Lying to an Insurer, Even if the Claim Has Been Denied, Can Land You in Jail

State v. Goodwin, 129 A.3d 316 (N.J. 2016)

In January of 2016, the Supreme Court of New Jersey upheld the guilty conviction of second-degree insurance fraud for defendant Robert Goodwin (“Goodwin”), even though the insurer had denied the claim. This claim was denied based on discovery of the fraud during an Examination Under Oath (“EUO”), ultimately leading to criminal charges and a felony conviction.


In April of 2009, Goodwin’s girlfriend “Stacey” (a pseudonym provided in the opinion) purchased a used SUV, which was fully insured. Goodwin was the primary driver of the vehicle, and used it when he was secretly on a date with “Linda,” (a pseudonym provided in the opinion) who lived in the same building as Stacey’s mother. Goodwin parked the vehicle on a street near the building to avoid detection by Stacey’s mother, and returned in the morning to discover the vehicle had been set on fire. Goodwin went back to Stacey’s apartment, where he explained to Stacey that the vehicle had been stolen and burned.

Stacey filed a theft and fire claim with her insurance carrier, who proceeded to investigate the claim. During the EUO of Goodwin, he was confronted with information showing the SUV could not have been operated without the key. Goodwin explained that he lied about the location where the SUV was parked in order to avoid having Stacey find out he was cheating on her, but denied setting the vehicle on fire. Based on the misrepresentation of facts provided, the insurance company denied the claim.

Goodwin was later found guilty by a jury of second-degree insurance fraud, and not guilty on charges of arson and theft by deception. On appeal, Goodwin’s conviction was overturned. The appellate court determined that the jury was not instructed that a finding of insurance fraud could only be returned if the carrier actually relied on the defendant’s false statements.


The Supreme Court of New Jersey held that “[a] false statement of material fact is one that has the capacity to influence a decision-maker in determining whether to cover a claim. If the falsehood is discovered during an investigation but before payment of the claim, a defendant is not relieved of criminal responsibility.” This ruling involves a thorough examination and interpretation of the statute because materiality was not defined. The end result was the court determining that actual reliance is not necessary for a false statement to be material. The jury could find that Goodwin provided a materially false statement, and that the inconsistent verdicts were irrelevant.


The relevant language of the New Jersey statute is provided in the opinion of the case, stating:

the statute states that a defendant “is guilty of the crime of insurance fraud if [he] knowingly makes, or causes to be made . . . a false . . . statement of material fact . . . as part of . . . a claim for payment . . . pursuant to an insurance policy.”

The New Jersey insurance-fraud statue, N.J.S.A. § 2C:21-4.6,is similar to Texas Penal Code section 35.02, which describes the crime of insurance fraud as, with intent to defraud or deceive an insurer, the person in support of a claim for payment presents or causes to be presented to an insurer a statement that the person knows contains false or misleading material information. Tex. Penal Code Ann. § 35.02(a)(2) (West 2015). Texas further defines materiality as a statement that could have affected the eligibility for coverage or amount of the payment on a claim under an insurance policy. Tex. Penal Code Ann. § 35.015(1) (West 2015). This definition is similar to the holding of the court, as actual reliance on the statement by the insurer is not a requirement.


The ruling by the Supreme Court of New Jersey shows that a felony conviction for insurance fraud can be upheld, even if there is no actual reliance by the insurer on the false statements of the defendant. Submitting a false claim or falsifying a claim constitutes insurance fraud, based on the intent of the party—not the reliance of the insurer. Texas courts show a similar result (Nguyen v. State, 177 S.W.3d 659, (Tex. App.—Houston 1st Dist. 2005, writ ref’d)) because the Texas Penal Code defines the materiality element in a similar fashion to that interpreted by the New Jersey Courts. Lying on an insurance form with the intent to deceive, even if the claim is denied or not actually relied upon, can land that party in jail.

* * *

Attorney David M. Sarnacki specializes in insurance coverage and works for Parker, PLLC Attorneys at Law in the Fort Worth, Texas main office.