David N. Cinotti Authors Article in New Jersey Law Journal, “Third Circuit Overlooks Jurisdictional Problem in New Jersey Insurance Fraud Claims Decision”

David N. Cinotti, partner at Pashman Stein Walder Hayden P.C., authored an article in the New Jersey Law Journal titled, “Third Circuit Overlooks Jurisdictional Problem in New Jersey Insurance Fraud Claims Decision.” The article discusses Government Employees Insurance Company v. Mount Prospect Chiropractic Center, No. 23-1378 (3d Cir. Apr. 26, 2024), a recent decision in which the U.S. Court of Appeals for the Third Circuit reversed the district courts’ decisions that GEICO’s claims under the New Jersey Insurance Fraud Prevention Act (IFPA) were not subject to arbitration. The defendant healthcare providers argued that (1) their contracts with GEICO required arbitration of any disputes arising under the agreements or relating to claims for insurance benefits, and (2) New Jersey’s statute relating to no-fault automobile insurance required arbitration of the claims.

“The Third Circuit held that both the contracts and the statute independently required arbitration. As explained in this article, however, the Third Circuit had appellate jurisdiction under the Federal Arbitration Act (the FAA) to decide only whether the claims were arbitrable under a written arbitration agreement. Whether the New Jersey no-fault statute mandates arbitration of IFPA claims—a hotly debated issue of New Jersey state law—was outside the scope of that jurisdiction. This jurisdictional issue was not discussed in the opinion or the parties’ briefs,” writes Cinotti.

The article concludes:

“The Third Circuit’s exercise of appellate jurisdiction over the state statutory issue was significant because that issue is very much in debate in New Jersey courts and the parties’ briefs did not devote extensive attention to it. That limited briefing appears reflected in the court’s short, two-paragraph discussion of the matter, which did not address many arguments germane to whether the New Jersey legislature intended no-fault dispute resolution to apply to IFPA claims. Among other things, the Third Circuit did not consider the principle of constitutional avoidance; that is, since the New Jersey Constitution guarantees a right to a jury trial on IFPA damages claims, whether courts must interpret the no-fault dispute-resolution statute—which, unlike a contractual arbitration agreement, is not a waiver of the right to a jury trial—to avoid the constitutional problem of requiring alternative dispute resolution of those claims.”

To read the full article in the New Jersey Law Journal, click here.