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May 25, 1994

CHIROPRACTIC ALLIANCE OF NEW JERSEY, an Association of New Jersey Chiropractors, on behalf of its members, and as class representative on behalf of all similarly situated individuals; Jeffrey Susman, D.D.S.; and Samuel Soriero, D.C., Plaintiffs,

The opinion of the court was delivered by: STANLEY S. BROTMAN


 Before the court is the motion of defendants Lewis Parisi et al. ("Defendants") to dismiss the complaint of plaintiff Chiropractic Alliance of New Jersey ("Plaintiff"). *fn1" Oral argument was held in this matter on April 14, 1994. For the reasons stated below, the motion is denied.

 I. Background

 This is a class action brought by a non-profit chiropractor's association against officers and investigators of the New Jersey Department of Insurance, Fraud Division ("DIFD"). Plaintiff alleges, in sum, that the Defendants have engaged in a state-wide scheme to extort money from chiropractors, medical doctors, and other New Jersey residents.

 Plaintiff specifically contends that the DIFD systematically mass mail thousands of form letters to health care practitioners, which letters contained vague accusations of misconduct and which offered to accept a fine payment in lieu of proceeding with legal action. According to Plaintiff, the DIFD randomly selects targets from a huge pool of claims brought to their attention by insurance companies. Plaintiff claims that the DIFD mails the form letters to targets without first conducting any investigation or screening to determine the validity of the insurance companies' queries. Plaintiff further contends that DIFD officials regularly use coercive tactics in conjunction with the form letters in order to obtain penalty payments from alleged offenders. According to Plaintiff, from 1988 through 1992, the DIFD scheme brought in over six million dollars from approximately 1000 practitioners.

 Plaintiff filed a three-count complaint, alleging (1) violations under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(c) ("RICO"), (2) Racketeering Conspiracy in violation of 18 U.S.C. 1962(d), and (3) civil rights violations under 42 U.S.C. § 1983. Plaintiff seeks treble damages, declaratory relief enjoining defendants from the alleged practices, and costs and attorneys fees.

 Defendants argue that the DIFD is engaged in the appropriate regulation of fraudulent insurance claims and that Plaintiff is casting a "sinister aura" over a legitimate procedure to settle claims outside or court.

 II. State Statutory Scheme

 Because it is relevant to the discussion below, the Court gives pause to lay out the statutory framework underlying the DIFD procedures. In 1983 the New Jersey State Legislature enacted the Insurance Fraud Prevention Act, N.J.S.A. 17:33A (the "Act"). The purpose of the Act, as provided in the statute, is to

confront aggressively the problem of insurance fraud in New Jersey by facilitating the detection of insurance fraud, eliminating the occurrence of such fraud through the development of fraud prevention programs, requiring the restitution of fraudulently obtained insurance benefits, and reducing the amount of premium dollars used to pay fraudulent claims.

 N.J.S.A. 17:33A-2. The Act established the DIFD (referred to in the Act as the "Division of Insurance Fraud Prevention") to assist the Commissioner of Insurance in administratively investigating allegations of insurance fraud and in developing and implementing programs to prevent insurance fraud. N.J.S.A. 17:33A-8(a). DIFD consists of supervisory and investigative personnel who can subpoena witnesses and documents but who themselves are not subject to subpoena to testify about their investigations in civil actions in any court of the State of New Jersey. N.J.S.A. 17:33A-11. The Act imposes on DIFD officials a duty to discriminate between colorable and meritless claims, providing:

The [DIFD] shall review the reports and select those alleged violations as may require further investigation. It shall then cause an independent examination or evaluation of the facts surrounding the alleged violation to be made to determine the extent, if any, to which fraud, deceit, or intentional misrepresentation of any kind exists.

 N.J.S.A. 17:33A-9(a).

 Pursuant to the Act, it is a violation for any individual or "health care practitioner" (those authorized to practice medicine, surgery, psychology, and chiropractic) to, inter alia, submit any written or oral statement in support of a claim for payments pursuant to an insurance policy knowing that the statements contain false or misleading information. N.J.S.A. 17:33A-4. Any person or practitioner who violates any provision of the Act is subject to a sliding scale civil penalty based on the number of offenses committed in the past. For a first offense, the Act allows the Commissioner of Insurance, through the DIFD, to enter into a consent agreement with the alleged violator wherein that party would neither admit nor deny the charge but would pay a civil penalty. Such agreement could not be used in any subsequent civil or criminal proceedings, nor would notification be made to the appropriate licensing authority, as would normally be required under the Act. N.J.S.A. 17:33A-5. *fn2"

 If the allegations of insurance fraud cannot be resolved by consent agreement, the Commissioner of Insurance is authorized to initiate suit in the Superior Court to prove the alleged violations of the Act. If the allegations are proven, the practitioner is subject to the aforementioned civil penalties. Id.

 III. Discussion

 In the motion before the court, Defendants make four arguments in support of dismissal: first, that several theories of abstention preclude the Court from ruling on the instant matter; second, that Plaintiff lacks "representational" standing; third, that Plaintiff's claim fails due to a lack of specificity; and fourth, that Defendants are entitled to absolute immunity. These four arguments are respectively addressed below.

 A. Abstention

 Defendants raise two arguments as to why this Court should abstain from deciding the instant dispute. *fn3" First is the abstention doctrine set forth in Burford v. Sun Oil Co., 319 U.S. 315, 87 L. Ed. 1424, 63 S. Ct. 1098 (1943).

 1. Burford Abstention

 Under the Burford doctrine, where adequate state court review is available, the federal court sitting in equity must abstain from interfering with the proceedings of state administrative agencies:

(1) when there are "difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the results in the case at bar"; or (2) where the "exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to ...

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