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Probable cause is not a high bar
People who attempt insurance fraud are always upset when the scam fails. When that failure results in an arrest and trial, outrage grows. When the jury acquits the fraudster, thanks are never enough, there is no need to go to jail, the fraudster wants – to paraphrase Shakespere – a pound of flesh from those who stopped the attempt.
IN Joseph Fehl v. Borough of Wallington; et al, No. 21-3019, United States Court of Appeals, Third Circuit (January 25, 2023) Joseph Fehl sued Borough of Wallington; Witold Baginski, the district’s former business administrator; and Sean Kudlacik, a captain in the borough’s police department, alleging civil rights violations. The district court found no material facts in dispute and granted the defendants’ motion for judgment.
FACTS
Fehl served as a volunteer EMT and firefighter for the Borough of Wallington. He filed for workers’ compensation, claiming he was “hit [a] car” during a rescue operation. Kudlacik conducted an investigation that raised questions about Fehl’s story, as it found no physical evidence, no signs of serious injury and no vehicle matching the description Fehl provided. Nor did video from the scene show any vehicles in the area where the accident allegedly occurred. As a result, Fehl was charged with felony insurance fraud and tampering with public records. After the trial, a jury acquitted him of those charges.
Based on the acquittal, Fehl sued, asserting several claims arising from his arrest and prosecution. The district court granted the defendants’ request for a preliminary ruling and concluded that their actions were supported by probable cause.
PROBABLE CAUSE
Fehl argued that a reasonable jury could have concluded that Kudlacik lacked probable cause to investigate his employment claim. However, probable cause exists when there is a “reasonable probability” that the person to be arrested has committed the crime. Police officers are not required to properly resolve conflicting evidence and their assessments of credibility need not, in retrospect, be correct. For these reasons, probable cause is not high.
With all reasonable inferences in Fehl’s favor, the Third Circuit could see no error in the district court’s analysis. The facts known to Kudlacik at the time of Fehl’s arrest provided a sufficient basis to doubt Fehl’s credibility and to believe that he committed the crimes charged.
Consider Fehl’s statement in his grant application that he was hit by a car, with no corroborating physical evidence. Or consider Fehl’s claim that he suffered nerve damage from the accident — an injury that defies the extent and type of physical injury a hit-and-run victim would typically suffer. Fehl also, after being confronted, changed his story and admitted that he could have just tripped and fallen.
The finding of probable cause is not negated by the jury’s verdict. The mere fact that a defendant is later acquitted of the crime he is arrested for has no bearing on the validity of the arrest. Guilt in a criminal case must be proven beyond a reasonable doubt, a standard enforced by the rules of evidence. Probable cause places no such burden on the government—rather, it requires police officers to find only a “reasonable probability” that a crime has been committed. That standard was met at the time of Fehl’s arrest, and the jury’s verdict does not change that finding.
BREACH OF THE CONSTITUTION
Fehl argued that Baginski, as city administrator, violated Fehl’s First and Fourteenth Amendment rights. Fehl alleged that Baginski created a scheme to force Fehl to submit his workers’ compensation claims, directed a third-party administrator to not pay the benefits, and conspired with Kudlacik to initiate a police investigation. Even if true, these allegations cannot state a constitutional claim.
To state a First Amendment claim for retaliation or retaliation, a plaintiff must plead and prove the lack of probable cause for the criminal charge. Fehl’s arrest and prosecution were, contrary to his claims, supported by probable cause.
Fehl needed to show that Baginski participated in, directed or accepted retaliation. Baginski confirmed that he had no role in investigating, or leading any risk manager in the investigation of, any damage claims, including Fehl’s. Nor did Baginski urge Kudlacik or anyone else to arrest Fehl.
The facts showed that there was clear probable cause to arrest Fehl, especially after he changed the claim that he was hit by a car to that he tripped and fell, establishing a lack of veracity in the claim and an attempt to deceive the employer in order to obtain workers’ Reimbursement fraud. His attempted First Amendment and punitive damages claims failed because there was sufficient probable cause to arrest and convict Fehl of insurance fraud. His acquittal did not alter the conclusion that there was probable cause for the arrest and trial.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and zalma@zalma.com
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