Man Bites Dog Story: State Farm Sues Chiropractors for Fraudulent Claims


Insurers Frustrated by Lack of Prosecution for Insurance Fraud Proactively Sue Chiropractors they Claim Defrauded the Insurers

Insurers, victims of insurance fraud, see little or no prosecution of those who defraud them. State Farm, not willing to wait, proactively sued defendants James Marshall, D.C. and Marshall Chiropractic, LLC (collectively “Defendants”) for fraud. After discovery was completed the Chiropractors moved for summary judgment seeking dismissal of State Farm’s suit. In State Farm Guaranty Insurance Company, and State Farm Indemnity Company v. Marshall Chiropractic, LLC and James Marshall, D.C., Civil Action No. 20-1918 (MAH), United States District Court, D. New Jersey (September 17, 2021) the USDC was asked to dismiss because State Farm failed to file an  affidavit of Merit asserted against the chiropractors required of malpractice suits against health care providers. State Farm did not allege malpractice.


Plaintiffs are auto insurers who provide personal injury payment (“PIP”) coverage to their insureds. Defendant Marshall is a chiropractor licensed in the State of New Jersey and the owner of Defendant Marshall Chiropractic.

Plaintiffs sued the chiropractors asserting four causes of action: common law fraud; breach of the New Jersey Insurance Fraud Prevention Act; unjust enrichment; and declaratory relief. According to the Complaint, Defendants fraudulently acquired PIP payments from Plaintiffs by imposing a predetermined treatment protocol and subjecting State Farm-insured patients to “virtually the same laundry list of services on nearly every visit, ” rather than conducting an individualized assessment and creating a personalized treatment plan. Plaintiffs demanded reimbursement for PIP-benefit payments totaling “approximately $850,000.” They also sought treble damages, costs, and declaratory relief as redress for Defendants’ alleged misconduct.

Fifteen months after the initiation of the suit and over twelve months after filing their Answer, Defendants moved for summary judgment. They assert for the first time that Plaintiffs were required to file an affidavit of merit under New Jersey statutes.


Application of the New Jersey Affidavit of Merit Statute

Defendants argued that Plaintiffs were required to comply with the New Jersey Affidavit of Merit Statute because the Complaint contains allegations that Defendants “breach[ed] the applicable standard of care owed . . . to their patients in providing medical services.” Plaintiffs responded that their claims are outside the statute’s scope because they are not pursuing personal injury, wrongful death, or property damages, and they have not filed an action for malpractice or negligence.

The failure to provide an appropriate affidavit or a statement in lieu thereof shall be deemed a failure to state a cause of action and ordinarily requires dismissal of the complaint with prejudice. However, plaintiffs have not filed an action for malpractice or negligence.  The USDC concluded that claims seeking to recoup a finite sum previously paid, does not fall within the Affidavit of Merit Statute.

In this case, Plaintiffs sought to recover a sum that is substantially certain. Specifically, Plaintiffs seek the return of “more than $850,000 in PIP benefits” paid because of Defendants’ alleged scheme. Although Plaintiffs relatedly seek treble damages, declaratory relief, and costs, those potential damages do not change the Court’s analysis. The demands for repayment do not hinge upon a showing that Defendants committed professional malpractice. Accordingly, Plaintiffs’ allegations do not trigger the Affidavit of Merit Statute.

Defendants’ motion for summary judgment was denied.


State Farm, and other insurers, that proactively sue the persons and entities they believe are defrauding them have found that taking money from fraudsters is more effective than the rare prosecution by the state of the fraud perpetrators. As victims of fraud any insurer has the right to be indemnified from the fraudsters and, more importantly, take the profit out of the crime. Waiting for a state prosecutor – especially with some state prosecutors who are averse to even prosecuting serious criminal activities like assault, battery, and murder, it is time that all insurers – if their SIU develops evidence that they are being defrauded – should proactively file for damages under the state fraud statutes and the federal RICO statutes.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

He is available at and Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at;  Follow Mr. Zalma on Twitter at; Go to Barry Zalma videos at ; Go to Barry Zalma on YouTube-; Go to the Insurance Claims Library –  The last two issues of ZIFL are available at  podcast now available at


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