The New Jersey Supreme Court has agreed to hear Allstate Ins. Co. v. Northfield Medical Center,1 which has consequences for insurers across the country seeking to deter insurance fraud schemes intended to avoid the prohibition on the corporate practice of medicine. The issue before the court is whether a health-care lawyer (who was not admitted to practice in New Jersey) and a California chiropractor violated New Jersey’s Insurance Fraud Prevention Act (IFPA)2 by allegedly devising and marketing a multidisciplinary medical and chiropractic practice format in New Jersey that violated the corporate practice of medicine doctrine and, thus, that improperly billed an automobile insurance company under the state’s personal injury protection (PIP) statute.3 Although insurers vigorously pursue people who participate in fraudulent schemes, this case raises the important issue of the liability of those who devise a fraudulent scheme, and market it to practitioners, but who never actually participate in the enterprise themselves.

A trial court found that the defendants—including attorney Robert P. Borsody and chiropractor Daniel H. Dahan—had violated the IFPA, and it granted judgment in favor of Allstate Insurance Company and two affiliates. The trial court’s award included $1.32 million in counsel fees and costs, which it trebled under Section 17:33A-7(b) of the IFPA.

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