Opinion ID: 526781
Heading Depth: 3
Heading Rank: 1

Heading: Fraudulent Use of Polygraph Testing

Text: 23 Plaintiffs first claim that Coronet and Elston represented to plaintiffs that their claims would be paid when, in fact, Coronet intended to deny a predetermined percentage of the claims through the use of a devise it knew to be inherently unreliable--the polygraph test--and pressured claimants to take polygraph tests in order to guarantee a certain number of failed claims. Coronet and Elston protest that plaintiffs never developed this theory at the district court level. The district court also noted that plaintiffs' argument was vague but stated, it would seem that there could be no deception absent there being more to the scheme than merely unjustified reliance on polygraph results. We acknowledge that plaintiffs' claim has metamorphosed through the course of this lawsuit but, because plaintiffs are the nonmovants, we will construe their argument as favorably as possible. 24 Plaintiffs present the following facts: Some studies indicate that polygraph tests are inherently unreliable. Coronet used polygraph testing as a matter of routine, even though its polygraph examiner was aware of the studies that criticized polygraph testing. Elston representatives told plaintiffs that they must or should take the polygraph test to receive payment on their claims. Half of the claimants appeared to take the test even though they were not legally or contractually obligated to take it. Coronet denied the claims of approximately half the people who took the test based solely on the test results. One insurance adjuster testified that Coronet paid only 25-40% of the claims of those who refused to take the test. 25 Plaintiffs have not established that Coronet and Elston engaged in fraud. Although ordinarily proof of fraud requires a showing of a false statement of material fact, coverage under the mail and wire fraud statutes is read broadly and extends beyond the limits of common law fraud. United States v. McNeive, 536 F.2d 1245, 1247 (8th Cir.1976). Cf. United States v. Anderson, 809 F.2d 1281, 1284 (7th Cir.1987) (defendant who engaged in bribery activities convicted under mail fraud statute). As the Supreme Court noted in Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 488, 105 S.Ct. 3275, 3280-81, 87 L.Ed.2d 346 (1985), however, a civil RICO action may be brought against defendants who are indictable for one of the various federal crimes listed under the RICO statutes. Plaintiffs' proof of fraud, unchallenged, could not lead to an indictment of Coronet or Elston. Cf. McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 2881, 97 L.Ed.2d 292 (1987) (There are no constructive offenses; and before one can be punished, it must be shown that his case is plainly within the statute.). 26 Plaintiffs' case against Coronet and Elston is riddled with significant loopholes. Plaintiffs have not established that Coronet intended to defraud plaintiffs of their claims. See United States v. Mascio, 774 F.2d 219, 221 (7th Cir.1985) (Intent is a critical element of the mail fraud offense.). They present no proof that Coronet officials were aware of the studies that criticized polygraph testing. Although plaintiffs repeatedly emphasize that polygraph tests are inherently unreliable, the record shows that courts, the State of Illinois, and persons interested in polygraphy disagree on the issue. See Marsh v. Lake Forest Hospital, 166 Ill.App.3d 70, 73-74, 116 Ill.Dec. 612, 614-15, 519 N.E.2d 504, 506-07, appeal denied, 121 Ill.2d 571, 122 Ill.Dec. 439, 526 N.E.2d 832 (1988) (these cases [discussing polygraph tests] represent a recognition by the supreme court that polygraph results may be useful for some purposes other than as evidence at trial); Moskos v. National Ben Franklin Ins. Co., 60 Ill.App.3d 130, 134, 17 Ill.Dec. 389, 393, 376 N.E.2d 388, 392 (1978) (polygraph test results held admissible as evidence of good faith); Ill.Rev.Stat. ch. 111, paragraphs 2401-2432 (Smith-Hurd 1985) (Illinois licensing procedures for polygraph examiners). Coronet may innocently believe that polygraph tests are reliable. Plaintiffs have not demonstrated that Coronet officials knew polygraph testing was unreliable or presented any basis for a jury to conclude that Coronet purposely used what they knew to be an inherently unreliable device to avoid claims. 27 Plaintiffs have not established that Elston fraudulently administered the polygraph tests or falsely reported test results. Plaintiffs have not alleged that the polygraph examiner intentionally falsified his reports, nor have they provided this court with any statements regarding the truthfulness of answers that they gave on the polygraph examinations. 28 Furthermore plaintiffs want us to accept that Coronet's practices are so extreme that they can only be explained as fraudulent. We have no way of gauging, however, whether the number of claims that Coronet rejected is disproportionate with those denied by other insurance companies. Plaintiffs have not indicated that Coronet's profitability increased when it began to use polygraph tests or provided statistics regarding other insurance companies who deal with this type of insurance. Both parties at oral argument agreed that Coronet insures persons considered high risk because they have unfavorable histories or live in high risk areas of the community. In order to determine whether Coronet and Elston committed fraud, we need clear evidence that Coronet and Elston engaged in practices that were deliberately fraudulent. Although plaintiffs' counsel has characterized the results of the polygraph exams as shocking, plaintiffs must do more than assert their disbelief to withstand summary judgment. 3