.
This decision tips the scales in favor of the “no subrogation” camp—at least until there is a published, precedential appellate ruling or legislative amendment. It aligns Med Pay with other collateral source benefits that are not recoverable through subrogation, reinforcing the holdings in Ingersoll and Warnig.
For insurers and recovery professionals, this means that unless the claim falls within a statutory exception (such as workers’ compensation reimbursement under N.J.S.A. § 34:15-15.1), Med Pay payments made in New Jersey cannot be recovered from tortfeasors or their insurers. Arbitration forums that have historically awarded such recoveries may now see increased resistance and motions to vacate based on this decision.
While Progressive Garden is not precedential, it will carry significant persuasive weight. Defense counsel will undoubtedly cite it in opposing Med Pay recovery claims, and trial courts may be inclined to follow its reasoning. Plaintiffs and subrogating insurers will need to carefully assess the viability of such claims and consider whether legislative advocacy is warranted to expressly authorize Med Pay subrogation in the same way PIP reimbursement is authorized under N.J.S.A. § 39:6A-9.1.
Conclusion: Closing the Door on Med Pay Subrogation—For Now
The Appellate Division’s decision in Progressive Garden State Insurance Company v. Allstate New Jersey Insurance Company, No. A-1321-23 (App. Div. Aug. 13, 2025), closes the door—at least for now—on Med Pay subrogation in New Jersey. By applying the collateral source statute, N.J.S.A. § 2A:15-97, and reaffirming that Med Pay is distinct from PIP, the court has resolved the long-standing debate in favor of those who argue that Med Pay cannot be recovered from tortfeasors. Unless and until the Legislature acts, Med Pay subrogation claims in New Jersey will likely fail, making this a critical development for insurers, attorneys, and claims professionals operating in the state.
