On December 21, 2015, the Appeals Court denied the appeal of a former Lawrence attorney, James C. Hyde, who had been found guilty of motor vehicle insurance fraud, grand larceny, and attempted grand larceny, relating to staged automobile accidents intended to defraud automobile insurers.
Although suspended by the Supreme Judicial Court from the practice of law following his 2011 conviction, Attorney Hyde has had his 2 ½ year prison sentence stayed during the pendency of his appeal. Unless the Supreme Judicial Court decides to hear his appeal on further appellate review, which is quite unlikely, Attorney Hyde will have to serve his prison sentence. Also, to add insult to injury, he will be formally disbarred.
Attorney Hyde’s charges arose out of the Lawrence initiative against motor vehicle insurance fraud
In 2003, Lawrence had the dubious title as the auto insurance fraud capital of Massachusetts. Late in that same year, a 65-year old grandmother died in what was later proven to be a staged auto accident put together by one of the insurance fraud rings operating in the Lawrence area. As a result of this unfortunate death, the Lawrence Police Department joined with the Insurance Fraud Bureau and the Essex County District Attorney’s Office in a “Community Insurance Fraud Initiative” (“CIFI”).
Over the next five years, this joint effort to suppress insurance fraud showed remarkable results. With the assistance of print media and television, billboard advertisements, and frequent press conferences, along with the support of insurance companies and ordinary citizens, who were paying some of the highest insurance rates in the state, the fraud rings began to be uncovered, investigated, and indicted.
During the course of the Community Insurance Fraud Initiative 484 persons, In Lawrence alone, were charged and prosecuted for insurance fraud as a result of this initiative.
Among those who were indicted were runners, chiropractors, and attorneys. One of these attorneys was James C. Hyde.
Attorney Hyde indicted and convicted with co-defendant chiropractor and runner for two staged accidents
Attorney Hyde was indicted in 2008 for fraud charges arising out of two staged accidents. One of the supposed accidents was alleged to have occurred on October 1, 2002, and the other was alleged to have occurred on December 20, 2002
The charges against Attorney Hyde and his two co-defendants, a chiropractor and an employee of the chiropractor who put together the staged accidents, included two counts of filing a false motor vehicle insurance claim, G. L. c. 266, § 111B; two counts of grand larceny, and two counts of attempt to commit grand larceny. Additionally, the three defendants were also charged with conspiracy to commit each of these crimes.
On May 17, 2011, after a six-week trial as well as three days of jury deliberation, all of the defendants were found guilty of the six charges they were tried on.
Attorney Hyde received concurrent terms of two and one-half years in the house of correction followed by five years’ probation.
A Superior Court judge stayed the prison sentence pending the outcome of his appeal.
Appeal delayed pending co-defendant’s motion for new trial
Although the appeal from the jury verdicts was entered in the Appeals Court in May 2012, the actual appeal was not heard by the court on oral argument until June 12, 2015. A little over six months later the Appeals Court entered its Order affirming the jury verdicts.
The unusual delay in this appeal seems to stemmed from Attorney Hyde’s co-defendant, the chiropractor, successfully seeking seventeen extensions which stayed the appeal pending his motion for new trial in the Superior Court. Eventually, in late 2014, the chiropractor withdrew his appeal.
A cooperating witness testifies to scheme
At the trial, one of the individuals testifying with cooperation agreements with the prosecution, was Leo Lopez.
Mr. Lopez, who had already pleaded guilty, admitted to staging approximately twenty fraudulent accidents between 2000 and 2002 and testified that Attorney Hyde paid referral fees to him for every person he directed to them.
At first, he staged “live” two-car collisions, where police and other emergency responders would be called to the scene. However, by mid-2001, he testified that he had transitioned to staging “paper” accidents.
In those instances, he would obtain and damage two cars, recruit people willing to pose as the occupants, and fill out paperwork as if a real accident had occurred. The day after each purported accident, the persons pretending to be the injured occupants would be taken to one of two chiropractors and one of two lawyers. The lawyers would be either Attorney Hyde or another lawyer who practiced at a different firm.
Attorney Hyde would then file claims for “injured” claimants with insurance companies, claiming damages based on the chiropractor’s fraudulent bills.
Both accidents involved in the indictments were denied by the insurers
The evidence showed at trial that the October 1, 2002, and December 20, 2002, staged accidents were both paper accidents.
On the alleged October 1, 2002 accident, Mr. Lopez testified that he filled out the operator’s report for the purported driver, supplying information about the two vehicles, the names and personal data of the occupants. He also provided a description of the accident, including the time, date, and location of the collision.
He then brought the alleged passengers to the chiropractic clinic and later to Attorney Hyde’s law firm. At the law firm, the passengers met an associate. They never met Attorney Hyde personally. Medical bills were generated, and Hyde submitted claims on behalf of the passengers.
Lopez received a check dated October 1, 2002, for $1,000 from Attorney Hyde for having referred these clients to him.
After Attorney Hyde’s clients were examined under oath by the insurer, the insurer denied the claims in a letter to Attorney Hyde, stating that its investigation revealed that the “accident was not of a direct or accidental nature” and that the examinations under oath “yielded vague and inconsistent testimony, especially in regards to what happened before and after the loss”; there were no police, ambulance, or fire department personnel called to the scene; there were no witnesses; and accident reconstruction had determined that the damage done to the vehicles “[did] not support a mutual contact exchange between the vehicles allegedly involved.”
Upon receiving the denial letter, Attorney Hyde wrote to his clients informing them that their claims had been rejected and that he would not continue to represent them.
The December 20, 2002 alleged accident had the same result.
The story given the insurer on the December 20 accident was that a minivan with a driver transporting three passengers, was struck on the side by a vehicle driven by a confederate carrying three passengers.
All the “victims” first went to the chiropractor then they all went as a group to Attorney Hyde’s law firm.
Mr. Lopez testified that at this meeting at Attorney Hyde’s office, he remembered informing Attorney Hyde in person that he and the runner, who became Attorney Hyde’s co-defendant, were both involved and that they would be splitting the referral fee.
Again the “victims” never met Attorney Hyde. Attorney Hyde submitted claims for the clients’ medical bills, and the insurer made payments in excess of $250.
The insurer, however, eventually denied the claims stemming from the December 20 accident, stating that its investigation had shown that “the loss did not occur as alleged by [Hyde’s] clients.” The insurer explained that the “claimants could not provide consistent and credible testimony regarding the events surrounding the loss, and … the two vehicles allegedly involved did not collide as described.”
Again Attorney Hyde wrote to the clients informing them of the denial, and discontinued representing them.
Appeals Court lays out staged auto accident scheme jurors could have found beyond a reasonable doubt
Attorney Hyde’s major argument before the Appeals Court for reversing his conviction was that there was no direct evidence establishing his knowledge of the specific fraudulent claims at issue; rather, his conviction was secured on circumstantial evidence alone.
Unfortunately for Attorney Hyde, the Appeals Court disagreed.
Mr. Lopez testified as to a number of private conversations he had had with Attorney Hyde after the two became friendly as a result of their common venture. Mr. Lopez, the Appeals Court noted, said Attorney Hyde made specific suggestions how best to stage the accidents, including:
- Attorney Hyde telling Lopez that there were three insurance companies to be avoided, because they were “really going hard investigating the accidents.”
- Hyde told Lopez on four or five occasions, to keep the number of people in a vehicle to no more than three.
- Hyde would tell Lopez that he should “coach” a nervous client “better,” in case the insurance company sent out an investigator to ask the client questions.
- Hyde also advised that if the client gave a statement that was inconsistent with the accident report, it would raise suspicions and no one would get paid.
- Lopez testified that on more than one occasion in the period from December, 2000, through September, 2002, he told Hyde that the clients he was referring were from staged accidents.
The Appeals Court ruled that the testimony of Mr. Lopez and another cooperating witness about their conversations with Attorney Hyde established that Attorney Hyde knew that they routinely brought him clients whose accidents were staged. While neither Lopez nor Ortega testified that he specifically informed Hyde that the October 1 and December 20 accidents were fictitious, the jury nevertheless could reasonably infer from the circumstances surrounding these accidents, that Hyde knew they were staged.
The Appeals Court found telling the number of clients brought to Attorney Hyde after each of these accidents
Mr. Lopez testified to his understanding that if there were too few occupants, the accident would not generate enough money for all concerned. Also, he had a personal incentive to stage accidents involving large numbers of occupants, because he received fees for each individual he referred.
The Appeals Court reasoned that the jury could infer that it was because of this incentive that, as Mr. Lopez testified, Attorney Hyde had found it necessary to discuss with him some four to five times the need to keep the number of people in the accident vehicles to no more than three per vehicle, so as not to raise “red flags” with the insurance companies.
The Appeals Court also noted that the jury could consider Attorney Hyde’s behavior in handling the claims. Although Attorney Hyde was the attorney of record on both cases, he met with none of the clients he received from the October 1 and December 20 accidents. Instead, he assigned his associate to handle all of the personal interactions with them.
As a result, the Court noted that the jury reasonably could infer that this was Hyde’s way of distancing himself from claims he knew to be fraudulent. Also indicative of Hyde’s knowledge was his failure to challenge the insurers’ denials; instead, he promptly abandoned the cases and the clients.
The Appeals Court did not accept that what occurred could be could be consistent with legitimate accidents
The Court, however, found the aggregation of so many telltale indications sufficed to permit the conclusion that Attorney Hyde knew that the October 1 and December 20 accidents were fictitious. Quoting from another case involving an attorney’s submission of fraudulent automobile insurance claims it opined:
[w]hile each factor by itself likely would not be enough to support conviction,” the “circumstances present[ed] sufficient evidence of knowledge … for a rational jury to find the defendant’s guilt beyond a reasonable doubt.
Average savings of $335 per vehicle in Lawrence
In its 2013 report on the ten-year results of the original Community Insurance Fraud Initiative, that ultimately spread beyond Lawrence to include the twelve largest urban areas in the state, the IFB and Automobile Insurers Bureau state that staged auto accident activity in Massachusetts had dropped dramatically over the ten years between 2003 and 2013 as a result of CIFI efforts.
In Lawrence for example, where Attorney Hyde and his cohorts operated, the 2013 report stated that auto insurance policyholders had saved over $68 million dollars since the introduction of the CIFI in their city.
Moreover, according to the report, many professionals who participated in the cottage industry of auto insurance fraud have either closed their operations or been prosecuted like Attorney Hyde.
The report also noted that larger chiropractors in Lawrence have decreased their clinic counts and their billings by some 90 percent. Likewise, the report states that high volume therapy clinics, often with huge annual billings, have been completely eliminated along with a huge drop in attorney involvement on PIP claims.