Arbitrator Must Decide No Fault Fraud Claims
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:
a dispute by [Plaintiffs]
involving Defendants' recovery of PIP Benefits that
one party wishes to send to arbitration.
Consequently, Plaintiffs' common law fraud, unjust enrichment, and RICO
claims fall within the statute's arbitration provision.
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.
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.
