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Accident in Missouri and fraud in Kansas



Under KSA 2020 Supp. 21-5106 (a) (1) and (b) (3), a court in Kansas has jurisdiction over an offense committed in part in Kansas by a criminal who commits either (1) an act that constitutes a component and material part of crime or (2) an act that is an essential and integral part of an overall ongoing crime plan and the act causes an effect or consequence in Kansas close enough in time or causes an immediate result. Two courts found no jurisdiction but the Supreme Court read the entire charter and found jurisdiction in State of Kansas v Ivan Rozell, no. 121, 094, Supreme Court of Kansas (April 22, 2022)

PRELIMINARY INTERROGATION

The state’s burden of proof in a preliminary hearing is not evidence beyond a reasonable doubt, but only probable cause. Probable cause in a preliminary investigation means evidence that is sufficient to make a person of ordinary caution and prudence to conscientiously harbor a reasonable belief in the guilt of the accused. To determine if the state has met this burden, a preliminary interrogation judge does not transfer credibility, and when evidence is in conflict, the judge must accept the version of the testimony that is most favorable to the state.

FACTS

Rozell did not commit any insurance fraud charges when he was physically in Kansas. In view of this, Rozell claims that the Wyandotte County District Court lacked jurisdiction to prosecute him because Kansas law has no extraterritorial effect.

Crime sometimes involves multi-state behavior. And the United States Supreme Court has ruled that “[a]acts committed outside a jurisdiction, but intended to produce and produce harmful effects within it, motivate a state to punish the cause of the damage as if [the defendant] had been present at the effect. ” [Strassheim v. Daily, 221 U.S. 280, 285, 31 S.Ct. 558, 55 L.Ed. 735 (1911).] Both the district court and the court of appeal disagreed with the state.

Rozell was in a minor vehicle collision with Saul Lopez at an intersection in Kansas City, Missouri. Lopez did not obey the right of way and hit Rozell’s vehicle, but all contact between the vehicles was minimal. Lopez provided Rozell with insurance information. Rozell told Lopez that he was fine and declined Lopez’s offer to call the police.

Lopez’s father owned and insured the vehicle Lopez was driving at the time of the accident. His father lived in Kansas City, Kansas, and was insured under a Kansas insurance policy issued by State Farm Insurance through an agent based in Kansas. Lopez also lived in Kansas City, Kansas.

Rozell faxed a copy of a hospital bill to State Farm. The bill applied to services received at the Research Medical Center in Missouri. The State Farm representative thought the amount on the bill – around $ 52,000 – was disproportionate to the severity of the collision. He contacted Rozell and asked if Rozell had submitted the correct document. Rozell confirmed that he had. The representative transferred the claim to a special investigation department at State Farm.

The special investigator, Michael Haire, was based from a state farm office in Kansas. Haire reviewed the original medical bill that Rozell had submitted to State Farm and a second that Rozell sent after his first claim. Haire determined that the first bill concerned medical expenses two days before the vehicle collision.

A registry guardian for Research Medical Center also reviewed the original invoice and noticed that its discharge date did not match the hospital registry. State Farm refused to pay Rozell’s claim and filed a fraud report with the Kansas Insurance Department. The state then accused Rozell of insurance fraud and false information.

The preliminary trial judge found probable cause to bind Rozell to trial for insurance fraud and to provide false information.

A judge other than the one who heard the preliminary hearing conducted a hearing on Rozell’s second motion. The judge upheld the motion for dismissal on the ground of lack of jurisdiction.

The state appealed, claiming that Kansas courts had jurisdiction. Rozell did not file briefs or appear during the appeal. The Court of Appeal upheld the dismissal and considered that the state had not established jurisdiction. The state requested a timely review, which the Supreme Court granted.

ANALYSIS

The question presented to the district court was whether the state presented sufficient evidence at the preliminary hearing to establish probable cause for Kansas to have jurisdiction. To resolve this issue, the Supreme Court required the interpretation of the statutes.

Legal framework of jurisdiction for related causes

Rozell focused on constitutional and statutory provisions about a defendant’s right to a trial in the county or district where the crime, or one or more parts of the crime, were committed. Complies with Strassheim, 221 U.S. at 285, the U.S. Supreme Court has ruled that this Sixth Amendment does not preclude a state’s territorial jurisdiction over a crime that has been committed in part in several states. The court ruled USA vs. Rodriguez-Moreno, 526 US 275, 281, 119 S.Ct. 1239, 143 L.Ed.2d 388 (1999) who considered that “‘[W]here a crime consists of distinct parts that have different locality, the whole thing can be tried where some part can be proven to have been done. ‘”).

For a court in Kansas to have jurisdiction under the KSA 2020 Supp. 21-5106 (b) (3), there must be a direct link or link between the defendant’s document or documents outside of Kansas and the result in Kansas.

The state accused Rozell of crimes that do not necessarily require anyone, or anything, to suffer harm. Rozell may be found guilty of both of the alleged crimes despite the fact that the insurance company disputed his claim.

Under KSA 2020 Supp. 21-5106 (a) (1) and (b) (3), a court of Kansas jurisdiction over a crime committed in part in Kansas by a criminal who commits either (1) an act that is an element and material part of crime or (2) an act that is an essential and integral part of an overall ongoing crime plan and that act causes an effect or consequence in Kansas close enough in time or causes an immediate result.

Insurance fraud

The crime requires that a person:

  1. communicates information to an insurer, here communication about medical records and bills that are alleged to be related to treatment for damages that occurred in the car accident;
  2. is aware that the communication contains material false information, such as the alleged change in the date on which Rozell received medical treatment;
  3. provides the false information in support of an insurance claim or benefit or insurance application, here Rozell’s claim against Lopez’s father’s insurance; and
  4. acts with intent to defraud, which a reasonable person can conclude from Rozell’s submission of the alleged amended bill.

The state claims that “it is undeniable that the insurance company that issued the insurance is injured when it is the subject of a fraudulent claim.” State Farm investigators in Kansas, testified about steps he took in Kansas to investigate the allegation, which included interviews with Lopez and Lopez’s father and photography of the damage to the car Lopez was driving. The referral of the fraud investigation to the Kansas investigator and the follow-up of the insured in Kansas both occurred within a month of the accident and came directly from Rozell’s submission of papers documenting his claim. And those measures were integrated into State Farm’s review of Rozell’s claim. A reasonable conclusion can be drawn in the light most favorable to the State that Rozell’s submission of an alleged fraudulent claim was an act which caused immediate results in Kansas.

To make a false information

The evidence at the preliminary hearing was sufficient to establish that the alleged amended paper went to Kansas, where the investigator drew conclusions as to whether State Farm should pay or deny Rozell’s claim. This evidence is sufficient to persuade a person of ordinary caution and prudence to conscientiously hold a reasonable belief that Rozell’s actions led or resulted in Kansas trying to persuade Haire to accept Rozell’s claim.

Jurisdiction

The Supreme Court concluded that the State presented sufficient evidence to establish probable cause that Rozell’s action to file an alleged false claim, which he supported with alleged amended documents, with the alleged intent to defraud State Farm caused a consequence or effect in Kansas sufficiently close in time or cause to the alleged criminal acts of insurance fraud and make false information to qualify as a related result that allows Kansas to exercise jurisdiction.

The Supreme Court of Kansas found that the two lower courts allowed a technical detail – an activity in the sister city of Kansas City, Missouri to Kansas City, Kansas defeated the criminal jurisdiction even though the investigation and expenses for State Farm took place in Kansas, was an act of form in front of substance. Rozell will be prosecuted for insurance fraud in Kansas and should be convicted because the medical bills submitted were manifestly fraudulent and for services provided prior to the accident.


(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his internship to the position of insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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