Court revives coverage dispute, sanctions attorney over AI-cited cases

A New Jersey appellate court on Friday reinstated a workers compensation insurer’s coverage dispute after finding a lower court improperly dismissed the case with prejudice, while also sanctioning the plaintiff’s attorney for citing nonexistent case law generated by artificial intelligence.

In Amtrust North America, etc. v. Liberty Mutual Insurance Co., the New Jersey Superior Court Appellate Division said AmTrust North America could proceed with its declaratory judgment action, but only after correcting a key procedural error.

The dispute stems from benefits paid to an injured worker, Justin McGinness, who was hurt in a motor vehicle accident while working. AmTrust, the employer’s workers compensation insurer, paid more than $75,000 in benefits and sought reimbursement beyond a $15,000 third-party recovery through underinsured motorist coverage it alleged was issued by the defendants.

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