Sometimes you just know where it’s going (or do you)….When crazy facts result in crazy decisions.
In the world of NJ state court appeals you have published decisions and unpublished decisions. A published decision means that the decision or legal principal is binding on all equal or lower courts… in nerdy lawyer speak: stare decisis. An unpublished decision is just instructive. Meaning, to the extent that the legal ruling is new or strays from existing binding (published) case law, the unpublished case is NOT binding.
As a general matter, a published decision needs to have a three-judge panel at the appellate division and will generally give us some kind of legal test to be applied. Or it may modify an existing rule, but slightly.
I read a lot of case law. I also do a lot of appeals. My favorite decisions are the ones where I know what the court is going to do just from the first sentence of the appeal. Just such a gem of a case came down recently. But then the entire case took a bizarre almost complete turnaround at the end.
In Allstate New Jersey Insurance Company, Et. Al. vs. Carteret Comprehensive Medical Care, PC, Et. Al., Approved for Publication January 9, 2025, Docket A-0778-23 (Reporter not yet available), the court’s first sentence was as follows: 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.
In normal people talk: can you make someone arbitrate criminal stuff? Duh… no you can’t. And sure enough, the court held that “insurance fraud claims under the Fraud Act and RICO are not subject to PIP arbitration under the AICRA.”
The facts are not well-developed as the case was dismissed and sent to arbitration at the pleadings stage… but this is what was alleged. Defendants engaged in insurance fraud amount to over $1.7 million dollars that Allstate wanted back. The Defendants moved to dismiss the case and compel arbitration (if you are laughing you should be)… and what is really crazy is that the trial court did it! The trial court sent a Fraud Act and RICO case to arbitration.
Plaintiff-Allstate argued on appeal 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.” Notably, four amicus briefs were filed supporting the Plaintiff by New Jersey Department of Banking and Insurance and the New Jersey Office of the Insurance Fraud Prosecutor, Citizens United Reciprocal Exchange, the Coalition Against Insurance Fraud, and the Insurance Council of New Jersey and American Property Casualty Insurance Association.
While the court meticulously analyzed the relevant statutory provisions and deftly reconciled the public policy behind the AICRA, the Fraud Act, and RICO, in the end the appellate panel came to the rather obvious conclusion that a defendant cannot use arbitration to defeat a lawsuit when they stole money from an insurance company. To be clear, the court also noted that the scope of PIP arbitration is narrow and that the broad forms of equitable relief, discovery, and other litigation tools to which the plaintiff in this case may be entitled to use/seek are not available in arbitration. The court further noted that PIP arbitration was simply not designed to handle complex insurance fraud claims.
But wait there’s more… just when you think that the court’s rationale and conclusion are completely obvious, the decision takes a weird turn. The court then turned to what it described as a departure from another recent federal court case. In GEICO v. Mt. Prospect, 98 F.4th 463 (3d. Cir. 2024), the federal court apparently decided the exact opposite! In an appeal of a district court determination that refused to send a fraud case to arbitration, the USCA said hold my beer, there is a binding agreement to arbitrate so go arbitrate - fraud. Scratching your head or just LOLing like I am? Allstate distinguished itself from GEICO, but it is baffling that two sets of courts could have come to such disparate conclusions based on similar facts.
If you have a civil matter where your case has been dismissed at the pleadings stage, please contact me to review the case to determine if you have a viable appeal.
