INSURANCE FRAUD UPDATE

By: Rafael A. Llano, Esq.

A person is guilty of the crime of insurance fraud if that person knowingly makes a false statement of material fact in connection with a claim for payment, reimbursement or other benefit pursuant to an insurance policy. N.J.S.A. 2C:21-4.6(a). On January 19, 2016, the New Jersey Supreme Court held in State v. Goodwin that one may be convicted of insurance fraud under N.J.S.A. 2C:21-4.6(a), even if an insurance carrier is not induced by a person’s false statement to pay a claim. Further, one may be found guilty of insurance fraud even where they are acquitted of criminal offenses underlying the statements at issue.

This case arose out of a claim for theft and fire damage. The Defendant was in a relationship with the policy holder for a 1999 Chevy Tahoe. On September 13, 2009, he used the SUV to visit another woman with whom he carried on a separate relationship. In the morning, the defendant and his paramour discovered the vehicle with severe fire damage. The Defendant told a Progressive investigator that he parked the vehicle in a location different from where it was discovered. However, he later admitted that he parked the vehicle where it was discovered and had lied to conceal his second relationship. Progressive denied the claim.

Defendant was charged with second-degree arson, third-degree attempted theft by deception, and second-degree insurance fraud. The trial court instructed the jury that guilt could be found if the defendant’s false statements had the capacity to influence the insurance company's decision to pay the claim. The jury found him guilty of second-degree insurance fraud, but not guilty of arson and attempted theft.

On appeal, the Appellate Division reversed as to both claims. They found that Progressive knew the SUV was not stolen and denied the theft claim, and “the panel determined that defendant's assertion that he did not set fire to the SUV was not a false statement unless the jury convicted him of the arson or theft charges.”

After granting the State’s petition for certification, the Court found that the criminal insurance fraud statute, N.J.S.A. 2C:21-4.6(a), “does not contain any language stating that criminal liability only attaches where an insurance company suffers a loss resulting from its reliance on a false statement.” As “material” is not defined in N.J.S.A. 2C:21-4.6, the Court looked to N.J.S.A. 2C:28-1(b) (Perjury), and found that the definition of materiality does not require that the false statement corrupt the outcome. The trial court correctly used the definition of material fact in the Model Jury Charge (Criminal), Insurance Fraud: Making False Statement (Claims).

The Court also held that a conviction of insurance fraud can stand without a predicate finding of guilt on arson or theft charges.

New Jersey’s Legislature has made clear its intent to aggressively confront the problem of insurance fraud in New Jersey. N.J.S.A. 17:33A-2; see Merin v. Maglaki, 126 N.J. 430, 446 (2012). The Goodwin holding is consistent with the legislature’s intent and ensures that individual wrongdoing goes punished regardless of whether the insurance company takes the bait.