Landmark Alert - Case Law on Fraud

Saturday, October 22, 2005 | 0

Landmark Alert - Case Law: Village of North Palm Beach and the Fraud Defense; a definitive new 1st DCA fraud ruling further clarifying, simplifying and toughening the "fraud" defense. Village of North Palm Beach and Employers Mutual, Inc. v. McKale, FLW D2365b, (Fla. 1st DCA 10/06/05). WHAT HAS HAPPENED:

1. Establishes that E/C's standard of proof is simply "preponderance of evidence "not" clear and convincing evidence".

2. As such, there is no "presumption" of truth but a "neutral" playing field in terms of testimony. Implicit in the opinion is repudiation of the JCC's statement, borrowed from "civil" actions; "Honesty, not fraud, is presumed."

3. Where "work-like" activity is demonstrated (e.g., surveillance) but Claimant denies "employment," so long as there has been "any false, fraudulent, incomplete, or misleading statement, whether oral or written, for the purpose of obtaining...or in support of his claim;" the JCC must rule Claimant "forfeits" all benefits (per Wright v. Uniforms for Industries, 772 So 2d 560 (Fla. 1st DCA 2000). IN SHORT: It is not necessary to prove or even "determine whether Claimant was employed or received payment for work while he was receiving benefits."p 4. "Significantly, it is not necessary that a false, fraudulent or misleading statement be material to the claim; it must only be made for the purpose of obtaining benefits."

5. "Normally, knowingly making inconsistent statements would indicate at least one of them was false," and if the "JCC determines one of the explanatory statements was false, and Claimant made the statement because he believed it would assist him in obtaining benefits, forfeiture applies."

6. Video documentation of activity and ability inconsistent with Claimant's status of total disability, about which misleading or incomplete statements are made "to obtain or enhance compensation", constitutes commission of a "prohibited act" which must result in forfeiture.

DISCUSSION

McKale sets straight a great deal of claims' confusion over the years. Significant among several key holdings is the elimination of the necessity to prove actual earned income where "observed activities" resembling work are discovered.

Also eliminated is a common materiality argument: that a misrepresentation not related to a fact in direct dispute, while maybe impacting Claimant's credibility, cannot be the basis of a forfeiture of benefits. Where any question is knowingly answered with intent to mislead the E/C and for the purpose of supporting the claim, such misrepresentation warrants forfeiture.

CONCLUSION

Wright v. Uniforms for Industry warded off the initial constitutional challenge to the fraud statute and established that any misrepresentation made in support of a claim compels forfeiture of all benefits. Medina v. Gulf Coast Linen Services, 842 So 2d 845 (Fla. 2003) lead to the forfeiture of all benefits based on forged medical prescription.

by H. George Kagan of the MKRS lawfirm. George can be reached by e-mail at GeorgeK@mkrs.com, or phone at 800.761.MKRS.

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