New Jersey's top court says insurers can take insurance fraud claims to a jury - not the limited arbitration built for routine PIP disputes.
The Supreme Court of New Jersey ruled on July 21, 2026, affirming a lower-court decision that keeps insurance fraud claims in court, not arbitration.
The fight began when six related Allstate companies sued a group of New Jersey medical practices and physicians. Allstate alleged the defendants "conspired to obtain over $1.7 million in personal injury protection (PIP) benefits" through "fraudulent and misleading medical claims." Those allegations have not been proven, and the fraud claims have not yet been decided.
The question was narrow but costly. Could Allstate press its claims in court, or was it locked into arbitration? The trial court sided with the providers. It dismissed the fraud claims and ordered arbitration, reading the state's Automobile Insurance Cost Reduction Act, known as AICRA, to cover any dispute over recovering PIP benefits.
The Appellate Division reversed, and the Supreme Court agreed. The problem was a mismatch of powers. New Jersey's Insurance Fraud Prevention Act "allows for the recovery of compensatory damages, investigative expenses, costs, attorneys' fees, and, where a pattern of fraud is established, treble damages." The state's anti-racketeering law lets private parties sue in court for damages and injunctions. PIP arbitrators can do far less. They cannot grant equitable relief, and the court flagged "serious questions" about whether they could even award such damages or fees to an insurer.
That gap settled it. The court held that "claims under the Fraud Act or RICO do not fall within the ambit of PIP arbitration under AICRA." As the ruling put it, "the current PIP arbitration set up under AICRA is designed for limited disputes over the timely payment of PIP benefits. That arbitration process is not set up to handle complex insurance fraud claims."
The providers also pointed to arbitration language in Allstate's own Decision Point Review Plans. It did not help them. The court found those provisions, "mandated by regulations promulgated under AICRA," were "no broader than the statutory PIP arbitration established by AICRA."
For insurers, the message is direct. Suspected fraud can be pursued in court, with jury trials and the fuller remedies the fraud statute allows, rather than funnelled into a process built for routine benefit disputes. The court also broke with a 2024 federal appeals ruling that had found Fraud Act claims arbitrable, holding that state law controlled.
The justices sent the case back to the trial court, reinstating Allstate's complaint so it can pursue all claims - with the jury trial it sought.
