PIP Fraud Disputes Should Never be Limited to Arbitration
Post number 5269

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In Government Employees Insurance Co. et al v. Active Medical Care, P.C. et al, No. 2:24-cv-10909 (BRM) (JRA), United States District Court, D. New Jersey (January 9, 2026) Defendants moved to Compel Arbitration and Stay the Proceedings (“Motion”). Plaintiffs Government Employees Insurance entities opposed.

Defendants’ Motion to Compel Arbitration and Stay the Proceedings was administratively terminated, and it was further ordered that the parties shall jointly notify the Court as soon as a decision is issued by the New Jersey Supreme Court in the appeal of Allstate New Jersey Insurance Company, et al. v. Carteret Comprehensive Medical Care, P.C., et al. Supreme Court Docket No.: 090337.

ANALYSIS

The central dispute was whether GEICO’s IFPA claims are subject to arbitration and, if so, whether the proceedings for both arbitrable and non-arbitrable claims should be stayed. Because of the grant of certification in Carteret Comprehensive the USDC and others administratively terminated similar actions brought by GEICO pending a decision from the New Jersey Supreme Court.

The Attorney General for the state of New Jersey, in his amicus brief concluded, as follows:

“In sum, a fair reading of the Appellate Division’s published decision shows that it thoroughly considered the statutes, the trial court’s orders, and all of Defendants’ arguments before rejecting them. That Defendants disagree with its decision does not constitute a sufficient basis for certification. Nor is certification warranted in the interests of justice or for any “special reasons.”

Defendants repeat arguments that were presented to and considered by the Appellate Division. The Appellate Division addressed those challenges below
and correctly applied the plain language of statutes and well-settled law to the facts in this matter. Thus, further review by this Court is unwarranted.”

The statute the Supreme Court is considering provides:

“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 dollars used to pay fraudulent claims.”

It seems obvious to me from the AG’s arguments in its brief that making an insurer arbitrate every potentially fraudulent claim when there is evidence of a conspiracy and multiple fraudulent claims, to allow litigation to fulfill the purpose of the statute, is to eliminate the occurrence of such fraud.

The AG’s brief also concluded:

“In short, a rule channeling affirmative insurance fraud claims to PIP arbitration would negatively impact insurance fraud prevention and weaken the ability of insurance carriers, the Department, and OIFP to each combat insurance fraud. The Legislature did not so intend.”

ZALMA OPINION

The intent of the IFPA is to deter and/or defeat insurance fraud. It makes no sense to make it difficult for the AG and the insurers to fulfill the requirements of the statute.

Because GEICO and Allstate have moved to take the profit out of the crime by suing the fraud perpetrators for damages the fraudsters continue to seek arbitration of each individual claim to make the cost of fighting the fraud too expensive for the insurer and the state of New Jersey. The Supreme Court of New Jersey has not yet ruled in Carteret Comprehensive so those who deal with insurance fraud must patiently wait for the decision and do everything possible to convince the Supreme Court that defeating fraud is more important than allowing individuals to arbitrate the fraud defense without the access to the discovery available in a tort or RICO lawsuit.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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