FedEx sues NYC law firm, alleges staged car accidents

Federal Express has filed a lawsuit against New York lawyers it accuses of staging traffic accidents and arranging for unnecessary medical treatment to increase the value of injury lawsuits.

FedEx sued Ikhilov Law Group and several medical care providers last week in New York federal court, as rising auto-insurance costs have been a hot topic in the state. Even Gov. Kathy Hochul has blamed staged accidents for driving up costs for everyone, and federal prosecutors last week charged a man with scamming insurers out of tens of millions of dollars.

New York drivers are required to carry no-fault insurance, which lets them and others obtain benefits of up to $50,000 for injuries in accidents. Hochul said insurers reported more than 38,000 incidents of suspected auto-insurance fraud in 2023, which helped tack an extra $300 onto everyone’s yearly premium.

The no-fault law also limits lawsuits to only those alleging a “serious injury” – something doctors named in FedEx’s racketeering lawsuits are allegedly happy to diagnose.

“This statutory structure creates a powerful financial incentive for individuals seeking large payouts and settlements to manufacture, exaggerate, or escalate injuries beyond what the accident objectively produced,” the complaint says.

“Once a threshold is met, the claimants and their representatives can file lawsuits against the vehicle owner or operator, in this case FedEx and its employees, and pursue significantly larger damages. These lawsuits open the door to six- or seven-figure demands, vastly exceeding anything payable under the No-Fault system.”

As for examples, FedEx cites an August 2019 accident in Brooklyn, where passengers in a car claimed they were side-swiped by a FedEx vehicle. The driver complained at an emergency room of shoulder pain but said there were no headaches, neck or back pain.

However, two days after the accident he visited NYC Care PT at 632 Utica Ave. He was prescribed physical therapy, massage, ultrasound therapy and electrical stimulation for pain in his neck and back.

Other companies at the same address also provided physical therapy, as well as acupuncture and chiropractic treatments. In the months after the wreck, he visited these providers more than 120 times, FedEx says, driving up medical costs for his lawsuit against the company.

The driver had hired Ikhilov Law Group about two weeks after the incident. A doctor found he had a torn labrum despite negative imaging results elsewhere, and Dr. Alexios Apazidis connected lower back pain to the car wreck.

The complaint lists many similar stories, saying FedEx’s commercial fleet is a known target for “staged and intentionally caused motor vehicle accidents.” Similar RICO cases over treatment to personal-injury plaintiffs have had trouble getting over initial hurdles, while Uber has filed multiple racketeering lawsuits around the country, including in New York, that allege personal injury lawyers are sending clients to meet with doctors willing to perform invasive surgeries in order to increase the value of the claim.

Gov. Hochul is trying to get support from lawmakers for her plan, which would give insurers more than just the current 30 days to investigate and will change a law that allows individuals committing crimes like impaired driving to receive big payouts. To do so, she plans a cap on non-economic damages in those instances.

She’d also follow the lead of other states like Connecticut and New Jersey that permit recovery of damages only if the plaintiff is not primarily at fault. The term “serious injury” also needs to be more clearly defined, as its application is currently inconsistent in courts, she says.

“Car insurance rates are just too damn high, especially at a time when families are feeling squeezed by the cost of living,” Hochul said.

Polling shows voters support lawsuit reform that would lower their auto-insurance premiums, and the group Protecting American Consumers Together pushed a television ad campaign aimed at “billboard lawyers” who corrupt the legal system at the expense of all New Yorkers.