Bill would create felony penalties for staged construction site accidents

Mar. 8—State Sen. Neil Breslin and Assemblyman David Weprin are pushing for passage of a bill that would make staging a construction site accident a class E felony, in order to combat what they call a growing trend of insurance fraud.

Speaking at the state Capitol on Tuesday, Breslin, D-Albany, said both individuals and criminal organizations are increasingly using staged construction site accidents to file false insurance claims.

"This kind of crime must be met with severe punishment, because the result of this kind of a crime is telling homeowners and home builders that it's going to be a lot more expensive for you, because we have insurance," said Breslin, the chair of the Senate committees on Ethics and Internal Governance and Insurance. "And when we have insurance, we have to measure our risk, and measuring the risk means that if we allow this insurance fraud to continue, the prices for insurance will just spike up and spike up and the companies will have to endure, which will drive the prices up."

Weprin, the chair of the Assembly Insurance Committee, said the increased insurance costs ultimately lead to higher construction costs, which can negatively impact the industry as the state aggressively pursues the construction of new affordable housing projects.

"Contractors and developers have become burdened with exorbitant insurance premiums, which are ultimately passed down to consumers and result in higher housing expenses for all New Yorkers," Weprin said. "In the first six months of 2022 alone, workers compensation premiums increased an average of 10.1%. These premium increases have outpaced the rate of inflation. A recent study revealed that insurance premiums for construction and contractor businesses in New York are 400% higher than the national average."

Weprin said the legislation is modeled after Alice's Law, which created criminal penalties for people who stage car accidents for the purposes of insurance fraud. The bill was named after a 71-year-old Queens woman, Alice Ross, who was killed in a staged accident in 2003. Weprin also sponsored that proposal, which was signed into law by former Gov. Andrew Cuomo in 2019.

During Tuesday's press conference, Brian Sampson, president of the Empire State Chapter of the Associated Builders and Contractors, broke down some of the increase in costs construction companies are facing due to the problem.

"In 2010, a $100 million project in the state of New York was looking at about 4% of the cost of that project going towards workers' compensation, general liability and excess insurance," Sampson said. "Fast forward to 2020, that number jumped to about 8.5%. In 2024/2023, that number has gone up to 12.5%. Looking ahead to 2025, they're expecting that number to go to 13% or 14% on a $100 million project."

He also compared New York's rates to those in surrounding states — like Connecticut, New Jersey and Pennsylvania, which he said hover around 2.5%.

"When you look at things like affordable housing, when you look at things like market-rate housing, you're going to lose 40 to 45 to 50 units for every one of those projects," Sampson said. "We have a crisis here in the state of New York that has to be fixed."

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