Client Advisory
Additional Recent Client Advisories
NJ Supreme Court Holds PIP Insurance Fraud Claims Under IFPA and RICO are Not Subject to Mandatory Arbitration
The New Jersey Supreme Court unanimously held that insurance fraud claims brought under the Insurance Fraud Prevention Act (IFPA) and the Racketeer Influenced and Corrupt Organizations (RICO) are not subject to the mandatory arbitration provisions of the Automobile Insurance Cost Reduction Act (AICRA), requiring those claims to proceed in court rather than through PIP arbitration.
In Allstate New Jersey Insurance Company v. Carteret Comprehensive Medical Care, P.C., the New Jersey Supreme Court unanimously affirmed the Appellate Division’s determination that insurance fraud claims asserted under IFPA and RICO are not subject to AICRA’s mandatory arbitration process. Allstate alleged that defendants fraudulently obtained more than $1.7 million in PIP benefits through more than 800 fraudulent and misleading medical claims submitted between 2008 and 2022. After Allstate filed suit, certain defendants moved to compel arbitration pursuant to AICRA’s mandatory arbitration provision. The trial court judge agreed, issuing an order compelling Allstate to arbitrate the RICO and IFPA claims.
On appeal, the Court held that AICRA’s mandatory PIP arbitration provision did not extend to affirmative claims brought under the IFPA and RICO. This decision clarifies that insurers pursuing affirmative insurance fraud claims under the IFPA and RICO are not limited to the PIP arbitration process merely because the claims involve PIP benefits. As a result, insurance fraud claims alleging fraudulent billing schemes can remain in the judicial system, visible to the public, rather than being resolved through mandatory arbitration.
For insurers and defense counsel representing insurance carriers, the ruling provides greater certainty regarding the proper forum for litigation of complex insurance fraud actions and confirms that statutory fraud claims are distinct from routine disputes over the payment of PIP benefits. The ruling will also provide more visibility into the ongoing efforts by insurance companies to curb fraudulent billing in the context of personal injury lawsuits. Those defending against personal injury lawsuits should consider asking their counsel to investigate whether the personal-injury plaintiff sought treatment from the providers listed as defendants in such lawsuits.