Case Title: State v. Randi Fleischman

Citation: 

Docket Number: a-4-06

State: new-jersey

Court: New Jersey Supreme Court

Date: 2007-03-19T00:00:00Z

Document:
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). On December 4, 2003, after having made arrangement for a friend to dispose of her 2000 Chrysler Sebring, Fleischman contacted the Edison police to report that her car had been stolen. She told police that she arrived alone at the Menlo Park Mall at 5:30 p.m. on December 4, 2003, and subsequently discovered that her car had been stolen when she returned to the parking lot at 6:15 p.m. Fleischman also contacted her automobile insurer, Liberty Mutual Insurance Company, to report that her car had been stolen. In that conversation, Fleischman stated that she and a friend arrived at the mall at 9:00 a.m. on December 4th and discovered at 6:30 p.m. that the car had been stolen. On December 12, 2003, Fleischman filed with Liberty Mutual an Automobile Theft Affidavit, in which she swore that the automobile had been stolen from the Menlo Park Mall parking lot, that she did not know the thief s identity, and that she had no information about the car s whereabouts. Fleischman s affidavit also stated that she did not own any other automobile and that her car had not been for sale. Fleischman subsequently admitted that her car had not been stolen and withdrew her insurance claim. A grand jury indicted Fleischman, charging her with second-degree insurance fraud, N.J.S.A. 2C:21-4.6; third-degree attempted theft by deception, N.J.S.A. 2C:20-4; third-degree tampering with public records, N.J.S.A. 2C:28-7(a)(2); and fourth-degree false swearing, N.J.S.A. 2C:28-2(a). Five acts of insurance fraud specifically were alleged to support the second-degree insurance fraud charge: (1) Fleischman s oral report to Liberty Mutual that her car was stolen; (2) her false affidavit submitted to Liberty Mutual in support of her claim; (3) her statement to the Edison Police that she arrived alone at the mall at 5:30 p.m.; (4) her contradictory statement that she arrived at the mall with a friend at 9:00 a.m.; and (5) her statements to Liberty Mutual that she did not own any other vehicles and that her Sebring was not for sale. Fleischman moved to dismiss her indictment in its entirety and, alternatively, to dismiss the second-degree insurance fraud count (Count One). The motion court found that the State presented only three acts of insurance fraud: Fleischman s fraudulent report to Liberty Mutual; the false affidavit that she submitted to Liberty Mutual; and Fleischman s fraudulent police report. Accordingly, the court dismissed Count One, leaving intact the remaining charges. On leave to appeal granted to the State, the Appellate Division affirmed. State v. Fleischman, 383 N.J. Super. 396 (2006). This Court granted leave to appeal. HELD: When a defendant provides to officials in connection with a fraudulent claim a document or oral narrative that contains material facts relating to the claim, each such document or narration is a statement equating to an act of insurance fraud. The Court rejects the assertion that every discrete fact within a narrative about a single claim amounts to an act of insurance fraud. Pursuant to the New Jersey Code of Criminal Justice, one can be charged with the offense of insurance fraud for knowingly making a false or misleading statement of material fact in connection with an insurance claim. N.J.S.A. 2C:21-4.6. That third-degree offense may be elevated to the second degree by aggregating five acts of insurance fraud, the total value which exceeds $1,000. (pp. 1-2) In 1983, the Legislature passed the Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to -14. In 2003, the Legislature added the crime of insurance fraud to the Code of Criminal Justice. Pursuant to N.J.S.A. 2C:21-4.6(a), a person commits insurance fraud when one knowingly makes, or causes to be made, a false, fictitious, fraudulent, or misleading statement of material fact (Emphasis added). The State argues that statement should encompass each fraudulent factual declaration within a single oral or written assertion or submission made in connection with a fraudulent claim. Fleischman asserts that statement should be generally coextensive with a person s narration or report submitted in connection with the claim. (pp. 5-7) N.J.S.A. 2C:21-4.6(a) s reference to a statement is ambiguous. (pp. 7-11) Extrinsic materials, such as the Legislature s statement in N.J.S.A. 2C:21-4.4(a) to (c) and the Health Care Claims Fraud Act, are of little assistance in resolving whether discrete facts within a single narrative advanced in furtherance of a fraudulent insurance claim should be considered individual fraudulent acts. (pp. 11-15) IFPA, the predecessor to the instant criminal provision, addressed insurance fraud through the imposition of stiff civil penalties. Although civil in nature, IFPA punished the submission of a false or misleading statement through language essentially identical to that which now appears in the criminal statute. N.J.S.A. 17:33A-4. In Merin v. Maglaki, 126 N.J. 430 (1992), the Court construed that IFPA language where an individual submitted six documents in connection with a fraudulent attempt to receive life insurance benefits for his wife. The Court concluded that each document constituted a separate false statement in respect of the fraudulent claim. The Merin holding reinforces that the violations were based on each submission of a knowing and material false statement in its totality, which significantly enhanced the credibility or evidence of the fraudulent claim. (pp. 15-18) In light of the connection between the IFPA and the later crime of insurance fraud, defined in similar language, the Court concludes that the Legislature would have presumed that each document or narrative statement containing materially false facts would be held to be a separate act of insurance fraud. This effectuates the legislative intent to be tough on insurance fraud, but in a way that takes into consideration whether Fleischman reasonably should have been aware that three acts of insurance fraud would have been committed by knowingly making three reports of her loss that repeated and augmented the asserted authenticity of her fraudulent claim. Fleischman concedes that the three statements she made in connection with her alleged stolen car claim constituted three acts of insurance fraud. (pp. 18-19) The Court rejects the argument that more than five acts of insurance fraud were perpetrated by Fleischman when she made three statements in support of her fraudulent insurance claim. Each document or oral narrative is a statement equating to an act of insurance fraud, not every discrete fact within a narrative assertion about a single claim. The State presented three acts of insurance fraud to the grand jury: Fleischman s report to the police, Fleischman s oral report of the alleged theft to Liberty Mutual, and Fleischman s affidavit submitted to Liberty Mutual in support of her claim. (pp. 19-20) The judgment of the Appellate Division is AFFIRMED. JUSTICE LONG has filed a separate, DISSENTING opinion, in which JUSTICE ALBIN joins, concluding that the Legislature, in enacting N.J.S.A. 2C:21-4.4 to -4.7, did not intend to criminalize every false document submitted by a defendant in connection with a single insurance claim. CHIEF JUSTICE ZAZZALI and JUSTICES WALLACE and RIVERA-SOTO join in JUSTICE LaVECCHIA s opinion. JUSTICE LONG filed a separate dissenting opinion in which JUSTICE ALBIN joins. JUSTICE HOENS did not participate. Plaintiff-Appellant, v. RANDI FLEISCHMAN, Defendant-Respondent. Argued November 29, 2006 Decided March 19, 2007 On appeal from the Superior Court, Appellate Division, whose opinion is reported at 383 N.J. Super. 396 (2006). Greta A. Gooden Brown, Assistant Attorney General, argued the cause for appellant (Stuart Rabner, Attorney General of New Jersey, attorney; Ms. Brown and John F. Kennedy, Assistant Attorney General, of counsel and on the briefs). Gerald D. Miller argued the cause for respondent (Miller, Meyerson, Schwartz & Corbo, attorneys; Mr. Miller and Leonard Meyerson, on the briefs). JUSTICE LaVECCHIA delivered the opinion of the Court. Pursuant to the New Jersey Code of Criminal Justice (Code), one can be charged with the offense of insurance fraud for knowingly making a false or misleading statement of material fact in connection with an insurance claim. N.J.S.A. 2C:21-4.6. That third-degree offense may be elevated to the second degree by aggregating five acts of insurance fraud, the total value of which exceeds $1,000. The State indicted defendant Randi Fleischman for second-degree insurance fraud. The factual underpinnings for the charge were based on various items of false information contained in defendant s statements to the police and to her automobile insurer in connection with a stolen car claim. Defendant challenged the sufficiency of the evidence to support the indictment, claiming that her three statements (made when reporting to the police that her car had been stolen and when submitting an oral and then written insurance claim) constituted only three acts of insurance fraud. This appeal provides the Court with its first opportunity to construe N.J.S.A. 2C:21-4.6 s penalizing of a false statement as an act of insurance fraud that can be accumulated to elevate insurance fraud to a second-degree offense. The offense is elevated from the third to the second degree when a person commits five or more acts of insurance fraud and the aggregate value of property, services or other benefits obtained or sought exceeds $1,000. N.J.S.A. 2C:21-4.6(b). The statute further provides: Each act of insurance fraud shall constitute an additional, separate and distinct offense, except that five or more separate acts may be aggregated for the purpose of establishing liability pursuant to this subsection. Multiple acts of insurance fraud which are contained in a single record, bill, claim, application, payment, affidavit, certification or other document shall each constitute an additional, separate and distinct offense for purposes of this subsection. [Ibid. (emphasis added).] Thus, the breadth of the phrase act of insurance fraud for grading purposes depends, in part, on the breadth of the term statement, in subsection a. of the Act. We now must determine how the Legislature intended the term statement to be applied. The State argues that statement should encompass each fraudulent factual declaration within a single oral or written assertion or submission made in connection with a fraudulent claim. In contrast to that narrow reading of what should constitute a fraudulent act, defendant takes the position that statement should be generally coextensive with a person s narration or report submitted in connection with a claim. The problem of insurance fraud must be confronted aggressively by facilitating the detection, investigation and prosecution of such misconduct, as well as by reducing its occurrence and achieving deterrence through the implementation of measures that more precisely target specific conduct constituting insurance fraud. To enable more efficient prosecution of criminally culpable persons who knowingly commit or assist or conspire with others in committing fraud against insurance companies, it is necessary to establish a crime of insurance fraud to directly and comprehensively criminalize this type of harmful conduct, with substantial criminal penalties to punish wrongdoers and to appropriately deter others from such illicit activity. [N.J.S.A. 2C:21-4.4(a) to (c).] The State also points to the Health Care Claims Fraud Act (HCCFA), which expresses a similar legislative intention to curb aggressively health care insurance fraud. In the HCCFA, the Legislature created the offense of health care claims fraud, which is making, or causing to be made, a false, fictitious, fraudulent, or misleading statement of material fact in . . . any record, bill, claim or other document. N.J.S.A. 2C:21-4.2. When the Legislature criminalized insurance fraud, it simultaneously amended the HCCFA using language similar to the Act. It made each act of health care claims fraud a separate and distinct offense and stated that [m]ultiple acts of health care claims fraud which are contained in a single record, bill, claim, application, payment, affidavit, certification or other document shall each constitute an additional, separate and distinct offense. N.J.S.A. 2C:21-4.3(e). According to the State, were this Court to equate a statement with a narrative, we would make it more difficult to prosecute both automobile and health insurance fraud -- a result that would be at odds with the Legislature s initiatives. The State s arguments do not address the fact that the Legislature created two distinct offenses: third-degree insurance fraud and second-degree insurance fraud. N.J.S.A. 2C:21-4.6(b). Were statement to be interpreted as the State suggests, it would be difficult to envision a setting in which a violator could be charged with third-degree insurance fraud and not the second-degree offense. Even one sentence uttered in connection with a falsely submitted insurance claim, such as in the hypothetical example noted earlier, would permit the State to charge an individual with five acts of insurance fraud. Although it is evident that the Legislature intended to curb insurance fraud, we cannot ignore that the Legislature created two separate offenses of different degrees. It would be inappropriate to interpret the Act in a manner that leads to the absurd result of practically eliminating the third-degree offense. See Lewis, supra, 185 N.J. at 369 ( [A] court should strive to avoid statutory interpretations that lead to absurd or unreasonable results. ). In sum, we find that those extrinsic materials are of little assistance in resolving whether discrete facts within a single narrative advanced in furtherance of a fraudulent insurance claim should be considered individual fraudulent acts. The legislative findings and declarations simply do not compel the interpretation that the State urges us to accept. Therefore, we turn to the established principle of statutory interpretation that the Legislature is presumed to act with knowledge of the judicial construction given to predecessor or related enactments. See Brewer v. Porch, 53 N.J. 167, 174 (1969). IFPA, the predecessor to the instant criminal provision, addressed insurance fraud through the imposition of stiff civil penalties. Although civil in nature, IFPA punished the submission of a false or misleading statement through language essentially identical to that which now appears in the criminal statute. N.J.S.A. 17:33A-4. In Merin v. Maglaki, 126 N.J. 430 (1992), we construed that IFPA language. We considered whether an individual who had submitted six documents in connection with a fraudulent attempt to receive life insurance benefits for his wife could be held liable for each false statement submitted. Id. at 432. We concluded that each document constituted a separate false statement in respect of the fraudulent claim. Ibid. Holding that the IFPA created a violation for false statements, not false claims, id. at 435, we found that the defendant had submitted six false statements that were material to his fraudulent claim. Id. at 440. As was noted by the Court in Merin, [t]he Commissioner [of Insurance] correctly asserts that each knowing and material false statement enhances a fraudulent claim, making the danger of payment more likely. Insurers often require a claimant to file several documents as supporting proof of a claim for benefits. Claimants frequently must present a proof of loss in the form of a detailed factual statement or statements to justify claims for benefits. Each additional statement further supports the credibility of the claim. Therefore, a claimant who makes a fraudulent claim in an initial documentation may well have subsequent opportunities to rectify previous misrepresentations when the insurer calls for further proof of loss. . . . [T]he person who persists in asserting a fraudulent claim by continuing to submit material misrepresentations compounds the evil that the legislature seeks to eliminate with the [IFPA]. Construction of the [IFPA] to penalize claims rather than component statements would produce the inequitable result of placing the State in the same position with respect to [the defendant] as it would be in with respect to a claimant who makes an initial false statement and then recants. Such a result fails to effectuate the legislature s intent that persons who file several false statements should be punished for each instance of prohibited conduct. [Id. at 437.] The holding in Merin acknowledged that the legislative intent to curtail insurance fraud would be effectuated by penalizing each false statement submitted to support a fraudulent claim, provided that the false statement is material and significantly enhances the credibility of or evidentiary support for the claim. Id. at 439. We added that it would be unreasonable to increase the penalty for each instance that the same misrepresentation appears in a single document or for false assertions that substantively repeat information contained in other misrepresentations in the same document. We are confident, however, that the Commissioner does not seek to stretch the limits of the [IFPA] that far. [Ibid. (emphasis added).] Applying the standard it articulated, the Merin Court noted that defendant had submitted six falsified documents: a claim form, an authorization to release information relating to his wife, a traffic-accident investigation report that purported to be a document prepared by the Manila Police Department, a certificate of death, a certificate of post-mortem examination, and a receipt for a burial permit. Id. at 433. All six contained false and misleading facts concerning the alleged death of defendant s wife and expenses associated with her funeral and burial. Ibid. The Court concluded that each document was material to the claim, and to have enhanced the credibility of the claim, and to have exacerbated [the insurer s] exposure to potential liability. Id. at 440. There is no suggestion in the Court s analysis that it was basing its finding of six acts of fraud on discrete parsing of individual facts within the narrative contained in each document. Rather, the Merin holding reinforces that the violations were based on each submission of a knowing and material false statement in its totality, which significantly enhanced the credibility or evidence of the fraudulent claim. We take the same approach to the Legislature s strikingly similar language concerning fraudulent statements of material fact that are now criminalized. The prior interpretation of the parallel language informs our perception of the Legislature s intention when it employed the same language and enhanced the scope of remedies available to combat insurance fraud. In light of the connection between the IFPA and the later crime of insurance fraud, defined in similar language, we conclude that the Legislature would have presumed, consistent with our Merin holding, that each document or narrative statement containing materially false facts would be held to be a separate act of insurance fraud. With that construction we effectuate the legislative intent to be tough on insurance fraud, but do so in a way that takes into consideration whether defendant reasonably should have been aware that three acts of insurance fraud would have been committed by knowingly making three reports of her loss that repeated (albeit not in synchronicity) and augmented the asserted authenticity of her fraudulent claim. As noted, defendant concedes that the three statements she made in connection with her alleged stolen car claim constituted three acts of insurance fraud. See supra at ____ (slip op. at 9, n.3). See footnote 4 To summarize, we reject the argument that more than five acts of insurance fraud were perpetrated by defendant when she made three statements in support of her fraudulent insurance claim. We hold that when a defendant provides to officials in connection with a fraudulent claim a document or oral narrative that contains a material fact or facts relating to the claim, each such document or narration is a statement equating to an act of insurance fraud. Although we recognize that there can be multiple statements in a single document or narration, for example when a document s or narration s contents relate to a separate claim of loss (the fur coat example), we reject the assertion that the Legislature intended every discrete fact within a narrative assertion about a single claim would amount to an act of insurance fraud. Because defendant s oral and written statements related to a single claim of a stolen automobile, we conclude that the State presented three acts of insurance fraud to the grand jury: defendant s report to the police, defendant s oral report of the alleged theft to Liberty Mutual, and defendant s affidavit submitted to Liberty Mutual in support of her claim. Plaintiff-Appellant, v. RANDI FLEISCHMAN, Defendant-Respondent. ____________________________ JUSTICE LONG, dissenting. Because I do not believe that, in enacting N.J.S.A. 2C:21-4.4 to -4.7, the Legislature intended to criminalize every false document submitted by a defendant in connection with a single insurance claim, I respectfully dissent. N.J.S.A. 2C:21-4.6(a) provides, in relevant part, that a person is guilty of the crime of insurance fraud if: the person knowingly makes, or causes to be made, a false, fictitious, fraudulent, or misleading statement of material fact in . . . any record, bill, claim or other document, in writing, electronically, orally or in any other form, that a person attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted as part of, in support of or opposition to or in connection with: (1) a claim for payment, reimbursement or other benefit pursuant to an insurance policy . . . . At issue is whether each false claim, each false document, or each false statement, submitted by an insurance claimant, constitutes the act of insurance fraud proscribed by that statute. Like the majority, I agree that the statutory definition, standing alone, is ambiguous and requires interpretation. I part company from my colleagues in connection with their concomitant conclusions that: (1) the legislative intent cannot be gleaned from the statute as a whole; and (2) that extrinsic evidence is of little assistance in resolving the issue before us. I also disagree with the notion that our decision in Merin v. Maglaki, 126 N.J. 430 (1992), sheds light on the subject. My difficulty with the majority opinion begins with its failure to account for all aspects of N.J.S.A. 2C:21-4.6. In particular, that statute includes an aggregation provision that, to me, is the critical context clue in this case: b. Insurance fraud constitutes a crime of the second degree if the person knowingly commits five or more acts of insurance fraud, including acts of health care claims fraud pursuant to section 2 of P.L. 1997, c. 353 and if the aggregate value of property, services or other benefit wrongfully obtained or sought to be obtained is at least $1,000. Otherwise, insurance fraud is a crime of the third degree. Each act of insurance fraud shall constitute an additional, separate and distinct offense, except that five or more separate acts may be aggregated for the purpose of establishing liability pursuant to this subsection. Multiple acts of insurance fraud which are contained in a single record, bill, claim, application, payment, affidavit, certification or other document shall each constitute an additional, separate and distinct offense for purposes of this subsection. [N.J.S.A. 2C:21-4.6 (emphasis added) (internal citation omitted).] In common parlance, to aggregate is to add together or total up. The very use of the term aggregate value clearly indicates that the Legislature contemplated that each criminal act of insurance fraud has a monetary value, otherwise there would be nothing to aggregate for the purposes of establishing liability by meeting the $1,000 threshold. If that is so, only a fraudulent claim can be actionable, not each document or lie submitted in support of such a claim. The final section of N.J.S.A. 2C:21-4.6 blends seamlessly with that view. It assures that there will be no free claims - rather multiple false claims contained in a single document, for example, the hypothetical provided by the majority opinion regarding a fur coat in the trunk of a stolen car, each with a monetary value, will constitute distinct offenses. It may be that Merin properly interpreted the statute before it - the New Jersey Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to -14. However, I note that the IFPA was civil in nature, thus implicating a different interpretative rationale. More importantly, it is quite distinct from N.J.S.A. 2C:21-4.6 insofar as it does not include an aggregation provision. Those differences between the IFPA and N.J.S.A. 2C:21-4.6 are critical and substantive and render Merin of little value here. On the contrary, the Health Care Claims Fraud Act, N.J.S.A. 2C:21-4.2 to -4.3, passed in 1997, five years after Merin, is instructive. In defining the prohibited acts, that statute uses identical language to that before us: As used in this act: Health care claims fraud means making, or causing to be made, a false, fictitious, fraudulent, or misleading statement of material fact in, or omitting a material fact from, or causing a material fact to be omitted from, any record, bill, claim or other document, in writing, electronically or in any other form, that a person attempts to submit, submits, causes to be submitted, or attempts to cause to be submitted for payment or reimbursement for health care services. [N.J.S.A. 21:4-2.] The Health Care Claims Fraud Act also has an aggregation provision similar the one before us: c. A person, who is not a practitioner subject to the provisions of subsection a. or b. of this section, is guilty of a crime of the second degree if that person knowingly commits five or more acts of health care claims fraud and the aggregate pecuniary benefit obtained or sought to be obtained is at least $1,000. In addition to all other criminal penalties allowed by law, a person convicted under this subsection may be subject to a fine of up to five times the pecuniary benefit obtained or sought to be obtained. . . . e. Each act of health care claims fraud shall constitute an additional, separate and distinct offense, except that five or more separate acts may be aggregated for the purpose of establishing liability pursuant to subsection c. of this section. Multiple acts of health care claims fraud which are contained in a single record, bill, claim, application, payment, affidavit, certification or other document shall each constitute an additional, separate and distinct offense for purposes of this section. See footnote 5 [N.J.S.A. 2C:21-4.3.] The one difference between the statutes is that the Health Care Claims Fraud Act has a legislative history that is neither sparse nor equivocal. Upon its enactment, that statute was accompanied by a full statement of the Senate Health Committee: Under this bill, it would be a crime of the second degree when a practitioner knowingly submits, or attempts to submit, one fraudulent claim or when a person who is not a practitioner submits, or attempts to submit, five or more fraudulent claims with an aggregate amount of at least $1,000. It would be a crime of the third degree when a person who is not a practitioner knowingly submits, or attempts to submit, one fraudulent claim. The bill also creates lesser offenses applicable to reckless, rather than knowing, fraudulent conduct. [S. Health Comm., Statement to S. No. 2270, at 1 (1997), cited in, N.J.S.A. 2C;21-4.2 cmt. (2005).] Thus, in describing the import of a statute nearly identical to the one before us, the Legislature has declared that it criminalizes a fraudulent claim and not the individual documents or lies undergirding it. In that respect, it is well-settled that when the Legislature uses the same term in cognate statutes (and there is no question but that the Health Care Fraud Claims Act and N.J.S.A. 2C:21-6 are of a piece), the term should be given the same meaning in both. G.S. v. Dept. of Human Servs., Div. of Youth & Family Servs., 157 N.J. 161, 172 (1999); State v. Federanko, 26 N.J. 119, 129 (1958); State v. Brown, 22 N.J. 405, 415 (1956). There is simply nothing in the statutes to suggest that the Legislature intended the identical definitions in N.J.S.A. 2C:21-4.6 and the Health Care Claims Fraud Act to mean different things. Because the Legislature has spoken regarding the meaning of the language in the Health Care Claims Fraud Act and declared the proscribed conduct to be the fraudulent claim and nothing less, that is the meaning to be ascribed to the statute in this case. Finally, even if I were to agree that the majority view is a plausible one, the rule of lenity would require that this penal statute be strictly construed in favor of defendants, thus compelling the interpretation I here advance. State v. Alexander, 136 N.J. 536 (1994); State v. Sutton, 132 N.J. 471 (1993). For those reasons, I would reverse the decision of the Appellate Division. Justice Albin joins in this opinion. SUPREME COURT OF NEW JERSEY NO. A-4 SEPTEMBER TERM 2006 ON APPEAL FROM Appellate Division, Superior Court STATE OF NEW JERSEY, Plaintiff-Appellant, v. RANDI FLEISCHMAN, Defendant-Respondent. DECIDED March 19, 2007 Chief Justice Zazzali PRESIDING OPINION BY Justice LaVecchia CONCURRING OPINION BY DISSENTING OPINION BY Justice Long