New York Law Journal: Intentionally Caused Motor Vehicle Accidents in the Video Spotlight
By: Michael Sirignano
In California, multiple Los Angeles area residents submitted claims to their automobile insurers for damage to their luxury cars allegedly caused by a “bear” that had entered the cars in the San Bernardino Mountains. In support of their claims, the residents submitted video that showed a furry figure entering the side door of the vehicles, including a Rolls Royce, at night, climbing around the backseat and crawling out, damaging the automobiles’ interiors in the process.
However, a California Department of Insurance investigation determined that the bear was actually a person in a bear costume – and four Los Angeles area residents were arrested in November on charges of insurance fraud and conspiracy, according to the California Department of Insurance. See https://www.insurance.ca.gov/0400-news/0100-press-releases/2024/release056-2024.cfm The Department posted the “bear” video online. https://vimeo.com/1029340693/2294a5bc86.
To ensure it was not actually a bear in the video, the California Department of Fish and Wildlife reviewed the alleged bear video and opined that the purported marauding “bear” was clearly a human in a bear suit. After executing a search warrant, detectives found a bear costume in one of the suspect’s homes. Id. Apparently, the defrauded insurance companies paid out over $141,000 in connection with the fake bear attacks on the luxury automobiles.
In New York, there have been no reports of phony bears intentionally damaging automobiles (at least not yet), but in the same month that California’s phony marauding “bear” was unmasked as a human, the New York Queens County District Attorney’s Office announced the arrest of a defendant charged with intentionally staging a motor vehicle accident on the Belt Parkway – with the infamous “crash” captured on a dash cam video that went viral. See https://queensda.org/brooklyn-man-charged-with-staging-car-crash-on-belt-parkway-in-rosedale/ and https://abc7ny.com/post/belt-parkway-viral-crash-brooklyn-man-arrested-accused-staging-accident-insurance-fraud/15527118/.
As seen in the viral Belt Parkway video, the defendant and others in a silver Honda Civic cut-off another car, forcing the driver to stop on the busy highway – then the Honda Civic inexplicably reversed and rammed into the victim’s car. Four people exited the Honda Civic, one apparently leaving the scene in another car, while the remaining “passengers” exited the offending vehicle holding their heads and snapping pictures.
The Queens District Attorney announced recently that one individual was arrested and charged with staging a motor vehicle accident in the second degree, criminal mischief in the third degree, reckless endangerment in the first degree, conspiracy in the fifth degree, and insurance fraud in the fifth degree, and that their investigation is ongoing. See id.
Staged Accidents and Automobile Insurance Fraud
Public awareness of staged motor vehicle accidents has been raised by the viral video of the Belt Parkway crash and subsequent arrest last month, but staged, intentionally-caused losses have been a problem for insurers for a long time. As noted by the New York Court of Appeals in 2003, it has been common for “ringleaders (often associated with organized crime) [to] purchase minimum automobile insurance, perhaps under a fraudulent name, on wrecked or salvaged vehicles, and recruit others to fill up the vehicles and participate in staged accidents (typically sideswipes or fender benders). Med. Soc’y v. Serio, 100 N.Y.2d 854, 861 (2003). “These purported victims were then steered to corrupt medical clinics, called ‘medical mills,’ where they feigned aches, pains and soft tissue injuries. The medical mills would then generate stacks of medical bills for each passenger, detailing treatments and tests that were unnecessary or never performed.” Id.
At times, various crime rings involved in intentionally-caused accidents have been the subject of indictments and criminal proceedings. For example, as described in a 2013 indictment and press release issued by the United States Attorney’s Office, Eastern District of New York, eight individuals were arrested for intentionally causing U-Haul accidents in Kings and Nassau counties in order to obtain insurance payments. See USA v. McFadden et al, 13-cr-00284-DRH-ARL (E.D.N.Y. 2013); https://www.justice.gov/usao-edny/pr/eight-indicted-two-million-dollar-staged-accident-conspiracy.
The scheme involved the defendants and their co-conspirators renting vehicles from U-Haul offices in Nassau and Brooklyn and thereafter driving, or riding in, those vehicles to various locations where they caused intentional “accidents.” Id. As part of the alleged scheme, following the staged accidents, the defendants falsely reported to law enforcement officers that they had been involved in real accidents, causing the law enforcement officers to file motor vehicle accidents reports containing false information. The defendants then visited various medical offices for treatment of their purported physical injuries, causing fraudulent claims to be submitted to automobile insurers. Finally, the defendants visited attorneys’ offices and caused the filing of false personal injury claims. Id.
Some of the defendants in USA v. McFadden went to trial and were found guilty by a jury on various counts, while others pled earlier in the proceedings. One of the defendants who pled guilty indicated he was recruited to participate in a staged accident and then submitted fraudulent insurance claims, receiving a total of $7,000. Id. No doubt others who were part of the scheme profited significantly more from the fraudulent medical services, fraudulent insurance claims, and fraudulent personal injury lawsuits.
In United States v. Jean, 2018 U.S. Dist. LEXIS 171056 (S.D.N.Y Oct. 3, 2018), the United States District Court for the Southern District of New York recounted a large scale scheme to defraud insurers through intentionally-caused accidents in connection with a defendant’s motion to set aside his sentence of 120 months' imprisonment and three years' supervised release.
In denying defendant Maxo Jean’s motion, the District Court noted that “[f]or nearly six years, Jean served as the leader of a conspiracy to deliberately cause car accidents and defraud insurance companies”; “Jean recruited drivers and passengers, whom he directed to crash into the cars of innocent victims”; and “after the accidents, Jean brought the drivers and passengers to corrupt medical clinics for treatment for fake injuries, and then directed those individuals to file fraudulent insurance claims for those fake injuries.” Id. According to the Court, Jean’s group staged at least 31 accidents.
In the civil context, it is well established that an intentionally caused or staged vehicular collision is not a covered accident under an insurance policy. See e.g., Adirondack Ins. Exch. v. Rodriguez, 215 A.D.3d 904 (2d Dept. 2023). When a collision is intentionally caused, the insurer is not obligated to provide coverage, even to innocent third parties. Id.
Notably, while an insurer may put forth evidence of a fraudulent scheme in order to prove that a collision was not an accident, the insurer need not prove fraud. See V.S. Med. Servs. PC v. Allstate Ins. Co., 25 Misc.3d 39, 40 (App. Term, 2d Dept. 2009); NYRX Pharm. Inc. v. Mid-Century Ins. Co. 2023 N.Y. Misc. LEXIS 8283 (Civ. Ct., Kings Co. 2023).
In affirming a judgment of the civil court, after a non-jury trial, the Appellate Term in V.S. Med. Servs held that the defendant insurer could properly premise its defense upon a lack of coverage and establish this defense by a preponderance of the evidence – rather than by clear and convincing evidence – because it was not required to prove that the collision was the product of fraud. The Appellate Court noted, agreeing with the trial court, that it only mattered whether the accident was unintentional (a “true accident”) or whether at least one driver intended to make contact. Id at 41. If the collision was an intentional occurrence, it was outside the scope of the policy “regardless of why or how it occurred or who was behind it.” Id.
In Rodriguez, supra., the plaintiffs demonstrated their prima facie entitlement to judgment as a matter of law by proffering evidence that the collisions were intentional. “Specifically, the plaintiffs proffered evidence that the insured individuals procured the subject insurance policies fraudulently and that the collisions occurred under similar circumstances.
In both collisions, the insured individuals were not in the insured vehicles at the relevant time, the insured vehicles struck a UPS truck while exiting a parking space, the individuals involved in the collisions were all closely interrelated, and all of the individuals allegedly injured in the collisions sought treatment from the same healthcare providers.” Id., 215 A.D.3d at 905-906.
In contrast, in NYRX Pharm. Inc. v. Mid-Century Ins. Co., the court denied summary judgment to an insurer where the insurer submitted two alleged affidavits from the drivers of vehicles, one of which included a U-Haul truck, which ostensibly admitted that the accident was intentionally caused and that they were promised $500 for participating in the staged collision.
The court took issue with the fact that the affidavits used were “fillable” documents submitted without any evidence that the alleged conspirators were fluent in English or understood what they were signing. Further, the affidavits were notarized only after the attorney for the alleged conspirators withdrew from their representation, plainly leaving the court with additional questions about the veracity of the “affidavits.” Id, 2023 N.Y. Misc. LEXIS 8283 *16.
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