The Massachusetts Appeals Court today affirmed the convictions of Andover Attorney James Hyde for participating in a scheme in and around Lawrence to defraud insurance companies by staging fake car accidents and collecting on the policies. The name of the case is Commonwealth v. Hyde.
The defendant was indicted on multiple counts of motor vehicle insurance fraud, larceny over $250, and attempted larceny over $250 following a multi-year investigation by the Lawrence Police Department and the Massachusetts Insurance Fraud Bureau. A Salem Superior Court jury heard testimony from a man named Leo Lopez, who started working for a local chiropractor in 2000. The chiropractor told Lopez he would receive cash bonuses for bringing new patients to the clinic and suggested Lopez could make extra money by staging car accidents. Lopez began staging accidents shortly thereafter. Initially Lopez staged “live” accidents where two cars would intentionally collide and the police would be called. The occupants of the cars would then seek medical care at the chiropractic clinic and Lopez would refer the cases to the defendant, who would initiate legal action against the insurance company on behalf of the people riding in the cars. As time went on, Lopez began staging “paper” accidents in which he would damage two cars, enlist people who would claim to have been riding in the cars during the purported accident, and refer those people to the chiropractor (for bogus medical treatment) and the defendant (to initiate bogus lawsuits against the insurance companies).
In less than two years, Lopez and his friend who was involved in the scam referred more than 20 staged accidents to one of two chiropractic clinics and one of two lawyers (including the defendant). The chiropractor and the defendant paid referral fees to Lopez for every person he directed to them. The defendant gave advice to Lopez about staging accidents and told him there were some insurance companies to avoid (as those companies were particularly diligent in investigating alleged accidents). The defendant also told Lopez to have no more than three people in each car because too many passengers might alert the insurance companies that something was amiss. The defendant also advised Lopez on “coaching” the people who were submitting claims to improve their performances when they were being interviewed by insurance company investigators. Lopez testified he told the defendant more than once that he was referring individuals from staged accidents to him. However, some of the referrals (approximately 20% according to Lopez) were from legitimate car crashes.
The Commonwealth indicted the defendant for his alleged participation in only two cases – both paper accidents occurring in 2002. In both cases, the purported occupants of the cars hired the defendant, but never met personally with him (and instead worked with his associate). In both cases, the defendant demanded settlements from the insurance companies and in both cases the insurance companies denied coverage after concluding the accidents were fraudulent. The defendant then immediately discontinued representing the clients. Following his convictions, the defendant appealed.
The defendant argued on appeal that even if there was evidence that he knew generally about the scheme, the Commonwealth failed to prove he knew the two cases for which he was indicted were fraudulent. After all, Lopez sometimes referred legitimate accident cases to him. The Appeals Court rejected that argument and concluded circumstantial evidence could have allowed the jury to reasonably find the defendant knew the two accidents at issue were setups. The large number of people from the accidents who were referred to the defendant should have been a red flag, according to the Court. It was suspicious that no police officers or emergency personnel were called to the accident scenes. The defendant should have realized his clients were accumulating substantial medical bills for minor injuries and that the clients’ stories did not correspond with the damage to the vehicles. Finally, it was suspicious that the defendant never met personally with his clients and immediately dropped their cases when the insurance companies denied coverage. The Appeals Court determined the Commonwealth had proven its case beyond a reasonable doubt in light of the circumstantial evidence.
The defendant was sentenced to serve two and a half years in jail followed by a lengthy period of probation. The Lawrence Eagle Tribune reported the sentence was stayed, which means the defendant was free pending his appeal. Unless the Supreme Judicial Court reverses the Appeals Court, the defendant will soon be required to report to jail to begin serving his sentence.