Plude v. Adams

Citations: 100 F. Supp. 3d 172; 2015 U.S. Dist. LEXIS 28337; 2015 WL 1014526Docket: Civil No. 3:12-cv-0069 (AWT)

Court: District Court, D. Connecticut; March 9, 2015; Federal District Court

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Michael Plude initiated a lawsuit against Officer John T. Petrillo, Jr. and several others, but all claims against the other defendants were dismissed. Plude's claims against Petrillo included false arrest under 42 U.S.C. § 1983 and malicious prosecution, to which Petrillo responded with a motion for summary judgment. The court granted Petrillo's motion.

Plude, a certified public accountant, provided services to Pioneer Gas Appliance Inc. from 1999 until July 2008. The case stems from Plude's arrest on June 25, 2009, for health insurance fraud and conspiracy to commit health insurance fraud, following a Shelton Police Department investigation initiated on July 22, 2008. Pioneer reported suspicions of fraud regarding Plude's alleged misuse of company funds and sought police assistance in retrieving records from him.

Petrillo's investigation revealed that Plude submitted a health insurance application stating he was employed by Pioneer as Treasurer, which Pioneer denied. Additionally, an Insurance Fraud Report from Anthem Blue Cross indicated that Plude had fraudulently added himself to Pioneer’s insurance plan without authorization, despite not being an employee. The report detailed that Plude managed to secure health insurance coverage through Anthem while circumventing proper procedures, leading to the subsequent charges against him.

Joanne Wilson, Pioneer’s former bookkeeper, allegedly orchestrated a scheme to issue payroll checks for Plude, ensuring that only enough net pay remained to cover his family’s health insurance. Following the discovery of this scheme, Wilson was terminated, and Pioneer ended its relationship with Plude. Fredrick Serra, a vendor, believed Plude was actively involved in Pioneer’s operations and always directed health benefit inquiries back to Wilson. During the investigation, various records were acquired, revealing inconsistencies in Plude's claims about his employment status. Interviews indicated Plude had claimed in August 2007 that he was running Pioneer and sought benefits through the company, which Wilson and Tirella allegedly approved. 

On April 30, 2009, documents obtained showed discrepancies in Plude’s health insurance application, which inaccurately stated he was a full-time employee. Ralph Tirella, Pioneer’s Vice President, confirmed that Plude was never an employee but an independent contractor and was unauthorized to enroll in the insurance plan. Records indicated Plude’s claimed employment start date of December 7, 2006, was incorrect, with evidence showing he was not listed as an employee until late 2007. Plude disputed the findings, asserting he became Treasurer and was approved for insurance in August 2007, and claimed his firm stopped billing Pioneer after his enrollment. He also claimed that exculpatory information was omitted from the warrant application for his arrest.

Petrillo applied for an arrest warrant for Plude, who was arrested on June 25, 2009, for health insurance fraud and conspiracy to commit health insurance fraud, as per Conn. Gen. Stat. § 53-442 and § 53a-48. The charges were nolled on March 4, 2011, in Connecticut Superior Court without plaintiff consideration. On July 9, 2010, Plude and Wilson filed a civil lawsuit (the “2010 Action”) against multiple defendants, alleging that they maliciously published false accusations of theft and unethical acts to various authorities, leading to Plude's arrest. A settlement was reached in the 2010 Action. 

Regarding the legal standard for summary judgment, it cannot be granted if there are genuine issues of material fact. The court’s role is to identify these issues without resolving them, focusing solely on whether the evidence could allow a reasonable jury to find for the nonmoving party. A "genuine" issue exists if the evidence is sufficient for a reasonable jury to rule in favor of the nonmoving party, while a "material" fact is one that could influence the case's outcome. The court reviews evidence in the light most favorable to the non-movant, but mere speculation or minimal evidence is inadequate to prevent summary judgment.

Petrillo seeks summary judgment on claims of false arrest and malicious prosecution, asserting he had probable cause to arrest Plude. The court concurs, noting that probable cause serves as a valid defense for both claims. For a Section 1983 false arrest claim, a plaintiff must demonstrate that the arrest was intentional, that they were aware of it, that there was no consent, and that it lacked probable cause. In contrast, a malicious prosecution claim requires proof that the defendant initiated criminal proceedings without probable cause and with malice.

Probable cause exists when there is sufficient information that a reasonable person would believe an offense has occurred. The determination of probable cause is based on the totality of circumstances. In this case, the relevant offense is health insurance fraud under Conn. Gen. Stat. § 53-442, which penalizes presenting false or misleading information in insurance applications.

Petrillo had evidence that Plude submitted a health insurance application with material misstatements regarding his employment with Pioneer, which would disqualify him from insurance eligibility. Testimony from Pioneer’s Vice President confirmed Plude was never an employee. Additionally, documentation indicated that Plude was not listed as an employee during the relevant period and was employed by his accounting firm, which billed Pioneer. After Plude’s health insurance enrollment began, his accounting firm stopped billing Pioneer, and payroll records revealed that Plude’s salary was structured to cover his medical insurance costs, resulting in a net pay of $0.00. This information substantiated Petrillo's conclusion that Plude committed health insurance fraud.

Plude was not considered an employee of Pioneer, nor did he work the requisite 30 hours per week to qualify for health insurance benefits, as he arranged to receive those benefits in exchange for accounting services. Plude claims that the totality of the information available to the defendant at the time of the warrant application undermined any reasonable belief in probable cause for his arrest on health insurance fraud charges. He asserts that documents provided by Petrillo, along with statements from others, exonerated him or weakened the basis for alleged fraud. 

Plude became Treasurer of Pioneer in December 2006 and was later added to the company health insurance policy in September 2007. He billed Pioneer for his services through his accounting firm until that time. The court found that the additional facts presented by Plude did not create a genuine issue of material fact regarding Petrillo's probable cause belief. Specifically, it noted that Adams's deposition did not confirm that Petrillo knew about incomplete sections of Plude's application, and Plude himself did not assert that Petrillo was informed he failed to state he worked 40 hours a week. Although Plude argued his employment status, he did not provide evidence to support his claim of being a full-time employee eligible for health insurance, rendering the factual disputes immaterial to the question of probable cause for fraud.

Pioneer employees were only eligible for health insurance if they worked 30 hours or more weekly. Plude failed to provide evidence that Petrillo had any information indicating he worked over 30 hours, aside from his claim on the insurance application stating he worked 40 hours weekly. There are no genuine disputes regarding the fact that records showed Plude continued working for his accounting firm after September 2007 and that his only compensation from Pioneer was health insurance coverage. Plude did not demonstrate that Petrillo had contrary information, only that Pioneer executives knew of his situation. The court found that the information available to Petrillo justified a reasonable belief that Plude falsely claimed full-time employment for health insurance benefits, which were only available to employees working 30 hours or more. As there are no genuine issues of material fact regarding probable cause for Plude's arrest for health insurance fraud, Petrillo is entitled to summary judgment.

Regarding qualified immunity, it serves as a complete defense to a Section 1988 false arrest claim. An officer can invoke qualified immunity even without probable cause if there is "arguable probable cause," meaning it was reasonably believed that probable cause existed or that reasonable officers could disagree on its presence. The information possessed by Petrillo indicated that Plude was not an employee of Pioneer at the time he enrolled in the health insurance plan and had likely arranged to obtain benefits through accounting services. Thus, even if a factual dispute existed concerning probable cause, it was reasonable for Petrillo to believe it existed, and reasonable officers could disagree on whether the probable cause standard was met. Consequently, Petrillo is entitled to qualified immunity regarding Plude’s Section 1983 false arrest claim.

Petrillo's request for summary judgment based on a release from the 2010 Action is denied. The release, executed between plaintiffs Plude and Wilson and defendants Pioneer and others, broadly discharges all claims against the defendants, including their affiliates and representatives, related to events prior to the release's execution. However, it explicitly does not release claims against non-parties F.W. Serra Inc. or Frederick W. Serra. According to Connecticut General Statutes § 52-572e, the intent of the contracting parties governs the scope of a release, allowing extrinsic evidence to clarify ambiguity, which deviates from the standard contract construction that favors plain meanings without outside evidence.

The release named only the plaintiffs and their insurers, excluding Petrillo and others involved in the current action. Although Petrillo highlighted that Serra was explicitly excluded while he was not, the relationships and circumstances surrounding these parties differ significantly. While there is ambiguity regarding Serra's involvement, there is none concerning Petrillo, who did not act in concert with Pioneer or its employees. The release's language and the parties' circumstances indicate a clear intent not to include Petrillo, affirming that their contractual rights and obligations should reflect this intent.

The Defendant's Motion for Summary Judgment (Doc. No. 80) is granted, resulting in the closure of the case. The court notes that the application for the arrest warrant referenced by both parties is undated and seeks the arrest of Joanne Wilson, an alleged coconspirator of Plude. The plaintiff's claim that his accounting firm billed Pioneer until August 2008 is contradicted by the last invoice, dated August 6, 2007. During Adams's deposition, he confirmed discussions with Mr. Petrillo regarding Mr. Serra's claim of authorship of parts of the healthcare application under investigation. Adams acknowledged he had a document from Plude’s office that was believed to have been sent to Serra's office. Although Serra claimed to have written portions of the application, Adams expressed disbelief but did not communicate this skepticism to Petrillo. Their discussion primarily revolved around Plude's claim to be involved in the application process.