In a recently published decision by the New Jersey Appellate Division in Allstate New Jersey Insurance Company, et al v. Carteret Comprehensive Medical Care, PC, et al, A-0778-23 (2025), the court addressed whether insurance fraud claims brought under New Jersey’s Insurance Fraud Prevention Act (IFPA), 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, can be compelled to mandatory arbitration under the dispute-resolution system set up by the Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-1.1 to -35. The case arose when Allstate alleged that various defendant medical providers submitted over 800 fraudulent and misleading claims, seeking more than $1.7 million in personal injury protection (PIP) benefits. Defendants successfully moved in the trial court to compel arbitration; however, Allstate appealed.
In reversing the trial court, the Appellate Division meticulously reviewed the text and purpose of both the IFPA and AICRA. Under AICRA, disputes involving “the recovery of medical expense benefits” are typically subject to mandatory arbitration to ensure quick resolution of PIP claims. However, the court determined that IFPA and RICO claims—seeking damages, attorney fees, injunctive relief, and treble damages—extend beyond straightforward PIP disputes. Because those statutes allow civil actions in “any court of competent jurisdiction,” and because the remedies for fraud claims (such as treble damages and broad discovery needs) surpass what AICRA’s streamlined PIP arbitration provides, the court held that these insurance fraud claims are not mandated to AICRA arbitration. The decision turned on a close reading of the statutes, and prior cases (including Nationwide Mut. Fire Ins. Co. v. Fiouris and Allstate N.J. Ins. Co. v. Lajara, where the court explained that a trial court is better equipped to handle allegations of massive insurance fraud), and the need to preserve the right to a jury trial for legal claims sounding in fraud and racketeering.
With this ruling, the Appellate Division not only reinstated Allstate’s court action but also clarified that alleged fraudulent schemes under the IFPA or RICO are better suited to the full discovery and legal processes available in the Law Division, rather than AICRA’s expedited arbitration system. The holding underscores the Legislature’s distinct aims in enacting the IFPA (to “confront aggressively the problem of insurance fraud”) versus AICRA’s goal of resolving routine PIP benefit disputes promptly. Insurers and medical providers alike should be aware that, going forward, any large-scale fraud or racketeering claims arising from PIP billing will likely remain in the Superior Court, rather than in the PIP arbitration forum.
The decision can be found here.