Panniel v. Diaz

This ease arises out of the recurring scenario in which the same insurance company happens to cover both vehicles involved in a roadway accident. As is often the case, plaintiff in this matter, a driver injured in the collision, pursued personal injury protection (PIP) medical benefits from her insurer in private arbitration, while also bringing a tort action in the Superior Court against the owner and driver of the other vehicle. After an extensive hearing at which both the plaintiff and the insurance company were represented by counsel, the PIP arbitrator concluded that plaintiffs primary injuries were proximately caused by the accident, and awarded her benefits.

The novel legal question before the court is whether principles of “offensive” collateral estoppel bind the defendant insureds in the Superior Court action to the PIP arbitrator’s finding of proximate cause, in a situation where the plaintiff has agreed to limit her tort damages to the insurer’s policy limits. Plaintiff argues that, in essence, the insurance company is the real party in *602interest in defending the tort action, and that it should now be stuck with the adverse finding of causation from the arbitration.

For the legal, policy and practical reasons explained below, the court finds that the defendant insureds are not estopped by the PIP outcome from relitigating issues of proximate causation in this tort action.

I.

On June 19,2002, an automobile driven by plaintiff June Panniel was struck by an ambulance at an intersection in Hamilton Township, New Jersey. The ambulance was driven by defendant Felix Diaz, Jr., and was owned by defendant Robert Wood Johnson University Hospital at Hamilton (“RWJ”). Coincidentally, both Panniel and RWJ had separately insured their respective vehicles with New Jersey Manufacturers Insurance Company (“NJM”).

Panniel was transported from the accident scene to Robert Wood Johnson University Hospital, where she was treated for chest and shoulder pain. The following day, June 20, 2002, plaintiff noticed a cut or laceration on the bottom of her right foot. After her own efforts to treat the wound were- unsuccessful, plaintiff returned to the hospital and was admitted on July 2, 2002. Her admitting diagnosis was cellulites of the right foot and new onset diabetes. On July 12, 2002, twenty-three days after the accident, plaintiff underwent surgery on her right foot to remove the contaminated tissue. All five toes of plaintiff’s right foot were amputated in that procedure.

Plaintiff also was diagnosed several months after the accident with carpal tunnel syndrome in her right arm. She sought precertification for carpal tunnel surgery from her PIP carrier, NJM.

By letter dated August 19, 2002, NJM informed her that “there is no PIP coverage available” because “the documented injuries and treatment are not motor vehicle accident related.” The gist of NJM’s position was that plaintiff had undiagnosed diabetes prior *603to the accident, and that the pre-existing diabetes, coupled with her failure to seek prompt medical attention for the cut on her foot, led to the need for her foot surgery. NJM also contended that plaintiffs carpal tunnel condition was unrelated to the accident.

In response to NJM’s denial letter, plaintiffs counsel sent a demand for PIP arbitration to the American Arbitration Association (AAA) on November 12, 2002. The AAA assigned the PIP case Docket No. 18-Z-600-19165-02. A week later, on November 19, 2002, plaintiffs same counsel filed this personal injury action on her behalf in the Superior Court (Docket No. MER-L-3657-02) against RWJ and Diaz.

NJM hired the law firm of Lenox, Socey, Wilgus, Formidoni, Brown, Giordano and Casey, LLC (“the Lenox firm”) to defend it in the PIP dispute and also to defend its insureds, Diaz and RWJ, in the personal injury action. The parties exchanged simultaneous discovery addressing both the PIP and personal injury claims.

It is undisputed that defense counsel focused his discovery in both matters on the issue of the alleged nexus between the motor vehicle accident and the partial amputation of plaintiffs right foot. The defense obtained plaintiffs surgical and other hospital records, her MRI studies, and subpoenaed medical records from nine other providers who treated plaintiff before and after the motor vehicle accident.

Plaintiff served the defense with a narrative report from Ulysses Williams, Jr., M.D., a Board-certified internist who diagnosed the need for surgical resection of the toes on her right foot. Dr. Williams opined that plaintiff cut her foot in the accident and bacteria entered the open wound causing the infection that required her toes to be amputated.

Prior to the PIP arbitration hearing, defense counsel deposed plaintiff about her injuries, and also arranged for her to appear before Robert Carabelli, M.D., for an Independent Medical Examination. Dr. Carabelli was unable to support defense counsel’s *604position that plaintiffs right foot injury was unrelated to the motor vehicle accident.1 Defense counsel thereafter obtained an expert report from Angelo Scotti, M.D., a Board-certified infectious disease and emergency medicine specialist. Dr. Scotti concluded from his review of the medical records that plaintiffs right foot infection and the ensuing amputation were not the result of the accident. He cited the non-involvement in the collision of any sharp object that could have pierced through her shoe, the lack of foot symptoms or any abnormal findings concerning plaintiffs foot at the emergency room, and plaintiffs pre-existing diabetes.

The PIP arbitration hearing was held on July 17, 2003. The arbitrator, also known under AAA rules as the Dispute Resolution Professional (“DRP”), was Michael F. Carnevale, II, Esq., an attorney. The arbitration was conducted in person rather than telephonically. The arbitrator heard live testimony from both Panniel and from her physician Dr. Williams, both of whom were examined and cross-examined by counsel. The arbitrator also considered the defense expert reports from Dr. Scotti and Dr. Carabelli, as well as what he described as “substantial” medical records and reports, including plaintiffs entire hospital record.

Following the PIP arbitration hearing, defense counsel submitted a supplemental letter along with a July 13, 2002 hospital record of Marc Whitman, M.D., who saw the patient for purposes of antibiotic management after her foot surgery earlier that day. In a segment of that post-surgical report, Dr. Whitman described plaintiffs condition as involving a “severe diabetic foot infection.”2

*605On September 29, 2003, Arbitrator Carnevale transmitted a four page -written decision to the parties. His decision found that Panniel was injured in an automobile accident on June 19, 2002, while insured by NJM. The decision further concluded that, “based on the credible medical evidence ... the expenses related to the care of the right leg and foot and ultimate amputation are causally related to the automobile accident [and are] payable as medical expense benefits, and are subject to relevant fee schedule, copay and deductible.” Arb. Decision at 2, ¶ 13.

The arbitrator specifically found Dr. Williams’ testimony to be “particularly informative, credible and helpful.” Id. at ¶ 2. He observed that:

Dr. Williams opined, after lengthy testimony and skillful cross-examination by respondent’s [defense] counsel, credibly and, convincingly that JP [plaintiff] was an undiagnosed diabetic at the time of the accident, sustained a small (too small to be noted in the emergency room records) cut to the leg, which in turn, due to the diabetic condition[,] resulted in infection, cellulitis and ultimately transmetarsal amputation.

Id. at 2, ¶ 12 (emphasis added). The arbitrator found the competing opinions from Dr. Scotti to be “significantly less helpful than Dr. Williams’ testimony on this point.” Id. at ¶ 13. The arbitrator also noted that the defense IME examiner, Dr. Carabelli, supported plaintiffs view of causation with respect to the amputation. Ibid. The arbitrator did not comment, however, on Dr. Whitman’s post-surgery impression of a “diabetic” foot infection.

*606As to the carpal tunnel claim, however, the arbitrator sided with the defense. The arbitrator acknowledged that “there is no real dispute that [plaintiff] may have carpal tunnel, or that ... surgery may be medically necessary.” Id. at 2, ¶ 4. Nonetheless, the arbitrator found that the credible medical evidence, including plaintiffs own testimony, showed that the carpal tunnel complaints did not appear until long after the accident. Ibid. This led the arbitrator to find that “the complaints of carpal tunnel syndrome[,] while real, are not causally related to the automobile accident,” and that “the denial of [the] precertification request was proper.” Ibid.

Neither plaintiff nor NJM timely pursued an appeal of the arbitrator’s decision. See AAA New Jersey No-Fault Arbitration Rules (“AAA Rules”)(eff. May 1, 2003), at Rule 36 (allowing limited appeals of a DRP’s decision shown to be incorrect as a matter of law). Accordingly, the arbitrator’s resolution is now final. See N.J.S.A. 39:6A-31.

Having substantially prevailed in the PIP arbitration, plaintiff filed a motion for partial summary judgment on October 23, 2003. The motion seeks to preclude the defendants in the tort action from relitigating the arbitrator’s finding that the plaintiffs amputation was proximately caused by the motor vehicle accident. In connection with that motion, plaintiff has certified that she will not seek any damages from defendants RWJ and Diaz in excess of the $1 million in liability coverage afforded under their policy with NJM. Defendants RWJ and Diaz oppose the motion, principally arguing that they were not parties to the PIP arbitration and therefore cannot be fairly bound by any of the arbitrator’s findings.

Oral argument in this matter was initially heard on November 21, 2003. At that oral argument, defense counsel confirmed that neither RWJ nor. Diaz had prior notice of the PIP arbitration proceedings. In light of that revelation, this court continued the argument to a second date. It did so in order to explore more *607fully the discrete interests, if any, of RWJ and Diaz that may remain in this lawsuit, apart from NJM’s $1 million in coverage.

Shortly thereafter, RWJ’s general counsel, Lawrence Lavigne, Esq., submitted a certification from Andrew Greene, President and Chief Executive Officer of the Robert Wood Johnson Health Network. Greene certifies that RWJ could still be adversely affected by a judgment for plaintiff in this case, even though plaintiff has agreed to cap her recovery at the NJM policy limits.

Greene advises that RWJ no longer procures liability coverage through NJM. Instead, RWJ is presently covered, in combination with Children’s Specialized Hospital (“CSH”), as a shareholder in a captive malpractice and general liability company with other hospitals, through System and Affiliate Members, Ltd. (“SAAML”). According to Greene, a judgment against RWJ in this case will likely affect the future underwriting rating of both RWJ and CSH as a “single cell” under the SAAML umbrella. Moreover, Greene asserts that any judgment would decrease the amount of remaining coverage available to RWJ under the aggregate claims limit of the NJM policy for any other claims asserted for calendar year 2002. At the Court’s invitation, RWJ’s general counsel Levigne appeared at the second oral argument to address these points.3

Plaintiff does not refute these underwriting and coverage consequences. Instead, plaintiff argues that RWJ and. Diaz are in privity -with NJM, and that RWJ and Diaz were “virtually” represented at the PIP arbitration by the very same attorney defending them in the tort action. She also urges that defense counsel had ample opportunities and incentives to disprove causation at the arbitration, and that it would be wasteful and unfair for this court to require plaintiff to prove causation a second time.

*608In support of those arguments, plaintiff relies heavily on Habick v. Liberty Mut. Fire Ins. Co., 320 N.J.Super. 244, 727 A.2d 51 (App.Div.1999), in which the court precluded a plaintiff who lost a causation dispute before a PIP arbitrator from relitigating those causation issues in her separate lawsuit against her insurer for uninsured motorist (UM) benefits. Defendants, on the other hand, argue that Habick is factually distinguishable, and that its reasoning should not be extended to the present circumstances.

II.

The doctrine of collateral estoppel is an equitable doctrine designed to “promote efficient justice by avoiding the relitigation of matters which have been fully and fairly litigated and fully and fairly disposed of.” Barker v. Brinegar, 346 N.J.Super. 558, 566, 788 A.2d 834 (App.Div.2002). New Jersey follows Section 27 of the Restatement (Second) of Judgments (1982) respecting collater al estoppel, and thus for the doctrine to apply to foreclose the relitigation of an issue, the party asserting the bar must show that:

(1) the issue to be precluded is identical to the issue decided in the prior proceeding;

(2) the issue was actually litigated in the prior proceeding;

(3) the court in the prior proceeding issued a final judgment on the merits;

(4) the determination of the issue was essential to the prior judgment; and

(5) the party against whom the doctrine is asserted was a party to or in privity with a party to the earlier proceeding. [Sackarow v. Sacharow, 177 N.J. 62, 826 A.2d. 710, (2003); In re Estate of Dawson, 136 N.J. 1, 20-21, 641 A.2d 1026 (1994).]

Even if all of these stated elements of collateral estoppel are met, a court can decide not to apply the doctrine where there are sufficient countervailing interests, or if it would not be fair to do so. In re Coruzzi, 95 N.J. 557, 568, 472 A.2d 546 (1984). It remains essential that the party to be bound by the former adjudication have “fair notice and be fairly represented in the prior proceeding [;] [preclusion can only occur [wjhen an issue of fact or law is actually litigated and determined by valid and final *609judgment.” Sacharow, supra, 177 N.J. at 77, 826 A.2d 710 (internal citations omitted).

Here, viewing the motion record in a light most favorable to defendants as the nonmoving parties, see R. 4:46-1 et seq., the court believes that at least the first four of these five collateral estoppel factors are met.

First, the issue of proximate causation of the partial amputation of plaintiffs right foot is substantively identical in both the PIP arbitration proceeding and in this personal injury case. Defendants contend that the issue in the PIP arbitration was whether or not there was a “substantial nexus” between plaintiffs foot injury and the automobile accident, which they argue is somehow different from the standard for proximate cause in a personal injury case. To be sure, the arbitrator’s decision does not parrot the words of the Model Civil Jury Charges for proximate causation. See Model Jury Charge (Civil), 7.10 to 7.14. The arbitrator found that the plaintiffs right leg and foot injury and ultimate amputation were “causally related” to the automobile accident. Arb. Decision at 2-3.

This court finds no substantive difference in what was or is at stake in the two proceedings concerning causation.4 It is for the finder of fact in both matters to determine whether the motor vehicle accident of June 19, 2002 was a substantial factor in causing plaintiffs right foot to be partially amputated. The *610arbitrator has already made that call, having been “credibly and convincingly” persuaded by plaintiffs expert, Dr. Williams, that the accident led to the amputation.

Defendants now wish, through the post-arbitration reports of Dr. Sporn, to dilute their role in the chain of causation. They argue that plaintiff contributed to her harm through her own delay in obtaining medical attention for her foot. That argument goes to distinct questions of comparative fault and the mitigation of damages. See Ostrowski v. Azzara, 111 N.J. 429, 437-38, 545 A.2d 148 (1988)(reciting the doctrine of “avoidable consequences” for a bodily injury).5 It does not undermine the arbitrator’s core finding that the accident was a (if not the sole) proximate cause of the foot injury. Whether or not defendants are due some offset because of plaintiffs own conduct would be an open issue for the jury trial, but the threshold question of causation from the accident is substantively identical in both proceedings.

With respect to the second and third elements of the Restatement test, the doctrine requires the identical issue to have been “actually litigated” in the prior proceeding and that a court in the prior proceeding issued a “final” judgment on the merits. These factors are easily satisfied here.

In Kozlowski v. Smith, 193 N.J.Super. 672, 475 A.2d 663 (App.Div.1984), the Appellate Division held that collateral estoppel may prevent a litigant in a personal injury action from relitigating a fact in issue determined against that litigant in a PIP action against her insurer in the Superior Court. In Kozlowski, the trial judge in the PIP case found that plaintiffs cardiac condition had not been caused by the motor vehicle accident. Following that adverse ruling, the trial court in the personal injury action held that plaintiff was collaterally estopped from linking the cardiac *611condition to the accident. The Appellate Division upheld that result, finding that plaintiff had a “full and fair opportunity to present whatever evidence she had in the manner she chose. She had her day in court in the issue in question.” Id. at 675, 475 A.2d 663. The causation issue had been actually litigated in the PIP action, resulting in a final judgment.

In Habick v. Liberty Mut. Fire Ins. Co., supra, 320 N.J.Super. at 258, 727 A.2d 51, these concepts of collateral estoppel were applied in the context of a PIP arbitration. The plaintiff in Habick had been injured in a motor vehicle accident with an uninsured driver. Her doctors recommended that she have her right knee surgically replaced. Her insurer, Liberty Mutual, disputed the causal nexus of the planned knee replacement surgery to the accident, and denied payment for the procedure. Plaintiff requested arbitration of the PIP claim. Plaintiff also filed for uninsured motorists (UM) coverage against Liberty Mutual, a claim that was routed to a separate UM arbitration. Liberty Mutual prevailed in the PIP arbitration on the causation issue, and the insurer sought to have that finding given preclusive effect in the UM matter. The Appellate Division agreed with the insurer, concluding that plaintiff was collaterally estopped by the PIP arbitrator’s ruling on causation from relitigating that issue in the UM case.

Habick acknowledged the preclusive effect of an arbitration when the party to be bound has had an ample chance to be heard in the arbitral forum. The guiding principle, according to Habick, is that the party to be bound had a “ ‘full and fair opportunity to litigate the issue’ in the earlier proceeding.” Id. at 257, 727 A.2d 51. In that vein, Habick relied upon Section 84 of the Restatement (Second) of Judgments, which allows for the preclusive effect of a valid and final award by arbitration. Id. at 258, 727 A.2d 51; see also Konieczny v. Micciche, 305 N.J.Super. 375, 384, 702 A.2d 831 (App.Div.1997) (“In appropriate circumstances, arbitration awards may be given collateral estoppel effect in subsequent judicial proceedings.”). Section 84 provides that “a valid *612and final award by arbitration has the same effects under the rules of res judicata, subject to the same exceptions and qualifications, as a judgment of a court.” Restatement (Second) of Judgments, § 84.

Here, there is no doubt that the issue of whether the June 19, 2002 auto accident caused Panniel’s foot injury was “actually litigated” before the PIP arbitrator. Indeed, that was a central issue in the arbitration. Both parties put on competing proofs from medical experts on the issue. The arbitrator noted that the plaintiffs expert, Dr. Williams, testified at length and was subjected to “skillful cross-examination” by defense counsel. Moreover, the PIP arbitrator’s decision is “final” because under the Auto Arbitration Act, N.J.S.A. 39:6A-31, his decision is binding and there is no right to seek a trial de novo in the Superior Court. See Churm v. Prudential Prop. & Cas. Ins. Co., 276 N.J.Super. 631, 632-33, 648 A.2d 741 (App.Div.1994). As noted above, the parties waived any further internal review of the award by a DRP panel of the AAA.

The fourth element of the collateral estoppel test is whether the arbitral finding that the accident proximately caused the partial amputation of plaintiffs right foot was or is “essential” to both the PIP award and to this personal injury action. The court readily finds that to be so. Without that causation finding, the arbitrator could not have awarded plaintiff her medical expenses for the foot surgery. Likewise, a jury in the tort action would have to decide whether the auto accident was the proximate cause of the plaintiffs injuries, as an essential element to an award of damages for those injuries. See Model Jury Charge (Civil), 7.10 (1998); see also Fama v. Yi, 359 N.J.Super. 353, 820 A.2d 65 (App.Div.2003) (precluding a motorist in a PIP action from arguing that his injuries and medical expenses were related to his auto accident, given the “essential” previous finding by a jury in his personal injury action that the accident was not a proximate cause of those injuries); Habick v. Liberty Mut. Fire Ins. Co., supra, 320 N.J.Super. at 247-62, 727 A.2d 51 (declaring a PIP arbitra*613tor’s determination of lack of causation final, noting that the causation issue had been fully litigated before the arbitrator).

The harder question before the court revolves around the fifth element of the Restatement’s test: whether the party against whom collateral estoppel is asserted in this litigation was a party or in privity with a party to the earlier proceeding. Although courts traditionally confined application of collateral estoppel to cases in which the parties were the same in both proceedings, the modern trend favors “a more pragmatic, case-by-case approach” to mutuality of parties. Zirger v. Gen. Accident Ins. Co., 144 N.J. 327, 337-38, 676 A.2d 1065 (1996).

In Zirger, the Supreme Court held that an underinsured motorist (UIM) carrier that had notice of a pending auto negligence action by its insured against the other driver in the accident could be bound by the jury’s findings in that negligence case. The Court found that “ordinarily there will be a sufficient identity of interests between the third-party tortfeasor’s carrier and the UM7UIM carrier to justify according preclusive effect to the result of a damages verdict in the litigation between the injured plaintiff and the tortfeasor.” Id. at 339, 676 A.2d 1065. Zirger noted that the UIM carrier could protect its interests by seeking permissive intervention in the negligence action, a measure which, if granted, would obviate the need to relitigate questions of fault and damages in a separate UIM case. Id. at 341-42, 676 A.2d 1065.

As the Court recognized in Zirger, “[t]he concept of privity, as well as its parameters, is necessarily imprecise.” Id. at 338, 676 A.2d 1065. “It is merely a word used to say that the relationship between the one who is a party on the record and another is close enough to include that other within the res judicata.” Ibid, (citing Bruszewski v. United States, 181 F.2d 419, 423 (3d Cir.) (Goodrich, J., concurring), cert, denied, 340 U.S. 865, 71 S.Ct. 87, 95 L.Ed. 632 (1950)). “A relationship is usually considered ‘close enough’ only when the party [against whom collateral estoppel is asserted] is a virtual representative of the non-party, or when the non-party actually controls the litigation.” *614Ibid. (citing Collins v. E.I. DuPont de Nemours & Co., 34 F.3d 172, 176 (3d Cir.1994)).

A mere connection between the parties in interest in two proceedings may not be sufficient to establish privity for purposes of collateral estoppel. For example, in Pace v. Kuchinsky, 347 N.J.Super. 202, 789 A.2d 162 (App.Div.2002), the Appellate Division ruled that there was an insufficient nexus between an injured motorist and one of his treating physicians to impose upon the motorist the adverse result of an earlier PIP arbitration pursued by that physician against plaintiffs PIP carrier. The plaintiff was merely a witness at the PIP arbitration, and was not represented in that proceeding by his own counsel. The arbitrator did not alert plaintiff that the outcome in the PIP arbitration might foreclose his right to prove causation in his pending tort action against the other motorist. Under those circumstances, the Appellate Division in Pace found that the “real party in interest” in the PIP matter was plaintiffs doctor who wanted his bills paid, not the plaintiff. Id. at 217, 789 A.2d 162. Hence, the court found insufficient privity between the plaintiff and her doctor to preclude her from relitigating issues of causation in her personal injury case. Ibid.

Here, the parties are not identical. Panniel was the claimant in the PIP arbitration and is the plaintiff in this personal injury action. She was represented by the same attorney in both proceedings. However, the respondent defending the PIP action was NJM, her PIP carrier, whereas the named defendants in this tort action are Felix Diaz, Jr., and RWJ. Neither RWJ nor Diaz was a party to the PIP arbitration. Indeed, it is undisputed that they had no notice of that proceeding, either from the arbitration tribunal or from the Lenox law firm.

The question then becomes whether there is privity between NJM, on the one hand, and Diaz and RWJ on the other. As described in Zirger, is the relationship between ■ NJM and its insureds named as defendants in the auto ease “close enough” to *615support a finding of privity? That privity analysis is affected by a variety of facts and circumstances in the record.

It is clear that NJM, through its counsel, controlled the defense of the PIP arbitration. NJM decided which discovery to pursue, which doctors to conduct IME reviews of the plaintiffs medical condition, and which proofs to present at the PIP arbitration. NJM also retained the sole discretion to contest the PIP claims, to pay them in full, or to compromise them. RWJ and Diaz would have no right to interfere with NJM’s decisions on those matters.

On the other hand, NJM and the present defendants have had a common interest in disproving plaintiffs claims of causation. If NJM had succeeded in persuading the PIP arbitrator that Panniel’s right foot condition was unrelated to the motor vehicle accident, RWJ and Diaz would have been able to take advantage of those findings in this tort action. That is the natural implication of Kozlowski and Habick, which estopped plaintiffs who had failed to prove causation in their PIP cases from relitigating those causation issues in the UM context. NJM, Diaz and RWJ all would have a shared desire for plaintiff to lose the PIP arbitration. Likewise, if the tort action had been tried first before the PIP ease, NJM presumably would hope that plaintiff would fail in proving causation to the jury, and then invoke that adverse finding to its benefit in the PIP action.

The overlap of defense interests here is heightened by several additional factors. First, NJM happens to be the insurer of both vehicles involved in the accident. Thus, it has the dual status as the respondent on the plaintiffs PIP claims and as the insurer of the defendants in the tort action. Pursuant to its liability policy with RWJ and Diaz, NJM would have the right to control the defense of the tort action. Indeed, NJM engaged the very same law firm to serve as defense counsel in both eases.

Further, plaintiff has disavowed any right of recovery beyond NJM’s policy limits in the tort action. That eliminates the possibility that RWJ or Diaz would be exposed to an excess verdict *616payable out of their own assets. Any judgment would be paid solely by NJM.

Given these various characteristics, the court concludes that NJM is sufficiently in privity with its insureds, RWJ and Diaz, to satisfy the fifth element of the Restatement test. That determination, however, does not end the court’s analysis. Collateral estoppel is not to be applied mechanically. Even where all of the required elements for preclusion are present, countervailing factors may call for restraint.

Specifically, there are five recognized exceptions to collateral estoppel listed in Section 28 of the Restatement (Second) of Judgments (1982), all of which are recognized by New Jersey case law. See Ensslin v. Tp. of North Bergen, 275 N.J.Super. 352, 370, 646 A.2d 452 (App.Div.1994). At least one of those exceptions6 warrants close attention in the present case. In particular, collateral estoppel should not be imposed where:

(5) [t]here is a clear and convincing need for a new determination of the issue (a) because of the potential adverse impact of the determination on the public interest or the interests of persons not themselves parties in the initial action, (b) because it was not sufficiently foreseeable at the time of the initial action that the issue would arise in the context of a subsequent action, or (e) because the party sought to be precluded, as a result of the conduct of his adversary or other special circum*617stances, did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action.

[Ibid.]

The court finds subparts (a) and (c) of this exception germane to the present case. It turns first to subpart (a): “potential adverse impact ... on the public interest or the interests of persons not themselves parties in the initial action.” In terms of private justice, the court is mindful of the adverse follow-on consequences that could befall RWJ and Diaz if the PIP arbitrator’s finding of causation is foisted upon them in this tort action. If, for example, the preclusive finding of causation leads to a plaintiffs verdict, the damages awarded for her five amputated toes and her associated pain and suffering may well be considerable. As RWJ’s affiant explains, such a verdict would reduce its remaining aggregate coverage from NJM for policy year 2002. The verdict could also damage RWJ’s rating in its current self-insurance pool, and might even affect another hospital in the same risk cell within that pool.

Similarly, Diaz has something to lose at trial as well. Even though NJM would protect him up to its policy limits and plaintiff has waived any claims above that amount, there could be adverse underwriting consequences for Diaz if a jury finds that his operation of the ambulance resulted in a major injury to the plaintiff. A large verdict might, for instance, affect Diaz’s own personal automobile insurance rates in the future, or his ability to procure coverage in the private insurance market.

A preclusive finding of causation for plaintiffs amputated toes could have a pivotal impact at trial. Counsel has informed the court that plaintiff is subject to the verbal threshold for non-economic damages under the Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-8. Plaintiff is thus required to prove either that she suffered an injury from the accident which resulted in dismemberment, see N.J.S.A. 39:6A-8(a), or an injury that is permanent and has caused a serious impact on her activities of daily living, see N.J.S.A 39:6A-8(a); James v. Torres, 354 *618N.J.Super. 586, 596, 808 A.2d 878 (App.Div.2002). The threshold would seem to be easily surmounted by plaintiffs amputation. If, however, the loss of her toes were found by the jury to be unrelated to the accident, plaintiffs soft-tissue neck and back injuries from the collision may well be inadequate to vault the threshold. Hence, the presence or absence of a causal link between plaintiffs foot injury and the auto accident could be dispositive of the verbal threshold, and thus serve as the linchpin between a no-cause verdict and a substantial award for pain and suffering. Precluding a full trial on causation issues would realistically deprive RWJ and Diaz of the chance for an award of zero damages, a result they would certainly prefer with or without NJM’s indemnity protection.

The court also considers the potential impact on the public interest. If it applies collateral estoppel to insured defendants in circumstances such as these, such an approach might produce undesirable ripple effects within our automobile insurance system. For example, the PIP arbitration process could become unwieldy if an arbitrator’s findings of causation favorable to a PIP plaintiff were routinely exported to such plaintiffs’ personal injury actions against third parties. Such a rule of law could lead defense counsel and their carriers to resist PIP claims even more aggressively, since the PIP case would be the final chance for anyone to prove or disprove causation of an injury. This very well could lead to more discovery, more adversity and more formality in the PIP arbitration process, a process that was legislatively intended to be expeditious. The PIP statute is to “be liberally construed to effect the prompt and efficient payment of benefits for victims of auto accidents.” Elkins v. New Jersey Mfrs. Ins. Co., 244 N.J.Super. 695, 700, 583 A.2d 409 (App.Div.1990). The objective of PIP legislation is “to get needed money to injured people quickly.” Cynthia M. Craig & Daniel J. Pomeroy, New Jersey Auto Insurance Law: No Fault (PIP), Uninsured & Underinsured Motorists 10 (2004). The statute was enacted “to provide a prompt source of first-party recovery for losses sustained in automobile accidents,” id. at 61, and to “minimize resort to the *619judicial process.” Gambino v. Royal