By Jeffrey Randolph, Esq., ANJC Legal Counsel

New Jersey No-Fault Insurers Have Been Violating New Jersey Statutes & Legislative Intent for Decades by Suing Doctors for Fraud

Insurance fraud has a long and tortuous history in the State of New Jersey. To combat insurance fraud, the New Jersey Legislature in 1983 passed into law the New Jersey Insurance Fraud Prevention Act (“NJIFPA”), N.J.S.A. §17:33A-1 (1983), which provided the Commissioner of the Department of Banking and Insurance as well as private insurance companies a private cause of action to sue fraudsters in the Superior Courts of the State. The Legislature also had passed the New Jersey Racketeer Influenced and Corrupt Organizations Act, N.J.S.A. §2C:41-1, et seq., (“NJRICO”), in 1970 which was primarily aimed at organized crime organizations but was expanded through the years to apply to conspiracies to commit fraud.

Fast forward approximately fifteen years and the Legislature realized that the NJIFPA and NJRICO’s intended benefit of combating and reducing insurance fraud was an abject failure. Insurance premiums continued to skyrocket, and fraud was rampant despite the permission for lawsuits under the NJIFPA. See, N.J. Coalition of Healthcare Providers v. NJDOBI, 348 N.J. Super. 242 (App. Div. 2002).

In response, the Legislature therefore passed into Law the Automobile Insurance Cost Reduction Act, N.J.S.A. §39:6A-1.1 et. seq., in 1998. (“AICRA”). Among other things, AICRA implemented a mandatory arbitration system for No-Fault disputes between insurers and claimants. AICRA provided that once either party opted into the system, arbitration of their disputes was mandatory and that there could be no piecemeal, one-by-one determination of which claims to submit to arbitration and which to court. The Legislature had full knowledge of the existence of the NJIFPA and NJRICO laws, passed into law decades prior and their private cause of action, when it enacted AICRA. However, they did not exempt these NJIFPA / NJRICO civil actions from mandatory arbitration under AICRA.

It would have been simple for the Legislature to include in AICRA a single paragraph exempting insurance company litigation under the NJIFPA/NJRICO. However, no such carve out or exemption exists in AICRA, the subsequently passed legislation that supersedes and preempts the private cause of action afforded by NJIFPA/ NJRICO.

Despite the passing into law of AICRA and opting-in to the mandatory arbitration process, No Fault Insurers in New Jersey continue to sue healthcare providers for fraud and racketeering in Superior Court in direct violation of the mandates of AICRA to resolve these disputes through arbitration. However, no one ever called the insurers on these improper actions until recently when Judge Christopher Rafano sitting in Middlesex County Superior Court interpreted the statutory language and interplay of AICRA and NJIFPA/NJRICO correctly and dismissed Allstate’s NJIFPA and other claims in a fraud action against chiropractors.

Judge Rafano made the correct decision based upon express statutory interpretation. This is especially so in light of the crisis the New Jersey court system faces with unprecedented judicial vacancies. The crisis has reached the tipping point where Justice Rabner has actually had to suspend civil trials in two counties in the state. Statement of Chief Justice on Suspension of Civil and Matrimonial Trials in Vicinages Due to Vacancy Crisis. (7/5/2023).

This case is presently on appeal by Allstate and we will keep membership advised as it progresses through the legal system.

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The author of Legal Ease (Jeffrey Randolph, Esq.) is an independent person of the ANJC, and his views are not authorized, sponsored, or otherwise approved by the A.N.J.C. The information provided is for general guidance on matters of interest only and may not take into account particular facts relevant to your individual situation.

The application and impact of laws and health care can vary widely based on the specific facts involved. Given the changing nature of laws, rules, and regulations, there may be omissions or inaccuracies in information contained in these materials. Accordingly, the information you receive is provided with the understanding that the author and the A.N.J.C. are not herein engaged in rendering legal, accounting, tax, health care, or other professional advice and services. Furthermore, they are not providing specific advice with regard to your practice, the treatment of any specific illness, disease, deformity or condition, or any other matter that affects trade, commerce, or legal rights of others.

As such, this article should not be used as a substitute for consultation with professional accounting, tax, legal, health care, or other competent advisers. Before making any decision or taking any action, you should consult an appropriately trained professional.