Insured Can Be Convicted of Insurance Fraud Even if the Carrier Is not Induced by a False Statement to Pay a Damage Claim

In State of New Jersey v. Goodwin, 2016 N.J. LEXIS 7 (Jan. 19, 2016), the New Jersey Supreme Court was asked to decide whether a defendant can be convicted of insurance fraud even when the insurance carrier has not relied on the false statements to pay the claim. In Goodwin, the defendant falsely reported the theft of his girlfriend’s Stacey’s SUV, which was found severely damaged due to arson. After a jury trial, the defendant was convicted of second degree insurance fraud, N.J.S.A. 2C:21-4.6.

The Appellate Division overturned the conviction, finding that the jury was not told that the finding of insurance fraud could be returned only if the insurance carrier relied on the defendant’s false statements. Essentially, the trial court charged the jury with a relaxed standard that the false statements need only have the capacity to influence the carrier’s decision to pay the claim.

The defendant had driven his girlfriend’s SUV to his other secret girlfriend’s apartment (Linda’s apartment) and parked it there when it was found to have been severely damaged. However, he did not want Stacey to know about his other girlfriend and, thus, lied to her, the police, and the insurance company about the vehicle being stolen.  He did not want Stacey to know that he was cheating on her.

The carrier set up an investigation and took the defendant’s statement under oath. The defendant claimed that the vehicle was parked in front of Stacey’s apartment when it was stolen. Thereafter, he finally admitted that he had lied about the location of the vehicle when it was set on fire. Based upon his misrepresentation of the facts concerning the theft, the carrier denied the claim.

The Supreme Court reversed and reinstated the conviction. It found that a person violates the insurance fraud statute even if he does not succeed in duping the insurance company into paying a fraudulent claim. A false statement is one that has the capacity to influence the carrier in determining whether to cover the claim. Even though the falsehood is discovered during an investigation, but before payment of the claim is made, a defendant is not relieved of criminal responsibility.

In this case, the defendant falsely reported to the insurance company that his girlfriend’s vehicle was stolen. It was for the jury to decide whether the false statements made by the defendant concerning the theft had the capacity to influence the carrier to reimburse for the damage caused by the arson. Because the Supreme Court concluded that the trial court judge did charge the jury with the correct legal standard, it reinstated the defendant’s conviction.