Arbitration and No Fault Fraud Claims
Barry Zalma
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This case is about the relationship between New Jersey healthcare providers and the insurance companies that pay those providers for treating patients for injuries arising from automobile accidents.
In GEICO In v. Caring Pain Management PC a/k/A Careon Pain Management, Jinghui Xie, M.D., First Care Chiropractice Center, L.L.C., and Konstantine Fotiou, D.C., No. 2:22-cv-05017(BRM)(JSA), United States District Court, D. New Jersey (May 31, 2023) the insurer attempted to defeat fraudulent claims under the New Jersey no-fault law.
BACKGROUND
Multiple GEICO insurers (the "Plaintiffs) alleged a series of fraudulent schemes, including unlawful compensation in exchange for patient referrals, misrepresentation of the nature, extent, and results of patient examinations, and false representation regarding compliance with pertinent healthcare laws.
MOTION TO DISMISS
In deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a district court is required to accept as true all factual allegations in the complaint and draw all inferences from the facts alleged in the light most favorable to the non-moving party.
DECISION
The Insurance Fraud Prevention Act (“IFPA”), which was enacted roughly a decade after the No-Fault Law, provides that an “insurance company damaged as the result of a violation of any provision of this act may sue therefor in any court of competent jurisdiction.” In part, the New Jersey Legislature enacted the IFPA to address rising insurance rates resulting from widespread fraud with the clear objective to confront aggressively the problem of insurance fraud in New Jersey by facilitating the detection of insurance fraud and eliminating the occurrence of such fraud through the development of fraud prevention programs.
A person or practitioner violates the IFPA by presenting or preparing false or misleading statements in connection with an insurance claim, or by failing to disclose the occurrence of an event that affects an individual's entitlement to insurance benefits or the amount of benefits
THE COMMON LAW FRAUD, UNJUST ENRICHMENT, AND RICO CLAIMS
The No-Fault Law's language, legislative intent and application cover Plaintiffs' claims for common law fraud, unjust enrichment and RICO. The plain language of the No-Fault statute provides that “[a]ny dispute regarding the recovery of . . . benefits provided under personal injury protection coverage . . . 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.” (emphasis added)
Plaintiffs' claims involve:
1 a dispute by [Plaintiffs]
2 involving Defendants' recovery of PIP Benefits that
3 one party wishes to send to arbitration.
Consequently, Plaintiffs' common law fraud, unjust enrichment, and RICO claims fall within the statute's arbitration provision. Having reviewed the No-Fault Law's language, legislative intent, application, and arbitrable claims with Plaintiffs' claims for common law fraud, RICO and unjust enrichment, the USDC found there was nothing preventing an arbitrator from hearing the claims.
New Jersey IFPA Claim
The plain meaning of the New Jersey Insurance Fraud Prevention Act (IFPA) requires insurers' claims for damages under the IFPA be judicially resolved. Although the statute states that insurers “may sue in any court of competent jurisdiction,” arbitration does not constitute a court of competent jurisdiction.
To the extent the IFPA may seem to contradict the No-Fault Law, state legislatures are presumed aware of prior enactments, including the pre-existing No-Fault Law. The state legislature could have provided a carve out for PIP Benefits disputes in the IFPA but did not.
The USDC concluded that to avoid duplicative findings, the Court, in its discretion, declined to separately entertain the IFPA claim under the Declaratory Judgment Act. To the extent Plaintiffs seek a declaration that Defendants violated RICO, committed common law fraud, or are liable for unjust enrichment, an arbitrator shall decide that issue.
ZALMA OPINION
Clearly, the health care providers who were accused by GEICO of fraud felt that they had a better chance of success with an arbitrator rather than a federal judge. The judge found the statutes allowed for arbitration and sent the fraud to an arbitrator. I would like to be that arbitrator and hope the parties get an arbitrator who dislikes insurance fraud as much as I do, and find they would have done better with a federal judge. GEICO should be honored for working to defeat fraud by attempting to take the profit out of the fraud.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Interpleader Protects All Claimants Against Life Policy and the Insurer
Who’s on First to Get Life Insurance Proceeds
Post 5184
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Interpleader Protects All Claimants Against Life Policy and the Insurer
In Metropolitan Life Insurance Company v. Selena Sanchez, et al, No. 2:24-cv-03278-TLN-CSK, United States District Court, E.D. California (September 3, 2025) the USDC applied interpleader law.
Case Overview
This case involves an interpleader action brought by the Metropolitan Life Insurance Company (Plaintiff-in-Interpleader) against Selena Sanchez and other defendants (Defendants-in-Interpleader).
Key Points
Plaintiff-in-Interpleader’s Application:
The Plaintiff-in-Interpleader...
A Claim by Any Other Name is not a Claim
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It is Imperative that Insured Report Potential Claim to Insurers
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In Jeffrey B. Scott v. Certain Underwriters At Lloyd’s, London, Subscribing To Policy No. B0901li1837279, RLI Insurance Company, Certain Underwriters At Lloyds, London And The Insurance Company, Subscribing To Policy No. B0180fn2102430, No. 24-12441, United States Court of Appeals, Eleventh Circuit (August 25, 2025) the court explained the need for a claim to obtain coverage.
Case Background:
This appeal arises from a coverage dispute under a Directors & Officers (D&O) insurance policy. Jeffrey B. Scott, the plaintiff-appellant, was terminated from his role as CEO, President, and Secretary of Gemini Financial Holdings, LLC in October 2019. Following his termination, Scott threatened legal action against Gemini, and ...
A Claim by Any Other Name is not a Claim
Post 5182
It is Imperative that Insured Report Potential Claim to Insurers
Read the full article at https://lnkd.in/gfbwAsxw, See the full video at https://lnkd.in/gea_hgB3 and at https://lnkd.in/ghZ7gjxy, and at https://zalma.com/blog plus more than 5150 posts.
In Jeffrey B. Scott v. Certain Underwriters At Lloyd’s, London, Subscribing To Policy No. B0901li1837279, RLI Insurance Company, Certain Underwriters At Lloyds, London And The Insurance Company, Subscribing To Policy No. B0180fn2102430, No. 24-12441, United States Court of Appeals, Eleventh Circuit (August 25, 2025) the court explained the need for a claim to obtain coverage.
Case Background:
This appeal arises from a coverage dispute under a Directors & Officers (D&O) insurance policy. Jeffrey B. Scott, the plaintiff-appellant, was terminated from his role as CEO, President, and Secretary of Gemini Financial Holdings, LLC in October 2019. Following his termination, Scott threatened legal action against Gemini, and ...
Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive and became a consultant and expert witness for lawyers representing insurers and lawyers ...
APPRAISAL AWARD SETS AMOUNT OF DAMAGES RECOVERED FROM INSURER
Post 5180
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It’s a Waste of Time to Sue Your Insurer if You Don’t Have Evidence
Evidence Required to Prove Breach of Contract
Read the full article at https://www.linkedin.com/pulse/evidence-required-prove-breach-contract-barry-zalma-esq-cfe-rfelc, see the full video at https://rumble.com/v6yd2z0-evidence-required-to-prove-breach-of-contract.html and at https://youtu.be/2ywEjs3hZsw, and at https://zalma.com/blog plus more than 5150 posts.
It’s a Waste of Time to Sue Your Insurer if You Don’t Have Evidence
In Debbie Beaty and Jonathan Hayes v. Homeowners Of America Insurance Company, No. 01-23-00844-CV, Court of Appeals of Texas, First District (August 26, 2025) Debbie Beaty and Jonathan Hayes filed a claim under their homeowner’s insurance policy with Homeowners of ...
