Insurance fraud is a global issue that costs insurers billions of dollars annually. New Jersey has one of the strictest anti-insurance fraud laws in the country, which lets authorities aggressively detect, deter and investigate insurance fraud. Part of this hard-hitting approach is to allow insurers to bring civil actions directly against violators under the New Jersey Fraud Prevention Act (Act). Until a recent appellate court ruling, however, the Act did not specify whether violators have the right to a jury trial in such an action. That all changed when New Jersey’s appellate court addressed the jury trial issue head on inAllstate New Jersey Ins. Co. v. Lajara. After examining the Act and the State Constitution, the court held that no statutory or constitutional right to a jury trial exists.
This decision is a positive one for insurers as it strengthens their ability to combat fraud in New Jersey. Having a judge – rather than a jury – interpret and apply the Act will result in more consistent outcomes and eliminate the negativity associated with an action brought by an insurer against a policyholder. Matters of insurance fraud can be fairly complicated, and expensive to litigate. For insurers that were previously reticent to take advantage of the private right of action due to the uncertainty of an unfavorable jury verdict, the fact that a judge will try the case should alleviate such concerns and encourage more insurers to take advantage of New Jersey’s strong anti-fraud laws.
