On May 13, 2006, Edward Feierstein was driving home from his Philadelphia fitness club when his car was rear-ended. Two days later, Feierstein filed a claim with the tortfeasor’s liability insurer seeking reimbursement for his alleged bodily injuries. Two years later he filed suit against the company’s insured. The liability insurer, in its defense of the suit, hired a private investigator. Surveillance video footage was secured of Feierstein working out at a fitness center, and his club, while stretching, exercising on an elliptical machine, a weight-lifting machine, and playing tennis.
At his deposition, Feierstein was unware of the video surveillance. He testified that he had not played tennis at all since the accident, nor worked out in any gyms since the accident. Feierstein withdrew his civil suit when he learned of the video footage. On December 15, 2011, he was charged criminally with insurance fraud and perjury. He was convicted at a bench trial after his motion to suppress the video footage was rejected. On appeal, he claimed that the Commonwealth of Pennsylvania failed to prove the element of materiality with respect to his false deposition testimony. He claimed that his “mistaken deposition testimony” was material to nothing, that he was confused and, as such, incapable of forming the requisite intent, and claimed that his reasonable expectation of privacy was violated. Relying in large part upon the opinion of the trial court, the Pennsylvania Superior Court in Commonwealth v. Edward Feierstein, 2016 WL 800615 (Pa. Superior Ct. 2016) affirmed the judgment of sentence.
The court held that even though the false deposition testimony occurred as a direct consequence of Feierstein’s civil lawsuit, rather than the initial submission of his insurance claim to the liability insurer, the distinction was meaningless since Feierstein’s litigation against the tortfeasor, in furtherance of his insurance claim, required that the insurer defend its insured against the suit. Thus, insurance fraud is not (and ought not to be) limited to the pre-litigation stages of a claim.
Additionally, the court held that records from the defendant’s fitness center, which were turned over to the investigator for the Insurance Fraud Unit of the Pennsylvania Attorney General’s Office, were appropriately admitted since a third party with joint access and control over the records consented to the search. Therefore, there can be no reasonable expectation of privacy under those circumstances.
The court also ruled that the offenses of insurance fraud and perjury require that a false statement be material. 18 Pa. C.S.A. § 4117(a)(2). The court held that the Insurance Fraud statute does not require a defendant to cause actual injury or detriment to a victim.
Feierstein claimed that since the insurer’s attorney at the deposition already possessed the surveillance video of the defendant playing tennis, the attorney could not have believed or relied upon his false deposition testimony that he could not play tennis. Therefore, the information was immaterial. Rejecting this argument, the court held that the only reason defendant made the false statements was to contribute to the success of his claim (emphasis added). The only reason the insurer ordered the surveillance was to prove the limited extent of defendant’s injury. The court stated that Feierstein was not “stretching the truth on a collateral issue, but offering a direct measure of the extent of the effects of his injuries in an attempt to increase his award, which was still at issue.”
The court also stated: “Defendant’s false representations as to the extent of his injuries were meant to, and did, have a central role in the survival and strength of his insurance claim.” The court held the element of intent is established if a person acts intentionally, knowingly or recklessly with respect thereto under the perjury statute, and knowingly with respect to the insurance fraud statute. The court held that Feierstein’s intentions in making his false statements can indeed and often must be proved by circumstantial evidence.
Thus, criminal insurance fraud can be established even during the course of legal proceedings, and the materiality of false statements is satisfied if they are made in order to contribute to the success of an insurance claim.