Prima Facie Staged accident

Staged Accidents and the “Insured Incident” Requirement in No-Fault Coverage

New York’s No-Fault Insurance Law provides coverage for injuries arising from the “use or operation” of a motor vehicle. However, this broad coverage mandate contains an important limitation: the injuries must arise from an actual accident or “insured incident.” When insurance carriers discover evidence suggesting that no genuine accident occurred, they can disclaim coverage on the ground that the alleged injuries did not result from a covered event.

Staged accident cases present unique evidentiary challenges. Typically, the only witnesses to the alleged accident are the participants themselves, many of whom may have financial incentives to support the existence of an accident. Physical evidence may be minimal or manufactured. Insurance carriers must therefore rely heavily on inconsistencies in testimony, implausible accident scenarios, and evidence of coordination among purported strangers to establish their fraud defenses.

The burden of proof on staged accident claims creates strategic considerations for both insurers and providers. On summary judgment, carriers must make a prima facie showing that no genuine accident occurred, shifting the burden to providers to raise triable issues of fact. The quality and nature of evidence required to meet this prima facie standard determines whether these cases proceed to trial or can be resolved at the summary judgment stage.

Case Background

In Jamaica Wellness Medical, P.C. v Hereford Insurance Co., the insurance carrier received a claim for no-fault benefits arising from an alleged motor vehicle accident involving its insured. During the investigation, the carrier scheduled and conducted an examination under oath of its insured driver, seeking to understand the circumstances of the claimed accident.

The insured driver provided testimony that fundamentally contradicted the accident report and the passengers’ version of events. According to the insured’s EUO testimony, he operated a vehicle providing transportation services and picked up three customers. While driving these passengers to their destination, they repeatedly asked him for money. When he refused their demands, they became agitated.

The insured testified that the passengers eventually caused him to stop the vehicle and summoned police to the scene. When police arrived, the passengers claimed that the vehicle had been involved in an accident with another vehicle that fled the scene. However, the insured driver stated unequivocally that no accident had occurred while the passengers were in his vehicle, and that no other vehicle had made contact with his vehicle during the trip.

This testimony directly contradicted the existence of any motor vehicle accident, raising serious questions about whether the claimed injuries arose from an “insured incident” covered under the no-fault policy.

Jason Tenenbaum’s Analysis

Jamaica Wellness Med., P.C. v Hereford Ins. Co., 2018 NY Slip Op 51586(U)(App. Term 2d Dept. 2018)

“In support of its motion, defendant submitted a transcript of the examination under oath (EUO) of its insured in which he testified that he had picked up three customers and had been driving them to their destination when they repeatedly asked him to give them money. After he declined to do so, he was pulled over by the police, who advised him that the passengers had reported that the vehicle had been in an accident with another vehicle which had fled from the scene. Defendant’s insured testified that the vehicle had not been in an accident while the passengers had been in the car. The EUO testimony by defendant’s insured was sufficient to demonstrate, prima facie, that “the alleged injury not arise out of an insured incident” (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 ; see Andromeda Med. Care, P.C. v NY Cent. Mut. Fire Ins. Co., 26 Misc 3d 126, 2009 NY Slip Op 52601 ; Midwood Med. Equip. & Supply, Inc. v USAA Cas. Ins. Co., 25 Misc 3d 139, 2009 NY Slip Op 52379 ). Plaintiff failed to raise a triable issue of fact in opposition to defendant’s motion (see Zuckerman v City of New York, 49 NY2d 557 ).”

Jamaica Wellness Med., P.C. v Hereford Ins. Co., 2018 NY Slip Op 51587(U)(App. Term 2d Dept. 2018)

LVOV Acupuncture, P.C. v Hereford Ins. Co., 2018 NY Slip Op 51589(U)(App. Term 2d Dept. 2018)

Is it ironic that Danny Safire, the purported owner of Jamaica Wellness Med was indicted at or about the time these cases were decided? The fact that an attorney would appeal a case with these facts speaks volumes about so much. I would have run for cover if I was a Plaintiff. But read the indictment…

Legal Significance

The Appellate Term’s decision clarifies that examination under oath testimony from an insured driver can constitute sufficient prima facie evidence that no accident occurred, thereby eliminating coverage under the no-fault law. The court recognized that when the insured driver definitively states that no collision or impact occurred, this testimony directly negates the foundational requirement that injuries arise from a motor vehicle accident.

This holding reflects the principle established in Central General Hospital v Chubb Group of Insurance Cos. that no-fault coverage extends only to injuries arising from insured incidents. When carriers present credible evidence that no accident occurred, the burden shifts to providers to produce evidence creating a genuine factual dispute about whether a covered event took place. Absent such contrary evidence, summary judgment dismissing the claim is appropriate.

The decision also demonstrates the critical importance of examination under oath procedures in investigating potentially fraudulent claims. The carrier’s diligent pursuit of EUO testimony from its insured produced the evidence necessary to defeat the claim on summary judgment. Without this testimony, the carrier would likely have faced greater difficulty establishing its staged accident defense.

Furthermore, the fact that providers appealed despite the overwhelming evidence against them illustrates the aggressive litigation tactics sometimes employed in no-fault fraud schemes. As Jason notes, the subsequent indictment of the provider’s owner vindicates the carrier’s investigation and raises questions about the ethics of pursuing appeals in cases with such unfavorable facts.

Practical Implications

Insurance carriers should utilize examination under oath procedures aggressively when investigating suspected staged accidents. Obtaining detailed testimony from insureds about the circumstances of alleged accidents can produce dispositive evidence for coverage defenses. Carriers should prepare comprehensive EUO questions addressing all aspects of the claimed accident, including precise details about vehicle movements, points of impact, witnesses, and any inconsistencies with accident reports.

For healthcare providers, this decision underscores the importance of conducting independent investigation before filing suit to collect no-fault benefits. Providers should verify that genuine accidents occurred and that their assignors’ accounts align with available evidence. Filing and pursuing claims known to be fraudulent exposes providers to potential sanctions, criminal liability, and reputational damage that far outweigh any potential recovery.

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