New York Lawyers and Medical Providers in Alleged Insurance Fraud Scheme: What You Need to Know
Insurance fraud is a serious issue, costing New Yorkers millions of dollars annually through increased premiums and higher prices for goods and services. While it takes many forms, a disturbing trend involves alleged schemes perpetrated by New York lawyers and medical providers. These schemes not only undermine the integrity of the legal and healthcare systems but also have far-reaching consequences for individuals and businesses across the state.
The Scope of the Problem
Recent cases highlight the severity of the issue. For example, in June 2025, a New York specialty insurance managing underwriter filed a Racketeer Influenced and Corrupt Organizations Act (RICO) lawsuit against a New York City personal injury law firm and numerous medical providers, alleging a wide-ranging scheme to defraud insurers through staged construction accidents and fraudulent medical treatments. The lawsuit claims that the scheme, which involved recruiting construction workers to stage or exaggerate workplace injuries, has been ongoing since at least 2018, with a “marked escalation” since 2020.
Similarly, in October 2025, Merchants Mutual Insurance Company accused a prominent New York plaintiff firm, along with a network of doctors and litigation-funding organizations, of operating a coordinated racketeering enterprise designed to inflate settlements, extend cases, and divert funds from injured clients.
These are just a few examples of the many insurance fraud cases involving lawyers and medical providers in New York. The schemes often involve a complex web of participants, including:
- Lawyers: Filing fraudulent lawsuits, directing patients to specific medical providers, and negotiating inflated settlements.
- Medical Providers: Providing unnecessary or prolonged medical treatment, billing for services not rendered, and falsifying medical records.
- Runners: Recruiting individuals to stage accidents or exaggerate injuries.
- Funders: Providing financial backing to claimants and medical providers in exchange for a portion of the settlement.
Common Types of Insurance Fraud
Several types of insurance fraud schemes have been identified in New York, including:
- Staged Accidents: Orchestrating fake car accidents or slip-and-fall incidents to file fraudulent claims.
- Exaggerated Injury Claims: Grossly exaggerating injuries to maximize insurance payouts.
- Fraudulent Medical Billing: Billing for unnecessary services, services never rendered, or using unlicensed staff to perform medical procedures.
- Unnecessary Medical Treatment: Providing or prolonging medical treatment solely to increase billable amounts.
- Kickbacks and Referrals: Exchanging kickbacks for patient referrals or services.
- Exploiting No-Fault Rules: Deceiving insurance companies into making payouts through staged accidents or other fraudulent means.
Legal Consequences
Engaging in insurance fraud can result in severe legal consequences, including:
- Criminal Charges: Depending on the amount of money involved, individuals may face misdemeanor or felony charges, such as insurance fraud, grand larceny, and healthcare fraud.
- Civil Penalties: Insurance companies may pursue civil lawsuits to recover damages and penalties from those involved in fraudulent schemes.
- Loss of Professional Licenses: Lawyers and medical providers who are convicted of insurance fraud may lose their professional licenses, effectively ending their careers.
- Restitution and Fines: Courts may order those convicted of insurance fraud to pay restitution to the victims and impose hefty fines.
- Imprisonment: Depending on the severity of the offense, individuals may face lengthy prison sentences.
Protecting Yourself
If you suspect that you have been a victim of insurance fraud, or if you have information about a potential fraud scheme, it is important to take action. You can report suspected insurance fraud to the New York State Department of Financial Services (DFS) by:
- Phone: Calling the Insurance Fraud Hotline at (888) FRAUDNY | (888) 372-8369.
- Online: Using the Report Insurance Fraud submission form on the DFS website.
- Mail: Printing, completing, and mailing the Report Fraud Form (PDF) to the New York State Department of Financial Services, Insurance Frauds Bureau, One State Street, New York, NY 10004.
- Fax: Printing, completing, and faxing the Report Fraud Form (PDF) to (212) 709-3555.
You can also file a complaint with the New York State Attorney General’s Office regarding healthcare issues, including Medicaid provider fraud.
Advice
If you are a healthcare professional, it is crucial to ensure that your billing practices are accurate and compliant with all applicable laws and regulations. Consider retaining a billing firm to guide your practice through proper billing procedures and avoid potential issues with insurance companies.
If you are accused of insurance fraud, it is essential to seek legal representation from an experienced attorney as soon as possible. An attorney can help you understand your rights, navigate the legal process, and develop a strong defense.
Conclusion
Insurance fraud schemes involving New York lawyers and medical providers are a serious problem that affects everyone in the state. By understanding the scope of the problem, the types of schemes involved, and the legal consequences, you can protect yourself and help to combat insurance fraud in New York.