Judge faces criminal charges for collecting on allegedly bogus injury claims

A federal grand jury recently indicted Pennsylvania Superior Court Judge Michael Joyce for mail fraud and money laundering. The charge arises from a 2001 rear-end motor vehicle collision in which Joyce claimed he was severely injured. Joyce collected $50,000 on his injury claim from State Farm, the at-fault driver’s liability insurer, and $390,000 in underinsured motorist (“UIM”) benefits from Erie Insurance Company, Joyce’s own motor vehicle insurer. The basis of the charges is Joyce’s alleged use of the U.S. Mail to perpetrate a fraud on the insurance companies.

The Pennsylvania Supreme Court has suspended Joyce, with pay, until further notice. The suspension order is available here.

Something stinks to high heaven here, and I’m not talking about Joyce’s alleged misconduct. According to this article, Joyce first notified State Farm of his claim on July 2, 2002 and State Farm paid the 50 grand, presumably the full per-person limit of the tortfeasor’s liability coverage, on September 2, 2002. Joyce notified Erie Insurance of his UIM claim on August 20, 2002 and the company ponied up $390,000, based on nothing but Joyce’s narrative statement, on November 26, 2002. So far as I’ve been able to determine, there’s no documentation of any medical treatment.

State Farm doesn’t make policy-limits offers two months after finding out about a claim unless it’s a clear liability death, amputation or multiple surgery case. This collision was a rear-ender, supposedly at under five miles per hour. In those cases State Farm plays it “scorched earth” all the way. It starts by making a take-it-or-leave-it offer of less than medical expenses. If you want more, you’ve got to file suit, hammer your way through the discovery process and convince a jury that your injuries are actually worth something.

Not here, though. State Farm paid on demand.

As the Erie Times article notes:

Joyce’s case is “not the typical way I’ve seen insurance claims handled in the past,” said Matthew J. Smith, president of the board of the 600-member National Society of Professional Insurance Investigators, based in Ohio. Smith, a lawyer in Cincinnati, said he has represented insurance companies for 23 years.

. . .

Smith said insurance companies do not automatically request independent medical exams and do them more rarely in cases where no lawsuit is pending. He said insurance companies typically consider the size of a claim in deciding on an investigation.

“Reasonably, I would think that in the case of such a large claim,” Smith said, referring to the Joyce case, “I think there would at least be documentation regarding the occurrence of the accident.”

No fucking shit. The implication, of course, is that the insurers paid a claim they knew was bogus in exchange for past or future favors in cases before Joyce’s court. If that’s true, some insurance fucks need to go to prison.

But the U.S. attorney’s office doesn’t want to hear about that shit. They’re saying that how the insurance companies handled the claims is their own business; the government’s case is based solely on the fraud perpetrated by Joyce. But if the insurers knew what was going on and went along, it wasn’t really a fraud, was it now?

You’d think a case like this would be a tort “reformer’s” wet dream, but we’re hearing nary a peep from the usual crowd. The reason for this, I surmise, is the very real possibility that insurer misconduct underlies the whole rancid mess. Tort “reform” advocates sell themselves as champions for the small businessmen being destroyed by frivolous lawsuits. In truth, they’re paid advocates for the insurance industry bent on putting more money in their masters’ pockets. The last thing they want is publicity for a case that might end up making the industry look bad.

In any event, this one has a long way to go, with much potential for exposing some of the motor vehicle insurance industry’s more heinous business practices. Joyce’s arraignment is set for Monday, 8/20.

Update: Judge Joyce entered a plea of not guilty, as expected, but also announced that he’s retiring from the bench when his current term ends in January. Earlier he’d said that he would run for retention to another ten-year term despite the indictment. The chairman of the state Republican party lauded Joyce’s retirement decision as “the appropriate course of action at this time for the party, his colleagues, and our judicial candidates.”