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A New Jersey court ruled that an arbitration claimant under indictment for fraud could exercise her Fifth Amendment right against self incrimination during examination under oath. However, the Court denied the claimant’s request to stay the arbitration pending the outcome of her criminal case.
In Vargas v. National Continental/Progressive Ins. Co., Case No. BER-L-7245-06, 2006 WL 3512277 (N.J. Super. Ct. Law Div. Nov. 21, 2006), Theresa Vargas filed a demand for arbitration with the National Arbitration Forum (the FORUM) seeking Personal Injury Protection (PIP) benefits from her insurance company for medical treatment allegedly received in connection with a motor vehicle accident.
Both Vargas and her employer, Dr. Shams Qureshi, were under indictment for fraudulent billing of services never rendered. The treatment and bills underlying Vargas’ arbitration claim were a subject of the indictment.
During Vargas’ examination under oath (EUO), the insurance company questioned her about facts and issues related to the indictment. Vargas refused to answer, citing her Fifth Amendment right against self-incrimination. Given Vargas’ refusal to testify, the insurance company asked the arbitrator to dismiss Vargas’ claim for PIP benefits.
Vargas subsequently filed a motion asking the Court to stay arbitration of her PIP claim pending the outcome of her criminal case. In support of her motion, Vargas argued that she should not be forced to choose between exercising her right against self-incrimination and preserving her claim for PIP benefits.
The Court agreed that Vargas could exercise her right against self-incrimination but denied her request for a stay. Accordingly, the Court ordered Vargas to attend another EUO with the caveat that Vargas be allowed to exercise her right against self-incrimination.
In denying Vargas’ request for a stay, the Court reasoned that the insurance company “should not have to wait until the conclusion of a potentially length criminal proceeding in order to resolve a PIP claim.” The Court thus remanded the matter to the FORUM for a decision on the merits.
This decision is consistent with court rulings regarding litigation in which the plaintiff pursues a civil claim but invokes the right against self-incrimination, typically at a deposition. In these cases, courts generally either allow the case to proceed or dismiss it if there is insufficient evidence to support the civil claim. See, e.g., Serafino v. Hasbro, Inc., 893 F.Supp. 104, 108 (D. Mass. 1995) (noting that “a plaintiff’s right to be silent does not obscure a defendant’s right to mount a defense”).
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