Commonwealth v. Ellis

Decision Date31 July 1998
Docket Number971922
Citation1998 MBAR 181
PartiesCommonwealth v. James N. Ellis, Jr. et al.1
CourtMassachusetts Superior Court

Mass L. Rptr. Cite: 8 Mass. L. Rptr. 678

Venue Superior Court, Worcester, SS

Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): BOHN

On March 13, 1998, this matter was before the Court for hearing on the motion of defendant James N. Ellis, Jr. ("defendant") to Dismiss, to Disqualify Prosecuting Counsel, and for Other Appropriate Relief.3 In support of his motion, the defendant argues that the forty-two indictments returned against him were obtained in violation of his right to a disinterested prosecutor, as guaranteed by the Due Process Clause of the Fourteenth Amendment, Articles 5, 6, 7 and 12 of the Massachusetts Declaration of Rights, and G.L.c. 12, 30. Specifically, the defendant argues that the legislative scheme which created an entity known as the Insurance Fraud Bureau ("IFB"), led to the formation of the Insurance Fraud Division of the Office of the Attorney General ("Fraud Division"), and assesses the insurance industry to fund indirectly the Fraud Division, injects impermissible private interests into the Fraud Division's prosecutorial decisions. The defendant also seeks an evidentiary hearing on his motion, arguing that he is entitled to "prove the extent to which the prosecutors are encumbered by private interests and private influence."

The Commonwealth opposes the defendant's motion, arguing that the legislative funding mechanism is constitutional. Regarding the defendant's request for an evidentiary hearing, the Commonwealth argues that the defendant has failed to make an adequate threshold showing that material facts are in dispute; and, in any event, the Commonwealth is willing to agree, for purposes of this motion, with the substance (but not the relevance) of defendant's factual statement. Accordingly, the Commonwealth argues, no evidentiary hearing is necessary.

Thus, the issues to be resolved by this Court are the following: has the legislative scheme at issue, and the relationship it has engendered between the IFB and the Fraud Division, deprived the defendant in this case of a fair and disinterested prosecution; if so, should the indictments returned against the defendant and his co-defendants be dismissed; and, is an evidentiary hearing necessary to resolve the first two issues. For the reasons which follow, the Court has determined that, based on the undisputed material facts set forth in the pleadings in this case and the arguments of counsel, no such deprivation occurred, even if the underlying facts are construed in the manner the defendant urges. For that reason, the defendant's motion to dismiss will be DENIED, as will his request for an evidentiary hearing.

BACKGROUND

The Court has read the defendant's motion to dismiss, the memorandum in support of that motion, the Commonwealth's opposition, the subsequent response and reply briefs, and the exhibits to those memoranda. Furthermore, it has heard and considered the arguments of counsel and has read and considered reported cases in the Commonwealth and elsewhere relevant to the issues presented in this motion. The following facts are based on those considerations, pleadings and arguments as well as reasonable inferences which can be drawn from those sources.

I. THE LEGISLATIVE SCHEME.

In December 1990, the Massachusetts General Court enacted St. 1990, c. 338,4 which authorized the Automobile Insurers Bureau of Massachusetts ("AIB") to create the IFB.5 The AIB is a voluntary, non-profit association of Massachusetts automobile insurance companies, formed pursuant to G.L.c. 175A, 8, which represents the interests of those companies in regulatory and rate-making proceedings.6 See Automobile Insurers Bureau of Massachusetts v. Commissioner of Ins., 415 Mass. 455, 456 n.1 (1993). The IFB, a private investigative agency, see In the Matter of Ellis, 425 Mass. 332, 340 (1997), was established "for the prevention and investigation of fraudulent insurance transactions." St. 1990, c. 338, 1(a).

When the IFB was first created, all costs of its operation were to be paid by the AIB.7 St. 1990, c. 338, 1(d). The AIB, in turn, charged an assessment to its members based on a market-share formula. At the outset, the IFB's thirteen-member board of governors included the Secretary of the Executive Office of Public Safety, the Registrar of Motor Vehicles, the Commissioner of Insurance, and ten members of the AIB's governing committee. St. 1990, c. 338, 1(b).

Among other things, c. 338 granted the IFB access to confidential records, including those kept by the Registry of Motor Vehicles and insurance companies, as well as criminal offender record information. St. 1990, c. 338, 1(e). According to c. 338, 1(e), those records were to be accessed "solely for the use by such authorized personnel in the performance of their official duties and responsibilities within said insurance fraud bureau" and only when "relevant to any... insurance fraud bureau investigation."

At the hub of the controversy now before the Court is St. 1990, c. 338, 1(l), which initially authorized the Commissioner of Insurance to levy an annual assessment against the AIB in the amount of $100,000, to "be utilized by the attorney general for the purpose of the investigation and prosecution of automobile insurance fraud matters referred to the attorney general by said insurance fraud bureau." Concomitantly, c. 338 mandated that the Office of the Attorney General "designate at least one assistant attorney general who shall devote full-time to the investigation and prosecution" of fraud matters referred by the IFB. Id. Thus, the AIB not only paid for the operation of the IFB; it also provided money indirectly to the Office of the Attorney General for the prosecution of insurance fraud.

In December 1991, c. 338 was amended by St. 1991, c. 398, 99, as part of legislation designed to reform the workers' compensation system as a whole. As amended, the act directed the IFB to investigate and prosecute workers' compensation fraud as well as other fraudulent insurance transactions, including automobile insurance fraud. Chapter 398 also paired the Workers' Compensation Rating and Inspection Bureau ("WCRIB") with the AIB in the structure, operation, and financing of the IFB.8 St. 1991, c. 398, 99, subsection 1(d). Similar in nature to the AIB, the WCRIB is a voluntary association of workers' compensation carriers, formed pursuant to G.L.c. 152, 52C, which represents workers' compensation carriers in rate-making and regulatory affairs.9 As with the AIB, the WCRIB bases its membership fee and IFB costs assessment on a carrier's market share.

The 1991 amendments also increased the membership of the IFB's governing board to fifteen, adding the Secretary of the Executive Office of Labor, the Commissioner of the Department of Industrial Accidents, and five members of the WCRIB's governing committee, while reducing the AIB's representation to five members. St. 1991, c. 398, 99, subsection 1(b). Through subsection 1(d), the executive director of the IFB was to publish "informational brochures" and establish a toll-free hotline in order to "encourage the public to report workers' compensation fraud," St. 1991, c. 398, 99, subsection 1(d); and, in subsection 1(e), the IFB was given access to a wider range of records for use during IFB investigations, adding those kept by the Department of Industrial Accidents, Department of Revenue, Department of Welfare,10 Department of Employment and Training, and the WCRIB itself.

In addition to continuing the $100,000 annual assessment against the AIB, St. 1991, c. 399, 3 authorized the Commissioner of Insurance to assess the WCRIB the sum of $100,000 annually, to be "utilized by the attorney general for the purpose of the investigation and prosecution of automobile insurance fraud matters and workers' compensation fraud matters." Furthermore, the Office of the Attorney General was directed to designate at least two assistant attorneys general who would devote full-time to the investigation and prosecution of insurance fraud: one to focus on workers' compensation fraud, another on automobile fraud; and to designate additional assistant attorneys general if deemed necessary. Id.11

In 1995, the amount of the assessments against the AIB and WCRIB were revised upward, and for the first time, the levels were no longer equal.12 Pursuant to St. 1995, c. 38, 210, subsection 3, the AIB was assessed $200,000, the WCRIB $368,602. The assessments continued to be for the use of the Office of the Attorney General in investigating and prosecuting automobile and workers' compensation fraud matters. In addition to these fixed assessments, the AIB and WCRIB were to be assessed "an amount equal to the total amount of funds estimated by the secretary of administration and finance to be expended from the general fund for indirect and fringe benefit costs... attributable to personnel costs of the attorney general's office related to [insurance fraud prosecutions under the act]." St. 1995, c. 38, 210, subsection 3.13

The newly-created Fraud Division was to include "at least" thirteen assistant attorneys general: six to prosecute automobile insurance fraud, and seven to prosecute workers' compensation fraud. Again, the Office of the Attorney General could designate additional assistant attorneys general as necessary. Id.

II. THE IFB AND ITS REFERRAL SYSTEM.

Historically the IFB investigative staff has been comprised mainly of former investigators from insurance company special investigative units,14 and, from its inception, the staff was assembled to collect and review reports of suspected insurance fraud. By the terms of the legislation,...

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