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Coordinating Civil and Criminal Arson Investigations

by Guy E. Burnette, Jr., Esquire

Contents


Introduction

Arson is an absolute defense to an insurance claim where the claimant has caused the fire. Arson is also a crime. The investigation of a criminal arson case is subject to a set of rules which differs greatly from the rules governing a civil arson investigation. The two investigations proceed along parallel lines. While the lines may be closely parallel, they do not intersect. The fundamental objectives are different: a criminal investigation seeks to solve a crime and bring the responsible party to justice, whoever it may be; a civil investigation seeks to determine whether a specific individual - the claimant - was responsible for the fire and to refuse payment if he was. A criminal investigation of arson is subject to a set of rules determined by the criminal code and constitutional law. A civil investigation of arson is controlled by the insurance code and contract law. A criminal investigator can do things which a civil investigator cannot do, and vice versa. A criminal investigator can gain access to information which a civil investigator cannot obtain, and vice versa. A criminal investigator has resources available to his investigation which are not available to the civil investigator, and vice versa. Between the two investigations, virtually all of the resources and information an investigator could ever want are available. Coordinating the criminal and civil investigations and promoting cooperation between the two investigations will enable each side to carry out its own investigative function while maximizing the benefit of the resources and information available from all sources. Where cooperation cannot be developed, conflicts can arise between the criminal and civil investigations of an arson case. When that happens, the investigative efforts of both sides are frustrated and the investigative product will suffer. Only the arsonist stands to gain in that situation.

Understanding the Framework of Civil and Criminal Arson Investigations

A criminal arson investigation works within the framework of the criminal justice system. The investigation is conducted on behalf of the state and the investigator acts under the authority of the state. The criminal investigator exercises the police powers of the state in carrying out his investigation. There are limits on his ability to question and compel cooperation from the focus of the investigation. Other witnesses can be compelled to appear and produce the records and evidence necessary to complete the investigation. The investigative subpoena is a powerful tool in carrying out these activities. However, the criminal investigator will be subject to statutory and constitutional limitations on the scope of the investigation and the methods by which the investigation is undertaken.

The civil investigator acts on behalf of a private citizen, the insurance company. His investigative authority is determined by contract law and the provisions of the insurance code, as well as certain administrative requirements. At the investigative stage, he can only compel the cooperation of the other party to the insurance contract - the claimant. Under the terms of the contract, he can require the claimant to give a statement and produce all relevant books and records. However, he has no authority over any other parties and can only request their cooperation.

The resources available to the criminal investigator include all of the traditional law enforcement resources such as intelligence networks, inter-agency contacts, forensic resources and laboratories, subpoena process, grand jury investigations and the ability to "make a deal" with informants and accomplices. Additionally, the criminal investigator has the ability to access information from the civil investigator under the circumstances set forth below.

The civil investigator does not have direct access to any of those resources. At best, he may be able to share in the information derived from those resources. However, the civil investigator has two powerful resources at his disposal: time and money. He can devote the time necessary to complete the investigation without concern about his caseload. He has the financial resources to carry out the investigation of a complex arson case without concerns about a department budget or unauthorized expenditures. There are, of course, practical limitations to this. Still, the resources of time and money are among the most valuable resources available to the civil investigator.

Investigative Access to the Fire Scene and Evidence

The criminal investigator has first access to the fire scene and can control it. He can take into custody all of the evidence relating to the fire. He can deny access to the fire scene to everyone else, even the owner or occupant of the property. He has the exclusive opportunity to analyze the fire scene before it has been disturbed or changed in any way.

The civil investigator usually must wait until the fire scene is released. He can request access to the fire scene while the criminal investigation is ongoing, but has no right to demand it. In most cases, the criminal investigator has already completed his fire scene analysis before the civil investigator even arrives there. The fire scene has necessarily been disturbed and altered. He must reconstruct the fire scene and determine the conditions which existed at the time of the fire. Otherwise, his cause and origin determination may be based upon a faulty premise. Critical evidence may already have been removed by the criminal investigator. Remaining evidence may have been disturbed or discarded in the process of the criminal investigator's fire scene analysis. The civil investigator may be able to overcome these problems with a little extra effort, but always confronts them in his investigation. This necessarily complicates the job for the civil investigator. For this reason, cooperation from the criminal investigator is essential.

Striking a Delicate Balance

The criminal investigator faces a concern in sharing information and cooperating with the civil investigator. His single greatest concern is that confidential and sensitive information developed in his investigation will be disclosed. Additionally, he is concerned that something will be done by the civil investigator to jeopardize his ongoing investigation. Contact with a confidential informant or surveillance activities can be disrupted inadvertently by the civil investigator. Effective communication between the criminal investigator and civil investigator is the key to avoiding such problems.

The civil investigator has his own concerns about the disclosure of his investigative information and activities. The release of confidential information from his investigative file can not only jeopardize his investigation, it can create far more serious problems for his client. It can lead to allegations of "bad faith" against the insurance company or a claim that the insurance company is trying to promote a prosecution of its insured. The civil investigator needs to communicate these concerns to the criminal investigator in order to avoid problems.

The civil investigator's greatest concern is that information will be withheld from him by the criminal investigator. Time is the enemy of the civil investigator, as he must complete his investigation within a short time frame. He needs to find out everything he can possibly learn, as quickly as possible.

Accessing Information

As previously stated, the criminal investigator has a number of resources for gathering information in the investigation of a criminal arson case. There are a number of important resources which can be utilized in the course of the investigation.

Inquiries in the scope of an official investigation carry the "authority of the badge". Most citizens will cooperate with an investigator or a law enforcement officer when asked to do so. Cooperation on a voluntary basis is the primary source of information for the criminal investigator.
Information can be obtained through legal process by the use of an investigative subpoena, search warrant, administrative warrant, grand jury subpoena or court authorized wiretap. With the use of these tools, the criminal investigator can get what he needs with or without the cooperation of other parties.

Resources within the law enforcement community can provide other sources of information. Criminal intelligence networks, inter-agency task forces, law enforcement data bases and forensic resources are all available to the criminal investigator involved in an arson case.

Through the arson immunity reporting act (New York Insurance Law §319), the criminal investigator has the ability to access virtually all of the information developed in a civil arson investigation. Much of this information would not otherwise be available to the criminal investigator. It is one of the most important sources of information available to the criminal investigator.

The civil arson investigator can only mandate the cooperation of one person - the claimant. The claimant is required to cooperate in the investigation by providing information, giving sworn statements and turning over books and records related to the investigation. This is only one source of information and may not be enough to complete a full investigation of the case.

Information from other sources requires a lot of effort and a little luck. Information from the public records is available if the investigator knows where to look for it and how to find it. Information from certain sources can be obtained through the use of a disclosure release from the claimant. This includes such matters as financial records, tax records, credit records, sales and purchase records, business records and other such information. Other sources of information can only be approached on a voluntary basis. Information from witnesses, family members, neighbors, friends and business associates may or may not be provided to the civil investigator. He can only request it, he cannot compel it.

Information from criminal investigation resources depends upon a cooperative relationship between the civil investigator and criminal investigator. Sensitive information may be withheld based upon the status of an ongoing criminal investigation. However, the arson immunity act is intended to promote cooperation between the civil investigator and criminal investigator so that this information can be made available. An understanding of the arson immunity act is the key to promoting cooperation between the two sides of an arson investigation.

The Arson Immunity Reporting Act: The New York Case

New York Insurance Law §319 contains the New York Arson Immunity Reporting Act. The first immunity act was enacted in Ohio in 1978. Since then, every other state has adopted similar legislation. Every state now has an arson immunity reporting act, including the district of columbia. A federal arson immunity act is expected to be proposed to congress and may soon be enacted.

The purpose of the immunity act is to promote cooperation between the criminal and civil sector. It serves to ensure important information about an arson case is made available to both sides of the investigation. It mandates the exchange of information under penalty of law. It provides a grant of immunity from civil liability for insurance companies sharing information developed in their investigation. The concept of an immunity act resulted from the concerns of insurance companies that they could be held civilly liable for turning over their information to the authorities, which was often the case prior to the enactment of the first immunity act. Despite the fact this legislation has been around more than fifteen years, there is still some uncertainty on the part of both criminal and civil investigators about the application of this law.

The immunity reporting acts in place around the country vary from state to state. Most of the general provisions are contained in the immunity act of every state. However, there are differences in certain aspects of the immunity act depending upon the particular jurisdiction.

This is the text of the current New York Arson Immunity Reporting Act:

§319 release of information resulting from insurers' investigation of fires
(a) in this section, "authorized law enforcement agency" means:

(1) any official of any agency authorized to investigate a fire at the place where the fire occurred;
(2) the district attorney responsible for the prosecution in the county where the fire occurred; and
(3) solely for the purpose of subsections (b) and (c) hereof, the Federal Bureau of Investigation or any other federal agency, and the United States Attorney's Office when authorized or charged with investigation or prosecution of the fire in question.

(b) each insurer authorized to issue policies covering losses incurred to personal or real property through fire shall contact the appropriate authorized law enforcement agency and release information in its possession resulting from an investigation conducted by it pertaining to any such fire loss, should the insurer be of the opinion that the fire was caused by other than accidental means. The notification to a single authorized agency shall be sufficient for purposes of this section, provided, however, that in cities with a population over one million, notification to the appropriate fire protection agency shall be sufficient for the purposes of this section.

(c) any authorized law enforcement agency may, in writing, require the insurer to release, to that agency, any relevant information or evidence deemed important to the authorized law enforcement agency that the insurer may have in its possession relating to the fire loss in question. Relevant information shall include, but shall not be limited to:

(1) pertinent insurance policy information relevant to a fire loss under investigation and any application for such a policy;

(2) policy premium payment records that are available;

(3) history of previous claims made by the insured, and

(4) material relating to the investigation of the loss, including statements of any person, proof of loss, and any other evidence relevant to the investigation.

(d) any insurer providing information to an authorized law enforcement agency or agencies concerning a particular fire loss for which the insurer has provided information pursuant to this section shall have the right to request relevant information and to receive within a reasonable time, not to exceed thirty days after the receipt of such request, the information requested, provided that the information is not subject to the provisions of paragraphs (a), (e) and (f) of subdivision two of section eighty-seven of the public officers law. This subsection shall confer no substantive or procedural rights on a defendant in a criminal action, proceeding or prosecution.

(e) the authorized agency provided with information pursuant to subsection (c) hereof, in furtherance of its own purposes, may release or provide such information to any other authorized law enforcement agency.

(f) any information or evidence furnished pursuant to this section shall be held in confidence by the appropriate agency until such information is required to be released pursuant to a criminal proceeding, or if such agency shall be served a summons or subpoena to testify as to any information or evidence in its possession regarding such fire loss in any civil action where an insured or other person is seeking recovery under a policy against an insurer for fire damage to real or personal property.

There are several key components to the New York Arson Immunity Reporting Act. First, insurance companies have the affirmative responsibility to contact the appropriate authorized law enforcement agency and report any case of suspected arson. Even though the fire may not be under investigation by the criminal authorities, the insurance company must notify the authorities when a case of suspected arson is discovered.

Second, the insurance company must respond to any request under the immunity act by providing virtually everything in its investigative file. The insurance company is required to turn over its file and cooperate fully in the investigation of the case.

Third, the information can be shared with any other law enforcement agency investigating the fire. The agency provided with the information may release the information to any other authorized law enforcement agency.

Fourth, the act specifically provides that the information turned over by the insurance company be kept in strict confidence until required to be released pursuant to a criminal proceeding or by a summons or subpoena in a civil action. There is no requirement that the insurance company receive advance notice of any intended disclosure.

Fifth, the act requires the cooperation of the criminal investigator in the insurance company's investigation upon request and requires providing testimony at a civil arson case on behalf of any party serving a summons or subpoena. The concerns about jeopardizing an ongoing criminal investigation are usually resolved by the fact it typically takes several years for a civil arson case to come to trial. However, the insurance company needs to share in the results of the criminal investigation long before that and the act provides an insurance company the right to request relevant non-privileged information from the law enforcement agency investigating the fire. Although the criminal investigation may still be ongoing, the insurance company needs to share in the information in order to make a decision on the claim, usually within thirty to sixty days of the filing of a claim. Without the information, the insurance company may be put at risk in deciding whether or not to raise the defense of arson to the claim.

The arson immunity reporting act is a powerful tool in the investigation of arson by criminal and civil investigators. An understanding and appreciation of the immunity act by both sides will enable everybody to benefit while maintaining the independence of the two investigations.

Cooperation Through Understanding

As previously stated, while there is much in common between a criminal investigation of arson and a civil investigation of arson, there remain importance differences. Many criminal investigators have little or no understanding of the processes involved in a civil arson investigation. Many civil arson investigators have little or no understanding of the processes involved in a criminal arson investigation. Sometimes the two sides don't know why the other side is doing something or not doing something. This can lead to frustration, anger and bewilderment in trying to understand what the other side is doing. Here are some of the more common questions raised by criminal and civil investigators when trying to understand what is going on. A better understanding and awareness of what the other side is doing will lead to a spirit of trust and cooperation which furthers the interests of all investigators.

Common Question #1: "Why aren't the authorities doing anything?"

Civil investigators are often frustrated to learn that nothing is happening on the criminal side of the investigation. Although a scene investigation may have been completed, the background investigation and follow-up by the authorities may not be proceeding. To the civil investigator, it may look like the authorities are not doing their job. However, the unfortunate truth is that arson investigators in the public sector are among the most understaffed and overworked individuals. When an investigator is asked to handle fifteen to twenty new fire investigations each month, he faces an impossible burden. Unless and until there is adequate funding and staffing for public sector fire investigators in this country, this problem will always be with us.

Common Question #2: "Why haven't they arrested this guy?"

a civil investigator who has developed a strong case of arson often wonders why the authorities have not made an arrest. There may be a number of explanations for this. First, all of the information may not be known to the authorities. It is the responsibility of the civil investigator under the immunity act to make sure all information developed in the civil investigation is turned over to the authorities. Second, the evidence may not be legally sufficient to file criminal charges. Many civil investigators don't have an appreciation of the burden of proof in criminal cases, which makes it more difficult to pursue an arrest. It is not enough to have a strong case; it must be a case proved beyond all reasonable doubt. Third, unless the district attorney is willing to file charges it makes no difference what kind of case you have. The charging decision can be based on a number of factors, not just the sufficiency of evidence. When other factors come into play, they can cause a seemingly strong case to be closed without arrest.

Common Question #3: "Why is the insurance company in such a hurry?"

For law enforcement investigators, the only real deadline is the applicable statute of limitations. In arson cases that is typically four (4) years. Of course, there is always a practical limitation in terms of the availability or memory of a witness, the existence of physical evidence and other such problems. In terms of an absolute deadline, however, there is only the statute of limitations. For insurance companies, it is a far different matter. In a strict legal sense, there is no such thing as an insurance "policy". It is an insurance contract. All of the rights and responsibilities of the insurance company and the corresponding rights and responsibilities of the insured person are contained in that contract. An insurance contract contains a "loss payable clause". This is a statement in the contract of when a claim is due and payable. In a commercial insurance policy, it is typically thirty (30) days after the submission of all of the claim documents and compliance with the other duties imposed upon the insured in presenting a claim. It is important to note that on the thirtieth day the claim is due and payable if all other conditions have been met. In a typical homeowners insurance policy, the period of time is sixty (60) days. There are virtually no insurance policies that allow more than sixty (60) days after submission of all claim documents and compliance with the other duties for the insurance company to make its decision. In most situations, the insured will submit the claim documents and satisfy all other duties within the first thirty (30) to sixty (60) days after the fire. This then leaves the insurance company another thirty (30) to sixty (60) days (whichever is applicable) to complete its investigation and make a final decision. It is highly unusual for the entire process to take more than one hundred twenty (120) days after the fire.

anybody who has ever participated in an arson investigation knows that this is not much time. In some cases, it is simply not enough time. However, the insurance company must make its decision or else a decision will be made for it. If a company has not made a formal decision on the claim by the deadline imposed under the contract of insurance, it will be considered as if the insurance company had denied the claim. Once that happens, the insured has no other responsibilities to the insurance company in terms of cooperating in the investigation, supplying records, giving statements or anything else. The insured is free to file suit without waiting any further. Once a lawsuit has been filed, the insurance company can be held liable for interest, costs and the insured's attorney fees unless the insurance company wins the lawsuit outright. The award of attorney fees in fire cases can be substantial. It can reach several hundred thousand dollars in a complex arson case. Certainly, the prospect of facing all of that puts a great deal of pressure on the insurance company to make a timely decision. The possibility of a "bad faith" claim seeking punitive damages into the millions of dollars is every insurance adjuster's worst nightmare. If it seems that the insurance company is in a rush to complete its investigation, that is absolutely right. They have to be in a hurry.

Common Question #4: "Why did the insurance company pay this S.O.B?"

"I can't believe the insurance company paid this claim!" "We're just about to break this case open!" "Everybody knows the S.O.B. is guilty as hell!" When a law enforcement investigator is hot on the trail of an arsonist, it can be shocking to learn that the insurance company has just paid the claim. However, there are a number of reasons why an insurance company must sometimes pay a suspicious claim. Here are a few of those reasons.

First, the time deadlines referenced above can force an insurance company's hand. While a case can, in fact, be about to "break wide open" the risk in waiting for that to happen can be enormous. If something goes wrong, if a witness changes his story, if something new comes to light pointing to another suspect, then an insurance company can find itself in serious trouble. If this happens in a law enforcement investigation, everybody can simply say "we were wrong" and walk away. An insurance company cannot walk away. The claims adjuster handling that file knows that the wrong decision can ruin his career. For him, it is a high stakes game.

Another reason for the payment of a suspicious claim can be traced to something that happened earlier in the handling of the file. When an insurance company makes a mistake, it will probably come to light if the claim is later litigated. Improperly obtained evidence could lead to a major lawsuit. Allegations of libel and slander may be raised against the company. If the company was not alerted to the suspicious circumstances of the claim, it may already have committed to payment of the claim or may have caused the insured to take some actions in reliance upon the payment of the claim. Waiver and estoppel arguments can cause an insurance company to pay a claim. In arson cases, perhaps the most common reason for payment of a suspicious claim is concern about the cause and origin aspect of the case. All of the suspicious circumstances in the world mean nothing unless the fire can be proved to be incendiary in origin. An insurance company may conclude that the evidence of incendiarism is weak or may learn that the insured has retained a fire expert who will testify that the fire is accidental in origin. In that event, an insurance company will have to decide if it is willing to take the risk of losing at trial, with all of the consequences outlined above, when the fundamental issue of incendiarism is in dispute.

Common Question #5: "Why did the insurance company pay off the arsonist's mortgage?"

Once again, the answer is found in the contract of insurance. Virtually every insurance policy contains a section dealing with the rights of mortgage companies and lienholders on the property. In almost all policies, it is specifically stated that the mortgage company or bank will still be paid for its interest in the property no matter what the named insured may do to cause a loss. When a fire occurs to property which is subject to a mortgage or lien, the claim of the mortgage company or bank will be treated completely separate from the claim of the named insured or property owner. In cases of arson, unless the mortgage company or bank was itself involved in causing the fire, their claim will be paid. It is truly ironic that while a mortgage is often the primary motive behind a case of arson, the insurance company has no choice but to pay off that mortgage even when it is proved that the insured property owner set the fire.

Conclusion

The resources and rights provided to criminal and civil investigations of arson operate within distinct frameworks. The underlying objectives of the investigations are different, although the two investigations are frequently pointed in the same direction. The information developed in the course of the respective investigations brings both sides closer to the truth. Each side has access to certain information that the other side cannot obtain. Each side has distinct advantages and disadvantages encountered in the investigation. Bringing the two investigations together provides the best of both worlds. The ability to do so without jeopardizing either side is dependent upon a respect and understanding of each side's concerns. When that can be done, the interests of both sides will be served.

Reprinted with permission from the author.

 
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