Small Fraud is Much a Crime as a Large Fraud

Insurance Fraud Conviction Affirmed Dispensing with Evidentiary Arguments

Insurance fraud convictions are rare. When a person is arrested, tried, convicted and sentenced for the crime of insurance fraud the perpetrator is – rightfully – surprised and immediately appeals the judgment even when there is no legal ground for the appeal. In Commonwealth of Pennsylvania v. Alvianette A. Kennedy, J-S42030-19, No. 3612 EDA 2018, Superior Court of Pennsylvania (October 15, 2019) Alvianette A. Kennedy was in just such a situation and appealed from the judgment of sentence imposed following her conviction of insurance fraud and securing execution of documents by deception.

FACTS

Kennedy was involved in a work-related car accident. Two months later Kennedy saw Anthony Salem, M.D., of Suburban Orthopedic Specialists. During the visit, Dr. Salem dictated notes regarding the appointment, which were later transcribed and placed in Kennedy’s patient file. The notes from the visit stated that Dr. Salem gave Kennedy a script which excused her from work due to her accident-related injuries.

Later, Kennedy made a claim to her insurance carrier, Esurance, for lost wages. In support of her claim, she faxed a packet of documents to Esurance. Included in the claim documents was a copy of the script from Dr. Salem. However, the script faxed to Esurance had been altered to include additional dates that Kennedy was purportedly excused from work. Based on the documentation submitted by Kennedy, Esurance issued her a check in the amount of $5,336.14 for lost wages.

After a dispute emerged between Esurance and Kennedy, Esurance conducted an internal investigation. Ultimately, the alteration of the script was discovered, and Kennedy was charged with insurance fraud. Following the trial, a jury found Kennedy guilty on both charges. The trial court imposed an aggregate sentence of five years of probation, and ordered Kennedy to pay restitution to Esurance in the amount of $5,336.14. Kennedy then filed an untimely post-sentence motion. On December 13, 2018, before the trial court ruled on the motion, Kennedy filed a notice of appeal.

ANALYSIS

The Commonwealth need not establish guilt to a mathematical certainty. The facts and circumstances established by the Commonwealth need not be absolutely incompatible with the defendant’s innocence. Any doubt about the defendant’s guilt is to be resolved by the fact finder unless the evidence is so weak and inconclusive that, as a matter of law, no probability of fact can be drawn from the combined circumstances.
The finder of fact is free to believe all, part, or none of the evidence presented, and determines the credibility of the witnesses.

A person commits the offense of insurance fraud by: “Knowingly and with the intent to defraud any insurer . . . presents or causes to be presented to any insurer . . . any statement forming a part of, or in support of, a claim that contains any false, incomplete or misleading information concerning any fact or thing material to the claim.” [18 Pa.C.S.A. § 4117(a)(2).]

A person acts “knowingly” when she is aware that it is practically certain that her conduct will cause such a result. Likewise, a person acts “intentionally” when it is her conscious object to engage in conduct of that nature or to cause such a result. Although the insurance fraud statute does not provide guidance on the meaning of the word “material,” the statute does not require an insured to cause actual injury to the insurer. There is no requirement that transference of insurer’s property must take place before crime occurs; rather, mere submission of any false statement done knowingly and with intent to defraud is sufficient to violate the statute.

A person commits the offense of securing execution of documents by deception if by deception he causes another to execute any instrument affecting or purporting to affect or likely to affect the pecuniary interest of any person.

Kennedy contends that the evidence was insufficient to prove that she sent Esurance an altered document with the intent to defraud, which was a requisite finding to both criminal charges. According to Kennedy, although the prosecution alleged that she submitted an altered doctor’s script which added dates excusing her from work, the Commonwealth did not establish that she altered the script, or sent the script to Esurance, or that the script induced Esurance to pay the claim. Kennedy acknowledges that the altered script was in Esurance’s possession, but points to her own testimony that she sent an unaltered script to Esurance. She also points out that no handwriting experts were introduced, and that neither her copy of the fax sent to Esurance, nor the Commonwealth’s copy contained a confirmation sheet listing the pages sent or received, or a date stamp documenting the transaction.

Although a conviction of insurance fraud requires an intent to defraud, and a conviction for documents by deception requires an intent to deceive, rare is the occasion when a party lays bare his or her subjective intent. Accordingly, the requisite intent to commit insurance fraud and documents by deception may be inferred from the surrounding circumstances. The evidence introduced at trial, when viewed in the light most favorable to the Commonwealth, established that Dr. Salem issued Kennedy a script excusing her from work for two days, as indicated by his office notes and the carbon copy of the original script that his office retained. The evidence also established that Kennedy faxed documents to Esurance in support of her wage loss claim, which included an altered version of the script to which several weeks of excused work days had been added.
Based on this evidence, the jury could properly infer that Kennedy, in an attempt to obtain insurance benefits that she was not entitled to receive, intentionally provided an altered script to Esurance seeking wage loss payments for days that she was not deemed unable to work, in an attempt to defraud and deceive it. The admission of evidence is solely within the discretion of the trial court, and a trial court’s evidentiary rulings will be reversed on appeal only upon an abuse of that discretion.

Kennedy contended that the altered script was improperly introduced as a business record through the testimony of James Cohn, one of Esurance’s Senior Special Investigators who was brought in to investigate her claim. Kennedy misapprehends the nature of the Uniform Business Records as Evidence Act. It is not essential to produce either the person who made the entries or the custodian of the record at the time the entries were made. Moreover, the law does not require that a witness qualifying business records even have a personal knowledge of the facts reported in the business record. As long as the authenticating witness can provide sufficient information relating to the preparation and maintenance of the records to justify a presumption of trustworthiness for the business records of a company, a sufficient basis is provided to offset the hearsay character of the evidence.

The court could discern no abuse of discretion in the trial court’s evidentiary ruling and the judgment of sentence was affirmed.

ZALMA OPINION

The Pennsylvania court refused to accept the defendant’s arguments because the evidence clearly established that the insurer was deceived by the presentation of a falsified doctor’s report. The fact that less than $6,000 was involved, the crime of insurance fraud was attempted and accomplished. Recognizing that no defendant will – responding to the fictional Perry Mason – confess to intent to deceive. The evidence was found to be sufficient to allow the jury to conclude that Kennedy intentionally acted to deceive the insurer, took money she knew she was not entitled to receive, and was appropriately convicted of the crimes with which she was charged.


© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

 

 

About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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