New Jersey Ruling Expands Consumer Fraud Act Exposure to Insurance Marketing

The New Jersey Supreme Court recently held that insurance brokers, producers, and agents are not categorically exempt from the New Jersey Consumer Fraud Act (CFA). In James G. Lowe, M.D. v. Bernard Audet, the court eliminated a threshold defense that had protected insurance intermediaries from certain CFA claims and held that policyholders may pursue CFA claims based on alleged misrepresentations or omissions concerning insurance coverage.

The decision follows significant regulatory enforcement actions involving allegedly deceptive health insurance marketing and highlights the potential for insurance marketing practices to face scrutiny under both federal and state laws prohibiting unfair or deceptive acts or practices (UDAP).

Because states differ significantly on whether and how their generally applicable consumer protection laws affect insurance, insurers and other insurance market participants should evaluate their marketing claims, disclosures, substantiation, and oversight practices on a state-by-state basis.

Key Takeaways

• Insurance brokers, producers, and agents are no longer categorically exempt from CFA claims.
• Claims concerning alleged misrepresentations about coverage, benefits, exclusions, or limitations may now proceed under the CFA if otherwise adequately pleaded.
• Insurers and their marketing partners should review marketing materials, producer training, and disclosure practices to ensure that those claims are adequately substantiated and consistent with the governing policy terms.

THE CLAIMS IN LOWE

Plaintiff James Lowe, MD, is a neurosurgeon who worked at and co-owned a medical practice, as well as several unrelated businesses. Between 2003 and 2016, insurance brokers Bernard Audet and Richard Laver and their employer, Creative Financial Group Ltd., allegedly marketed, sold, and procured disability insurance policies for Dr. Lowe and his medical practice. Dr. Lowe alleged that his disability insurance brokers advised him that he would receive the maximum available benefits if he became disabled but failed to disclose that ownership interests in the unrelated businesses could reduce the benefits payable under the policies.

After he became disabled and received less than the benefits he expected, he asserted a claim under the CFA based on alleged misrepresentations and omissions during the marketing and sale of the policies.  

The defendants moved to dismiss the CFA claim based on prior precedent treating insurance brokers as “semi-professionals” exempt from CFA liability. The trial court granted the defendants’ motion and the Appellate Division affirmed.

THE NEW JERSEY SUPREME COURT DECISION

The New Jersey Supreme Court reversed unanimously, holding that insurance brokers, producers, and agents are not exempt from the CFA as semi-professionals, learned professionals, “or otherwise.”

The court distilled a lengthy and sometimes conflicting line of precedent concerning professional exemptions from the CFA. Earlier cases had recognized a narrow judicial exception for certain professions historically viewed as “learned,” including physicians, attorneys, and theologians. More recent New Jersey authorities, however, questioned whether licensing and regulation alone could support an exemption from the CFA.

The Lowe Court concluded that the semi-professional exception has no basis in the CFA’s text, as insurance brokers are not among the professions historically recognized as learned, were permitted to advertise when the CFA was enacted, and do not become exempt simply because they are licensed and subject to insurance regulation. Allowing a categorical exemption, the court reasoned, would undermine the CFA’s broad remedial purpose.

PRACTICAL IMPLICATIONS AND THE FUTURE OF THE ‘LEARNED’ EXCEPTION

The principal significance of Lowe is procedural. Plaintiffs may now pursue CFA theories against insurance brokers and producers without first overcoming a categorical exemption. Because the CFA provides for treble damages and attorney fees, the decision increases the potential exposure associated with alleged marketing and sales representations. 

The decision also leaves broader issues unresolved: the court stated that it was not assessing or affirming the underlying learned professional exception, expressed “serious doubts” about its basis, and said that it would await a case directly challenging the exception. It also invited the New Jersey Legislature to clarify whether any professionals should be exempt from CFA liability. Thus, the continuing scope of the exception for traditional learned professionals will likely depend on a future lawsuit or legislative action.

A BROADER REGULATORY ENVIRONMENT

Lowe also comes amid increased regulatory scrutiny of insurance marketing practices.

In August 2025, the Federal Trade Commission announced settlements totaling $145 million with two companies involved in health plan marketing and lead generation. The FTC alleged that the companies misled consumers seeking comprehensive health insurance and directed them toward products that did not provide the coverage consumers had been promised. The parties in each case stipulated to a permanent injunction enjoining misrepresentations regarding the extent and limits of coverage, costs, provider networks, government affiliations, and product features.

The FTC followed these settlements by filing an enforcement action in January 2026 against Top Healthcare Options Insurance Agency, alleging false representations regarding the health insurance plans marketed online to consumers. Insurers and intermediaries should expect continued attention to representations made during the sale of insurance products.

A PATCHWORK OF STATE UDAP LAWS FOR INSURANCE

Although Lowe is distinctive in rejecting a judicially created professional exemption for insurance brokers, it now joins other jurisdictions that permit generally applicable consumer protection statutes to reach insurance sales or marketing despite parallel insurance regulation. That result is not universal: some states impose additional conditions on such claims, while others expressly exempt regulated insurance conduct.

Pennsylvania and New York have allowed consumer protection claims based on alleged deceptive insurance marketing or sales practices, confirming that insurance products are not categorically exempt from their generally applicable consumer protection statutes.

In Gregg v. Ameriprise Financial Inc., the Pennsylvania Supreme Court affirmed liability under the state’s Unfair Trade Practices and Consumer Protection Law as to an insurance salesperson who allegedly made material misrepresentations to induce consumers to purchase insurance policies. 

Similarly, in Plavin v. Group Health Inc., the New York Court of Appeals held that a complaint adequately alleged consumer-oriented conduct under New York’s deceptive practices and false advertising statutes where an insurer allegedly prepared materially misleading summaries of health plan coverage and benefits to induce city employees and retirees to select its plan.

Other states impose more significant limitations. California permits claims under its Unfair Competition Law only where the challenged conduct is independently actionable apart from the state's insurance-specific regulatory scheme, while Florida expressly exempts insurance-regulated persons and activities from its general deceptive trade practices statute.

These jurisdictions illustrate distinct approaches to UDAP applicability. As a result, insurers, brokers, and other insurance market participants should evaluate potential exposure under the consumer protection laws of each jurisdiction in which they operate rather than assuming a uniform national approach. 

CONCLUSION

The Lowe decision does not determine whether a CFA violation occurred, and it does not directly address liability of the insurers that issued Dr. Lowe’s policies. It nevertheless removes a threshold defense to CFA claims against insurance brokers, producers, and agents based on alleged marketing and sales misrepresentations or omissions. Combined with recent FTC enforcement and differing state UDAP regimes, the decision underscores the importance of understanding the claims being made, documenting the basis for those claims, and assessing exposure across jurisdictions.

HOW WE CAN HELP

Morgan Lewis can assist insurers and other insurance market participants in evaluating marketing practices, reviewing policy communications and disclosures, assessing state consumer protection risks, and developing compliance and oversight protocols.