The Big Apple’s Big Problem – The “Fraudemic”
New York City continues to grapple with a growing “fraudemic,” as insurance companies and small businesses face a wave of lawsuits built on phantom accidents and fabricated injuries. The state’s no-fault insurance system — which holds insurers fully liable regardless of fault — has created fertile ground for abuse. Unscrupulous plaintiffs’ lawyers and medical practitioners exploit the system for maximum payouts, often at the expense of their own clients and New York taxpayers. In some cases, patients are even subjected to unnecessary surgeries to bolster these fraudulent claims.
According to the New York State Department of Financial Services, there were nearly 39,000 reports for suspected no-fault fraud cases and nearly 42,000 suspected healthcare fraud reports in 2024, nearly double the number of reports in 2020.
As explored in the American Tort Reform Association’s 2025 paper, “Sanctionable,” New York is hot spot for unsupported, exaggerated, and suspicious lawsuits.
Slip-and-Fall Cases
New York ranks among the nation’s top hotspots for fraudulent trip-and-fall schemes. From individuals filing bogus claims against small businesses to more organized operations, these scams leave New Yorkers and their businesses footing the bill.
One case in January exposed a man in the Bronx staging a fall on water he had intentionally spilled at a supermarket. Surveillance video revealed the scheme, preventing the store owner’s insurance rates from spiking. The man’s own attorney quickly dropped him once the evidence came to light. But cases like this — where the fraud is caught — are the exception. Most often, fraudulent claims slip through, driving up costs for honest businesses and consumers alike.
Business Scams
Scammers increasingly target Medicaid and Medicare to siphon off taxpayer dollars. These schemes often rely on fake billing, kickbacks, and collusion — netting millions at the public’s expense. Despite public condemnation from lawmakers, meaningful legislative action has yet to materialize. Much of the fraud is tied to dodgy lawyers, medical practitioners, and medical offices working together to exploit insurers and the system itself.
Staged Auto Accidents
Carrying over from last year’s Judicial Hellholes® report, staged automobile accidents are driving New York insurance premiums to staggering levels. A new analysis from the New York Civil Justice Institute compared no-fault states — New York, New Jersey, and Massachusetts — and found New York’s personal injury protection insurance costs were more than 200% higher than New Jersey and over 500% higher than Massachusetts. With state minimum amounts of coverage required for personal automobiles set so high, New York insurers are especially vulnerable to fraud schemes.
These scams disproportionately target the rideshare market. In January 2025, Uber filed a RICO lawsuit against Wingate Russotti Shapiro Moses & Halperin, alleging it conspired with other attorneys and medical providers to inflate medical bills and drain Uber’s insurance payouts.
Cases to Watch
Businesses are starting to fight LM Insurance and Allstate are among the insurers taking aggressive legal action. By August, Allstate had filed 45 RICO lawsuits, while LM Insurance claimed more than $1 million in damages in several of its cases. LM’s suits accuse networks of doctors and medical offices of conspiring to submit unnecessary, false, or excessive medical claims relating to auto accidents. Allstate’s complaints similarly detail no-fault facilities generating inflated medical bills regardless of patient need, driving up costs on a massive scale.- Union Mutual Fire Insurance Co. has expanded its fraud litigation, filing four new lawsuits in Among the defendants are Subin Associates and Liakas Law, both highlighted in last year’s report. The complaints allege collusion with medical providers to pad reports and extract inflated payouts. In the Subin case, at least 12 individuals reportedly had $25,000–$30,000 each funneled to a medical practice — without their knowledge — through a third-party litigation funding company.
- GEICO has filed a major suit under the no-fault system, claiming fraudulent billings of $6.3 million.
- Liberty Mutual Insurance has also gone to court, alleging it was billed for unnecessary — or non-existent — medical treatments. In one instance, a patient who should have received only minor care after a car accident was instead subjected to invasive trigger point injections, ballooning costs to the insurer.
Construction-Related Fraud
The Gilded Age of New York City was defined by rapid infrastructural advancements and groundbreaking innovation in architecture and engineering. These developments, which were driven by the challenges of rapid urban expansion, laid the foundation for the city’s iconic skyline that we know today. In an attempt to protect the workers who were responsible for constructing these skyscrapers, lawmakers enacted New York’s Scaffold Law, which imposes a strict liability standard for gravity-related construction accidents. Despite decades of criticism and the fact that the law’s excessive liability accounts for about 10% of the state’s construction costs, New York is the only state that still maintains such a law.
This outdated standard has opened the door for abuse: some workers stage fake injuries to cash in, while third parties offer litigation loans that lock workers into costly cycles of debt. To strengthen cases, workers are often pushed into undergoing unnecessary and invasive surgeries — all to inflate settlement values. These schemes leave businesses and insurers footing the bill while driving liability costs to unsustainable levels.
Cases to Watch
- Roosevelt Road RICO Filings: Roosevelt Road has dramatically expanded its fraud litigation, filing three sweeping RICO lawsuits against Liakas Law, William Schwitzer & Associates, and Subin Associates. The insurer’s suits accuse these firms and affiliated medical providers of orchestrating fake construction accidents and requiring unnecessary medical treatments to inflate claims. The company’s initial RICO suit, filed in March 2024, alleges that a group of 46 individuals and businesses systematically exploited the New York State Workers’ Compensation system and state labor laws.
- Another complaint, Roosevelt Road Re, Ltd. v. Hajjar, alleges that those involved participated in a scheme to submit false or exaggerated injury claims to secure windfall settlements under the Scaffold Law. This scheme reportedly targeted “foreign-born workers who lack proficiency in English,” encouraging them to file claims for fabricated or exaggerated. In some cases, the injuries — a simple trip and fall, for example — would be exaggerated on paper into multi-million-dollar permanent disability claims. Videos of the alleged fraudulent falls have even surfaced, featuring workers staging accidents at construction sites, further highlighting the brazen nature of the fraud.
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- The impact of this alleged misconduct is staggering. According to the complaint, claims under this scheme have caused liability claim expenses for one reinsurer to balloon from $14 million in 2018 to over $142 million by 2022, exponentially increasing each year.
- Hillside Hotel LLC: In a May filing, Hillside accused Gorayeb & Associates of conspiring with construction workers, law enforcement, and a medical provider to stage fake accidents. The complaint points to striking similarities with another case in the Eastern District of New York, Roosevelt Road Re, Ltd. v. Surgicare of Westside LLC. Hillside argues that the scheme left them saddled with a $5 million judgment, which they contend exists only because of the fraudulent conduct of Gorayeb and others.
Judges Turn a Blind Eye
New York judges play a key role in perpetuating lawsuit abuse by allowing personal injury law firms to with-draw from cases when ethical concerns come to light. For example, in 2024, Subin Associates requested to withdraw from 200 to 300 cases because of “ethical concerns” involving its referral source. Attorneys familiar with the litigation say the judges engage in ex parte discussions with plaintiffs’ counsel, despite a rumored instruction to all sitting judges advising against it.
It appears to be a trend among judges to look the other way when presented with details of these scams, either by allowing firms to withdraw from cases without consequence or by keeping suspicious cases alive until they settle. By continuously granting plaintiff attorneys’ requests for orders to show cause, these judges clog the court’s dockets, delay legitimate plaintiffs’ claims, and cost defendants money. And by allowing plaintiffs’ counsel to easily withdraw from these cases without suffering consequences, judges allow the lawsuit abuse to continue ravaging New York’s tort system.
Fraudulent Workers Compensation Cases
A May 2025 report from Goldberg Segalla highlights the scope of the problem in the workers’ compensation context, detailing a dozen recent cases in which fraud was uncovered. In each, the firm demonstrated plaintiff misconduct through questionable medical records, inconsistent testimony, or outright fabricated injuries.
The Role of Third-Party Litigation Financing
The prevalence of third-party financing in these cases creates additional consequences for victims when judges allow withdrawals and dismissals without question. These funders provide plaintiffs with money up front to pay the doctors and lawyers involved in the elaborate schemes. Judges have reportedly allowed lawyers to walk away from cases without consequence, leaving plaintiffs owing thousands of dollars to the lenders.
A recent report by The Perryman Group estimated that New York’s economy lost $292.9 million as a result of third-party financed litigation. The harm to business activity leads to over $70 million lost in resources for the state and the loss of thousands of jobs.
The Big Apple has a big problem — fraud has been allowed to run rampant in its court system. From trip-and-fall schemes to staged accidents and fake construction injuries, New York judges have permitted plaintiffs’ lawyers to cash in, and small businesses and unknowing residents are left to pick up the pieces. A series of RICO lawsuits against plaintiffs’ firms, medical clinics, and others are shedding light on just how pervasive the “fraudemic” is in New York.
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