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We write in response to the article entitled “Insured's Misrepresentations in Coverage Litigation Do Not Count,” published in the Law Journal on March 4. As counsel on behalf of insurance companies, we beg to differ. In fact, we have seen numerous fraudulent claims defeated, in part, because of misrepresentations made by insureds during coverage litigation.

The authors of the article seek to discredit the case of Thomas v. New Jersey Insurance Underwriting Association, 277 N.J. Super. 630 (Law Div. 1994). While this was only a Law Division case, it was approved for publication and remains persuasive, albeit non-binding decisional law. We would therefore caution counsel not to rely too heavily on the article when advising clients. Between an article written by attorneys representing policyholders and a published opinion, we suspect the published opinion carries more weight.

If the Thomas case were as poorly informed a decision as the authors opine, or if it caused the problems that counsel suggests, then we suspect it would not have stood the test of time over the last 25 years.

The authors suggest that adherence to the Thomas decision would encourage insurers simply to deny claims without basis and then hope that the insured makes a misrepresentation during the litigation process. This is not consistent with our experience in investigating and litigating a high volume of insurance coverage cases. In reality, insurers do not typically deny claims and go to litigation over them in the absence of a fairly debatable reason to do so, consistent with Pickett v. Lloyds of London, 131 N.J. 457 (1993).

Misrepresentations during litigation are not a typical cause of claim denial. Rather, experience teaches, they are usually a reiteration of misrepresentations that have been made previously. It is our position that a lie, or a fraud, does not become any less actionable or objectionable because it occurs during litigation as opposed to before litigation.

The Thomas decision reinforces what should be good practice from the very beginning—one should tell the truth. Insurance fraud is a serious problem, whether it occurs before or during insurance litigation. New Jersey has taken a strong stand against insurance fraud, and we do not feel that it would be helpful to suggest that an insured may make misrepresentations while litigating a claim and risk nothing more than denial of the claim. Fraud is fraud, and just as insurers are governed by strict statutory and common law proscriptions against bad faith, so does (and should) the Insurance Fraud Prevention Act punish fraud by a policyholder—whenever it may occur.

Fredric Paul Gallin and Eric Harrison are attorneys with Methfessel & Werbel in Edison.