Opinion ID: 526781
Heading Depth: 3
Heading Rank: 2

Heading: Representations Made to Plaintiffs

Text: 29 Plaintiffs have asserted that, in addition to relying on polygraph tests, Coronet represented to claimants in violation of the law and the insurance contract that they must take the polygraph tests. Plaintiffs stated that Elston representatives told them that polygraph tests were required to receive payment. 30 The Illinois Department of Insurance has issued Regulation 919.60(d) that states: 31 No company shall require any insured to submit to a polygraph or other similar type of examination as a condition precedent to payment of a claim. The use of examinations under oath, sworn statements or similar procedures authorized under the terms of the applicable insurance contracts shall not be restricted. 32 Illinois courts have held that polygraph test results are inadmissible as substantive evidence in court, Marsh, 166 Ill.App.3d at 73-74, 116 Ill.Dec. at 614-15, 519 N.E.2d at 506-07, but are admissible to show an insurance company acted in good faith in denying an insured's claim, Moskos, 60 Ill.App.3d at 134, 17 Ill.Dec. at 392, 376 N.E.2d at 391. Under Illinois law then, Coronet may request a claimant to take a polygraph test but may not require a claimant to take the test as a condition for payment of the claim. Coronet may also use the polygraph test to show its good faith in denying a claim but may not present the polygraph test results as evidence that claimant presented a fraudulent claim. 33 It appears from the allegations that Coronet may have violated Illinois law, but not that Coronet and Elston committed fraud. As the district court carefully explained, 34 While it would be a violation of Regulation 919.60(d) to impose such a requirement [that plaintiffs take a polygraph test], [plaintiffs] did not testify that they were told Illinois law or the insurance policy required the polygraph examination. Therefore, their deposition testimony only supports a contract or insurance law claim, not a claim for fraud. Defendants were not being deceptive; under Coronent's (sic) practices--at least those practices shown by plaintiffs' evidence--the claims would indeed be denied if the request for a polygraph examination was refused. 35 Record at 77. If Coronet told plaintiffs that they must take a polygraph test in order to receive payment, Coronet violated state law. A violation of state law, however, does not necessarily indicate that the actions were also fraudulent. Cf. North Barrington Dev., Inc. v. Fanslow, 547 F.Supp. 207, 210 (N.D.Ill.1980) (the purpose of RICO is not to transform state law violations into federal violations, but to prevent interference with free competition). Coronet did not misstate its policy or represent that its policy was in conformity with Regulation 919.60(d). It did not attempt to conceal its reliance on polygraph tests. Cf. McNeive, 536 F.2d at 1252 (court found that mail fraud was not evident because defendant did not misrepresent the existence or the nature of the gratuity practice). Even when coupled with Coronet's practice of denying insurance claims based on test results, these representations do not rise to the level of a RICO violation. 36 Likewise, the letters that Coronet sent to claimants do not fraudulently compel the insured to take the polygraph tests. The insurance contract that covered plaintiffs' claims states that the insured shall cooperate with the company. The second letter, the more emphatic of the two letters, notified claimants that if they refused to take the polygraph test, they would be obligated to make a sworn statement regarding the loss. This letter alone did not mandate that claimants take the test. It requested, albeit in words intended to persuade claimants to take the test, that plaintiffs cooperate by taking the polygraph test. It provided an alternative, however, to those who refused to take the test. The letters did not misrepresent the law or the terms of the insurance contract, which allowed Coronet to elicit plaintiffs' cooperation and obtain a sworn statement of loss from a claimant. Because the letters did not compel claimants to take the polygraph tests or misrepresent the terms of the contract or Illinois law, they cannot support a RICO claim.