Allstate New Jersey Insurance Company v. Gregorio Lajara

Citations: 433 N.J. Super. 20; 77 A.3d 491Docket: A-5684-11T4

Court: New Jersey Superior Court; October 9, 2013; New Jersey; State Appellate Court

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The document pertains to an appellate case in the Superior Court of New Jersey, Docket No. A-5684-11T4, involving multiple parties. Plaintiffs-Respondents include various Allstate insurance companies and other insurers, while Defendants-Respondents consist of numerous individuals, medical professionals, and healthcare facilities. Defendants-Appellants are A.P. Diagnostic Imaging, Inc. and Dr. Harshad Patel. The appeal was argued on April 30, 2013, and decided on October 9, 2013. The legal representatives for the appellants and respondents are identified, indicating a complex case involving multiple claims and parties. The notation “NOT FOR PUBLICATION” suggests that the decision is not intended for broader public dissemination without court approval.

Defendants appeal the trial court's order that granted plaintiffs' request to withdraw their jury demand and struck defendants' jury demand in a case under the Insurance Fraud Prevention Act (N.J.S.A. 17:33A-1 to -30). The court must determine if the Act implies a right to a jury trial or if such a right is guaranteed by the New Jersey Constitution (N.J. Const. art. I, par. 9) in private actions under the Act. After examining the Act's language, legislative history, and intent, the court concludes that the Act does not provide a right to a jury trial. It further finds that the equitable nature of the relief sought under the Act was not recognized at common law prior to the State Constitution's adoption, thus the Constitution does not guarantee a jury trial in this context. The court affirms the trial court's order.

The plaintiffs, who claimed to have paid $8.2 million in personal injury protection (PIP) benefits under the Unsatisfied Claim and Judgment Fund Law (N.J.S.A. 39:6A-1 to -91) due to violations of the Act, named various defendants in their forty-two count complaint. Allegations included involvement in a fraudulent scheme orchestrated by Gregorio Lajara, who was unlicensed, and various unlawful acts by the defendants related to billing and medical regulations. The plaintiffs sought a declaratory judgment on their obligation to pay PIP benefits, disgorgement of payments made to defendants, imposition of a constructive trust, and damages under the Act. Initially demanding a jury trial, the plaintiffs later moved to withdraw this demand, opposed by the defendants who then asserted their own jury demand. The Commissioner of Banking and Insurance also intervened to strike the jury demand concerning the Commissioner's claims. Judge Kenneth J. Grispin approved the plaintiffs' motion and struck the defendants' jury demand, leading to this appeal.

Plaintiffs argue for an implied right to a jury trial under the Act, referencing a precedent where such a right was found under the Consumer Fraud Act (CFA) in *Zorba Contractors, Inc. v. Housing Authority of Newark*. They differentiate *Zorba* by highlighting the distinct relief provided under the CFA compared to the Act, asserting that the equitable nature of relief under the Act necessitates a non-jury trial. They cite a previous ruling stating that actions initiated by the Commissioner under the Act do not confer a jury trial right due to their restitutionary nature.

The court applies a de novo standard of review regarding the trial court's denial of a jury trial right. It clarifies that defendants who did not demand a jury in their answers have not waived that right, as a jury trial can proceed if demanded by any party. A jury trial can only be waived with the consent of all parties involved. 

The court notes that the Act does not explicitly provide a right to a jury trial, contrasting it with other legislative enactments that do. The historical practice of the Legislature is to expressly grant jury trial rights for newly created statutory causes of action. The court emphasizes the importance of the plain language of the Act in determining whether it implies a right to a jury trial or if it simply establishes a cause of action without such a right.

The Act prohibits various forms of fraudulent conduct related to insurance claims, expanding on common law fraud which was deemed insufficient for deterring insurance fraud. Unlike common law fraud, which requires proof of intent and reliance, the Act focuses on the act of presenting false or misleading statements in connection to insurance claims without needing to prove intent to deceive or reliance by the insurer. Specifically, violations occur when a person presents statements containing false information related to claims or insurance applications (N.J.S.A. 17:33A-4a(1, 2, and 4)), and such violations do not require evidence of the insurer’s reliance or resulting damages. The Act also penalizes the failure to disclose events that could affect insurance entitlements, even if this does not constitute legal fraud (N.J.S.A. 17:33A-4a(3)). Additionally, it prohibits misrepresenting a principal place of residence for obtaining automobile insurance, requiring intentional presentation of the false statement but not proof of knowledge of its falsity (N.J.S.A. 17:33A-4a(4)(a)). The Act further encompasses those who assist in or benefit from another's violations (N.J.S.A. 17:33A-4b and -4c).

The Act, initially established in 1983, authorizes the Commissioner to initiate civil actions for penalties related to violations, with penalties determined by the court within specified monetary limits (N.J.S.A. 17:33A-5). The court can also award costs and reasonable attorney's fees. A 1997 amendment expanded the Commissioner's authority to assess violations and impose penalties in administrative proceedings, including the power to order restitution for losses incurred by affected insurance companies or individuals (N.J.S.A. 17:33A-5c). Respondents have the right to a hearing before the Office of Administrative Law (OAL), and the Commissioner can enforce penalties through summary proceedings (N.J.S.A. 2A:58-10 to -12). Insurers harmed by violations can sue for compensatory damages, which now must include reasonable investigation costs and attorney's fees, with potential for treble damages if a "pattern" of violations (defined as five or more related incidents) is established (N.J.S.A. 17:33A-7a, 7b; L. 1997, c. 151, §5).

Insurers are required to notify the Commissioner of any civil actions, allowing the Commissioner to intervene for penalties and cost recovery (N.J.S.A. 17:33A-7d). However, the Act does not explicitly grant insurers the right to intervene in administrative proceedings initiated by the Commissioner. Additionally, the Act does not clearly state the right to a jury trial in actions brought by either the Commissioner or insurers. The court must determine if a pattern of violations exists, and while defendants argue for an implied right to a jury trial, the interpretation of the statute does not support this implication. The court prioritizes understanding the Legislature's intent in statutory interpretation, declining to assume rights not explicitly stated in the statute or required by its legislative history.

Interpretation of statutes begins with their plain language, resorting to legislative intent only when ambiguity arises, leading to multiple interpretations or absurd results. Courts must not assume the Legislature intended anything beyond the explicit text and cannot rewrite statutes. The Legislature's silence on a right to a jury trial in specific statutes indicates intent not to confer such a right, as demonstrated by prior cases. While courts may sometimes recognize implied provisions, there is a strong presumption against inferring a private right of action or jury trial where the Legislature has not expressly provided for it. The lack of an express provision for a jury trial in newly created statutory causes leads to the consistent denial of such rights, reflecting the Legislature’s intent. The Constitution does not guarantee a jury trial for statutory claims unfamiliar to common law, and any statutory right to a jury trial must be clearly stated to effectuate a deviation from common law principles. Therefore, courts should be cautious in recognizing implied rights to a jury trial that are not constitutionally protected.

The Court in Shaner conducted a two-step analysis, determining that the Law Against Discrimination (LAD) does not imply a right to a jury trial, nor is such a right constitutionally grounded. The Court evaluated the intent behind the LAD, its structure allowing administrative and judicial actions, and the equitable nature of the remedies, concluding that these factors are inconsistent with an implied jury trial right. Similarly, in Sailor, the Court found no right to a jury trial under N.J.S.A. 17:33A-5a, noting the Legislature's silence on the matter and emphasizing that the Legislature knows how to explicitly provide for a jury trial when intended. The analysis highlighted that the Act allows the Commissioner to seek restitution through administrative processes that do not involve jury trials, and that the court is designated to determine critical factual issues for imposing treble damages. The Court rejected the defendants' claim for an implied jury trial right based on the nature of the cause of action being similar to legal fraud, stating that the analogy was insufficient to support such a finding. Overall, the Court concluded that there is no statutory basis for a jury trial in actions under N.J.S.A. 17:33A-7.

A violation may not constitute legal fraud, and while insurers can pursue "compensatory damages," the Commissioner has the authority to seek "restitution" for the insurer's losses, aligning with the restitutionary purpose of N.J.S.A. 17:33A-2. Restitution is considered an equitable remedy. The Act aims to combat insurance fraud by enhancing detection, preventing occurrences through fraud prevention programs, mandating restitution of fraudulently obtained benefits, and decreasing premium costs associated with fraudulent claims. The 1997 amendments emphasized a swift and cost-effective resolution through non-jury administrative actions. Despite the esteemed role of jury trials, they are often slow, which the Act seeks to circumvent. The court concluded that a constitutional right to a jury trial is not implied under the Act, distinguishing it from the Consumer Fraud Act (CFA), which does imply such a right due to its provisions for treble damages and the court's role in determining damages. The Zorba ruling, which suggested a jury trial right based on the CFA, is not applicable here due to differences in statutory language and the tension between inferring a jury right and allowing for administrative restitution under the Act.

No statutory right to a jury trial exists under the Act. The right to a jury trial is constitutionally guaranteed in New Jersey only for civil cases where such a right existed at common law, typically excluding equitable cases. This constitutional protection arises from historical actions recognized by the state's constitutions since 1776. The court conducts a historical analysis to determine if a jury trial is warranted, considering both the nature of the action and the relief sought, with the remedy being the most influential factor. However, mere availability of monetary relief is insufficient to guarantee a jury trial; courts also assess whether the relief is predominantly equitable and the statute's broad objectives beyond individual remedies. The New Jersey Antitrust Act, despite allowing for monetary damages and injunctive relief, has been ruled to not afford a right to a jury trial due to its equitable nature and its focus on broader public policy goals. Specific to the insurer-plaintiff's claims, recovery of attorney's fees and investigation costs is deemed equitable, further negating the right to a jury trial under the Act. Thus, based on these principles, no constitutional right to a jury trial is found under the Act.

Monetary relief available to insurers under N.J.S.A. 17:33A-7a is characterized as restitution rather than compensatory damages, as plaintiffs seek refunds of wrongfully paid PIP benefits without additional consequential damages. Restitution is classified as an equitable remedy, not strictly legal relief, and is intended to restore plaintiffs to their prior position, as noted in various case law. The nature of the claims under the Act differs significantly from legal fraud; private actions do not require proof of scienter and resemble equitable fraud, which typically does not warrant a jury trial. Elements such as reasonable reliance and damages, often present in equitable fraud claims, are eliminated by the Act. The Act serves broad public policy goals, enlisting insurers in combating insurance fraud and requiring them to create plans against it, with penalties for non-compliance. The legislative intent aims to control insurance costs for consumers by addressing fraud, which increases rates. Consequently, the court concludes that there is no constitutional right to a jury trial for private claims under the Act. Affirmed.