Staged Accident Can Never Be a Covered Event
In 21st Century Insurance/21st Century Advantage Insurance Company/21st Century National Insurance Company v. Marie Baptisye et al., Index No.: 156199/2013, 2019 NY Slip Op 30781(U), Supreme Court of the State of New York County of New York: Part 63 (March 29, 2019) the insurer sought summary judgment against the answering Defendants, Doctor Goldshteyn Chiropractic, P.C., Mind & Body Acupuncture P.C., One to One Rehab pt, P.C., Remedial Medical Care P.c., Skillman Medical Diagnostic, P.C., Sharp View Diagnostic Imaging, P.C., and Easy Care Acupuncture P.C., for a declaration that: (a) Defendants Ralph Magny (Magny), Daphne Rympel (Rympel), and Hans Deetjen (Deetjen) because they breached a material condition precedent to coverage by refusing and failing to appear for an Examination Under Oath (EUO).
In addition Plaintiff asked for a ruling that it is not obligated to pay, honor, or reimburse any of the answering Defendants for any claims that were submitted for any No-Fault reimbursement on behalf of Magny, Rympel, and Deetjen; and (b) the incident of April 7, 2011 because the reported accident was staged and not a covered event, such that Plaintiff is not required to pay any sums arising out of the alleged incident.
Plaintiff insurer issued a motor vehicle insurance policy to Magny, which covered a 1995 Plymouth Neon Highline 4P. Sixteen days following the policy inception date the 1995 Plymouth Neon Highline 4P, which Magny operated, was allegedly involved in a collision at the intersection of Avenue W and 86th Street, Brooklyn, New York at 11:50 p.m. with a vehicle that was operated by Defendant Stanislaw Zhitkov (Zhitkov). Defendants Rympel and Deetjen were passengers in the 1995 Plymouth Neon Highline 4P vehicle at the time of the collision.
Magny, Rympel, and Deetjen all filed claims for no-fault benefits under the policy issued to Magny. Plaintiff submitted an affidavit from Investigative Analyst, Sandra Keane (Keane), which avers that Plaintiff’s investigation of the claim determined that the April 7, 2011 incident was staged.
The investigation considered the following red flags or indicators of fraud:
• that Magny, Rympel, and Deetjen were unrelated occupants who received treatment at the same multi-specialty facility;
• the loss occurred late at night when few persons were present;
• the incident occurred sixteen days after the policy’s inception and involved an older vehicle;
• the existence of common addresses, phone numbers and emails; and
• the claim was linked to multiple staged losses and at least four declaratory judgment action.
Plaintiff sought additional verification in the form of an EUO of Magny, Rympel, and Deetjen to determine the veracity of their claims and submitted the supporting affidavit of paralegal Stacey Peluso.
Magny, Rympel, and Deetjen all failed to appear for the first scheduled EUO. Peluso mailed a second EUO notice letter to Magny and counsel by first class mail and by certified mail, return receipt requested and mailed a second and third EUO notice letter to Rympel, Deetjen, and counsel by first class mail and by certified mail, return receipt requested; letters of representation for Magny, Rympel, and Deetjen. However, neither individual responded to the additional notices nor appeared for their respective EUOs.
Plaintiff moved for summary judgment, maintaining that an appearance at an EUO is a condition precedent to coverage and that the failure to appear constitutes a breach of the policy, which vitiates coverage. Plaintiff further maintains that it is entitled to summary judgment because the admissible evidence presented establishes that the incident was intentional and that the alleged injury does not arise out of an insured accident.
Defendants Sharp View Diagnostic Imaging, P.C. (Sharp View) and Easy Care Acupunture, P.C. (Easy Care) both argue in opposition that Plaintiff failed to establish that the April 7 incident was staged and that the EUOs were not properly noticed. Both Defendants also argue that the Plaintiff’s denials are untimely and Defendant Easy Care further challenges the qualifications of Plaintiff’s investigator (Keane) and paralegal (Peluso).
Once the person moving for summary judgment meets its burden, the opposing party must produce evidentiary proof in admissible form sufficient to raise a triable issue of material fact.
The appearance of an eligible injured person at an EUO is a condition precedent to coverage and the failure to appear vitiates coverage. Sharp View and Easy Care correctly contend that an insurer may deny all claims retroactively to the date of loss, regardless of whether the denials were timely issued since the right to conduct a EUO constitutes a condition precedent to coverage. Neither Sharp View nor Easy Care has submitted an affidavit from a party with personal knowledge controverting Plaintiff’s proof.
Therefore, the Court granted that branch of Plaintiff’s summary judgment motion for a declaration that Magny, Reympel, and Deetjen breached a material condition of the insurance policy by failing to appear for an EUO and that Plaintiff is not obligated to pay, honor, or reimburse any of the answering Defendants for any claims that were submitted for any No-Fault reimbursement on their behalf.
Plaintiff also established that the April 7 incident was not a covered event, but rather a staged and intentional act through presenting admissible evidence that Magny, Rympel, and Deetjen were unrelated occupants who received treatment at the same multi-specialty facility; that the loss occurred late at night when few persons were present; that the incident occurred within sixteen days from the policy’s inception and involved an older vehicle; the existence of common addresses, phone numbers and emails; and that the claim was linked to multiple staged losses and at least four declaratory judgment actions.
Plaintiff established that the incident was staged, which is not covered by no-fault insurance and, thus, is entitled to summary judgment regardless of the timeliness of its denial. Therefore, the Court granted the remaining branch of the Plaintiff’s motion for summary judgment that the claimed accident was staged and not a covered event, such that Plaintiff is not required to pay any sums arising out of the alleged incident.
This case explains the importance of an EUO when red flags indicate a potential fraudulent staged accident claim and that the demands for appearance at EUO are capable of proof. The red flags identified were sufficient to lead to a conservative conclusion that the alleged accident was staged sufficient to refuse to pay the claim and, adding to the rights of the insurer, was the fact that the claimants breached a material condition of the policy by refusing to appear at an EUO.
© 2019 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
“Arson-For-Profit Fire at the Cowboy Bar & Grill”
A true crime novel based on the experience of the author, Barry Zalma, who for more than 51 years has acted for insurers who were faced with arson-for-profit, one of the most dangerous insurance fraud schemes. The book explains how an insurance claims adjuster, working with a fire cause and origin expert, a forensic accountant and insurance coverage lawyer, were able to defeat an arson-for-profit scheme and obtain a judgment requiring the perpetrator to take nothing and repay the insurer all of its expenses in defeating the claim.