NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-0778-23
ALLSTATE NEW JERSEY INSURANCE COMPANY, ALLSTATE NEW JERSEY APPROVED FOR PUBLICATION PROPERTY AND CASUALTY January 9, 2025 INSURANCE COMPANY, ALLSTATE APPELLATE DIVISION INSURANCE COMPANY, ALLSTATE FIRE & CASUALTY INSURANCE COMPANY, ALLSTATE NORTHBROOK INDEMNITY COMPANY, and ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY,
Plaintiffs-Appellants,
v.
CARTERET COMPREHENSIVE MEDICAL CARE, PC, d/b/a MONROE COMPREHENSIVE MEDICAL CARE, d/b/a COMPREHENSIVE MEDICAL CARE, d/b/a FASSST SPORT, d/b/a COMPREHENSIVE VEIN CARE, INIMEG MANAGEMENT COMPANY, INC., 311 SPOTSWOOD-ENGLISHTOWN ROAD REALTY, LLC, 72 ROUTE 27 REALTY, LLC, SAME DAY PROCEDURES, LLC, MID-STATE ANESTHESIA CONSULTANTS, LLC, NORTH JERSEY PERIOPERATIVE CONSULTANTS, PA, INTERVENTIONAL PAIN CONSULTANTS OF NORTH JERSEY, LLC, d/b/a PAIN MANAGEMENT PHYSICIANS OF NEW JERSEY, d/b/a METRO PAIN CENTERS, d/b/a METRO PAIN AND VEIN, SOOD MEDICAL PRACTICE, LLC, ONE OAK MEDICAL GROUP, LLC, d/b/a NEW JERSEY VEIN TREATMENT CLINIC, ONE OAK ORTHOPAEDIC & SPINE GROUP, LLC, ONE OAK HOLDING, LLC, JOSEPH BUFANO, JR., D.C., CHRISTOPHER BUFANO, MICAH LIEBERMAN, D.C., RICHARD J. MILLS, M.D., JENNIFER M. O'BRIEN, ESQ., GERALD M. VERNON, D.O., D.C., ALVIN F. MICABALO, D.O., JOSE CAMPOS, M.D., JOHN S. CHO, M.D., MICHAEL C. DOBROW, D.O., RAHUL SOOD, D.O., SACHIN SHAH, M.D., FAISAL MAHMOOD, M.D., RAVI K. VENKATARAMAN, M.D., MANGLAM NARAYANAN, M.D., and SHANTI EPPANAPALLY, M.D.,
Defendants-Respondents. ____________________________________
Argued December 5, 2024 – Decided January 9, 2025
Before Judges Gilson, Firko, and Bishop-Thompson.
On appeal from an interlocutory order of the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-1469-23.
David N. Cinotti argued the cause for appellants (Pashman Stein Walder Hayden, PC, and McGill and Hall LLC, attorneys; Michael S. Stein and Thomas Hall, of counsel and on the briefs; David N. Cinotti, Doris Cheung, and Darcy Baboulis-Gyscek, on the briefs).
A-0778-23 2 Kevin J. Musiakiewicz argued the cause for respondent John S. Cho, M.D. (Calcagni & Kanefsky, LLP, attorneys; Eric T. Kanefsky, of counsel and on the brief; Kevin J. Musiakiewicz and Philip Morrow, on the brief).
Andrew Gimigliano argued the cause for respondents Mid-State Anesthesia Consultants, LLC, Interventional Pain Consultants of North Jersey, LLC, d/b/a Pain Management Physicians of New Jersey, d/b/a Metro Pain Centers, d/b/a Metro Pain and Vein, Sood Medical Practice, LLC, Rahul Sood, D.O., and Sachin Shah, M.D. (Mandelbaum Barrett PC, attorneys; Andrew Gimigliano, Brian M. Block, Mohamed H. Nabulsi, and Michael S. Kivowitz, on the briefs).
Jeffrey B. Randolph argued the cause for respondents Carteret Comprehensive Medical Care, PC d/b/a Monroes Comprehensive Medical Care, d/b/a Comprehensive Medical Care, d/b/a Fassst Sport, d/b/a Comprehensive Vein Care, Inimeg Management Company, Inc., 311 Spotswood-Englishtown Road Realty, LLC, and 72 Route 27 Realty, LLC (Law Offices of Jeffrey Randolph, LLP, attorneys; Jeffrey B. Randolph and Anna M. Skowronska, on the brief).
Thomas O. Mulvihill argued the cause for amici curiae The Insurance Council of New Jersey and American Property Casualty Insurance Association (Methfessel & Werbel, attorneys; Thomas O. Mulvihill, on the brief).
Daniel S. Hunczak argued the cause for amicus curiae Coalition Against Insurance Fraud (Bruno Gerbino Soriano & Aitken, LLP, attorneys; Daniel S. Hunczak, on the brief).
William L. Brennan argued the cause for amicus curiae Citizens United Reciprocal Exchange (Brennan &
A-0778-23 3 Sponder, attorneys; William L. Brennan, of counsel and on the brief).
Carl A. Salisbury argued the cause for amicus curiae Association of New Jersey Chiropractors (Bramnick, Rodriguez, Grabas, Arnold & Mangan, attorneys; Carl A. Salisbury, on the brief).
Jeffrey S. Posta, Deputy Attorney General, argued the cause for amici curiae The New Jersey Department of Banking and Insurance and The New Jersey Office of the Insurance Fraud Prosecutor (Matthew J. Platkin, Attorney General, attorney; Angela Cai, Deputy Solicitor General, Janet Greenberg Cohen, Assistant Attorney General, and Adedayo Adu, Assistant Attorney General, of counsel; Jeffrey S. Posta, on the brief).
The opinion of the court was delivered by
GILSON, P.J.A.D.
The issue presented is whether claims of insurance fraud under the
Insurance Fraud Prevention Act (the Fraud Act), N.J.S.A. 17:33A-1 to -30, and
the New Jersey Anti-Racketeering Act (RICO), N.J.S.A. 2C:41-1 to -6.2, are
subject to arbitration under the Automobile Insurance Cost Reduction Act
(AICRA), N.J.S.A. 39:6A-1.1 to -35. The resolution of that issue involves
discerning and harmonizing the Legislature's intent in enacting the Fraud Act,
RICO, AICRA, and the arbitration system set up under AICRA for the resolution
of disputes concerning personal injury protection (PIP) benefits. We hold that
A-0778-23 4 insurance fraud claims under the Fraud Act and RICO are not subject to PIP
arbitration under AICRA.
Accordingly, we reverse and vacate three orders in this matter that
compelled plaintiffs' Fraud Act, RICO, and related declaratory judgment claims
to PIP arbitration. We also vacate the provisions of those orders that dismissed
plaintiffs' complaint. Therefore, we remand with instruction that plaintiffs be
permitted to pursue their claims in the Law Division, with the right to a jury
trial.
I.
We discern the facts from the record developed when certain defendants
moved to dismiss all of plaintiffs' claims and compel arbitration. In doing so,
we accept for purposes of this appeal the allegations in plaintiffs' complaint.
Plaintiffs are six related insurance companies: Allstate New Jersey
Insurance Company; Allstate New Jersey Property and Casualty Insurance
Company; Allstate Insurance Company; Allstate Fire & Casualty Insurance
Company; Allstate Northbrook Indemnity Company; and Allstate Property and
Casualty Insurance Company (plaintiffs or collectively Allstate). Allstate
provides no-fault automobile insurance policies in New Jersey, under which
insureds can recover PIP benefits if they are injured in an automobile accident.
A-0778-23 5 When insureds receive medical treatment, they may, and typically do, assign
their PIP benefits to their medical providers. The medical providers can then
seek payment from insurers, like Allstate. See N.J.S.A. 39:6A-4 (allowing PIP
benefits to be assigned "to a provider of service benefits").
In March 2023, Allstate filed a nine-count complaint against over thirty
defendants, including several medical practices, the owners of those practices,
and current and former physicians and administrators working at or with those
medical practices. Allstate alleges that from 2008 through 2022, defendants
conspired to obtain over $1.7 million in PIP benefits from Allstate through more
than 800 fraudulent and misleading medical claims. In its complaint, Allstate
asserts that defendants' actions violated the Fraud Act and RICO. Allstate also
contends that certain defendants violated the Corporate Practice of Medicine
Doctrine, N.J.A.C. 13:35-6.16, and New Jersey's Anti Self-Referral Law,
N.J.S.A. 45:9-22.4 to -22.9. In support of its claims, Allstate alleges that
numerous defendants engaged in kickback schemes, illegal self-referrals, and
patterns of fraud and racketeering in providing the services for which defendants
obtained payments from Allstate. Thus, Allstate seeks declaratory judgments,
including a declaration that one defendant medical practice was illegally
structured and was not entitled to receive PIP benefits. As remedies, Allstate
A-0778-23 6 seeks damages, including the disgorgement of over $1.7 million that Allstate
paid to defendants, treble damages, injunctive relief, and attorneys ' fees.
In response to Allstate's complaint, three groups of defendants separately
moved to dismiss the complaint and to compel arbitration. Other defendants,
however, filed answers and requested a jury trial.
On October 27, 2023, the trial court entered three orders granting the
moving defendants' request to compel all claims asserted by Allstate to
arbitration under AICRA. Two of those orders also dismissed Allstate's
complaint, without prejudice, including the claims against the non-moving
defendants.
In support of its orders, the trial court issued three written statement s of
reasons, that were all based on the same substantive reasoning. The trial court
held that AICRA's language required arbitration of "all 'disputes' around the
'recovery' of PIP [b]enefits." The trial court noted that "'any party to the
dispute'" may invoke arbitration, and that the arbitration provision encompassed
"a broad array of legal disputes regarding PIP benefits, including mistaken
claims for benefits, fraud-based claims, or any other claim including the
'recovery' of PIP [b]enefits." The trial court then held that all of Allstate's claims
were within the purview of the provision, because they involved "(1) a dispute
A-0778-23 7 by Allstate (2) involving [Defendants'] recovery of PIP [b]enefits that (3) one
party wishe[d] to send to arbitration." Finally, the trial court explained that it
discerned nothing in the statute, nor any independent reason, for the fraud-based
claims to be exempted from the arbitration mandate.
Allstate now appeals from the orders dismissing its complaint and
compelling arbitration. See R. 2:2-3(b)(8) (allowing appeals from orders
compelling arbitration).
II.
On appeal, Allstate argues that the trial court erred in finding that AICRA
requires PIP arbitration of its Fraud Act and RICO claims. In that regard,
Allstate contends that (1) AICRA cannot take away the right to a jury trial
guaranteed by the Fraud Act and RICO; (2) the plain language of AICRA
provides only for PIP arbitration of disputes regarding "recovery of medical
expense benefits or other benefits provided under [PIP] coverage"; (3) AICRA,
the Fraud Act, and RICO can be harmonized so that an insurance claim under
the Fraud Act or RICO is not subject to PIP arbitration; and (4) canons of
statutory interpretation support the position that claims under the Fraud Act and
RICO are not subject to PIP arbitration.
A-0778-23 8 Four amici curiae filed briefs supporting Allstate's position. They are the
New Jersey Department of Banking and Insurance (the Department) and the
New Jersey Office of the Insurance Fraud Prosecutor (the OIFP), Citizens
United Reciprocal Exchange (CURE), the Coalition Against Insurance Fraud
(the Coalition), and the Insurance Council of New Jersey and American Property
Casualty Insurance Association. The amici briefs largely echo Allstate's
arguments that claims brought under the Fraud Act are not subject to PIP
arbitration. Several of the amici also assert that the contrary decision in
Government Employees Insurance Co. v. Mount Prospect Chiropractic Center
(the GEICO decision), 98 F.4th 463 (3d. Cir. 2024) rests on flawed reasoning
and is otherwise not binding on us.
In response, defendants maintain that Allstate's claims are subject to PIP
arbitration under AICRA. According to defendants, (1) AICRA requires claims
regarding the recovery of medical expense benefits, including claims of fraud,
to be submitted to PIP arbitration; (2) the trial court correctly dismissed
Allstate's complaint for lack of subject matter jurisdiction; (3) caselaw from the
United States Court of Appeals for the Third Circuit (the Third Circuit) supports
the contention that Fraud Act claims are subject to PIP arbitration; and (4) both
the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, and New Jersey
A-0778-23 9 Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -36, support the conclusion that
Allstate's claims are subject to PIP arbitration. Defendants also assert that the
history of AICRA demonstrates that the Legislature intended for Fraud Act and
RICO claims to be subject to mandatory PIP arbitration, and that the caselaw
Allstate relies on to make the contrary argument is distinguishable.
Amicus Association of New Jersey Chiropractors supports defendants'
position, contending that a party can waive his or her right to a jury trial in an
arbitration agreement. Consequently, the Association of New Jersey
Chiropractors argues that by opting into the arbitration protocols of AICRA,
Allstate waived its right to a jury trial.
III.
Appellate courts review orders compelling arbitration under a de novo
standard. Flanzman v. Jenny Craig, Inc., 244 N.J. 119, 131 (2020). We also
review de novo a trial court's interpretation of statutes. Allstate N.J. Ins. Co. v.
Lajara, 222 N.J. 129, 139 (2015). The primary issue presented on this appeal is
whether claims of insurance fraud under the Fraud Act and RICO can be
compelled to PIP arbitration under AICRA. To put that issue in context, we first
summarize the Fraud Act, RICO, and AICRA.
A. The Fraud Act.
A-0778-23 10 The Fraud Act was enacted in 1983 "to confront aggressively the problem
of insurance fraud in New Jersey." N.J.S.A. 17:33A-2. In that regard, the
Legislature declared:
The purpose of this act is to confront aggressively the problem of insurance fraud in New Jersey by facilitating the detection of insurance fraud, eliminating the occurrence of such fraud through the development of fraud prevention programs, requiring the restitution of fraudulently obtained insurance benefits, and reducing the amount of premium dollars used to pay fraudulent claims.
[N.J.S.A. 17:33A-2.]
The Fraud Act authorizes both the Commissioner of Banking and
Insurance (the Commissioner) and insurance companies to bring actions in
courts to seek damages, costs, and attorneys' fees. N.J.S.A. 17:33A-5, 17:33A-
7. Regarding suits by insurance companies, the Fraud Act states:
Any insurance company damaged as the result of a violation of any provision of this act may sue therefor in any court of competent jurisdiction to recover compensatory damages, which shall include reasonable investigation expenses, costs of suit and attorneys fees.
[N.J.S.A. 17:33A-7(a).]
An insurance company is also entitled to an award of treble damages
where a pattern of fraud is proven. N.J.S.A. 17:33A-7(b). Moreover, the Fraud
A-0778-23 11 Act authorizes the Commissioner to intervene in any case brought by an
insurance company alleging a violation of the Act. N.J.S.A. 17:33A-7(d).
The New Jersey Supreme Court has held that private parties in an action
brought under the Fraud Act have a right to a jury trial "because the [Fraud Act]
provides legal relief in the form of compensatory and punitive damages and
because [a Fraud Act] claim is comparable to common-law fraud." Lajara, 222
N.J. at 151. In Lajara, the Court held that the right to a jury trial could be
invoked by a defendant. Id. at 134-35, 151.
B. RICO.
The Legislature enacted RICO "to safeguard the public interest . . . to
prevent, disrupt[,] and eliminate the infiltration of organized crime type
activities which are substantial in nature into the legitimate trade or commerce
of this State." N.J.S.A. 2C:41-1.1(c). The aim of RICO is to combat
"'[r]acketeering activity,'" which is broadly defined to include various crimes,
including "fraudulent practices." N.J.S.A. 2C:41-1(a)(o).
Modeled on the federal statute, RICO provides a private cause of action.
N.J.S.A. 2C:41-4(c). "Any person damaged in his [or her] business or property
by reason of a violation" of RICO "may sue therefor in any appropriate court
and shall recover" treble damages and cost of suit, including reasonable
A-0778-23 12 attorneys' fees. N.J.S.A. 2C:41-4(c). A court also has express authority to
"restrain the acts or conduct which constitute violations of" RICO. N.J.S.A.
2C:41-4(a).
"All remedies permitted by [New Jersey's] RICO law are 'cumulative with
each other and other remedies at law,' [] and the Legislature has instructed that
[New Jersey's] RICO law must be 'liberally construed to effect [its] remedial
purposes[.]'" Fairfax Fin. Holdings Ltd. v. S.A.C. Cap. Mgmt., L.L.C., 450 N.J.
Super. 1, 37 (App. Div. 2017) (fourth alteration in original) (first quoting
N.J.S.A. 2C:41-6.1; and then quoting N.J.S.A. 2C:41-6). Moreover, the law is
well-settled that parties to a civil RICO action have a right to a jury trial.
N.J.S.A. 2C:41-4. See also Grandvue Manor, LLC v. Cornerstone Contracting
Corp., 471 N.J. Super. 135, 142 (App. Div. 2022).
C. No-Fault Insurance and AICRA.
New Jersey operates under a no-fault automobile insurance system, which
includes AICRA. See N.J.S.A. 39:6A-1.1 to -35. Under AICRA, every standard
automobile liability insurance policy issued in New Jersey must provide PIP
benefits to the named insured and members of the insured's household. N.J.S.A.
39:6A-4. Those benefits are paid regardless of who is at fault for the accident.
Ibid.
A-0778-23 13 AICRA, enacted in 1998, established a resolution system to expeditiously
resolve disputes regarding the amount or legitimacy of PIP claims. That system
may consist of either arbitration or review by a medical review organization.
N.J.S.A. 39:6A-5.1(c), (d); N.J.S.A. 39:6A-5.2. In that regard, AICRA states:
Any dispute regarding the recovery of medical expense benefits or other benefits provided under personal injury protection coverage pursuant to section 4 of [L. 1972, c. 70] (C. 39:6A-4), section 4 of [L. 1998, c. 21] (C. 39:6A-3.1) or section 45 of [L. 2003, c. 89] (C. 39:6A-3.3) arising out of the operation, ownership, maintenance or use of an automobile may be submitted to dispute resolution on the initiative of any party to the dispute, as hereinafter provided.
[N.J.S.A. 39:6A-5.1(a).]
AICRA explains that the type of disputes covered by PIP arbitration "may
include, but not necessarily be limited to," matters concerning:
(1) interpretation of the insurance contract; (2) whether the treatment or health care service which is the subject of the dispute resolution proceeding is in accordance with the provisions of section 4 of P.L. 1972, [c.] 70 (C. 39:6A-4), section 4 of P.L. 1998, [c.] 21 (C. 39:6A-3.1) or section 45 of P.L. 2003, [c.] 89 (C. 39:6A:-3.3) or the terms of the policy; (3) the eligibility of the treatment or service for compensation; (4) the eligibility of the provider performing the treatment or service to be compensated under the terms of the policy or under regulations promulgated by the commissioner, including whether the person is licensed or certified to perform such treatment; (5) whether the disputed medical treatment was actually performed; (6) whether
A-0778-23 14 diagnostic tests performed in connection with the treatment are those recognized by the commissioner; (7) the necessity or appropriateness of consultations by other health care providers; (8) disputes involving application of and adherence to fee schedules promulgated by the commissioner; and (9) whether the treatment performed is reasonable, necessary, and compatible with the protocols provided for pursuant to P.L. 1998, [c.] 21 (C. 39:6A-1.1 [to -35]).
[N.J.S.A. 39:6A-5.1(c).]
AICRA delegated to the Commissioner the responsibility to promulgate
rules and regulations regarding dispute resolution, and to designate an
organization to administer the proceedings. N.J.S.A. 39:6A-5.1(b); see also
N.J.S.A. 39:6A-1.2 (explaining that the "[C]ommissioner may promulgate any
rules and regulations . . . deemed necessary in order to effectuate the provisions
of this amendatory and supplementary act").
In accordance with that authority, the Commissioner has established
regulations detailing the "procedures for the resolution of disputes concerning
the payment of medical expense and other benefits provided by the personal
injury protection coverage in policies of automobile insurance." N.J.A.C. 11:3-
5.1(a). See N.J.A.C. 11:3-5.1 to -5.12. Under those regulations, a request for
arbitration of a "PIP dispute" can be made by the injured party, the insured, the
provider who is an assignee of PIP benefits, or the insurer. N.J.A.C. 11:3-5.6(a).
A-0778-23 15 Since 2011, the Commissioner has used Forthright Solutions (Forthright)
as the exclusive PIP arbitration services provider in New Jersey. See Forthright,
New Jersey No-Fault Arbitration Rules (rev. 2022) [hereinafter New Jersey No-
Fault Arbitration Rules], https://www.nj-no-fault.com/rules. See also Citizens
United Reciprocal Exch. v. N. NJ Orthopedic Specialists, 445 N.J. Super. 371,
376-77 (App. Div. 2016) (recognizing that Forthright currently serves as the
arbitration forum for PIP disputes); Kimba Med. Supply v. Allstate Ins. Co. of
NJ, 431 N.J. Super. 463, 468 (App. Div. 2013). Forthright, in turn, has issued
rules governing PIP arbitration. See New Jersey No-Fault Arbitration Rules;
see also N.J.A.C. 11:3-5.4(b).
Under AICRA's regulations, insurers are required to adopt a Decision
Point Review Plan (DPR Plan). DPR Plans outline the insurer's oversight of the
payment of PIP benefits to medical providers. See N.J.A.C. 11:3-4.7. DPR
Plans are also required to have an arbitration provision, which requires disputes
for PIP benefits to be resolved through arbitration under AICRA. See N.J.A.C.
11:3-4.7B(b) ("Insurers shall only require a one-level appeal procedure for each
appealed issue before making a request for alternate dispute resolution in
accordance with N.J.A.C. 11:3-5. That is, each issue shall only be required to
A-0778-23 16 receive one internal appeal review by the insurer prior to making a request for
alternate dispute resolution.").
"The goal of PIP is to provide prompt medical treatment for those who
have been injured in automobile accidents without having that treatment delayed
because of payment disputes." Selective Ins. Co. of Am. v. Hudson E. Pain
Mgmt. Osteopathic Med., 210 N.J. 597, 609 (2012). In that regard, N.J.S.A.
39:6A-5.1 "establish[ed] an expeditious non-judicial procedure for resolving
any dispute regarding the payment of PIP benefits, in furtherance of the No-
Fault Act's objectives of facilitating 'prompt and efficient provision of benefits
for all accident injury victims' and 'minimiz[ing] resort to the judicial process.'"
Endo Surgi Ctr., PC v. Liberty Mut. Ins. Co., 391 N.J. Super. 588, 594 (App.
Div. 2007) (second alteration in original) (quoting Gambino v. Royal Globe Ins.
Cos., 86 N.J. 100, 105, 107 (1981)).
D. Interpreting and Harmonizing the Fraud Act, RICO, and AICRA.
"When interpreting a statute, [the] aim [is] to effectuate the Legislature's
intent, which is best indicated by the statutory text." Keyworth v. CareOne at
Madison Ave., 258 N.J. 359, 379 (2024) (citations omitted). "In construing
statutory text, 'words and phrases shall be given their generally accepted
meaning, unless that meaning is inconsistent with the clear intent of the
A-0778-23 17 Legislature or unless the statute provides a different meaning. Words in a statute
should not be read in isolation.'" Ibid. (quoting Shelton v. Restaurant.com, Inc.,
214 N.J. 419, 440 (2013)).
Accordingly, courts are to "read the statute[] in [its] entirety and construe
each part or section . . . in connection with every other part or section to provide
a harmonious whole." C.A. ex rel. Applegrad v. Bentolila, 219 N.J. 449, 459-
60 (2014) (omission in original) (first quoting State v. Marquez, 202 N.J. 485,
499 (2010); and then quoting Bedford v. Riello, 195 N.J. 210, 224 (2008))
(internal quotation marks omitted). "If the text's plain meaning is clear and
unambiguous, we apply the law as written." Keyworth, 258 N.J. at 380 (first
quoting State v. J.V., 242 N.J. 432, 443 (2020); and then quoting Murray v.
Plainfield Rescue Squad, 210 N.J. 581, 592 (2012)) (internal quotation marks
omitted). "Conversely, if the text is ambiguous, 'we may turn to extrinsic
evidence, including legislative history to aid our inquiry.'" Ibid. (quoting W.S.
v. Hildreth, 252 N.J. 506, 518 (2023)).
It is "[a]n overriding principle of statutory construction" that courts must
seek to "harmonize legislative schemes," Richter v. Oakland Bd. of Educ., 246
N.J. 507, 538 (2021), "in light of their purposes," Am. Fire & Cas. Co. v. N.J.
Div. of Tax'n, 189 N.J. 65, 79-80 (2006) (citing St. Peter's Univ. Hosp. v. Lacy,
A-0778-23 18 185 N.J. 1, 14 (2005)). "Whenever statutory analysis 'involves the
[interpretation] of two or more statutes, [courts] seek to harmonize [them], under
the assumption that the Legislature was aware of its actions and intended' for
related laws 'to work together.'" N.J. Ass'n of Sch. Adm'rs v. Schundler, 211
N.J. 535, 555 (2012) (third alternation in original) (quoting State ex rel. J.S.,
202 N.J. 465, 480 (2010) (citations omitted)).
The plain language of AICRA provides for PIP arbitration of "[a]ny
dispute regarding the recovery of medical expense benefits or other benefits
provided under personal injury protection coverage" pursuant to N.J.S.A.
39:6A-4 (personal injury protection), N.J.S.A. 39:6A-3.1 (basic automobile
policies), or N.J.S.A. 39:6A-3.3 (special automobile insurance policies) arising
out of the operation, ownership, maintenance, or use of an automobile. See
N.J.S.A. 39:6A-5.1(a); see also N.J.S.A. 39:6A-5.1(c). While that definition is
broad, the focus is on providing swift compensation for people injured in
automobile accidents. See Gambino, 86 N.J. at 105-06; Amiano v. Ohio Cas.
Ins. Co., 85 N.J. 85, 90 (1981) ("The No Fault Act is social legislation intended
to provide insureds with the prompt payment of medical bills, lost wages and
other such expenses without making them await the outcome of protracted
litigation.").
A-0778-23 19 Consequently, the PIP regulations and PIP arbitration process are
designed to expeditiously address disputes concerning the payment of medical
expenses. See N.J.A.C. 11:3-5.1(a). PIP arbitrators usually provide limited or
no discovery and do not involve parties who did not sign a bill or make a claim
for medical services. And, even where limited discovery is available, the inquiry
is limited to facts related to the nature, extent, or validity of the PIP claim.
N.J.S.A. 39:6A-13(g). In short, PIP arbitration is a streamlined and specialized
process to resolve disputes between insureds, their medical providers, and
insurance companies. In that regard, we have held that "PIP benefits are
statutory in origin" and the remedies for insureds and assignees who are denied
PIP benefits are limited to interest and attorney's fees. Endo Surgi Ctr., 391 N.J
Super. at 591-95.
By contrast, the goal of the Fraud Act is to "confront aggressively the
problem of insurance fraud in New Jersey." N.J.S.A. 17:33A-2; Lajara, 222 N.J.
at 143. The statute provides for a private right of action to be brought in "any
court of competent jurisdiction." N.J.S.A. 17:33A-7. Moreover, the Fraud Act
allows for the recovery of compensatory damages, investigative expenses, costs,
attorneys' fees, and, where a pattern of fraud is established, treble damages.
Ibid. The Fraud Act also vests broad authority in the Bureau of Fraud Deterrence
A-0778-23 20 to conduct discovery and investigate violations. See N.J.S.A. 17:33A-10.
Therefore, the legislative goal in enacting the Fraud Act was to root out
insurance fraud.
RICO has the goal of eliminating "activities [that] present[] a serious
threat to the political, social and economic institutions of this State." N.J.S.A.
2C:41-1.1(a). RICO provides for "strict civil and criminal sanctions," N.J.S.A.
2C:41-1.1(c), which are to be administered by a court, N.J.S.A. 2C:41-3(c),
2C:41-4(a). RICO allows private persons to bring a civil action in "court" to
recover damages and to seek injunctive relief. N.J.S.A. 2C:41-4(a), (c).
The parties dispute whether a PIP arbitrator can grant the relief called for
in the Fraud Act and RICO. In that regard, the current PIP arbitration
regulations and the Forthright rules of PIP arbitration do not clearly provide for
treble damages and injunctive reliefs. See New Jersey No-Fault PIP Arbitration
Rules. See also N.J.S.A. 39:6A-5.1; N.J.A.C. 11:3-5.1; N.J.A.C. 11:3-5.6. So,
there are serious questions whether a PIP arbitrator could award compensatory
damages, treble damages, or attorneys' fees to an insurer. Notably, N.J.A.C.
11:3-5.6(e) limits "reasonable attorney's fees [to] [] successful claimant[s]."
Indeed, we have held, and our Supreme Court has not indicated to the
contrary, that an insurer is not entitled to attorneys' fees in a PIP arbitration.
A-0778-23 21 David v. Gov't Emps. Ins. Co., 360 N.J. Super. 127, 149 (App. Div. 2003)
(emphasizing that "because N.J.S.A. 39:6A-9.1 does not explicitly provide for
the award of counsel fees, the arbitrator erred in awarding them"), certif. denied.
178 N.J. 251 (2003); N.J. Coal. of Healthcare Pros., Inc. v. Dep't of Banking and
Ins., 323 N.J. Super. 207, 263 (App. Div. 1999). Furthermore, the Fraud Act
and RICO allow for various types of equitable relief. See Lajara, 222 N.J. at
144; N.J.S.A. 2C:41-4(a). PIP arbitrators, however, do not have authority to
grant equitable relief. See N.J.S.A. 39:6A-5.1(e) (stating that arbitrators can
grant "reimbursement [of medical expenses] . . . with interest payable"); see also
N.J.S.A. 39:6A-5.1(d); Endo Surgi Ctr., 391 N.J. Super. at 592 (holding that
"PIP benefits are statutory in nature").
There also are serious questions whether a PIP arbitrator can provide for
broad discovery, including discovery from third parties. PIP arbitrators are not
trained to handle and effectively address insurance fraud claims. See Allstate
Ins. Co. v. Lopez, 311 N.J. Super. 660, 678-80 (Law. Div. 1998) (staying PIP
arbitration until the court could adjudicate the Fraud Act issue). While PIP
arbitrators can address fraud as a defense to a claim, State Farm Ins. Co. v.
Sabato, 337 N.J. Super. 393, 394 (App. Div. 2001), they have not historically
addressed insurance claims under the Fraud Act, Nationwide Mut. Fire Ins. Co.
A-0778-23 22 v. Fiouris, 395 N.J. Super. 156, 161 (App. Div. 2007). See also Sabato, 337 N.J.
at 397 (explaining that a court is better equipped to handle allegations of massive
insurance fraud).
Moreover, the PIP arbitration rules do not clearly provide for joinder of
third parties. See New Jersey No-Fault Arbitration Rules. Thus, if the
Commissioner seeks to join in a fraud claim action pursuant to N.J.S.A. 17:33A-
7(d), it is unclear whether PIP arbitration rules would allow him or her to do so.
The Fraud Act, RICO, and AICRA can be harmonized when the language
used in each statute is considered and construed in the context of the legislative
goals. PIP arbitration is limited to disputes "regarding the recovery of" PIP
benefits. N.J.S.A. 39:6A-5.1(a). Thus, it is suited for disputes of whether an
insured or an assignee should receive coverage for medical expenses and, if so,
in what amount. The Fraud Act, by contrast, has the goal of eliminating "'a
broad range of fraudulent conduct.'" Lajara, 222 N.J. at 143 (quoting Liberty
Mut. Ins. Co. v. Land, 186 N.J. 163, 172 (2006)). Moreover, compelling Fraud
Act claims to PIP arbitration would impede N.J.S.A. 17:33A-7(d), which
expressly provides: "Upon receipt of notification of the filing of a claim by an
insurer, the commissioner may join in the action for the purpose of seeking
judgment for the payment of a civil penalty authorized under section 5 of this
A-0778-23 23 act." The same rationale applies to RICO claims. Therefore, we conclude
claims under the Fraud Act and RICO do not fall within the ambit of PIP
Our existing caselaw supports our interpretation. In Nationwide, we held
that PIP arbitration did include a dispute regarding the validity of an insurance
policy where the insured had allegedly lied about his state of residence when he
applied for the policy. Nationwide, 395 N.J. Super. at 161. In making that
holding, we reasoned AICRA "only requires arbitration of disputes regarding
entitlement to or the amount of PIP benefits." Id. at 160. In short, the current
PIP arbitration set up under AICRA is designed for limited disputes over the
timely payment of PIP benefits. That arbitration process is not set up to handle
complex insurance fraud claims.
Over fifteen years ago, we stated: "It is clear from [the provision of the
Fraud Act that allows claims to be filed in any court of competent jurisdiction]
that the Legislature did not contemplate that a claim of a violation of the [Fraud]
Act would be heard by an arbitrator." Nationwide, 395 N.J. Super. at 161 (citing
Liberty Mut., 186 N.J. at 173-74). See also Lopez, 311 N.J. Super. at 677-78
(where the Law Division explained that insurance fraud claims under the Fraud
Act were to be decided in a court). If the Legislature had intended to include
A-0778-23 24 Fraud Act claims in PIP arbitration, it would have done so more clearly or
amended the statute to clarify its intent.
The history of AICRA also demonstrates that the Legislature intended PIP
arbitration to be expedited and streamlined to address disputes over PIP benefits.
For more than twenty-five years, PIP arbitration has been handling PIP payment
disputes, often involving a single claim. The Department and the OIFP have
submitted an amicus brief pointing out that insurance fraud claims have not
historically been, nor should they be, subject to PIP arbitration.
Moreover, the New Jersey Supreme Court has recently distinguished
between "recovery of medical benefits" and "damages based on tort claims" in
the context of a workers' compensation policy. Rodriguez v. Shelbourne Spring,
LLC, __ N.J. __, __ (2024) (slip op. at 16-17). The Court explained that tort
claims based in negligence are different than claims for recovery of medical
benefits, because a "lawsuit [based on tort claims] does not seek benefits [under
the insurance policy] . . . instead, it seeks money damages as compensation." Id.
at __ (slip op. at 17). Applying that same logic, we hold that complex fraud
claims rooted in tort law do not fall within the ambit of PIP arbitration under
AICRA, which is designed for disputes over the "recovery of medical expense
benefits." N.J.S.A. 39:6A-5.1(a).
A-0778-23 25 IV.
In reaching our conclusion that insurance fraud claims do not fall within
the ambit of PIP arbitration, we have also considered DPR Plans, a potential
constitutional issue, and the contrary holding reached by the Third Circuit.
A. The DPR Plans.
Certain defendants argue that they also have a right to arbitrate under
Allstate's DPR Plans and related assignment of benefits contracts. They contend
that the arbitration provisions in the DPR Plans are an independent, and
alternative, grounds for compelling arbitration and that those arbitration
provisions are enforceable under the FAA. We reject that argument because the
DPR Plans here were mandated by regulations promulgated under AICRA. See
N.J.A.C. 11:3-4.7; N.J.A.C. 11:3-4.7B. Therefore, the arbitration provisions in
the DPR Plans and related assignment of benefits contracts are no broader than
the statutory PIP arbitration established by AICRA.
Under AICRA and the corresponding regulations promulgated by the
Department, no-fault insurers must put in place DPR Plans, which describe the
insurer's decision-making process for considering claims for PIP benefits. See
N.J.A.C. 11:3-4.7. The Department must approve the DPR Plans and any
amendments to them. Ibid. The DPR Plans are permitted to include "reasonable
A-0778-23 26 restrictions on the assignment of benefits" from insureds to medical providers.
N.J.A.C. 11:3-4.7(c)(7). Those restrictions may include "[a] requirement that
as a condition of assignment, the provider agrees to submit disputes to alternat e
dispute resolution pursuant to N.J.A.C. 11:3-5," which implemented AICRA's
statutory PIP arbitration provision. N.J.A.C. 11:3-4.9(a)(3).
By referencing N.J.A.C. 11:3, Allstate made it clear that the arbitration
called for in its DPR Plans or assignment of benefits contracts was no broader
than the PIP arbitration under AICRA. That reading of the DPR Plans is
confirmed because when arbitration is invoked, the arbitration takes place under
the arbitration system set up by AICRA and its regulations.
Moreover, to the extent that defendants seek to rely on the FAA, that Act
expressly states that arbitration is a matter of contract. 9 U.S.C. § 2; see also
Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67 (2010) (explaining that
"[t]he FAA reflects the fundamental principle that arbitration is a matter of
contract"). In that regard, the FAA "places arbitration agreements on an equal
footing with other contracts." Rent-A-Center, 561 U.S. at 67 (citations omitted).
"Accordingly, the FAA 'permits states to regulate . . . arbitration agreements
under general contract principles . . . .'" Atalese v. U.S. Legal Servs. Grp., L.P.,
A-0778-23 27 219 N.J. 430, 441 (2014) (quoting Martindale v. Sandvik, Inc., 173 N.J. 76, 85
(2002)).
Here, the New Jersey state contract interpretation issue is whether the
arbitration provisions in Allstate's DPR Plans, and related assignment of benefits
contracts, are broader than the PIP arbitration established by AICRA. We hold,
as a matter of state law, that they are not because the DPR Plans expressly stated
that the arbitration is to be "[s]ubmit[ted] to alternative dispute resolutions
pursuant to N.J.A.C. 11:3."
B. The Potential Constitutional Issue.
Our interpretation of AICRA also avoids a constitutional issue. Allstate
argues that if AICRA is interpreted to require its insurance fraud claims to be
arbitrated, then that section of AICRA would be unconstitutional because it
would deprive Allstate of its constitutional right to a jury trial under the Fraud
Act and RICO.
The New Jersey Constitution guarantees the right to a jury trial "to causes
of action—even statutory causes of action—that sound in law rather than
equity." Lajara, 222 N.J. at 142. See also N.J. Const. art. I, ¶ 9 ("The right of
trial by jury shall remain inviolate . . . ."). As already noted, in Lajara the New
A-0778-23 28 Jersey Supreme Court held that private parties in a civil action under the Fraud
Act have the right to a jury trial. Lajara, 222 N.J. at 151.
Private parties can negotiate arbitration agreements and waive their right
to a jury trial, including for statutory claims. See Sandvik, 173 N.J. at 95-96.
The Legislature, however, cannot require a private party to waive its right to a
jury trial. See Jersey Cent. Power & Light Co. v. Melcar Util. Co., 212 N.J. 576,
599-600 (2013). In Jersey Central Power & Light, the New Jersey Supreme
Court considered a provision in the Underground Facility Protection Act,
N.J.S.A. 48:2-73 to -91, which compelled parties seeking monetary relief from
harm to underground facilities to arbitrate their claims without a de novo right
to a jury trial. Id. at 581. The Court held that the "mandatory, binding
arbitration is impermissible because it effectively denies . . . private litigants
their constitutionally guaranteed right to a trial by jury for a common-law cause
of action in negligence." Id. at 593-94. The Court further explained that "even
when the Legislature has acted to compel the use of arbitration [in other
statutes], this Court has highlighted the important caveat of permitting a right to
a trial de novo following mandatory arbitration whenever the constitutional right
to jury trial [is] implicated." Id. at 597.
A-0778-23 29 Because there is no constitutional right to a jury trial concerning the
entitlement to or the amount of PIP benefits, the Legislature can constitutionally
require PIP arbitration. See Endo Surgi Ctr., 391 N.J. Super. at 594. In Endo
Surgi Center, we held that the sole remedy for wrongful denial of PIP benefits
is an award of interest and attorney's fees. Ibid. We went on to explain that "if
an insured (or an insured's assignee) were allowed to pursue a common law
claim for an alleged bad faith denial of PIP benefits, under which the re would
be an entitlement to a jury trial, this would open the door to circumvention of
the statutorily mandated alternative dispute resolution procedure provided by
N.J.S.A. 39:6A-5.1." Id. at 594-95.
By construing AICRA's mandatory arbitration provision to cover PIP
claims and not insurance fraud claims, we avoid a potential constitutional issue.
It is well-settled that statutes should be construed to avoid constitutional
problems. See Whirlpool Props., Inc. v. Dir., Div. of Tax'n, 208 N.J. 141, 172
(2011) (explaining that "when 'a statute may be open to a construction which
would render it unconstitutional or permit its unconstitutional application, it is
the duty of [the] [c]ourt to so construe the statute as to render it constitutional if
it is reasonably susceptible to such interpretation'" (quoting State v. Profaci, 56
N.J. 346, 350 (1970))).
A-0778-23 30 C. The Contrary Holding By the Third Circuit.
The Third Circuit has recently reached a different conclusion and held that
claims under the Fraud Act are arbitrable under AICRA. GEICO, 98 F.4th at
469. That decision is not binding on us, and we disagree with the Third Circuit's
conclusion regarding New Jersey law.
In GEICO, the Third Circuit addressed consolidated appeals where
GEICO had sued various medical practices alleging that the defendants had
defrauded GEICO of more than $10 million by engaging in fraud to obtain PIP
benefits. Id. at 466-67. The Third Circuit held that GEICO's Fraud Act claims
were subject to arbitration under AICRA and GEICO's DPR Plan. Id. at 469-
71.
In evaluating AICRA, the Third Circuit recognized it was addressing a
question of state law. Id. at 467. It focused on the language in N.J.S.A. 39:6A-
5.1(a) and reasoned that while the statute did not use the word fraud, it
nonetheless covered claims of fraud under the Fraud Act. Id. at 468-69. We
disagree with the Third Circuit's analysis because it did not, in our view, fully
consider the legislative goals of AICRA and the Fraud Act.
As an alternative ground, the Third Circuit also concluded that GEICO's
Fraud Act claims were subject to arbitration under GEICO's DPR Plan and the
A-0778-23 31 related assignment of benefits form. Id. at 470-71. As we have already
discussed, we have construed the arbitration called for in the DPR Plans and
assignment contracts, which are authorized by the regulations of AICRA, to be
only as broad as PIP arbitration under AICRA. We believe this is a question of
state law and, therefore, is not an issue controlled by federal law. As we have
already analyzed, the FAA allows states to regulate arbitration agreements and
construe them in accordance with state law. Atalese, 219 N.J. at 441.
DPR Plans and the related assignment of benefits contracts are authorized
by and limited by AICRA's regulations. See N.J.A.C. 11:3-4.7; N.J.A.C. 11:3-
4.7B(b). Therefore, the scope of arbitration provisions incorporated into DPR
Plans and assignments are, in our view, a question of New Jersey law. See State
v. O'Donnell, 255 N.J. 60, 81 (2023) (explaining that on questions involving
state statutory law, federal court decisions are looked to "for their persuasive
reasoning, but their conclusions are not binding authority").
In short, we have come to a different conclusion than the Third Circuit in
GEICO. Because our holding is based on New Jersey law, we are not bound by
or persuaded by the reasoning and conclusions in GEICO.
A-0778-23 32 V.
In summary, we hold that Fraud Act and RICO claims are not subject to
PIP Arbitration. Therefore, the orders compelling plaintiffs' claims to PIP
arbitration are reversed and vacated. This case is remanded with instructions
that plaintiffs' complaint be reinstated and that they be permitted to pursue all
their claims in the Law Division, with the right to a jury trial.
Reversed, vacated, and remanded. We do not retain jurisdiction.
A-0778-23 33