The New Jersey Supreme Court has ruled unanimously that insurance brokers, producers, and agents are not entitled to a professional exemption from liability under the state’s Consumer Fraud Act (CFA).
The court found that “extending the learned professional exception to insurance brokers would unduly narrow the scope of the CFA and undermine the Legislature’s intent for it to serve as one of the nation’s strongest consumer protection laws.”
The ruling came in a case brought by James Lowe, M.D, a neurosurgeon who was diagnosed with a vision condition that prevented him from performing neurosurgery. He claims his insurance agents negligently failed to obtain sufficient disability insurance for him.
Lowe’s insurance agents —Bernard Audet and Richard Laver of Creative Financial Group, Ltd. —asked the court to dismiss the case because they argued that they are exempt from the CFA as “semi-professionals” under the “learned professional” exception that has been recognized by some court decisions.
The Appellate Division agreed with the agents that they are exempt and dismissed Lowe’s complaint. But the high court has now reversed the appellate court, vacated the dismissal of the CFA counts in Lowe’s complaint, and remanded the case or further proceedings.
Lowe’s Claim
After Lowe was diagnosed with the vision condition that prevented him from performing neurosurgery, he made claims for maximum benefits under the insurance policies that Audet and Laver has procured for him. But the insurers paid only partial benefits due to other business interests of his that were unrelated to his medical practice. Lowe alleges that his agents advised him that he would receive maximum should he become disabled and never advised him that business interests unrelated to his medical practice could affect a benefits claim.
Lowe filed a complaint with several counts including that his insurance agents violated the CFA by negligently failing to obtain sufficient disability insurance for him.
The agents moved to dismiss the CFA count, and the trial court granted the motion, relying on a 2006 Superior Court ruling (Plemmons v. Blue Chip Insurance Services, Inc.) that concluded that like real estate brokers “insurance brokers are ‘semi-professionals’ who are excluded from liability under the CFA for the services they render within the scope of their professional licenses.”
However 13 years later, the Appellate Division disavowed that ruling and decided the learned professional exception to CFA applies only to those professionals “who have historically been recognized as ‘learned’ based on the requirement of extensive learning or erudition.”
