Federal Court Orders Arbitration in GEICO Fraud Case Against Chiropractors (Insurance Journal)

Federal Court Orders Arbitration in GEICO Fraud Case Against Chiropractors

  Friday, April 19th, 2024 Source: Insurance Journal

In a significant legal reversal, the Third Circuit Court of Appeals has sided with three chiropractors, mandating that GEICO’s allegations of insurance fraud be settled through arbitration rather than litigation. GEICO had accused the chiropractors of defrauding over $10 million through inflated and falsified claims under personal injury protection (PIP) benefits, actions that allegedly included unnecessary medical treatments and kickback schemes. Initially, lower courts ruled that such claims could not be arbitrated under New Jersey’s Insurance Fraud Prevention Act (IFPA), but the appeals court disagreed, citing New Jersey law which broadly encompasses any disputes related to PIP benefits, including those involving fraud.

The court also emphasized that the Federal Arbitration Act supports this decision, as both parties had entered into valid arbitration agreements through GEICO’s Precertification and Decision Point Review Plan and the chiropractors’ assignment of benefits form. This decision sends the case back to arbitration, providing a noteworthy precedent on the arbitration of insurance fraud cases under New Jersey law.

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