Gov't Emps. Ins. Co. v. Mount Prospect Chiropractic Ctr., P.A. (In re in Relief & Wellness Ctr. LLC)

101 F.4th 272

GOVERNMENT EMPLOYEES INSURANCE CO.; GEICO Indemnity Co.;

GEICO General Insurance Company; GEICO Casualty Co. v. MOUNT PROSPECT CHIROPRACTIC CENTER, P.A.,d/b/a Mount Prospect Health Center; Terry McSweeney, D.C.;

Hassan Medical Pain Relief and Wellness Center LLC,

d/b/a Hassan Spine and Sports Medicine; Shady Hassan, M.D.

Hassan Medical Pain Relief and Wellness Center LLC,

d/b/a Hassan Spine and Sports Medicine; Shady Hassan, M.D., Appellants in No. 23-1378

Government Employees Insurance Co; GEICO Indemnity Co;

GEICO General Insurance Co; GEICO Casualty Co v. Caring Pain Management PC, aka Caring Pain Management;

Jinghui Xie, MD; First Care Chiropractic Center LLC; Konstantine Fotiou, D.C.

Caring Pain Management PC,

aka Caring Pain Management; Jinghui Xie, MD, Appellants in No. 23-2019

Government Employees Insurance Co;

GEICO Indemnity Co; GEICO General Insurance Co; GEICO Casualty Co v. Wael Elkholy, MD; Precision Pain & Spine Institute LLC;

Precision Spine & Sports Medicine of New Jersey LLC;

Precision Anesthesia Associates PC; Ashraf Sakr, MD; Fouad Karam, D.C.;

Luis Ramirez-Pacheco, MD; Lydia Shajenko, MD; Stuart Atkin, MD;

Mehrdad Langroudi, MD; Chang Lee, MD; Khaled Morsi, MD; Monica Johnson, N.P., Appellants in No. 23-2053

No. 23-1378

No. 23-2019

No. 23-2053

United States Court of Appeals, Third Circuit

Argued on January 18, 2024

Opinion filed: April 26, 2024

Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action Nos. 2-22-cv-00737, 2-22-cv-05017, and 3-21-cv-16255), District Judges: Honorable John M. Vazquez, Honorable Brian R. Martinotti, and Honorable Michael A. Shipp

Brian Block, Andrew Gimigliano (Argued), Mandelbaum Barrett, 3 Becker Farm Road, Suite 105, Roseland, NJ 07068, Counsel for Appellants in Case Nos. 23-1378, 23-2019 & 23-2053

Mohamed Nabulsi, Mandelbaum Barrett, 3 Becker Farm Road, Suite 105, Roseland, NJ 07068, Counsel for Appellants in Case Nos. 23-2019 & 23-1378

Damian P. Conforti, Mandelbaum Barrett, 3 Becker Farm Road, Suite 105, Roseland, NJ 07068, Counsel for Appellants in Case No. 23-1378

Max S. Gershenoff (Argued), Rivkin Radler, 926 RXR Plaza, West Tower, Uniondale, NY 11556, Gene Y. Kang, Rivkin Radler, 25 Main Street, Court Plaza North, Suite 501, Hackensack, NJ 07601, Counsel for Appellees in Case Nos. 23-1378, 23-2019 & 23-2053

Yonatan Bernstein, Rivkin Radler, 926 RXR Plaza, West Tower, Uniondale, NY 11556, Counsel for Appellees in Case No. 23-1378

Before: JORDAN, BIBAS, and AMBRO, Circuit Judges

OPINION OF THE COURT

AMBRO, Circuit Judge

These consolidated appeals ask if claims under New Jersey's Insurance Fraud Prevention Act ("IFPA"), N.J. Stat. Ann. §§ 17:33A-1 to 30, are arbitrable. They are, so we reverse and compel arbitration.

Background

Before us are three strikingly similar cases. Plaintiff-appellee Government Employees Insurance Company and certain affiliates (collectively, "GEICO") sued defendants-appellants (collectively, the "Practices"¹) in separate actions in the District of New Jersey, alleging they defrauded GEICO of more than $10 million by abusing the personal injury protection ("PIP") benefits offered by its auto policies. It alleges the Practices filed exaggerated claims for medical services (sometimes for treatments that were never provided), billed medically unnecessary care, and engaged in illegal kickback schemes. GEICO's suits against the Practices each included a claim under the IFPA, which gives insurers a fraud-like action with fewer elements than common-law fraud. Allstate N.J. Ins. Co. v. Lajara, 222 N.J. 129, 117 A.3d 1221, 1231-32 (2015). The Practices sought arbitration of GEICO's IFPA claim, arguing both that a valid arbitration agreement covered the claim and that a different New Jersey insurance law allowed them to compel arbitration. But each District Court disagreed, ruling instead that IFPA claims cannot be arbitrated. The Practices appeal to us.

Jurisdiction and Standard of Review

The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., provides us jurisdiction over interlocutory appeals of orders declining to compel arbitration. FAA § 16(a)(1)(B); In re Rotavirus Vaccines Antitrust Litig., 30 F.4th 148, 153 (3d Cir. 2022).

We review de novo rulings on motions to compel arbitration. Flintkote Co. v. Aviva PLC, 769 F.3d 215, 219 (3d Cir. 2014). Our role is to apply the test district courts are to use in deciding those motions. Singh v. Uber Techs., Inc., 939 F.3d 210, 217 (3d Cir. 2019).

When federal courts answer questions of state law, they rule as they predict the state supreme court would. New Castle Cnty. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 174 F.3d 338, 342 (3d Cir. 1999). If that court has not issued a determinative decision, we may consider decisions from state appellate courts, though we are not bound by them if they are not well reasoned or otherwise unpersuasive. In re Makowka, 754 F.3d 143, 148-52 (3d Cir. 2014) (disagreeing with precedential state appellate decision because we are "not, in fact, bound by [such] a decision[,]" and "the decision's sparse reasoning and internal inconsistency" would not persuade the state supreme court); Roma v. United States, 344 F.3d 352, 359-62 (3d Cir. 2003) (disregarding state intermediate appellate decision because it "is inconsistent with the plain language of [the statute] . . . and, therefore, cannot be used as an accurate predictor of how the Supreme Court of New Jersey would [rule]"). If the state supreme court would not defer to those opinions, then - given that our goal is predicting that court's decision - neither will we.²

A. IFPA Claims Can Be Arbitrated.

GEICO's primary argument to us is that the IFPA implicitly prohibits arbitration. This might defeat the Practices' effort to compel arbitration under a different New Jersey law and could do the same for the Practices' FAA-based request. While the FAA typically preempts state laws that prohibit arbitration, another federal statute, the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1015, complicates the analysis here. That act reverse-preempts federal laws that "invalidate, impair, or supersede" state insurance laws. Id. § 1012(b); Humana Inc. v. Forsyth, 525 U.S. 299, 306-07, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999). If compelling arbitration would "invalidate, impair or supersede" the IFPA, then we must disregard the FAA's contrary command.

GEICO bears the burden of persuading us that the IFPA prohibits arbitration. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). In New Jersey, a statute bars arbitration "only if [its text] or its legislative history evidences an intention to preclude alternate forms of dispute resolution[.]" Curtis v. Cellco P'ship, 413 N.J.Super. 26, 992 A.2d 795, 800 (2010) (internal quotation marks omitted).

GEICO's first argument is a massive string cite. It claims that every known decision has held IFPA claims inarbitrable; the Practices cite no case holding otherwise. But on closer inspection, GEICO's string cite lacks force.

The only appellate decision GEICO cites is Nationwide Mutual Fire Insurance Co. v. Fiouris, 395 N.J.Super. 156, 928 A.2d 154 (2007), certif. denied, 192 N.J. 598, 934 A.2d 640 (2007). GEICO relies on its statement that "the Legislature did not contemplate that a claim of a violation of the [IFPA] would be heard by an arbitrator," id. at 157, for the proposition that "IFPA claims are inarbitrable as a matter of law." Caring Pain GEICO Br. 15-16. But we do not think Fiouris stands for that proposition.

First, the authority Fiouris cites to support this statement does not suggest that the IFPA prohibits arbitration. It relies on IFPA § 7(a), a permissive jurisdiction provision saying insurers "may sue" for IFPA violations "in any court of competent jurisdiction." But those provisions do not prohibit arbitration. Gay v. CreditInform, 511 F.3d 369, 383 (3d Cir. 2007). And Fiouris cites only one case to support GEICO's key sentence. 928 A.2d at 157 (citing Liberty Mut. Ins. Co. v. Land, 186 N.J. 163, 892 A.2d 1240, 1246-47 (2006)). The cited section of Land merely summarizes the IFPA - it doesn't discuss arbitration. 892 A.2d at 1246-47. That is not surprising, because Land dealt with the standard of proof for IFPA claims, not their arbitrability. Id. at 1241. So we do not see Fiouris's statement as the arbitration bar GEICO says it is.

Second, the sentence GEICO leans on in Fiouris is dicta. That Court made clear that it was only answering one question: whether a different New Jersey law compelled arbitration of IFPA claims arising from fraud in the procurement of an insurance policy. Fiouris, 928 A.2d at 155. It was not seeking (and did not have) to answer whether IFPA claims were generally arbitrable.

So we doubt that the Supreme Court of New Jersey would accord Fiouris much weight on this issue. Following that predicted lead, we do not either. GEICO's other cases, all from trial courts, offer minimal analysis and so we give them little-to-no weight, as we expect New Jersey's highest court would. Makowka, 754 F.3d at 148; Roma, 344 F.3d at 360-62. In sum, GEICO's string cite leaves us unmoved.

Switching tacks, GEICO claims that the IFPA's anti-fraud mission bars arbitration. But it does not explain why arbitrating IFPA claims frustrates that goal. And the United States Supreme Court has made clear that claims arising from laws empowering private attorneys general can be arbitrated. Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 239-42, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (holding RICO claims arbitrable and citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 636-37, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (holding antitrust claims arbitrable because, even if they are arbitrated, antitrust law "will continue to serve both its remedial and deterrent function")).

Finally, GEICO suggests that a laundry list of factors shows that the IFPA implicitly prohibits arbitration. None...