Filed Under:Claims, Investigative & Forensics

Calif. Couple’s Fake Knee Injury Plot Exposed; Leads to Convictions

(Editor's Note: The following article was contributed by Barry Zalma, Esq., CFE, who has been practicing insurance law in California for more than 40 years.)

As claims professionals well know, insurance fraud is rampant in the United States. Experts have estimated the crime robs the industry of between $80 billion and $300 billion each year. Yet, no one knows the true amount because so many fraudulent insurance claims succeed. Those that do result in a prosecution and conviction are rare. People convicted of insurance fraud are usually amazed at the conviction and will invariably attempt to avoid the conviction by seeking reversal in the appellate courts. The fact that they have funds to pursue an appeal is evidence of how successful and profitable insurance fraud can be.  

The jury convicted Joanne of two counts of knowingly submitting a false insurance claim and one count of presenting a false statement as part of an insurance claim. The jury also convicted Steven of one count of presenting a knowingly false statement. The trial court sentenced both to the low end of recommended sentences of only two years in prison and, attempting to do justice, suspended execution of sentence for Steven and placed him on probation. Both Fawcetts appealed, arguing the sentences were too harsh and the convictions not founded in fact.

Reviewing Case Facts

In February 2008, Joanne cleaned Rhyne's own unit at 9032 El Cahon Way; Rhyne saw her there, scrubbing a window sill on her knees, and saw that some items to be hauled had already been moved onto a truck. Eileen Stearman, a division manager associated with Homepointe, knew both defendants, and testified that company records showed they did 17 cleaning jobs for Homepointe between February 29, 2008 and May 14, 2008. Joanne never mentioned any left knee problem.

Jeremy Essex, an investigator for USAA, testified Joanne asked for the policy limits of $100,000 to settle her claim. When she returned a release for USAA to access her medical records, she modified it to limit the release to records pertaining to being hit by a car on April 3, 2007. Essex interviewed Joanne on April 1, 2008, at her home, and Steven was present. Joanne claimed "constant severe pain" in her knee, which caused her to limp, prevented her from mounting stairs without Steven's help, and made it hard to enter and exit her van. She had not worked in "a few" years and had been on disability; because of the accident she could never work.

Steven’s counsel contends that because Steven had not filed any claim of his own, “his culpability, if any, had to have been based on the theory that he assisted or supported his wife's claim during his telephone conversation with Essex.” Steven's counsel also contended the “jury had to find that appellant knew of his wife’s unlawful purpose and specifically intended to aid, facilitate, promote, encourage, or instigate the commission of insurance fraud.”

But this contention fails. California Penal Code § 550 does not require that the defendant make a false statement in support of his or her own claim, nor does it require that the insurance claim itself be filed with fraudulent intent. It is enough that he presents a knowingly false statement of material fact about any insurance claim.

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