A New Jersey appellate court determined that an insurance company substantially complied with the statute of limitations, and allowed the company to file a PIP reimbursement claim against the tortfeasor's insurance company.

In New Jersey Manufacturers Ins. Co. v. Kopecky, L-4760-06, 2007 WL 4060128 (N.J. Super. Ct. App. Div. Nov. 19, 2007), in 2004, a vehicle driven by Samuel, owned by Bethel, collided with a school bus driven by Kopecky. Boyd was a passenger in Samuel's vehicle.

At the time of the accident, Bethel was insured by New Jersey Manufacturers Ins. Co. (NJM). Samuel and Boyd were both injured in the accident, but neither had insurance. NJM paid personal injury protection (PIP) benefits on their behalf under Bethel's policy. It was not disputed that the statute of limitations would expire on May 25, 2006, two years from the date the PIP claims were filed.

The bus Kopecky was operating was in the scope of his employment and was insured by RLI. On February 6, 2006, NJM sent RLI a reimbursement request for the PIP payments it made on behalf of Samuel and Boyd. NJM received no response, and RLI denied receiving the letter.

On May 24, 2006, NJM mailed a second request for reimbursement to RLI and also a demand for arbitration. RLI received this communication on May 31, 2006.

On May 25, 2006, NJM filed an action against RLI and demanded reimbursement for the
PIP payments, and in the alternative sought an order directing the parties to arbitration. The lower court dismissed the complaint against RLI on the grounds that NJM did not make a timely demand for arbitration within the applicable statute of limitations.

On appeal, NJM argued that their February 6 letter had the effect of putting RLI on notice of its claim. The Court noted that sending mere notice of a claim to a party within a two-year period does not constitute a demand for arbitration and does not toll the statute of limitations. Thus, the Court rejected NJM's argument that the February 6, letter constituted a demand for arbitration.

Nevertheless, the Court concluded that NJM's second letter, sent on May 24, complied with the two-year statute of limitations, because it was accompanied by a formal demand for arbitration.

Under the facts in this case, RLI did not demonstrate that it was prejudiced by having received the demand for arbitration on May 31, 2006, six days after the statute of limitations expired. Therefore, the Court concluded that NJM substantially complied with the statute of limitations, and the claim against RLI was not barred. Thus, the Court remanded the case to arbitration.