Court OKs Jury Trials for Private Insurance Fraud Defendants
Michael Booth, New Jersey Law Journal
July 21, 2015 | 0 Comments
SHARE
PRINT
REPRINTS
Barry Albin
Barry Albin
Carmen Natale
The New Jersey Supreme Court has ruled that defendants in civil actions brought under the state’s Insurance Fraud Prevention Act (IFPA) have the right to a jury trial.
In a unanimous ruling in Allstate Insurance v. Lajara, the court disagreed with two lower courts that said private claims brought under the IFPA are equitable and, therefore, there is no right to a trial by jury.
Justice Barry Albin, writing for the court, said the IFPA was akin to common-law fraud and added that the right to a jury trial is so deeply woven into the fabric of our society that it should not be so easily dismissed.
“The right to a civil jury trial is one of the oldest and most fundamental of rights,” Albin wrote in the July 16 ruling. “It predates the founding of our republic, is enshrined in the federal Bill of Rights, and is part of the fabric of all three of New Jersey’s constitutions.”
The ruling means dozens of defendants in an IFPA case, filed against them by inter-related insurance carriers, will have the claims decided by a jury rather than by a judge.
“A jury trial is self-government at work in our constitutional system, and a verdict rendered by one’s peers is the ultimate validation in a democratic society,” Albin said.
Allstate New Jersey Insurance Co. and a number of its affiliates alleged that defendant Gregorio Lajara owned or operated dozens of chiropractic facilities that engaged in a long-running pattern of fraud, which included staging automobile accidents and paying kickbacks for referrals, according to Albin’s opinion.
The carriers alleged that they paid out $8.2 million in fraudulent personal injury protection claims. They want the money back, as well as possible treble damages, counsel fees and costs, and the imposition of a constructive trust and equitable lien on the defendants’ assets until they have disgorged the damages sought.
Carl Salisbury, the lawyer for the defendants, welcomed the ruling.
“The court saw the issue the same as we did,” said Salisbury, of Scotch Plains’ Bramnick, Rodriguez, Grabas & Woodruff. “Given the strong language the court used regarding the right to a trial by jury, trial courts will likely be well-informed when that right is implied in a statute.”
Albin said since the IFPA contains provisions for private plaintiffs to be awarded compensatory damages, costs, counsel fees and perhaps treble damages if there was a pattern of fraud, the remedies in the statute when used by private plaintiffs are not equitable in nature.
“[W]e conclude that the right to a civil jury trial provided by Article I, Paragraph 9 of the New Jersey Constitution applies to private-action claims seeking compensatory and punitive damages under the IFPA,” he said. “We also presume that the legislature, in passing the IFPA, intended the statutory scheme to conform to the constitution.”
In 2013, the Appellate Division upheld a ruling by Union County Superior Court Judge Kenneth Grispin dismissing the defendants’ demand for a jury trial in their case, and the high court agreed to hear the their appeal.
Writing for the appeals court, Appellate Division Judge Mitchel Ostrer said the panel was “reluctant to infer statutory provisions of law when the legislature has not seen fit to expressly include them.”
“The constitution does not guarantee a trial by jury for a statutory claim that was unknown to the common law,” said Ostrer, who was joined by Judges Carmen Messano and Marie Lihotz.
Ostrer said it was well established that the protection of Article 1, Paragraph 9 applies to civil cases only where the right to a jury trial existed at common law. Otherwise, he said, the right must be provided specifically by statute.
The appeals court relied in part on another Appellate Division ruling from 2001, State v. Sailor, which said a defendant in an IFPA case filed by the state Department of Banking and Insurance was not entitled to a jury trial. In that case, DOBI alleged that the defendant gave false information to an insurance carrier about a car accident.
Albin said that case did not apply here because the only remedies available to DOBI were equitable.
During oral arguments in January, the carriers’ lawyer, Thomas Mulvihill, said the legislature apparently had concluded that defendants in private IFPA claims do not have the right to jury trials since it chose to not include language allowing for that right in the times that it has amended the act.
“They have not taken up the invitation to correct what some might say is an ambiguity,” said Mulvihill, of the Morristown office of Pringle Quinn Anzano, in January. He did not return a call following the Supreme Court’s ruling.
In his opinion, Albin traced the right to a jury trial back to the Magna Carta, and noted that it came to the American colonies, where it eventually became a fundamental right.
He cited two enactments made in the 1600s by the provinces of West and East Jersey that codified the right to a jury trial.
“[T]he tryals of all causes, civil and criminal, shall be heard and decided by the virdict or judgment of 12 honest men of the neighbourhood,” said the Concessions and Agreements of the Proprietors, Freeholders and Inhabitants of the Province of West New-Jersey, in America, Chap. XXII (1676).
He also cited the East Jersey House of Representatives’ 1699 Declaration of Rights and Privileges, which said”All trials shall be the verdict of twelve men.”.
One of the principle causes of the American Revolution was England’s move to rescind the right to jury trials in many cases, Albin said.
“The historical record of the early republic suggests that those who secured the right to a jury trial in New Jersey’s 1776 constitution–as well as this state’s two subsequent constitutions–did not intend for that right to be given a crabbed interpretation,” he said.
Justice Faustino Fernandez-Vina did not participate in the decision.
Contact the reporter at mbooth@alm.com.