SYLLABUS
(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).
Argued November 29, 2006 -- Decided March 19, 2007
LAVECCHIA, J., writing for the majority of the Court.
In this appeal, the Court must determine how to construe the term “statement” in subsection a. of N.J.S.A. 2C:21-4.6 to ascertain whether defendant Randi Fleischman engaged in a sufficient number of acts of insurance fraud to elevate the charged crime from third-degree to second-degree.
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.
SUPREME COURT OF NEW JERSEY
A-
4 September Term 2006
STATE OF NEW JERSEY,
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 State presented the following facts to the grand jury. On December 4, 2003, after having made arrangements for a friend to dispose of her 2000 Chrysler Sebring, defendant contacted the Edison Police to report that her car had been stolen. See footnote 1 She told the 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.
Defendant also telephoned her automobile insurer, Liberty Mutual Insurance Company (Liberty Mutual), 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 4 and discovered at 6:30 p.m. that the car had been stolen. In response to questioning about the claim, she told her insurer that she still possessed the automobile’s keys and that she had not been trying to sell her car.
On December 12, 2003, defendant 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. See footnote 2 A Middlesex County Grand Jury indicted defendant, 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) defendant’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. on December 4; (4) her contradictory statement that she arrived at the mall with a friend at 9:00 a.m. on December 4; and (5) her statements to Liberty Mutual that she did not own any other vehicles and that her Sebring was not for sale.
Defendant 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: defendant’s fraudulent report to Liberty Mutual; the false affidavit that she submitted to Liberty Mutual; and defendant’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 Count One’s dismissal, holding that “[e]ach lie told in support of one fraudulent claim in a single document cannot reasonably be seen as a separate act of insurance fraud, but rather only as a component of the one fraudulent claim.” State v. Fleischman, 383 N.J. Super. 396, 405 (2006). We granted leave to appeal. 187 N.J. 74 (2006).
In 1983, the Legislature passed the Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to -14, codifying the State’s intent “to confront aggressively the problem of insurance fraud.” N.J.S.A. 17:33A-2. The IFPA imposed stiff civil monetary penalties against perpetrators of insurance fraud. See N.J.S.A. 17:33A-5. In 2003, the Legislature added the crime of insurance fraud to the Code as part of “a comprehensive set of solutions to the automobile insurance availability and affordability challenges facing insurers, consumers and regulators in New Jersey.” Assembly Banking and Insurance Committee, Statement to Senate Subcommittee for Substitute for Senate Bill No. 63, at 1 (May 5, 2003).
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 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 . . . .
[(Emphasis added).]
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.
In this exercise in statutory construction, our function is to effectuate legislative intent. To accomplish that purpose we look first to the words used by the Legislature in its enactment because, if the language is clear, a court’s role is to apply the statute consistent with the plain meaning of the legislative choice of expression. State v. Lewis, 185 N.J. 363, 369 (2005). We give to “statutory words their ordinary meaning and significance.” DiProspero v. Penn, 183 N.J. 477, 492 (2005) (citing Lane v. Holderman, 23 N.J. 304, 313 (1957)). In other words, we do not “rewrite a plainly-written enactment of the Legislature [or] presume that the Legislature intended something other than that expressed by way of the plain language.” O’Connell v. State, 171 N.J. 484, 488 (2002). Rather, courts are to apply a statute as it has been enacted. See In re Closing of Jamesburg High Sch., 83 N.J. 540, 548 (1980). However, when the statutory language is ambiguous and a fair reading of the words permits more than one reasonable interpretation, then we may turn to extrinsic interpretative aids, including legislative history and established canons of construction, for assistance in discerning the Legislature’s intent. See DiProspero, supra, 183 N.J. at 494; Lozano v. Frank DeLuca Constr., 178 N.J. 513, 522 (2004).
In respect of the question before us, the State asserts that the Legislature clearly made the unit of prosecution a fraudulent “statement” and not the fraudulent “claim” by declaring that “[m]ultiple acts of insurance fraud which are contained in a single record . . . shall each constitute an additional, separate and distinct offense for purposes of this subsection.” N.J.S.A. 2C:21-4.6(b). Because each “statement of material fact” would constitute an “act” and multiple acts in a single document may be separate offenses, the State asserts that the Legislature intended prosecutors to dissect documents for “statements” of fraud. Before this Court, the State took the position that it presented to the grand jury evidence of nine specific fraudulent “statements,” constituting nine acts of insurance fraud by defendant: (1) the report to the Edison police that she arrived at the mall at 5:30 p.m.; (2) the report to the police that she had discovered the theft when she returned to the parking lot at 6:15 p.m.; (3) the presentation of one set of keys to the police and representation that she had no others; (4) the oral report to Liberty Mutual that her car had been stolen from the mall on December 4; (5) the oral report to Liberty Mutual that she arrived at the mall at 9:00 a.m.; (6) the oral report to Liberty Mutual that all sets of keys were in her possession; (7) the oral report to Liberty Mutual that her car was not for sale; (8) the affidavit stating that the car had been stolen from the mall on December 4; and (9) the affidavit claiming that she did not know the identify of the thief or the whereabouts of the car. Defendant concedes that multiple documents or statements submitted in support of a fraudulent claim may be separate fraudulent “acts” and, further, that multiple acts of fraud may be contained in a single document. See footnote 3 However, she says that the State’s interpretation of “statement” fractionalizes single events or conversations, permitting criminal events to turn on a conversation’s recordation or the speaker’s syntax.
The parties’ arguments highlight the inherent ambiguity in the Act’s inclusion of a “false, fictitious, fraudulent, or misleading statement of material fact” as constituting an “act” of insurance fraud. That the term “statement” does not have a universal meaning permits the parties to advance their competing interpretations. Dictionaries define “statement” both as “a report or narrative” and as “a single declaration or remark.” Webster’s Third New International Dictionary 2229 (16th ed. 1971); see also Funk & Wagnalls New Comprehensive International Dictionary 1225 (8th ed. 1978) (defining “statement” as “a summary of facts; narration; the act of stating”); Webster’s Ninth New Collegiate Dictionary 1151 (1991) (defining “statement” as “a report of facts or opinions” and as “a single declaration or remark”).
In the criminal context, a “statement” has a variety of meanings. In criminal procedure, “statement” is commonly understood to refer to a narrative and not a single declaration, such as, for example, a criminal suspect’s statement to police. See, e.g., State v. Cook, 179 N.J. 533 (2004); State v. P.Z., 152 N.J. 86 (1997); see also Black’s Law Dictionary 1416 (7th ed. 1999) (defining “statement” in criminal procedure as “[a]n account of a person’s . . . knowledge of a crime”). In the context of perjury, which is a “false statement under oath,” N.J.S.A. 2C:28-1, the Commentary to the Code takes the position that “statement” should mean each “item of information communicated in one sequence of declarations.” II The New Jersey Penal Code: Final Report of the New Jersey Criminal Law Revision Commission, cmt. 5 on 2C:28-1, at 272-73 (1971). However, the Commentary also suggests that “statement” could be construed more “rigorously” so that each offense is committed “by each false statement made under the oath.” Ibid.
No definition of “statement” answers the question posed by this appeal. N.J.S.A. 2C:21-4.6(a)’s reference to a “statement” is ambiguous, therefore, as to whether it was meant to be applied to discrete facts within a single narrative explanation, oral or written, in connection with an insurance claim. The ambiguity can be illustrated through the following hypothetical statement recited by a defendant to the police: “My car was stolen from the mall parking lot between 5:15 p.m. and 6:15 p.m. on December 4.” Were we to accept the State’s approach, we could find that the defendant made five separate false statements in one sentence: (1) the car was stolen; (2) from the mall parking lot; (3) after 5:15 p.m.; (4) before 6:15 p.m.; (5) on December 4. On the other hand, if we follow defendant’s interpretation, only one false statement would have been uttered. Assuming further that the same defendant repeated that sentence to an insurance company, the State’s interpretation would produce ten separate false statements and, thus, ten acts of fraud. We turn then to extrinsic evidence, such as “legislative history, committee reports, and contemporaneous construction” of related enactments, for assistance as to the Legislature’s precise intent. DiProspero, supra, 183 N.J. at 492-93 (quoting Cherry Hill Manor Assocs. v. Faugno, 182 N.J. 64, 75 (2004)).
The State urges that we consider the Legislature’s strongly expressed desire to curb the rampant and expensive problem of insurance fraud by increasing the penalties for such behavior. When interpreting criminal statutes, “whatever be the rule of construction, it is subordinate to the goal of effectuating the legislative plan as it may be gathered from the enactment when read in the full light of its history, purpose and context.” Lewis, supra, 185 N.J. at 369 (quoting State v. Gill, 47 N.J. 441, 444 (1966) (internal quotations omitted)). The premise of the State’s argument is that a narrow reading of “statement” would permit the finding of more “acts” of insurance fraud and, therefore, would allow the imposition of harsher punishment on individuals who submit false statements in connection with an insurance claim. Specifically, the Legislature stated:
Insurance fraud is inimical to public safety, welfare and order within the State of New Jersey. Insurance fraud is pervasive and expensive, costing consumers and businesses millions of dollars in direct and indirect losses each year. . . .
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.
The judgment of the Appellate Division is affirmed for the reasons expressed in this opinion.
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.
SUPREME COURT OF NEW JERSEY
A-
4 September Term 2006
STATE OF NEW JERSEY,
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
CHECKLIST
Footnote: 1
In fact, seven days earlier on November 27, 2003, defendant’s car was
discovered on fire in Brooklyn, New York. The fire marshall determined that the
cause of the fire was arson.
Footnote: 2
During an interview with the New York fire marshall, defendant confessed that
her car had not been stolen, that she had been trying to sell
it without success, and that she had given the car to a friend
to dispose of it for her.
Footnote: 3
Defendant conceded the latter by way of a hypothetical. She stated that
had she asserted that her car held a fur coat in the trunk
when the vehicle was stolen, even in a single report, then that single
narrative statement could be parsed into two separate “acts” of insurance fraud.
Footnote: 4
Our dissenting colleagues have a different take on the statute than that
advanced either by us or by defendant. They assert that the Legislature’s “use
of the term ‘aggregate value’ clearly indicates . . . that the Legislature
contemplated that each criminal act of insurance fraud has a monetary value” and
that, therefore, “only a fraudulent claim can be actionable.” Post at ___ (slip
op. at 3.) Moreover, the legislative history of the Health Care Claims Fraud
Act is asserted to support that reading. We disagree, first, that N.J.S.A. 2C:21-4.6(b)’s
permissive aggregation of the value of the “property, services, or other benefit obtained
or sought” requires that each fraudulent act must equate to a separate claim
of additional value. Second, as to the Health Care Claims Fraud Act’s legislative
history, we note that it states otherwise about making statements actionable as fraudulent
acts. Rather, that history affirms that the bill was meant to cover not
only claims for treatment not provided, “but also false and misleading statements” concerning
the necessity, nature, and scope of treatment. Senate Health Committee, Statement to Senate
Bill No. 2270, at 1 (Dec. 11, 1997) (emphasis added). Finally, it bears
noting that we do not reach and apply the rule of lenity because
that rule of construction is a rule of default, applied when extrinsic sources
do not resolve satisfactorily the alleged ambiguity –- a circumstance unlike that which
we find here. See 3 Norman J. Singer, Sutherland Statutory Construction § 59.3 at
133-34 (6th ed. 2001) (“[T]he possibility of articulating a narrower construction does not
by itself make the rule of lenity applicable. The rule of lenity should
only be applied if after reviewing all sources of legislative intent the statute
still remains ambiguous.”); see also State v. Brannon
178 N.J. 500, 509 n.2
(2004).
Footnote: 5
The second sentence of §(e) was added in 2003 when the Legislature enacted
N.J.S.A. 2C:21-4.6.