New Jersey passed the Insurance Fraud Prevention Act (“IFPA”) to aggressively address the problem of insurance fraud in New Jersey. To that end, the IFPA provides for the imposition of both civil and criminal penalties in connection with the commission of insurance fraud. In State v. Goodwin, 224 N.J.102 (2016), the New Jersey Supreme Court addressed the requirements for a criminal conviction under the IFPA. In that case, the defendant, Robert Goodwin, ended up with a seven-year prison term because he facilitated the filing of a false insurance claim in an attempt to hide that he was cheating on his live-in girlfriend.
Mr. Goodwin was convicted of second-degree insurance fraud, N.J.S.A. § 2C:21-4.6, for falsely reporting that his girlfriend’s SUV had been stolen. Mr. Goodwin actually borrowed his live-in girlfriend’s SUV to visit his other girlfriend. The SUV was vandalized and severely damaged by fire while parked overnight down the street from his second girlfriend’s apartment. Upon discovering the damage to the SUV, Mr. Goodwin returned to the apartment he shared with his first girlfriend. He convinced her to report the SUV as stolen to the police department and the insurance company. During an examination under oath conducted by the insurance company, Mr. Goodwin admitted that he lied about the SUV being stolen. Based on Mr. Goodwin’s misrepresentation about the theft, the insurer denied the claim.
Mr. Goodwin was later charged with second-degree aggravated arson, third-degree attempted theft by deception, and second-degree insurance fraud. The jury found Mr. Goodwin guilty of second-degree insurance fraud and not guilty on the other counts. The trial judge instructed the jury that a person is guilty of insurance fraud if he “knowingly makes or causes to be made a false … or misleading statement of material fact … in connection with a claim for payment, reimbursement, or other benefit from an insured’s company.” Id. at 107-08. The judge further instructed the jury that “[a]n insured’s misstatement is material if when the statement was made, a reasonable insurer would have considered the misrepresented [fact] relevant to its concerns and important in determining its course of action.” Id. at 108. Finally, the judge instructed the jury that “the statement of fact is material if it could have reasonably affected the decision by an insurance company … to pay a claim.” Id.
On appeal, the Appellate Division reversed the conviction, concluding, among other things, that the jury should have been instructed that Mr. Goodwin could be found guilty only if the insurer actually relied on the his false statements. The court held “that defendant was not guilty of insurance fraud on the theft claim because [the insurer] knew that the SUV was not stolen and did not pay the claim.” Id. The New Jersey Supreme Court reversed. According to the Court:
A person violates the insurance fraud statute … even if he does not succeed in duping an insurance carrier into paying a fraudulent claim. A false statement of material fact is one that has the capacity to influence a decision-maker in determining whether to cover a claim. If the falsehood is discovered during an investigation but before payment of the claim, a defendant is not relieved of criminal responsibility.
224 N.J. at 104-05. The Court held that because Mr. Goodwin falsely reported that the SUV was stolen, “[i]t was for the jury to determine whether the series of false statements about the theft generated by defendant had the capacity to influence the insurance carrier in deciding whether to reimburse for the damage caused by the arson.” Id. at 105. The Court further held that it was not necessary for the defendant to have been convicted of arson or theft to support his conviction of insurance fraud. Id. at 115.
Thus, a person can be convicted of insurance fraud regardless of whether the insurer actually was influenced to pay the claim by the defendant’s false statements. In other words, it is not necessary to show that the insurer actually relied on the defendant’s statements. The State merely has to show that the defendant’s actions “had the capacity to influence the insurance carrier” to pay the claim.
In this case, the jury found Mr. Goodwin not guilty on the claims that he stole or vandalized the SUV. It appears that his only false statement was the SUV was stolen and he made that statement because he was trying to hide his actions from his live-in girlfriend. That deception cost him seven years in prison.
© William D. Wilson and NJInsuranceBlog.com, 2016. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to William D. Wilson or NJInsuranceBlog.com with appropriate and specific direction to the original content.
Wow, what a fantastic story! Looks like the man got what he deserved and an insurance company acted very reasonably! What I wonder is how the insurance company’s attorney was able to get the man to admit the truth during the EUO. Policyholders lie under oath all the time because they know that the insurance company has no proof, only a suspicion, that the policyholder is doing something nefarious.
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