UNEARTHING THE TRUTH IN CLAIMS INVESTIGATIONS The Use Of Polygraphs And Other Techniques Thomas K. Mullins Gass Weber Mullins LLC

HONESTY DETECTION TESTS: What Can You Do and How Can You Use Them? Gass Weber Mullins LLC

What Can You Do? Relevant Wisconsin Laws Regarding the Use of Honesty Testing Devices and Disclosure of Results Employment Relations: Wis. Stat. § 111.37 (and 29 U.S.C. § 2001, et. seq.) Crimes Against Privacy: Wis. Stat. § 942.06. Gass Weber Mullins LLC

The Use of Honesty Tests In Employment Relations (Wis. Stat. § 111.37) Applies to polygraphs, voice stress analyzers and all similar tests. An Employer Cannot: Require or request that an employee or prospective employee take a test. Use, accept, refer to, or ask about the results of a test taken by an employee or prospective employee. Fire, discipline, discriminate, deny employment or promotion, or threaten an employee or prospective employee for refusing or failing test. Gass Weber Mullins LLC

The Use of Honesty Tests In Employment Relations (Wis. Stat. § 111.37) Exceptions for private employers: An employer, in some circumstances, may request that an employee take a polygraph test in an investigation of an economic loss or injury to a business when the employer has a reasonable suspicion that the employee was involved. An employer, in some circumstances, can administer a polygraph to prospective employees if engaged in the business of providing security personnel to protect facilities that have a significant impact on public health, safety, and welfare (e.g. power plants) or money. An employer that manufactures, distributes, or dispenses controlled substance, in some circumstances, can administer a polygraph to an employee relating to an ongoing investigation or to a prospective employee if the prospective employee would have access to the substances. Gass Weber Mullins LLC

The Use of Honesty Tests In Employment Relations (Wis. Stat. § 111.37) Limitations and Miscellaneous Requirements: An employer cannot rely solely on test results or a refusal to submit to a test as a basis for an adverse employment action despite the fact that the employer falls within one of the enumerated exceptions for administering tests. In order to administer a test an employer must follow the requirements enumerated in the statute relating to notice, administration, prohibited questions, and preconditions for adverse employment actions. Violations of the statute are punished by forfeiture’s of up to $ 10,000. Gass Weber Mullins LLC

The Use of Honesty Tests In Employment Relations (29 § 2001 et seq.) The Federal Employee Polygraph Protection Act (“EPPA”) provides substantially similar prohibitions and exceptions on the use of lie detector tests. The EPPA applies to employers engaged in or affecting commerce or in the production of goods for commerce. The EPPA provides for a similar civil penalty of up to $10,000 for any violation. Gass Weber Mullins LLC

Crimes Against Privacy (Wis. Stat. § 942.06) Applies to polygraphs, voice stress analysis and all similar tests. Prohibits: Anyone from requiring or administering a test without the prior written and informed consent of the subject. Anyone from disclosing the results of a test or that a person has taken a test without the prior written and informed consent of the subject. A violation constitutes a Class B misdemeanor punishable by a fine of up to $1,000 and 90 days imprisonment. Gass Weber Mullins LLC

How Can You Use Honesty Detection Tests In Court? The Admissibility of Evidence Relating Honesty Detection Tests in Insurance Coverage and Bad Faith Cases Gass Weber Mullins LLC

Wisconsin Law Gass Weber Mullins LLC The General Rule Concerning Test Results: The results of polygraph tests are inadmissible in civil actions. Estate of Neumann v. Neumann, 2001 WI App 61, 242 Wis. 2d 205, 626 N.W.2d 821. Gass Weber Mullins LLC

Wisconsin Law Gass Weber Mullins LLC The Rule Concerning an Offer to Take A Polygraph: An offer to take a polygraph test is relevant to an assessment of the offeror’s credibility. It might be admissible if the offeror believes the test is: Possible Accurate Admissible A person must voluntarily offer to take the test. A person does not offer to take a test when they do so at the request or suggestion of another person (including their attorney). State v. Santana-Lopez, 2000 WI App 122, 237 Wis. 2d 332, 613 N.W.2d 918; Estate of Neumann v. Neumann, 2001 WI App 61, 242 Wis. 2d 205, 626 N.W.2d 821. Gass Weber Mullins LLC

The Law In Other Jurisdictions The General Rule There Is No General Rule Courts Throughout the Nation Have Adopted Different Rules For The Admissibility of Evidence Relating to Polygraphs and Similar Tests Depending on Numerous Factors: Per se rules against admissibility vs. leaving it to the trial court’s discretion. Coverage Claims vs. Bad-faith Claims Evidence relating to results vs. Evidence relating to an offer or refusal to take a test Stipulation to admissibility Gass Weber Mullins LLC

Framework For Admissibility Of Test Results Frye v. United States: One of the first cases to discuss the admissibility of honesty tests. Court held that the results of a “Systolic Blood Pressure Deception Test” were inadmissible as unreliable because the test had not been sufficiently established to gain general acceptance in its particular scientific field. Gass Weber Mullins LLC

Framework For Admissibility Of Test Results Under the Daubert Standard: The admissibility of all scientific evidence was altered in 1993 with the adoption of a new standard: In Daubert, the Supreme Court held that Federal Rule of Evidence 702, governing the admission of scientific expert testimony, superseded Frye v. United States. Under Daubert the court becomes a gatekeeper in determining admissibility based on numerous factors: whether the theory or technique can be and has been tested. whether it has been subjected to peer review. whether the technique has a high known or potential rate of error. whether the theory has attracted widespread within a relevant scientific community. Gass Weber Mullins LLC

Considerations Regarding Admissibility Determinations on the admissibility of honesty detection test evidence typically revolve around two considerations: Questions concerning the reliability of the evidence. Concerns over supplanting the jury’s duty to determine the credibility of evidence vs. providing information to assist the trier of fact. Gass Weber Mullins LLC

The Typical Scenario An insured makes a claim for a loss. During the investigation, the insurer suspects that the insured was complicit in the loss. The insured either takes, offers to take, or refuses to take an honesty detection test. The insurer denies the claim and either (1) the insured sues for coverage and/or bad-faith denial, or (2) the insurer seeks a declaratory judgment regarding coverage. Can evidence of the results, evidence of the offer or refusal to take the test, or evidence of the circumstances surrounding the test, offer, or refusal be admitted at trial? Gass Weber Mullins LLC

Admissibility In Coverage Claims Per Se Inadmissibility Rules: Many courts hold that the results of honesty detection tests are inadmissible as substantive evidence (i.e. evidence showing the complicity of the insured in the loss that is the subject of the claim). These courts prohibit insurers from using poor test results to prove there was no coverage and also prohibit insured’s from using positive test results to show there should have been coverage. Gass Weber Mullins LLC

Admissibility In Coverage Claims Per Se Inadmissibility Rules: Many courts also hold that an insured’s offer or refusal to take a test is likewise inadmissible as substantive evidence (i.e. evidence showing the complicity of the insured in the loss that is the subject of the claim). These courts typically find that since test results are inadmissible (as unreliable) an offer or refusal to take an unreliable test has little probative value but great potential to prejudice the jury. Again, this per se rule prohibits both insurer’s and insured’s from using evidence of an offer or refusal Gass Weber Mullins LLC

Admissibility In Coverage Claims Stipulation Concerning Admissibility: In an effort to admit evidence relating to honesty tests parties sometimes agree prior to the test that the results will be admissible. Some courts have admitted evidence of test results pursuant to a stipulation out of fairness, since the party on the losing end of the test would have ultimately sought to admit it if the results would have been different. Other courts hold that regardless of a stipulation, concerns over a tests reliability and its affect on the jury’s credibility determination make it inadmissible. Gass Weber Mullins LLC

Admissibility In Coverage Claims Admissibility Left to Court’s Discretion: In some jurisdictions the admission of honesty test evidence is a matter left to the court’s discretion. Some jurisdictions apply this rule to test results while some maintain a per se inadmissibility rule for results and only allow the court to exercise discretion for evidence concerning an insured’s offer or refusal to take a test. A court’s exercise of discretion requires it to weigh the probative value of the honesty test evidence against the evidence’s prejudicial effect. Gass Weber Mullins LLC

Admissibility In Coverage Claims Evidence relating to honesty tests may be admissible for other purposes: Impeachment - If an insured testifies that he/she offered to take a honesty test, the insurer may be allowed to offer evidence that the insured failed the test. Evidence that an insured refused to take a test may be admissible as it relates to admissions the insured made at the time of the refusal Gass Weber Mullins LLC

Admissibility In Bad Faith Claims Per se rules regarding the admissibility of test results: Some courts allow admission of test results in bad-faith cases as proof of the insurer’s state of mind. Evidence that the insured failed a test supports an insurer’s good faith defense while evidence that an insure passed a test supports a bad-faith denial. Other courts, however, hold that even in bad faith cases, testimony regarding the results of an honesty test are inadmissible since such evidence is too unreliable for an insurer to reasonably rely upon in denying a claim. Gass Weber Mullins LLC

Admissibility In Bad Faith Claims Admissibility of Refusal or Offer Left to Court’s Discretion: In support of an insurer’s good-faith defense a court may admit evidence that the insured refused to take a honesty detection test since the probative value of untruthfulness outweighs any prejudice An insured may also be allowed to admit evidence that he/she offered to take a honesty test in support of a bad faith claim to show cooperation with the claim investigation. Gass Weber Mullins LLC

Admissibility In Bad Faith Claims Insurer’s Demand That Insured Submit To Honesty Test: An insurer should carefully consider whether to request that an insured take a honesty test. When an insurer has no legal right to submit an insured to a test, the request itself may be considered evidence of bad faith. Gass Weber Mullins LLC

Admissibility In Coverage/Bad Faith Claims When Coverage and Bad Faith Claims are asserted simultaneously: Courts that typically hold that evidence relating to test results or an offer or refusal to take a test is inadmissible in coverage cases, also may not admit the evidence to prove or defend a bad faith claim due to the prejudice the evidence could cause the coverage claim. Depending on the rules of the jurisdiction, counsel may want to consider limiting claims to coverage, bifurcating the claims, or trying the case to the bench. Gass Weber Mullins LLC Gass Weber Mullins LLC

The Use Of Polygraphs And Other Techniques UNEARTHING THE TRUTH IN CLAIMS INVESTIGATIONS The Use Of Polygraphs And Other Techniques Thomas K. Mullins Gass Weber Mullins LLC Gass Weber Mullins LLC