New Jersey Supreme Court Ruled July 21: PIP Arbitration Is 'Not Set Up to Handle Complex Insurance Fraud Claims.' Rahul Sood, D.O.'s $1.7M Practice Now Faces a Jury.

On July 21, 2026, the New Jersey Supreme Court closed a door that Carteret Comprehensive Medical Care and Sood Medical Practice had used since 2025 to keep Allstate's fraud claims away from a jury. A unanimous seven-justice panel, in Docket No. 090337, affirmed that mandatory PIP arbitration under the Automobile Insurance Cost Reduction Act does not reach civil RICO or Insurance Fraud Prevention Act claims. "The current PIP arbitration set up under AICRA is designed for limited disputes over the timely payment of PIP benefits," the court held. "That arbitration process is not set up to handle complex insurance fraud claims." The more than $1.7 million in PIP payments six Allstate entities say they paid Carteret, Sood Medical Practice, and more than thirty co-defendant practices and physicians between 2008 and 2022 is no longer an arbitrator's problem. It goes to a jury.

The reversal took three courts to land. A trial judge sided with the medical practices and ordered arbitration, reading AICRA's dispute-resolution language as mandatory. The Appellate Division reversed in 2025, in an opinion by Judge Robert J. Gilson reported at 480 N.J. Super. 566, and reinstated Allstate's complaint. The medical practices asked the Supreme Court to undo that reversal. Instead, the Court granted certification, heard argument on January 22, 2026, with David N. Cinotti arguing for Allstate, and affirmed six months later "substantially for the reasons expressed" in Gilson's opinion. No dissent. No separate opinion.

The statute did the work the trial court skipped. AICRA sends to arbitration "[a]ny dispute regarding the recovery of...benefits provided under [PIP] coverage...arising out of the operation, ownership, maintenance, or use of an automobile." N.J.S.A. 39:6A-5.1(a). The Insurance Fraud Prevention Act reaches further. It allows compensatory damages, investigative expenses, costs, attorneys' fees, and, where a pattern of fraud is proven, treble damages. New Jersey's civil RICO statute goes further still, letting private plaintiffs sue in court for damages and injunctive relief. A PIP arbitrator cannot grant equitable relief. The Court found "serious questions" whether an arbitrator can even order broad discovery, join third parties, or award treble damages or attorneys' fees to an insurer at all.

Carteret Comprehensive Medical Care and Sood Medical Practice are two names on a defendant list that runs past thirty, spanning pain centers, an anesthesia group, a vein clinic, a perioperative practice, and physicians including Rahul Sood, D.O., the practice's namesake. Brian Block of Mandelbaum Barrett argued for the Sood Medical Practice defendants. Jeffrey Randolph argued for Carteret. Allstate has not proven the underlying fraud allegations. The Court decided only where they get tried, not whether they are true. But the forum question was the whole fight. An arbitrator capped at PIP-benefit disputes was never going to unlock treble damages. A jury can.

The defendants tried one more escape route. They argued Allstate's own Decision Point Review Plans, the utilization plans regulated under AICRA, gave them a separate contractual right to arbitrate. The Appellate Division rejected that too, holding those plan provisions are "no broader than the statutory PIP arbitration established by AICRA" itself. The Court also sidestepped a live constitutional question, whether forcing arbitration would violate Allstate's right to a jury trial on Fraud Act and RICO claims, by resolving the case on statutory grounds instead. And it left a split standing on purpose. The Third Circuit ruled in 2024, in Government Employees Insurance Co. v. Mt. Prospect Chiropractic Center, that Fraud Act claims are arbitrable under AICRA. New Jersey's high court said it disagreed with that reasoning and, because its own ruling rests on state law, is not bound by the Third Circuit anyway.

The case now returns to the Law Division. The complaint is reinstated. Allstate gets to pursue every claim, RICO and Fraud Act both, with the jury trial right the trial court had tried to take off the table. Discovery reopens against a client list of more than thirty practices and physicians who have spent the time since the 2025 reversal litigating the forum instead of the facts. The next fight is no longer about where the case gets heard. It is about whether more than $1.7 million in disputed PIP claims survives being read to twelve people instead of one arbitrator.

Allstate has run this play before. It filed civil RICO claims against Select Medical Group of Michigan in June, alleging a fraudulent billing scheme dressed up as legitimate treatment, and it is still waiting on a responsive pleading there. New Jersey just handed the carrier something that Michigan federal court has not decided: a state supreme court on record, unanimously, that PIP-style arbitration cannot absorb a RICO claim. Carteret Comprehensive Medical Care and Sood Medical Practice now have three moves left. Fight the fraud allegations to a jury. Settle before discovery reopens in full. Or become the citation the next carrier reaches for when another medical network tries the same arbitration escape somewhere else.