Many jurisdictions provide insurers with civil claims for damages and/or civil penalties in the event they sustain losses caused by insured misconduct including arson/insurance fraud. Yet insurers are for the most part reluctant to take advantage of these provisions, fearing the arson/fraud case as either too costly or not good for company image.
These cases are both winnable and, not unpopular where there is a basis to proceed. Here is a quick survey of some key points to winning the arson/fraud case:
Pick The Right Case Before Buying In
To say that there are winnable fraud and arson cases is not to say that all cases of suspected fraud and arson are winnable. Perhaps a full 50% or more of determining whether a civil arson or fraud prosecution will be successful rides on selecting the correct cases for prosecution. In this regard, experience on both the claims team side and the outside counsel side is important when making this assessment, as is the collaborative process between the two. Case selection must be a joint exercise.
The topic of selecting the proper cases for trial could fill volumes, but some general guidelines will be helpful here: The fire science in the case must clearly point to incendiary origin. Motive, usually financial, is technically not required, but I have never successfully prosecuted a civil fraud or arson case without explaining to the jury why someone would want or need to try to burn their own home to the ground. It is a hard concept for most people to wrap their heads around without explaining why to them. Other possible non-financial motives include revenge, or “rage” fires, but my educated guess is that financial motive is the motive in play for more than every 8 of 10 arson fires.
The candidates for trial are likely to strike you in the face; they have a way of standing out. Regardless, however, analysis and due diligence of the merits of such candidates should always be done before a final decision is made.
Be Mindful of the Burden of Proof
This is sometimes overlooked until the case is well underway. However, it should be one of the first things considered before a decision is made to try an arson/fraud case.
In many jurisdictions the burden of proof for establishing arson/fraud is higher than the standard civil preponderance of the evidence standard, e.g., the clear and convincing evidence standard. The burden of proof should be considered at the outset, when analyzing a case for possible use of arson/fraud defenses, or for the affirmative seeking of compensation on behalf of the insurer victimized by the alleged arson/fraud. If the evidence is not so good that the burden of proof will be met, the case is not a good candidate for an arson/fraud trial.
Develop a timeline
Just as motive is crucial to success (addressed in Part II of this post), so is explaining to a jury precisely what happened and when and, most importantly, answering the question of whether the insured had the opportunity to start a fire at home within the appropriate window of time. The time line must be used to eliminate any potential alibis which can undermine successfully putting on an arson/fraud case.
When I suggest here that a timeline must be developed, I suggest also that it must be developed in a way that a jury can 1.) visually see the timeline of events (preferably via software like PowerPoint or TrialDirector); and 2.) understand the time line so that it makes sense, and does not look in any way at variance with the evidence.
Pictures Pictures Pictures
This is a close relative of the timeline tip, and arguably even more important. Jurors today more than ever view jury trials as television in the courtroom, albeit on a larger scale. They would much prefer to be educated by the insurer, law enforcement investigators, and counsel about the cause and origin of the fire, than to merely be told what caused a fire. The will be comfortable only after coming to a conclusion on their own, rather than taking the insurer’s word for it, even if that word is coming from an expert.
Demonstrative evidence, preferably photo, animation, video and other visual media presented on trial software is the best way to convey cause and origin information. With photographs and demonstrative evidence, experts can discuss and demonstrate origin points at the fire scene, point out burn patterns, and other critical visual evidence to give the jury the comfort it needs to make a finding that the insured essentially committed a crime.
Scale model fire scene diagrams, photos of documentary evidence (such as financial papers, tax return summaries, etc.) and fire scene photos and video evidence all aid the jury in assessing the arson/fraud case.
We will review additional keys to winning the arson/fraud case in Part II of this post.