The opinion of the Court was delivered by
The critical issues in this appeal concern the proper interpretation, as well as the constitutionality, of N.J.S.A. 17:28-1.4, New Jersey’s so-called “deemer” statute. That statute deems New Jersey’s “verbal threshold,” which allows automobile accident tort recovery for non-economic losses only for bodily injury of a type or degree within one of the nine defined categories set forth in N.J.S.A. 39:6A-8a, to apply to the policies of out-of-state residents using their automobiles in New Jersey if their insurers are authorized to do business in New Jersey. A secondary issue, assuming that the deemer statute is constitutional and applies to plaintiffs’ claim, is whether the injuries sustained by plaintiff Louis Whitaker satisfy the verbal threshold.
In a reported opinion, 287
N.J.Super.
370,
We granted the State’s and defendants’ petition for certification, and plaintiffs’ cross-petition challenging both the constitutionality of the deemer statute and the lower courts’ conclusion that plaintiffs injuries did not satisfy the verbal threshold. 145
N.J.
373,
I
On June 29, 1992, plaintiff stopped his automobile behind a car making a left turn from the eastbound lane of Route 518 in Montgomery Township, a Somerset County municipality. Defendant Ronald DeVilla was. driving a vehicle owned by defendant Romeo DeVilla eastbound on Route 518. That automobile collided with the rear of plaintiffs automobile.
Plaintiff and his wife reside in Pennsylvania and are insured under a Pennsylvania automobile insurance policy issued by Prudential Property and Casualty Insurance Company, an insurer authorized to do business in New Jersey. Pursuant to Pennsylvania law, which requires automobile insurance companies to provide both “full tort” and verbal threshold options, 75- Pa. Cons.Stat. Ann. § 1705(a)(1), plaintiff elected the full tort option in his automobile insurance policy.
As a result of the accident plaintiff experienced stiffness in his shoulders, neck, and back, causing him to miss seventeen hours of work during the week following the accident. He was treated initially with pain medication and a cervical collar. On the advice of an orthopedist plaintiff received physical therapy treatments from June to August of 1992. From October 1992 to November 1993, plaintiff was seen regularly by Dr. Daniel Brainum, a chiropractor. He determined that plaintiffs cervical range of motion was restricted, and that plaintiff experienced muscle spasms in the cervical, dorsal, and lumbar regions. He concluded that plaintiffs injuries were attributable to lumbosacral sprain/ strain, sacroiliac instability, cervical myofascitis, and cervical hypo
When plaintiff was deposed in August 1994, he complained of back pain after physical exertion, and back and neck stiffness after driving for extended periods. He acknowledged that there were no activities that he engaged in prior to the accident in which he was then unable to engage, but noted that he experienced pain and discomfort when engaging in heavy lifting, or in other specific activities such as waterskiing, snow skiing, and digging holes. Plaintiff stated his intention to participate in a basketball league beginning in October 1994.
In opposition to defendants’ motion for summary judgment, plaintiff relied on Dr. Brainum’s final report and on the October 1994 report of plaintiffs experts, Drs. William Tevlin and David Meyers. That report, based on an examination in September 1994, indicated that plaintiff continued to experience tenderness and muscle spasm in the posterior cervical musculature and in the lumbar area, that plaintiff has decreased flexion in the head, decreased extension during bending and twisting, and decreased ability to raise his legs. The report concluded that the prognosis for plaintiffs improvement was limited because his injuries “are precursors to progressive traumatic arthritis in the areas injured.”
The trial court granted defendants’ motion for summary judgment, determining that the deemer statute applied to plaintiffs suit and upholding the statute’s constitutionality, citing
Taylor-Segan v. Rajagopal,
275
N.J.Super.
286,
The Appellate Division agreed with the trial court’s conclusion that plaintiff had failed to satisfy the verbal threshold. 287
There is no basis shown in the present case to distinguish between a New Jersey resident who pays a New Jersey insurance company for “no threshold” coverage and an out-of-state resident who opts for substantially the same coverage with the same insurance company.
In any event, the result would be anomalous. Consider next-door neighbors living just over the border in a contiguous state. One pays for “no threshold” coverage with an insurance company authorized to do business in New Jersey, while his neighbor obtains his insurance from a company not so authorized, and does not pay for the greater coverage. If the Deemer provision is interpreted as applying to the first, he cannot recover for non-economic damages if he is injured in an automobile accident occurring here, but his neighbor, who has not paid the greater premium can recover non-economic loss without regard to the verbal threshold. We can not attribute so absurd and unnecessary an intention to our Legislature, particularly where the New Jersey authorized insurance company can probably control the optional premium for the “no threshold” coverage just as easily as it does with a New Jersey resident.
[Ibid]
II
The deemer statute, first enacted in 1985, L. 1985, c. 520, § 18, and subsequently amended in 1988, L. 1988, c. 119, § 1 (codified as amended at N.J.S.A. 17:28-1.4), provides as follows:
Any insurer authorized to transact or transacting automobile or motor vehicle insurance business in this State, or controlling or controlled by, or under common control by, or with, an insurer authorized to transact or transacting insurance business in this State, which sells a policy providing automobile or motor vehicle liability insurance coverage, or any similar coverage, in any other state or in any province of Canada, shall include in each policy coverage to satisfy at least the liability insurance requirements of section 1 of P.L.1972, c. 197 (C. 39:6B-1) or section 3 of P.L.1972, c. 70 (C. 39:6A-3), the uninsured motorist insurance requirements of subsection a. of section 2 of P.L.1968, e. 385 (C. 17:28-1.1), and personal injury protection benefits coverage pursuant to section 4 of P.L.1972, c. 70 (C. 39:6A-4) or of section 19 of P.L.1983, c. 362 (C. 17:28-1.3), whenever the automobile or motor vehicle insured under the policy is used or operated in this State.
Any liability insurance policy subject to this section shall be construed as providing the coverage required herein, and any named insured, and any immediate family member as defined in section 14.1 of P.L.1983, c. 362 (C. 39:6A-8.1), under that policy, shall be subject to the tort option specified in subsection a. of section 8 of P.L.1972, c. 70 (C. 89:6A-8).
By its terms the statute requires insurers authorized to transact motor vehicle insurance business in New Jersey to include in motor vehicle liability policies sold in any other state or in Canada policy coverage for the insured vehicle such as to assure that if that vehicle is operated in New Jersey the policy will provide the minimum liability coverage, uninsured motorist coverage, and personal injury protection coverage that the insurer would be obligated to provide to a New Jersey insured. Thus, irrespective of the minimum insurance requirements of the insured’s state, the deemer statute guarantees that if the insured’s vehicle is operated in New Jersey the insurer will provide liability coverage of not less than $15,000 on account of injury to, or death of, one person in any one accident, coverage of not less than $30,000 on account of injury to or death of more than one person in any one accident, and coverage of not less than $5000 for damage to property in any one accident. See N.J.S.A 39:6B-1, 39:6A-3. In addition, the deemer statute guarantees the out-of-state insured uninsured motorist coverage in the same limits as are required for liability coverage. See N.J.S.A 17:28-1.la. Finally, the deemer statute guarantees that out-of-state insureds driving in New Jersey and insured by companies authorized to transact insurance business in New Jersey have available up to $250,000 in personal injury protection (PIP) benefits, see N.J.S.A 39:6A-4, irrespective of the comparable benefits mandated by the insured’s home state.
When the deemer statute was enacted in 1985,
N.J.S.A
39:6A-8 required New Jersey insureds to elect one of two tort options. Subsection (a) of that statute described the less restrictive tort option that limited the right of insureds to recover non-economic losses for soft tissue bodily injuries arising from automobile accidents to those injuries for which the reasonable and necessary medical expenses for treatment exceeded $200. Subsection (b) of
N.J.S.A.
39:6A-8 defined the more restrictive tort option, which required that the reasonable and necessary medical expenses for
Because the $200 and $1500 alternative monetary thresholds for soft-tissue injury suits did not succeed in containing the rising cost of automobile insurance, see
Oswin v. Shaw,
129
N.J.
290, 296,
The statute that authorized insureds to choose between the full tort option and the verbal threshold also amended- the deemer statute. See L. 1988, c. 119, § 1 (codified at N.J.S.A. 17:28-1.4). That amendment provided that automobile insurance policies sold to out-of-state residents by insurers authorized to transact insurance business in New Jersey would be deemed to be subject to the verbal threshold if the automobile were operated in New Jersey. N.J.S.A. 17:28-1.4.
Prior to the Appellate Division decision under review, courts confronted with challenges to the deemer statute have applied it literally and upheld its constitutionality.
Murphy v. Allstate Ins. Co.,
252
N.J.Super.
280,
We identify a more comprehensive state interest. In our view the state interest was to make no-fault PIP benefits available to all people injured in automobile accidents without raising the general level of automobile insurance premiums. The Legislature attempted to accomplish this goal by relieving insurers from having to pay noneconomic damages to people not seriously injured. Insureds who elect to recover for minor injuries have to pay an added premium for themselves and household members of then1 immediate family. PIP beneficiaries such as plaintiffs cannot make such an election because they do not buy automobile insurance and are not part of the household of an immediate family member who does. Although the Legislature probably could devise a means for people in plaintiffs’ class to buy no-threshold coverage, as a matter of administrative convenience the Legislature instead deemed them subject to the verbal threshold.
Imperfect classifications that are part of a reasonable legislative scheme do not violate the equal protection clause.
[Id at 285-86,599 A.2d 916 (citation omitted).]
In
Adams v. Keystone Insurance Co.,
264
N.J.Super.
367,
The rationale of these eases is that a state, like New Jersey, has a legitimate interest in its insurance scheme. The Legislature has made a policy judgment to solve the insurance crisis, and the legislation strikes an appropriate balance. Nonresident insureds must meet a reasonable threshold in order to receive payment for non-economic loss. In return, non-residents insured by companies transacting business in New Jersey who are injured in New Jersey receive the benefits necessar-y to provide for their medical treatment. In addition, New Jersey has an interest in ensuring that persons injured in this state receive prompt and proper medical care and in assuring that the medical care facilities and practitioners who provide such care will be paid. The subject statute, designed to lower automobile insurance premiums while ensuring generous PIP benefits, simply furthers the policy objective of N.J.SA 39:6A-1 to -35, which is both fan- and rational.
[Id. at 377-78,624 A.2d 1008 .]
Watkins v. Davis,
259
N.J.Super.
482,
N.J.S.A. 17:28-1.4 not only subjects the class in question to the “verbal threshold” of N.J.S.A. 39:6A-8.1(a), it construes the “out-of-state” policy as providing the more expansive coverage required under New Jersey No-Fault Law (ie. [sic] liability insurance requirements, uninsured motorist insurance requirements, and personal injury protection benefits coverage). There is a rational basis for imposing upon this class the verbal threshold, even though they do not have the opportunity to elect the “no-threshold”, as these individuals are receiving the benefit of a more comprehensive series of benefits without regard to fault under New Jersey law.
Plaintiffs argument that the statute does not affect out-of-state drivers whose insurance companies do not transact business in New Jersey, while accurate, does not dictate a finding that the classification in question is unconstitutional. While still having the ability to pursue their noneconomic losses in the New Jersey courts, these out-of-state drivers do not receive the benefit of New Jersey No-Fault Law outlined above. Moreover, imperfect classifications that are part of a reasonable legislative scheme do not violate the equal protection clause.
[259 N.J.Super. at 491,614 A.2d 189 .]
Other Appellate Division panels have also rejected constitutional challenges to the provision of the deemer statute imposing the verbal threshold on non-resident insureds. In
Taylor v. Rorke,
279
N.J.Super.
63,
The Third Circuit Court of Appeals has also upheld the deemer statute against an equal protection challenge to its constitutionality. In
Dyszel v. Marks,
The Third Circuit determined preliminarily that because the statute’s application to the appellants involved “neither a fundamental constitutional right nor a suspect or quasi-suspect classification, [the constitutionality of the statute] is evaluated under the third tier of equal protection analysis — rational basis review.” Id. at 125. In sustaining the statute, the court first noted the benefits that the deemer statute conferred on non-resident insureds:
Under the deemer statute, residents of other states who have insurance with companies doing business in New Jersey receive significant benefits as well as certain limitations, such as losing the cause of action for non-economic injuries. For example, the deemer statute ensures that most out-of-state drivers who become involved in accidents in New Jersey receive uninsured motorist protection and $250,000 of personal injury protection. In return for this protection, out-of-state residents who have insurance with companies doing business in New Jersey are required to meet the standards of New Jersey’s verbal threshold law in order to sue for non-economic injuries.
[Id. at 127 (footnotes and emphasis omitted).]
In addition, the court observed that a rational basis supported the legislative decision to apply the statute only to non-residents whose insurers were authorized to transact business in New Jersey:
This plan is rational. The Legislature chose insurance companies licensed to do business in New Jersey because New Jersey has the greatest amount of control over such companies. Since this group includes the largest auto insurers (such as State Farm), the legislation can reasonably be expected to have the desired effect.
[Ibid.]
Finally, the court concluded that the Legislature acted rationally in determining that out-of-state residents insured by licensed New Jersey insurers should not be allowed to recover non-economic damages for automobile accident injuries unless they satisfied the verbal threshold:
There is also a clear rational basis to support the Legislature’s determination that out-of-state residents who operate autos in New Jersey should be precluded from recovering for non-economic loss unless the verbal threshold is satisfied. Inherent in the no-fault system is a statutory right to recover damages without the need to satisfy a threshold. The cost of such recovery must be paid out of the auto insurance system. Appellants, and those who would fall into their category, are not New Jersey insured. As such, they are not in a position to finance the cost of non-threshold coverage. Given this situation and the Legislature’s desire to reduce or contain the cost of auto insurance, the legislative judgment was rationally consistent with the purpose of the statute. Furthermore, if the broadest coverage (no threshold) was provided to persons who did not pay for it, then the added cost to the insurer would have to be borne by others, namely consumers who purchase auto insurance. The Legislature reasonably concluded that such a situation would not foster reduced auto insurance premiums.
{Ibid,}
III
We first address the Appellate Division’s conclusion that the Legislature did not intend the deemer statute to impose the verbal threshold on out-of-state insureds that paid for full tort coverage, 287
N.J.Super.
at 374,
Nor do we consider it anomalous that the deemer statute would not impose the verbal threshold on non-residents insured by carriers not authorized to transact business in New Jersey. Those insureds, if involved in an automobile accident in New Jersey, would not receive the benefit of New Jersey’s minimum mandatory liability coverage, uninsured motorist coverage, or personal injury protection coverage that the deemer statute mandates for non-residents insured through New Jersey authorized insurers. The legislative decision to impose the verbal threshold only on the latter class of non-resident insureds, in recognition of the substantial benefits conferred on those insureds by the deemer statute, constitutes a thoroughly rational and intelligible legislative classification.
The Legislature undoubtedly assumed that it could not compel insurers not authorized to transact business in New Jersey to provide non-resident insureds injured in New Jersey the minimum liability, uninsured motorist, and personal injury protection benefits mandated by the deemer statute, and absent the ability to provide those benefits to such non-resident insureds the Legislature may have perceived that the imposition of the verbal threshold would be unfair, inappropriate or unlawful. Although we express no view concerning the wisdom of that legislative judgment, we are persuaded that it constitutes a rational and understandable determination by the Legislature to attempt to contain the cost of automobile insurance premiums for New Jersey resi
That conclusion is also dispositive of plaintiffs equal protection claims. Because the deemer statute’s application to plaintiff does not implicate any fundamental constitutional right or any suspect or quasi-suspect classification, plaintiffs constitutional challenge is evaluated on the basis of the third tier of equal protection analysis, rational basis review.
Id.
at 125;
Barone v. Department of Human Servs.,
107
N.J.
355, 365-67,
Whether we apply the rational basis standard to plaintiffs federal equal protection challenges or assess the relationship between the statutory classification and the underlying governmental purpose in evaluating the state equal protection challenge, we entertain no doubt that the constitutionality of the statute must be upheld. As noted, the Legislature’s determination to contain the cost of New Jersey automobile insurance premiums by imposing the verbal threshold on non-resident insureds injured in this state and insured by companies authorized to do business here is obviously a rational and reasonable legislative judgment and one
Finally, we will not disturb the conclusion of both lower courts that plaintiffs medical reports do not offer adequate objective, credible evidence to enable plaintiff to overcome the verbal threshold. Although the finding of muscle spasm by plaintiffs medical experts may constitute an objective medical finding, the Law Division concluded that that finding was not sufficiently connected to one of the statutory classifications, see N.J.S.A 39:6A-8a, to satisfy the verbal threshold. We agree with that conclusion. See
Oswin, supra,
129
N.J.
at 320,
IV
We reverse the judgment of the Appellate Division.
Opposed — None.