It is no secret that New Jersey courts have a tendency to treat insurance policies different from standard contracts, at least in part because the insurance industry is heavily regulated and affects the public interest. In its ruling in State of New Jersey v. Goodwin, No. A-20 (N.J. Jan. 19, 2016), the New Jersey Supreme Court has drawn a definitive hard line in the sand in the fight against insurance fraud. The New Jersey Supreme Court ruled that a defendant can be convicted of insurance fraud, punishable by imprisonment, if they make a false statement to an insurer that was “capable of influencing a reasonable examiner to pay a claim” even where the insurer ultimately denies the claim based on the false statement.
In a rather interesting set of facts, Robert Goodwin and his live-in girlfriend purchased a $6,000 used SUV, which was typically parked outside of their apartment. The SUV was discovered on fire one morning several blocks away from the couple’s apartment. When the couple reported the incident to the local police, they both claimed the SUV had been parked outside their apartment the night prior and not in the spot where it was discovered ablaze, suggesting that the vehicle must have been stolen and set on fire. Despite this claim, the police investigation revealed that there was no damage to the vehicle’s ignition, casting doubt on the claim that it had been stolen and moved to the location where it was found.
Goodwin submitted a claim for the damaged vehicle to his auto insurer, and the insurer initiated an investigation of the incident. During the investigation, Goodwin informed the insurer’s investigator that there was only one set of keys to the SUV and he claimed that on the night before the accident, the SUV had been parked outside of the couple’s apartment where it was always parked. When the investigator confronted Goodwin concerning how the SUV could have been moved without keys since there was no damage to the vehicle’s ignition, Goodwin admitted he had in fact parked the vehicle in the spot where it was found in flames. Goodwin admitted that he had lied about the location of the SUV because he had parked it in front of his mistress’ apartment, whom he had stealthily visited the night prior to the fire, and did not want his girlfriend to know about the affair. Goodwin denied setting the SUV on fire and was later cleared of all charges related to the arson by the trial court. The insurer denied the claim based on Goodwin’s misrepresentation about the theft and the circumstances of the incident. At no point did the insurer issue any payment on Goodwin’s claim.
Goodwin was then charged with, and subsequently found guilty of, second degree insurance fraud pursuant to N.J.S.A. 2C:21-4.6 by a New Jersey trial court and then sentenced to a seven-year prison term. The Appellate Division reversed the trial court’s decision, reasoning that the trial court erred by not telling the jury that a finding of insurance fraud could be returned only if the insurance company had actually relied on Goodwin’s false statements and paid the claim. According to the Appellate Division, the trial court erred by charging this relaxed standard.
The New Jersey Supreme Court disagreed and reversed the Appellate Division’s holding, finding that a defendant can be convicted of insurance fraud, even when an insurance carrier was not induced by the false statement made and in fact denied the claim. In support of its seemingly harsh decision decision, the New Jersey Supreme Court referred to the legislative intent behind the insurance fraud statute, noting that the New Jersey legislature clearly did not intend for a person, who knowingly filed a false statement that could have reasonably affected the decision of an insurance carrier to pay a claim, to evade criminal prosecution merely because the carrier’s thorough investigation revealed the fraud before money passed hands. In addition, the Supreme Court noted that a fraudulent insurance claim, seeking more than $6,000 for damage to a vehicle, was not a trivial infraction to be taken lightly. As this Casanova learned, New Jersey courts take seriously New Jersey’s statewide campaign against insurance fraud.