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New Jersey Supreme Court allows Allstate to pursue PIP fraud in court
The court ruled that New Jersey's AICRA PIP arbitration is limited to routine benefit disputes, not complex fraud claims seeking remedies like investigative costs and treble damages.
New Jersey’s top court ruled that insurance fraud claims can proceed in court, not through the limited arbitration process used for routine personal injury protection, or PIP, benefit disputes. The decision, issued July 21, 2026, affirmed a lower court ruling that keeps fraud allegations in the judicial track.
HousingWire reports that the dispute began after six related Allstate companies sued New Jersey medical practices and physicians. Allstate alleged the defendants conspired to obtain over $1.7 million in PIP benefits through fraudulent and misleading medical claims.
According to Insurance Business, the trial court initially dismissed the fraud claims and ordered arbitration, interpreting New Jersey’s Automobile Insurance Cost Reduction Act, or AICRA, to apply to disputes over recovering PIP benefits. But the Appellate Division reversed, and the state Supreme Court agreed, concluding the statutory arbitration framework does not cover fraud claims that rely on New Jersey’s Insurance Fraud Prevention Act and the state’s anti-racketeering law.
The court said the Fraud Act and RICO-style claims do not fall within the ambit of PIP arbitration under AICRA, noting PIP arbitrators cannot grant equitable relief and there are serious questions about whether they can award certain damages and fees. It also said the AICRA arbitration setup is designed for limited timing disputes over PIP payments, not complex fraud cases.