"While the Appellate Court ruling represents a major victory for New Jersey

insurers and consumers, the NAII feels that much more needs to be done to stabilize the state's volatile insurance market," commented the National Association of Independent Insurers, based in Des Plaines, Ill.

The decision released Monday in Trenton upheld provisions of the Auto Insurance Cost Reduction Act of 1998, which were implemented by the state's insurance regulator. Suing to overturn the rules were the Association of Trial Lawyers of America, and a Coalition for Quality Health Care, which includes physicians, surgeons and osteopaths as members.

John K. Tiene, chief administrative officer for the Insurance Council of New Jersey in Trenton, noted that an initial suit against the insurance department's implementation of the cost reduction act was brought in 1998 and was defeated in 1999.

The latest action challenged the application of pre-certification regulations that vary by company under a plan they file with the state Department of Banking and Insurance. In the case at issue, pre-certification was required for items such as non-emergency surgery, medical equipment rental, rehabilitation care, and physical, speech and restorative therapy.

In the event of a denial, the request could be submitted to a physician advisor, or if unsuccessful be submitted for dispute resolution.

Mr. Tiene said that insurers under the regulations can require pre-certification by a physician before allowing treatments that go outside the normal care path for auto injuries. Special diagnostic testing and psychological treatment might be typical pre-certification items, he said.

NAII noted that it and other insurance groups had filed briefs in defense of the New Jersey Department of Insurance and Banking for its approval of pre-certification policy language authorized under the act.

"We are pleased that the court once again recognized the importance of the medical cost savings features of the 1998 AICRA act. This is the second time in four years this act has been challenged in court, and in both instances the department has been ruled to be acting in accordance with the law," said Don Cleasby, assistant vice president and assistant general counsel for the NAII.

Medical cost issues aside, Mr. Cleasby charged that "over the past three years, excessive insurance regulation in New Jersey has strangled competition, resulting in more than 20 auto insurance companies leaving the state."

He said the NAII and several of its member companies are actively working with the Coalition for Auto Insurance Competition, a group of concerned businesses, insurance agents, companies and trade organizations, "to help restore competition and choice back to the New Jersey insurance market."

The Appellate Division in its decision found that the department through its commissioner had not acted unreasonably in approving policy forms with restrictions on assignment of Personal Injury Protection medical expense benefits.

The court also directed the department to take another look at, and make any needed changes in policy language related to certain diagnostic tests to assure there is "correctness and clarity."