Merin v. Maglaki

• Decision Date: 08 January 1992
• Parties: , 60 USLW 2471 Kenneth D. MERIN, Commissioner of Insurance, Plaintiff-Appellant, v. Robert MAGLAKI, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 430

126 N.J. 430

599 A.2d 1256, 60 USLW 2471

Kenneth D. MERIN, Commissioner of Insurance, Plaintiff-Appellant, v. Robert MAGLAKI, Defendant-Respondent.

Supreme Court of New Jersey.

Argued Sept. 10, 1991.

Decided Jan. 8, 1992.

Debbie J. Thompson, Deputy Atty. Gen., for plaintiff-appellant (Robert J. Del Tufo, Atty. Gen. of N.J., attorney; Michael R. Clancy, Former Asst. Atty. Gen., and Joseph L. Yannotti, Asst. Atty. Gen., of counsel).

No appearance was made on behalf of defendant-respondent.

The opinion of the Court was delivered by

GARIBALDI, J.

This appeal concerns the scope of N.J.S.A. 17:33A-4(a), a provision of the New Jersey Insurance Fraud Prevention Act (the Act), N.J.S.A. 17:33A-1 to -14, and the civil penalties to be imposed for violations thereof pursuant to N.J.S.A. 17:33A-5(a). Specifically, we must determine the extent to which the Act penalizes a person who has submitted several false statements in support of a single fraudulent claim for insurance benefits. The Commissioner of Insurance (Commissioner) argues that each knowing and material false written statement presented in support of an insurance claim constitutes a separate violation of N.J.S.A. 17:33A-4(a) and, accordingly, each false submission subjects the claimant to a separate penalty pursuant to N.J.S.A. 17:33A-5(a). On the other hand, defendant, Robert Maglaki, contends that all of the false statements made in support of a single insurance claim constitute a single violation of N.J.S.A. 17:33A-4(a), and therefore regardless of the number of untrue statements submitted in support of an insurance claim, only one penalty should be imposed per claim.

The trial court disagreed with the Commissioner's interpretation of the Act and imposed a single penalty on defendant, who had submitted six falsified documents in support of a fraudulent claim for life insurance benefits. The Appellate Division affirmed. We now reverse.

We hold that the plain language of the Act as well as the legislative intent behind the statute support the Commissioner's interpretation. The Act authorizes a sanction for each material false statement knowingly submitted in support of a fraudulent claim for insurance proceeds that significantly enhances the credibility of or evidentiary support for the claim. Moreover, we hold that the civil penalties authorized by the Act are remedial in nature and do not constitute a second "punishment" of Maglaki within the meaning of the Double Jeopardy Clauses of the federal and state constitutions.

I

On June 30, 1986, Maglaki submitted a fraudulent claim to Prudential Insurance Company (Prudential) in an attempt to collect $300,000 in accidental-death benefits from two insurance policies on the life of his wife, Antonieta. Maglaki falsely claimed that Mrs. Maglaki had died in an automobile accident in the Philippines twelve days earlier. In fact, Antonieta Maglaki was alive.

In support of his fraudulent claim, Maglaki 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. The last three submissions purported to be official documents from the Republic of the Philippines. All six documents represented that Mrs. Maglaki had died in an automobile accident in Manila on June 18, 1986. That each document contained false and misleading statements concerning the death of Antonieta Maglaki and the expenses surrounding her funeral and burial is undisputed. Each document also supported the false claim for accidental-death benefits presented by Maglaki.

On June 10, 1988, Maglaki pleaded guilty to a single count of third-degree attempted theft by deception in violation of N.J.S.A. 2C:5-1 and 2C:20-4 arising from his efforts to secure property, the life-insurance proceeds, to which he was not entitled. The court thereafter sentenced him to five-years probation, 500 hours of community service, and $530 in fines.

Subsequently, the Commissioner filed a civil suit seeking penalties and other relief from Maglaki, pursuant to N.J.S.A. 17:33A-4. The complaint set forth six separate counts and charged that Maglaki had committed six separate violations of N.J.S.A. 17:33A-4, once for each fraudulent document submitted in support of his claim. The Commissioner asked the trial court to impose penalties totalling $30,000, $5,000 for each separate offense.

The trial court granted the Commissioner's summary judgment motion with respect to liability, but held that Maglaki's action constituted a single violation of the statute rather than six separate violations. The court therefore imposed a penalty of only $2,500.

The Appellate Division affirmed, in an unreported opinion, substantially for the reasons stated by the trial court. We granted certification, 126 N.J. 320, 598 A.2d 880 (1991).

II

N.J.S.A. 17:33A-4 provides in pertinent part:

a. A person or a practitioner, violates this act if he:

(1) Presents or causes to be presented any written or oral statement as part of, or in support of or opposition to, a claim for payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim; or

(2) Prepares or makes any written or oral statement that is intended to be presented to any insurance company or any insurance claimant in connection with, or in support of or opposition to any claim or payment or other benefit pursuant to an insurance policy, knowing that the statement contains any false or misleading information concerning any fact or thing material to the claim * * *.

Penalties for violations of the Act are set forth in N.J.S.A. 17:33A-5 as follows:

a. If a person or practitioner is found by a court of competent jurisdiction, pursuant to a claim initiated by the commissioner, to have violated any provision of this act, the person or practitioner shall be subject to a civil penalty not to exceed $5,000.00 for the first violation, $10,000.00 for the second violation and $15,000.00 for each subsequent violation.

Construction of any statute necessarily begins with consideration of its plain language. Kimmelman v. Henkels & McCoy, Inc., 108 N.J. 123, 128, 527 A.2d 1368 (1987); Renz v. Penn Cent. Corp., 87 N.J. 437, 440, 435 A.2d 540 (1981). Such language should be given its ordinary meaning, absent a legislative intent to the contrary. Town of Morristown v. Woman's Club, 124 N.J. 605, 610, 592 A.2d 216 (1991); Mortimer v. Board of Review, 99 N.J. 393, 398, 493 A.2d 1 (1985); Levin v. Township of Parsippany-Troy Hills, 82 N.J. 174, 182, 411 A.2d 704 (1980). The primary task for the Court is to "effectuate the legislative intent in light of the language used and the objects sought to be achieved." State v. Maguire, 84 N.J. 508, 514, 423 A.2d 294 (1980) (footnote omitted). The Court fulfills its role by construing a statute in a fashion consistent with the statutory context in which it appears. Waterfront Comm'n v. Mercedes-Benz, 99 N.J. 402, 414, 493 A.2d 504 (1985).

The language of N.J.S.A. 17:33A-4(a)(1) indicates that the legislature intended to hold claimants liable for each false statement submitted in support of a fraudulent insurance claim. The statute could hardly be clearer in describing a violation to include submission of "any written or oral statement as part of, or in support of * * * a claim for payment or other benefit pursuant to an insurance policy * * *." N.J.S.A. 17:33A-4(a)(1) (emphasis added). Any doubts about the legislative intent to penalize each material statement submitted in support of a claim are dispelled by the Act's definition of "statement" as including "any writing, * * * proof of loss, * * * receipt, invoice, account, * * * bill for services, * * * hospital or physician records * * * or other evidence of loss, injury or expense." N.J.S.A. 17:33A-3(i). Clearly, the legislature focused its attention not on the claim itself but on the false statements presented in support thereof.

The words chosen by the legislature are deemed to have been chosen for a reason. Gabin v. Skyline Cabana Club, 54 N.J. 550, 555, 258 A.2d 6 (1969). In the Act, the legislature describes the offense as the submission of "statements," not "claims." Had the legislature intended to restrict the Act to fraudulent claims rather than false statements, it would have drafted the statute accordingly.

Congress addressed the distinction between "claims" and "statements" when drafting the False Claims Act, which penalizes submission of "a false or fraudulent claim for payment" in one provision, 31 U.S.C. § 3729(a)(1), and using "a false record or statement to get a false or fraudulent claim paid" in another, 31 U.S.C. § 3729(a)(2). Federal courts recognize the statutory distinction that Congress had drawn between a false statement and a fraudulent claim. See United States v. Hill, 676 F.Supp. 1158, 1174 (N.D.Fla.1987) ("a 'false statement' in a loan guarantee application is not a 'false claim.' ").

Moreover, that interpretation is consistent with the legislature's intent. Our courts have continually recognized that furtherance of legislative purpose is key to the construction of any statute. State v. Tischio, 107 N.J. 504, 511, 527 A.2d 388 (1987), appeal dismissed, 484 U.S. 1038, 108 S.Ct. 768, 98 L.Ed.2d 855 (1988). "In discerning that intent we consider not only the particular statute in question, but also the entire legislative scheme of which it is a part." Kimmelman, supra, 108 N.J. at 129, 527 A.2d 1368. The legislature unambiguously articulated its purpose behind passage of the Act: "The purpose of this act is to confront aggressively the problem of insurance fraud in New Jersey by facilitating the detection of insurance fraud [and] eliminating the...