This bill adds two new criminal offenses to New York’s penal law: staging a construction-site accident to obtain insurance benefits and staging or fabricating motor vehicle collision claims. It also amends the insurance law to require restitution to insurers, civil fines, temporary exclusion from state-regulated benefits, and insurer cooperation and reporting.
The measure directs the Superintendent of Financial Services to adopt implementing regulations and directs additional resources to state insurance fraud units. By creating clear statutory definitions and criminal penalties for staged claims, the bill aims to shift some disputed conduct from civil litigation and claims handling into criminal enforcement, changing incentives for claimants, insurers, attorneys, and investigators across construction and auto insurance markets.
At a Glance
What It Does
The bill defines "fraudulent insurance claim," "construction site," and "motor vehicle accident claim," then creates two new felonies for staging construction-site accidents and for staging or fabricating auto-collision claims. It requires restitution, civil penalties, temporary exclusion from benefits, and imposes insurer duties to notify law enforcement, cooperate with investigations, and report fraud data.
Who It Affects
Contractors, subcontractors, construction-site managers and workers; auto insurers, claims adjusters and repair shops; plaintiff-side attorneys and medical providers who participate in claims; and state enforcement units (DFS and DCJS) that must implement and enforce the new regime.
Why It Matters
Criminalizing staged claims alters the balance between civil claims processes, workers’ compensation and insurance adjudication, and criminal enforcement. The new penalties and reporting requirements will change compliance obligations for insurers and may affect how companies underwrite, investigate, and price construction and auto risk.
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What This Bill Actually Does
The bill carves out two specific criminal offenses tied to insurance fraud: one aimed at construction sites and another at automobile collisions. For construction, it criminalizes entering a worksite and intentionally staging or simulating an accident to submit—or assist in submitting—an insurance claim, or directing others to do so.
For motor vehicles, it criminalizes intentionally staging a collision or knowingly submitting a fabricated automobile claim, including claims for medical treatment, repairs, or lost wages.
To support enforcement, the bill expands the penal law’s definitions to clearly identify who counts as a “person” for liability purposes and to define terms such as "fraudulent insurance claim," "construction site," and "motor vehicle accident claim," tying the construction-site definition to existing Labor Law workplace definitions. The bill then makes the described conduct a class E felony and builds a statutory path for increased penalties when the losses exceed a defined threshold.On the civil and administrative side, the insurance law addition requires convicted individuals to pay restitution to the insurer, permits civil penalties in addition to restitution, and allows the department to exclude convicted individuals from state-regulated insurance benefits for up to two years.
The measure also compels insurers to provide timely notice to law enforcement about suspected fraud, to cooperate in investigations, and to provide aggregate annual fraud data to the legislature.Finally, the bill tasks the Superintendent of Financial Services, working with the Division of Criminal Justice Services, with issuing implementing regulations within a statutory 180-day window and directs additional resources to state insurance fraud units. The act becomes effective 180 days after it becomes law, giving regulators and enforcement units a defined period to prepare operational and investigative changes.
The Five Things You Need to Know
The bill creates two new felonies: Section 176.90 (staging a construction-site accident) and Section 176.95 (auto insurance fraud for staged collisions or fabricated claims).
Convictions carry criminal exposure as a class E felony; the auto-fraud offense exposes defendants to increased penalties when the alleged loss exceeds $1,500.
Section 412 of the Insurance Law requires restitution to insurers, allows civil penalties of up to $5,000 plus the fraudulent claim amount, and permits exclusion from state-regulated insurance benefits for up to two years after conviction.
The Superintendent of Financial Services must promulgate implementing regulations in consultation with the Division of Criminal Justice Services within 180 days of the law’s effective date.
The bill requires insurers to timely notify law enforcement of suspected fraud, to cooperate with investigations and prosecutions, and to report aggregate fraud data annually to the Legislature.
Section-by-Section Breakdown
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Legislative findings and purpose
This section states the legislature’s rationale: staged and fabricated claims increase premiums and raise costs across housing, public works, and transportation. While not operative law, it frames enforcement priorities and will guide agencies and prosecutors on the policy intent behind the criminal and insurance-law changes.
Expanded definitions and covered actors
The bill broadens the statutory definitions that apply throughout the insurance-fraud provisions. It explicitly includes attorneys, physicians, and a ‘‘purported injured worker’’ within the definition of "person" for liability purposes, and it adds definitions for "fraudulent insurance claim," "construction site" (leveraging Labor Law workplace definitions), "motor vehicle accident claim," and "fraudulent insurance act." These definitional choices set the scope of who can be prosecuted and clarify that typical players in claim production (medical providers, lawyers) fall within the reach of the statute if they knowingly participate.
Offense: staging a construction-site accident
This provision makes it a crime to enter a construction site and intentionally stage, fabricate, or simulate an accident to file or assist in filing an insurance claim, or to hire or direct others to do so. The statute focuses on intent to further a fraudulent insurance act and applies even if the defendant claims to be an injured worker. Classifying the conduct as a class E felony means prosecutors may pursue imprisonment and criminal records alongside restitution and civil remedies.
Offense: staged collisions and fabricated auto claims
This section criminalizes intentionally staging a motor vehicle collision and knowingly submitting or conspiring to submit false automobile insurance claims, including medical or wage-loss claims. The statute sets a threshold ($1,500) for applying increased penalties, signaling the law targets both repeated small scams and larger-value frauds; it also broadens liability beyond the person who physically causes a crash to anyone who knowingly aids or submits fabricated claims.
Restitution, civil penalties, exclusions, and insurer duties
The insurance-law addition attaches collateral civil and administrative consequences to criminal convictions: mandatory restitution to insurers, civil fines up to $5,000 plus the fraudulent claim amount, and discretionary exclusion from state-regulated insurance benefits for up to two years. It also instructs the Superintendent to require insurers to notify law enforcement of suspected fraud, cooperate in investigations and prosecutions, and report aggregate fraud statistics annually—creating compliance and reporting obligations for carriers.
Regulatory rollout and enforcement resources
The bill requires the Superintendent of Financial Services, in consultation with DCJS, to issue regulations implementing the act within 180 days following its effective date and directs that the state’s insurance fraud units receive additional resources. The statute itself becomes effective 180 days after enactment, giving a fixed preparatory window for rulemaking, enforcement planning, and for insurers and employers to update policies and procedures.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Insurers and policyholders who pay premiums: by creating criminal penalties, the bill aims to reduce fraudulent payouts and may lower loss-adjustment expenses, which could reduce upward pressure on premiums over time.
- Construction companies and honest contractors: reducing staged-accident schemes can decrease false-claim litigation, reduce underwriting surprises for contractor liability and wrap-up policies, and limit reputational harm from fraud networks operating at jobsites.
- State enforcement agencies and prosecutors: the bill supplies a clearer statutory basis for charging staged-claim schemes and mandates rules and data flows that can improve detection and prosecution of organized fraud.
Who Bears the Cost
- Claimants and plaintiff-side attorneys: individuals pursuing legitimate injury claims may face heightened scrutiny, investigative delays, and the risk of criminal referral if evidence is ambiguous, increasing defense and litigation friction.
- Insurers and claims departments: carriers must adopt new notice-and-reporting workflows, train staff to meet cooperation obligations, and produce annual aggregate fraud data—incurring compliance costs and potential fines if they fail to comply.
- Construction employers and contractors: to defend against staging allegations, employers may invest in more site security, surveillance, documentation practices, and legal defenses, raising operational costs; they also face reputational risk and potential involvement in criminal probes.
Key Issues
The Core Tension
The bill trades a stronger criminal deterrent and clearer penalties for staged insurance schemes against the risk of chilling legitimate claims and imposing substantial compliance and investigative costs: it must balance deterring organized fraud without turning routine or disputed injury claims into criminal targets or creating administrative burdens that shift costs back onto policyholders and employers.
Proving intent will be the central operational challenge for prosecutors. The statutes require intent to commit or further a fraudulent insurance act, which will hinge on evidence such as communications, payments, coordinated behavior, or physical staging.
That evidentiary burden reduces the risk of prosecuting honest claimants, but it also raises investigation costs and may produce protracted factual disputes that blend civil discovery with criminal standards.
The bill’s criminal overlay sits atop existing civil regimes—workers’ compensation, Labor Law claims, and no-fault automobile coverage—creating several potential conflict points. For example, construction-site accident allegations often arise in parallel civil claims against employers or third parties; criminalizing staging could chill legitimate claims if claimants fear criminal exposure, or it could create leverage for insurers to deny or delay benefits while law-enforcement referrals proceed.
The exclusion-from-benefits penalty and civil fines introduce access-to-coverage concerns for individuals convicted under the statute and raise questions about proportionality for lower-value or borderline cases.
Finally, the operationalization of insurer reporting and the Superintendent’s rulemaking will determine how the regime functions in practice. Aggregate reporting obligations create useful data for legislators and enforcement agencies but also introduce privacy and administrative-cost issues.
The statute’s $1,500 threshold for enhanced penalties and the $5,000 civil-penalty cap are blunt instruments that may misalign with the varied economics of staged fraud schemes, and the statute provides limited guidance on how insurers’ cooperation duties interact with privilege, privacy, or ongoing civil litigation.
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