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Why Developing Case Law Will Affect Long-Distance Fraud Cases

Defense counsel and claims professionals must work together early on to assess the utility of pursuing out-of-state witnesses and evidence.

September 23, 2016 Photo

There can be no question that, as new technologies emerge, they present both opportunities and challenges to litigation, particularly in the insurance fraud arena. These new technologies, together with some tried-and-true methods, can assist the investigator or counsel in preparing and litigating long-distance fraud cases.

Long-distance fraud cases involve two kinds of circumstances: (1) matters in which the litigation is pending in one jurisdiction and the allegedly injured claimant resides out of state or across the country, or (2) cases in which the allegedly injured claimant resides in a jurisdiction where the litigation is pending but key witnesses or evidence are out of state. It is important for defense counsel and claims professionals to work together at an early stage to assess the utility of pursuing out-of-state witnesses and evidence.

Surveillance is still the most common tool used for proving a claimant’s injuries are fraudulent, and it sometimes can be more productive when the claimant lives outside of the state in which the liability or workers’ compensation action is pending. Virtually all claimants are aware of the possibility that they may be surveilled, especially with the increasing presence of traffic cameras and security cameras. Even in-home monitoring services can be subpoenaed. However, claimants tend to be more relaxed and let their guards down when they are living outside of the forum state. It is important to find an investigator who is not only familiar with the location in which the claimant resides, but also can work with your local investigator in the forum.

For example, work with a single investigator who has a small local practice if a case involves a claimant and witnesses located entirely within the state. However, if there are multiple states involved, use a national firm to coordinate the various investigators. This often results in a more cost-effective and efficient investigation. A national firm most likely will have all of the necessary surveillance technology and licensing in whatever jurisdiction you may need them to operate. If you are using an out-of-state firm or a national firm, you will want to discuss the need for appropriate licensing and whether you will need the investigator to maintain appropriate logs and preserve all footage. Additionally, specify that you need an investigator to prepare an associated written report. You also will need to explain to the out-of-state investigation firm, whether small or large, that whomever they send to perform the surveillance must be available, if called upon, to come to your jurisdiction in order to testify and authenticate the surveillance materials.

A very old-fashioned investigative technique is to simply conduct a background check of not only the claimant, but also any key witnesses. While this certainly is not cutting edge, the lesser cost and greater speed at which they can be obtained favor making it routine in any case of significant value, even when fraud is not yet suspected but liability and credibility are at issue.

Other tried-and-true investigative devices that can be useful when information, witnesses, or evidence are located in other jurisdictions include the types of requests that fall under the Freedom of Information Act (FOIA). Increasingly, the forms to obtain information can be found easily on websites of the various jurisdictions, including virtually all federal agencies. You will find that response times for these types of requests can often be much quicker than a traditional subpoena. Check out the FOIA website for more information. Additionally, various state and county agencies have open public records policies and can be great sources of information in property damage, fire, and construction defect cases.

Insurers and investigators increasingly are using tools such as cellular telephone triangulation and global positioning systems (GPS) as well as toll-road pass information to track the movements of insureds or other relevant witnesses suspected in property damage fraud and theft claims.

An interesting CNN article titled, “How Your Movements Create a GPS ‘Fingerprint’,” provides an overview of how cellphone usage creates a GPS track of users. When that article was authored, the information was news to many smartphone users. Now when you travel, your phone will suggest attractions near you, restaurants in your vicinity, and even provide you with the local weather, all unsolicited. Accordingly, everyone is aware of the fact that the cellphone itself retains data, which is transmitted to various services such as Google and your cellphone provider. How long this data is retained depends on not only the device itself, but also the cellular provider’s policy. Use of subpoenas and authorizations served upon cellular data carriers is essential to obtaining this information.

Constantly growing sources of data and information are available through cellular phones, GPS, social media, and encrypted data in photographs. However, once you receive your long-distance information, be it through a standard gumshoe using old-school methods or cutting-edge digital information, you must determine whether it should be used and, if so, how it should be used. Cellphone records routinely are found admissible on the issue of driver negligence (see Cole v. Driver and Motor Vehicle Services Branch, Butts v. United States, and O’Toole v. Carr). However, in order to utilize GPS data to demonstrate an individual’s presence at a particular latitude and longitude, it is necessary to satisfy the requirements for admissibility of scientific or technical evidence. Expert testimony may be required to address the software and firmware of the GPS device. These issues tend to come up more in the context of criminal prosecution than in civil litigation. (For an interesting discussion, see State of New Jersey v. Pittman.)

As this kind of technology is now ubiquitous and its use in litigation is subject to an inevitable increase, we are more likely to see it deemed to be scientifically sound and reliable. In fact, with appropriate authentication and an expert who can discuss how the data is collected and processed (subject to other issues, such as Rule 403,) GPS or cellular data location information likely is admissible for use in a civil case. A good overview of how cellular telephone triangulation works can be found in Larry E. Daniel’s book titled, Cellular Location Evidence for Legal Professionals.

Typically, video surveillance will be admissible where it is properly authenticated and does not violate state or federal wiretapping laws. (For example, see N.J.S.A. 2A:156A-2, et seq. and 18 U.S. Code § 25/10, et seq.) Ordinary video-recorded surveillance is not considered prohibitive wiretapping, thus video, without audio, almost always will be admissible when authenticated. Videos accompanied by audio recordings made by private parties in their own homes, such as through a security monitoring service, also are likely to be fully admissible (see State of New Jersey v. Diaz). Courts sometimes will look beyond actual consent to an audio recording. Sometimes signs in a public place advising that the premises are under audio and video surveillance will be enough to allow the audio portion of surveillance taken at a facility to be admissible.

Typically, case law is slow to follow emergent technologies. In the context of surveillance technologies, the foundation for admissibility has been laid. As a result, case law regarding cellular technology, GPS, surveillance, and social media likely will be used as the cornerstones for the development of case law in expanding areas for decades to come. The use of these technologies has and will continue to make it easier and more cost-effective to expand our investigative nets, surprising the perpetrators of fraud.

About The Authors
Jeanine D. Clark

Jeanine D. Clark, Esq., is partner at Margolis Edelstein.  jclark@margolisedelstein.com

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CLM’s Insurance Fraud Committee identifies, analyzes, and offers education on emerging fraud schemes and tactics; monitors and reports on developments in case law, state fraud statutes and applicable regulations; collaborates with other anti-fraud industry organizations and associations; and seeks to provide amicus support in matters of importance in the fight against insurance fraud.

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