Skylines News: Legislation To Halt the Epidemic of Staged Accidents Receives NY District Attorneys' Endorsement, Opposition by Unions

By: Skyline Restoration Staff

A8981/S8413 would make staging a construction site accident a Class E felony.

Staged Accidents bill A8981/S8413, that would make staging a construction site accident a Class E felony, was introduced by State Senator Neil Breslin and Assemblyman David Weprin at a press conference in Albany on March 5th. A coalition of organizations stood in support.

This proposed legislation is key to halting the rampant epidemic of fraudulent claims that threatens to cripple New York City on multiple levels.

In its annual (2023) Construction Safety report, the NYC Department of Buildings highlights a concerning trend: Despite the decline in violations and Stop Work Orders issued by the Department —a clear sign of more sites operating in compliance— worksite injuries are on the rise for a third straight year, increasing by 25 percent compared to 2022. Coinciding with the increase in reported injuries, is an increase in injuries that are investigated and where no safety violations are found.

Multi-year data collected by insurance investigators, underwriters, and legal teams, unveils a troubling nexus of staged accidents and fraudulent claims, the result of the growing exploitation of New York State Labor Law §240/241 (the Scaffold Law), which holds contractors and property owners strictly liable for any “gravity-related’ incident.

A distinguishing characteristic of the Staged Accidents bill is that it targets not only the claimants, but anyone who “directs, hires, requests, encourages, orchestrates, or invites another individual or individuals to stage a construction site accident.” The legislation encompasses all the bad actors – corrupt doctors, lawyers, and the crime syndicates.

Press Conference Highlights:

The press conference introducing A8981/S8413 highlighted the need for the proposed legislation to combat:

Inflated insurance premiums for construction projects and housing that are passed down to consumers in prohibitive costs.

Involvement of organized crime syndicates. These bad actors exploit vulnerable individuals, often migrant workers, seek to manipulate the legal system, and delay construction projects.

Worsening of the housing affordability crisis. Bogus claims cause construction costs to zoom upward which “trickles down” and makes affordable housing more and more of a misnomer as housing prices become prohibitive for a broadening segment of the City’s population.

Endorsements and Oppositions:

In his May 6th letter to Senator Breslin, Michael E. McMahon, the Richmond County District Attorney and President of the District Attorneys Association of the State of New York (DAASNY), supports legislation aimed at closing a loophole in existing insurance fraud laws. McMahon points out that current New York law does not explicitly prohibit the staging of construction-site accidents, allowing some organizers of such fraudulent acts to avoid liability. The proposed bill would address this gap by holding those who orchestrate staged construction accidents for false insurance claims directly accountable.

The Building Trades Employers’ Association (BTEA), representing over 1,200 union construction managers, general contractors, and specialty trades subcontractors in New York, expressed its support for legislation S8413A/A8981. In its May 14 letter addressed to Majority Leader Stewart-Cousins, Speaker Heastie, Senator Bailey, and Assembly Member Dinowitz, the BTEA highlights that insurance costs in New York are more than triple those in neighboring states, largely due to the Scaffold Law, but also significantly exacerbated by fraudulent construction accidents. These fraudulent activities lead to increased workers’ compensation and general liability insurance costs, affecting contractors and contributing to New York’s affordability crisis by inflating costs across the economy. Recognizing the staging of construction accidents for the purpose of insurance fraud for the crime that it is will be a step in the right direction which the BTEA supports.

The New York State Building and Construction Trades Council (NYSBCTC), representing over 220,000 unionized construction workers through various councils and unions, strongly opposes legislation S8413/A8981. The NYSBCTC argues that this bill is unnecessary since existing penal laws already cover such insurance fraud. They contend that the bill is driven by the insurance and business communities to undermine the Scaffold Law. The NYSBCTC emphasizes that construction workers often face hazardous conditions and targeting them with potential criminal charges for workplace accidents is unjust. They believe that existing laws sufficiently address insurance fraud without singling out construction-related incidents, and therefore, urge the legislature to reject the bill.

The New York State AFL-CIO, representing 2.5 million union members, retirees, and their families, opposes legislation S8413/A8981. They argue that the bill is an attempt by the financial services industry to intimidate workers and discourage valid workers’ compensation and Scaffold Safety Law claims. The AFL-CIO asserts that the legislation is unnecessary because insurance fraud is already covered under Article 176 of the Penal Law. They emphasize that the Scaffold Safety Law is crucial for holding employers accountable for worker safety by requiring proper equipment and instruction on construction sites. The AFL-CIO views this bill as an effort to undermine worker safety protections and urges the legislature to reject it.

The New York Committee for Occupational Safety and Health (NYCOSH) opposes legislation S8413A/A8981, which seeks to criminalize the staging of construction accidents. NYCOSH argues that insurance fraud is already addressed under Article 176 of the Penal Law, making this bill unnecessary. They contend that it would deter workers from reporting genuine job-related injuries or fatalities, especially in the inherently dangerous construction industry. NYCOSH, a non-profit advocating for workplace safety through education and advocacy since 1979, emphasizes that many workers, particularly vulnerable groups like Latinx immigrants, already hesitate to report safety concerns or file workers’ compensation claims due to fear of retribution. Highlighting the disparity between the high number of recorded workplace injuries and the significantly lower number of workers’ compensation claims in New York State, NYCOSH believes this legislation would exacerbate workers’ reluctance to report injuries. They urge the government to build trust in vulnerable communities instead of advancing this bill and recommend voting against it.

The Construction Workforce Project (CWP), a nonprofit advocacy organization collaborating with various community groups and industry leaders, strongly supports legislation S8413A/A8981. This bill aims to classify the staging of construction site accidents for insurance fraud as a Class E felony. CWP highlights that open/merit shop workers, who comprise about 80% of private developments in New York City, are predominantly Black and Latino, with 87% of the workforce being minorities and 82% residing in the five boroughs. CWP emphasizes the critical need for this legislation due to the alarming increase in staged construction site accidents, which exploit the workers’ compensation system and harm workers, particularly non-English speaking individuals. These fraudulent schemes, often orchestrated by criminal organizations, force workers into false claims and unnecessary surgeries, jeopardizing their health and financial stability. The legislation seeks to dismantle these fraudulent activities, holding accountable those who exploit vulnerable workers and ensuring timely medical and financial support for genuinely injured workers. By addressing fraud, the bills aim to improve the overall integrity of the construction industry and support New York’s efforts to manage its housing affordability crisis. CWP commends the bill sponsors for their efforts to enhance worker protection and promote an ethical construction sector.

NYS State Senator Neil Breslin, chairman of the Senate Committee on Ethics and Internal Governance and Insurance, quoted in an article in The Daily Gazette of Schenectady on March 8 said, “This kind of crime [staged accidents and fraudulent claims] must be met with severe punishment” as its harm casts a wide shadow.

“Contractors and developers have become burdened with exorbitant insurance premiums, which are ultimately passed down to consumers and result in higher housing expenses for all New Yorkers.”

He quoted sobering statistics:

Workers compensation premiums increased an average of over 10% in 2022, outpacing the rate of inflation.

Insurance premiums in New York are 400% high than the national average.

Breslin summed up the crisis in stark terms: “It’s the good guys against the bad guys and right now the bad guys are winning.”

A Growing Coalition:

The coalition of organizations standing in support of the Stage Accidents bill is expanding and includes:

The Business Council of New York State

The Associated General Contractors of New York State

National Federation of Independent Business

The Empire State Chapter of the Associated Builders and Contractors

New York Insurance Association, Inc.

The Long Island Builders Institute

The Lawsuit Reform Alliance of NY

Northeastern Subcontractors Association, Inc.

and many more add their support daily.

In May the coalition met with many elected officials, including Majority Leader Andrea Stewart-Cousins' office and Deputy Majority Leader Michael Gianaris.

As of 5/16/2024 co-sponsorship of the bill spreads among Democrats and Republicans.

A8981 – Sponsor Weprin

Co-sponsors: Ardila, Hyndman, Lucas, Pretlow, Zebrowski, Lavine, Blumencranz, Bendett, McGowan, Dinowitz, Thiele, Dickens.

Multisponsor: Levenberg

S8413 – Sponsor Breslin

Co-sponsors: Jacob Ashby

George M. Borrello

Patricia Canzoneri-Fitzpatrick

Patrick M. Gallivan

Andrew J. Lanza

Jack M. Martins

Mario R. Mattera

Dean Murray

Thomas F. O'Mara

Anthony H. Palumbo

Rob Rolison

Luis R. Sepúlveda

James Tedisco