New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of the General Counsel issued the following opinion on February 24, 2003, representing the position of the New York State Insurance Department.

RE: Meaning of "Written Statement" Under N.Y. Penal Law § 176.05

Questions Presented:

1) Must the actual insurance claim be in writing in order to satisfy the "written statement" requirement contained in N.Y. Penal Law § 176.05 (McKinney Pocket Part 2003)?

2) Does an insurance claim that is orally reported by telephone constitute a "written statement" as such term is used in N.Y. Penal Law § 176.05 (McKinney Pocket Part 2003)?

3) Does an insurance claim that is filed electronically constitute a "written statement" as such term is used in N.Y. Penal Law § 176.05 (McKinney Pocket Part 2003)?

Conclusion:

1) The actual insurance claim, which makes the demand for payment, does not have to be in writing in order to satisfy the "written statement" requirement contained in N.Y. Penal Law § 176.05 (McKinney Pocket Part 2003) provided that some written statement that supports the fraudulent claim has been submitted to the insurer.

2) An insurance claim that is orally reported by the insured by telephone constitutes a "written statement" as such term is used in N.Y. Penal Law § 176.05 (McKinney Supp. 2003) where the insurer or agent transcribes the information supplied by the claimant and the claimant knows that his or her conversation will result in a written statement or transcript being presented as part, or in support, of the claim.

3) An insurance claim that is filed electronically constitutes a "written statement" as such term is used in N.Y. Penal Law § 176.05 (McKinney Pocket Part 2003) where an electronic record is created as a result.

Facts:

The inquiry was general in nature, and no specific facts were presented.

Analysis:

N.Y. Ins. Law § 403(a) (McKinney 2000) states: "In this article, ‘fraudulent insurance act’ means an insurance fraud as defined in section 176.05 of the penal law[.]"

N.Y. Penal Law § 176.05 (McKinney Pocket Part 2003) states:

(1) A fraudulent insurance act is committed by any person who, knowingly and with intent to defraud presents, causes to be presented, or prepares with knowledge or belief that it will be presented to or by an insurer, self insurer, or purported insurer, or purported self insurer, or any agent thereof, any written statement as part of, or in support of, an application for the issuance of, or the rating of a commercial insurance policy, or certificate or evidence of self insurance for commercial insurance or commercial self insurance, or a claim for payment or other benefit pursuant to an insurance policy or self insurance program for commercial or personal insurance which he knows to: (i) contain materially false information concerning any fact material thereto; or (ii) conceal, for the purpose of misleading, information concerning any fact material thereto.

(2) A fraudulent health care insurance act is committed by any person who, knowingly and with intent to defraud, presents, causes to be presented, or prepares with knowledge or belief that it will be presented to, or by, an insurer or purported insurer or self-insurer, or any agent thereof, any written statement or other physical evidence as part of, or in support of, an application for the issuance of a health insurance policy, or a policy or contract or other authorization that provides or allows coverage for, membership or enrollment in, or other services of a public or private health plan, or a claim for payment, services or other benefit pursuant to such policy, contract or plan, which he knows to:

(a) contain materially false information concerning any material fact thereto; or

(b) conceal, for the purpose of misleading, information concerning any fact material thereto. Such policy or contract or plan or authorization shall include, but not be limited to, those issued or operating pursuant to any public or governmentally-sponsored or supported plan for health care coverage or services or those otherwise issued or operated by entities authorized pursuant to the public health law. For purposes of this subdivision an "application for the issuance of a health insurance policy" shall not include (a) any application for a health insurance policy or contract approved by the superintendent of insurance pursuant to the provisions of sections three thousand two hundred sixteen, four thousand three hundred four, four thousand three hundred twenty-one or four thousand three hundred twenty-two of the insurance law or any other application for a health insurance policy or contract approved by the superintendent of insurance in the individual or direct payment market; and (b) any application for a certificate evidencing coverage under a self-insured plan or under a group contract approved by the superintendent of insurance. (emphasis added)

N.Y. Penal Law § 176.00(2) (McKinney 1999) states:

"Statement" includes, but is not limited to, any notice, proof of loss, bill of lading, invoice, account, estimate of property damages, bill for services, diagnosis, prescription, hospital or doctor records, x-ray, test result, and other evidence of loss, injury or expense.

Written Statement

Based on the wording of Article 176 of the New York Penal Law, the actual insurance claim, which makes the demand for payment, does not have to be in writing in order to satisfy the "written statement" requirement contained in N.Y. Penal Law § 176.05 (McKinney Pocket Part 2003) provided that some written statement that supports the fraudulent claim has been submitted to the insurer. See also The People of the State of New York v. Alfaro, 121 Misc.2d 804, 469 N.Y.S.2d 987 (Sup. Ct. Qns. Co. 1983).

Claim Filed by Telephone

N.Y. Penal Law § 176.05 (McKinney Supp. 2003) states, in relevant part, that to commit insurance fraud a person must with knowledge and an intent to defraud, among other things, "cause to be presented . . . to or by an insurer . . . or any agent thereof, any written statement" containing materially false or misleading facts in support of a claim. The Department interprets this statute to apply to an insurance claim that is orally reported by telephone where the insurer or agent transcribes the information supplied by the claimant and the claimant knows that his or her conversation will result in a written statement or transcript being presented as part, or in support, of the claim. However, if a claimant makes a false or misleading telephone claim to an insurer or agent, and such claimant is not aware that a written record of the conversation will be created, such action would not fall within the definition of insurance fraud under N.Y. Penal Law § 176.05 (McKinney Pocket Part 2003). The statute does not cover purely oral communications unless such communications are converted to a writing with the knowledge of the claimant.

Electronic Filing

New York State enacted the Electronic Signatures and Records Act ("ESRA") as part of Chapter 4 of the Laws of 1999, adding the State Technology Law as Chapter 57-A of the Consolidated Laws, N.Y. State Tech. Law §§ 101 – 109 (McKinney 2003 Pamphlet). The Act creates a statutory structure in New York State that supports the use of electronic records and signatures in everyday public and business undertakings. N.Y. State Tech. Law § 102(2) states:

"Electronic record" shall mean information, evidencing any act, transaction, occurrence, event, or other activity, produced or stored by electronic means and capable of being accurately reproduced in forms perceptible by human sensory capabilities.

N.Y. State Tech. Law § 105(3) states that electronic records "shall have the same force and effect as those records not produced by electronic means".

The Department issued Circular Letter No. 33 (1999) advising that certain insurance transactions may be effected by electronic means since most existing provisions of the Insurance Law do not proscribe such activities. The Department stated therein that statutes that use the words "writing," "certificate," or "memorandum" permit electronic documents.

Furthermore, the federal Electronic Signatures in Global and National Commerce Act of 2000 ("E-Sign Act"), 15 U.S.C. §§ 7001-7031 (2000), provides that electronic records and signatures may not be denied legal validity simply because they are electronically created. Thus, the E-Sign Act and ESRA both authorize the use and acceptance of electronic signatures and electronic records in commercial transactions.

Based on the foregoing, the phrase "written statement" contained in N.Y. Penal Law § 176.05 (McKinney 2003 Pocket Part) is interpreted by this Department to apply to a claim that is filed electronically where an electronic record is created as a result.

For further information you may contact Senior Attorney Sally A. Geisel at the New York City Office.