Injury lawyers turn N.Y. courts into Ellis Island for illegal immigrants

In September 2022, Angel Peralta Ordonez crossed the Mexican border into Texas, then made the rest of his voyage to New York City in a stranger’s car. It wouldn’t take long until the Ecuadorian joined a longstanding American tradition: He filed a personal-injury lawsuit, according to legal documents filed in the case.

Ordonez, one of millions of undocumented immigrants who entered the country during the Biden administration, was apparently injured just weeks after arriving in the Big Apple while cleaning a construction site, according to court filings. Workers’ comp paid him $1,400 a month, but lawyers at Ginarte Law Firm, which boasts about its expertise in representing undocumented workers, had bigger ideas.

A controversial New York law puts property owners and operators at a disadvantage in court. Ordonez needed $21,000 to repay the coyotes who smuggled him into America, and Ginarte helped Ordonez sign contracts for “like, three” loans as part of the plan to sue, he said, against the future value of his lawsuit, which is pending and possibly worth millions for lawyers, lenders and doctors to split.

“Where else can you walk into an attorney’s office and walk out with a check for 10-15 grand?” said a defense lawyer who asked not to be named because he is involved in this litigation.

Illegal entry, slip-and-fall, lawsuit, loan: These are the first steps in what insurance companies say has become a rampant scheme in the courts of New York and elsewhere, in which plaintiff lawyers recruit poor and frequently undocumented workers to serve as plaintiffs in what the companies say are questionable tort cases.

“I literally get a labor law claim across my desk a week, and they’re massive,” said Jason Bartow, who sells construction insurance for his family’s commercial brokerage in New York. Premiums are rising rapidly, he said, and more of his clients are excluded from regulated insurance entirely and forced to find coverage in the excess and surplus lines market, where policies are riddled with exclusions.

“It’s become a vicious cycle of increase on top of increase,” Bartow said. “Your average contractor isn’t going to accept a price increase, they’re going to pass it on to the consumer.”

To make these cases more valuable, insurers say, plaintiff lawyers tap into a network of surgeons, radiologists and other medical providers who often perform unnecessary procedures to transform what would otherwise be nuisance cases into multimillion-dollar settlements. Union Mutual Fire Insurance is suing multiple law firms, doctors and lawsuit lenders in federal court, accusing them of a racketeering conspiracy fueled by tens of millions of dollars in funding from investors attracted by the high returns of betting on personal injury settlements.

“At its core, it is the same tired scheme: Stage a fall (or just make it up), overtreat and sue,” the company says in its Racketeering Influenced and Corrupt Organization (RICO) suit. “With the only limitation on income being getting the facility stocked full of patients, this incentivizes doctors to act in the manner which they are aware their referral source wants – here, finding injuries that don’t exist, overtreating as much as possible, and performing needless surgery.”

“These cases can be worth $5 million – you have a 20-year-old who says `I made $80-$100,000 a year and now I’ll never work again,’” said Don Orlando, an executive with Tradesman Insurance who has spent years investigating the migrant tort scheme. “The lowest you are going to settle one of those for is $2.5 million.”

At the bottom of the pyramid is the plaintiff, often a poor and undocumented immigrant, who signs off on open-ended loans in exchange for a modest amount of cash up front. Since the loans are contingent upon winning a case, New York doesn’t enforce its 16% interest cap on consumer loans. Rates are frequently above 50% a year.

The details were laid out in documents filed in the case of an undocumented immigrant from the Dominican Republic who used a false name to sue after tripping on a stair on 177th St. in 2012. While his case ultimately settled for $1.7 million – well within the normal range for Section 240 claims in New York, lawyers say – the plaintiff ended up with only about 25% of his settlement, while his lawyers at Subin Associates, financiers and doctors associated with firm employees kept the rest.

An emergency room report included in the court record doesn’t show any significant injuries, but the plaintiff underwent knee surgery, two back surgeries and one on his neck from doctors including Dr. Michael Gerling, a defendant in the Union Mutual suit. Before cashing his settlement check, the plaintiff had to clear up one misunderstanding: He’d filed all his court papers under his father’s name, Fracisco Angel Peralta, when his real name is Daniel Antonio Peralta Jimenez. In an apologetic filing with the court, he said he used his father’s name “because I love him very much and the use of his name is a sign of affection and respect in my culture.”

A closing statement filed in the record shows Peralta received $427,000, Subin was paid $564,625.86 and the remaining $700,000 went to lenders Case Cash ($561,000) and Wall Street Case Advance ($53,000), and Dr. Gerling, who claimed $68,000 of the proceeds. None of the parties involved responded to requests from Legal Newswire for comment.

The money available in injury lawsuits has drawn the attention of lenders, who finance the entire machine by bundling loans to plaintiffs, typically bearing astronomical interest rates, and syndicating them to hedge funds and other investors including banks and mainstream mutual funds. Statements insurers have obtained through legal discovery show some of the borrowed money flows immediately to surgeons and other medical providers, accumulating interest at 50% or more that is ultimately subtracted from the plaintiff’s recovery.

Some firms specialize in providing lines of credit to plaintiff law firms backed by their inventory of lawsuits. One such investor includes an Oregon mutual fund that has extended $8 million to a funding company named in the RICO lawsuit.

“It’s a grotesque and gruesome network where they’re recruiting migrants, disfiguring them, and then ensuring they are left with practically nothing,” said Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York. “After the lawyer, the doctor and the lender each take their third, the migrant is often sent back to the shelter with a fused spine.”

While lawsuit lending and insurance fraud are common nationwide, insurers say the problem is especially severe in New York because of its unique statute, Labor Law Section 240, also known as the Scaffold Law. That law allows workers not only to file claims against employers under workers’ compensation but also to sue building owners and general contractors for any injury remotely related to the force of gravity, like tripping on the stairs or stepping off a scaffold.

New York judges have interpreted the law to impose strict liability on defendants regardless of the plaintiff’s fault. As one analysis put it: “Only under the Scaffold Law can a claimant be 99% at fault for causing his/her own injuries and still recover 100% of the damages.”

The Scaffold Law has driven a massive increase in litigation and insurance premiums in New York. In a recent study, Chubb Insurance found Workers’ Comp claims of more than $5,000 are 85% more frequent in New York than other states, and 70% of the time they are accompanied by a Section 240 lawsuit. New York construction companies report one bodily injury claim per $2.74 million in annual payroll, 13 times higher than the national average. Insurers believe there are thousands of suspicious cases in New York courts.

New York’s Workers’ Comp law, unlike other states, doesn’t allow insurers to reject procedures, giving doctors the chance to perform unnecessary surgeries and invasive treatment. Bodily injury claims of more than $250,000 are 30 times more likely in New York and the average amount of a Section 240 claim rose 90% between 2012 and 2019, Chubb says.

Less than 5% of Scaffold Law claims go to trial, because putting them before a jury can be even more expensive for insurers – and ratepayers who ultimately pick up the bill. A Manhattan jury awarded $102 million to a Section 240 plaintiff in 2023, since reduced to $20 million. Another Scaffold Law plaintiff won $30 million in 2021.

Insurers have responded by raising deductibles to as much as $5 million per occurrence. Republicans in Congress are sick of sinking taxpayer dollars into New York building projects, with Rep. Nick Langworthy of New York this year introducing a bill that would mean the Scaffold Law’s rules aren’t in play on any project built with federal money.

“New York’s Scaffold Law is a gift to trial lawyers and a burden on our construction workers and taxpayers, and it must change,” said Langworthy, whose cause is joined by two other New Yorkers in the House, though the bill sits in committee.

Liberty Mutual has also had enough. In July, it excluded coverage for any “construction operations” performed in New York State, even if the policy is issued to contractors in Connecticut and New Jersey. Rep. Mike Collins, R-Georgia, in a letter to Attorney General Pam Bondi, warned of the increase in staged vehicle accidents and other forms of insurance fraud, saying it costs consumers $45 billion a year.

Some insurers have started fighting back by suing the lawyers, doctors and lenders who they say have engaged in a racketeering conspiracy. Two of the biggest offenders, insurers say, are the Subin and Gorayeb law firms, which file hundreds of workplace, slip-and-fall and vehicle accident cases each year

Subin’s lawsuits for just a few months in 2020 looked startlingly similar, though it is hard to tell from court records which, if any, plaintiffs are undocumented immigrants ("We refuse to subject our client to be intimidated or harassed by defendants based on his immigration status while the defendants reaped the benefits of our client's work," wrote James W. Coscia, a lawyer with Subin Associates, in a June 12, 2022, letter to the court in one case).

Luis Rivera sought $1.5 million after allegedly breaking his ankle when planks he was standing on shifted (he’s already obtained partial summary judgment under the Scaffold Law). In May, Salomon Fabian Vaquerano claimed he was hit by falling construction materials in Brooklyn. In June, Javier Vasquez said he had fallen off a scaffold and was “rendered sick, sore, lame, maimed and disabled."

In July, Elder Alvaro sued five days after falling from a scaffold. Less than a month later, Wilmer Mauricio Espinoza sued over a June 30 fall from an “elevated surface” (the defendant says he was climbing a scaffold incorrectly). Now represented by Omar Nahum Fernandez-Machuca, Espinoza’s seeking $25 million.

When these cases settle, how much money the plaintiff gets to keep is a closely guarded secret. New York law requires lawyers to file a closing statement with the court, as in the case above, but it remains confidential unless a party can convince an appellate judge to open it for inspection or someone accidently enters it into the public record.

Subin didn’t respond to requests for comment, directly to the firm or to its attorney, James Catterson of the prestigious law firm Pillsbury Winthrop. Catterson is a former New York appellate justice and assistant U.S. Attorney who also represents New York Mayor Eric Adams in his legal fight with the City Council.

In a statement to a New York television station last year, Subin said it "has an eight-decade record in matters involving serious personal injury. The firm takes its ethical responsibility obligations seriously.”

Onetime Subin client Manuel Martinez may disagree. He alleged a slip-and-fall in 2014, after which an unknown man took eight photos of the accident, which he turned over to Subin. Roosevelt Hospital found no serious injury, but Drs. Arden Kaisman and Gerling both performed surgeries on his neck and back. A defense radiologist later testified they were unnecessary, according to court documents.

In a handwritten response filed with the court in November 2023, after Subin dropped him as a client, Martinez said: "your honor It Is Impossible to keep a fraudulent lifestyle for 9 (nine) years. No one fraudes (sic) multiple surgeries and recoveries that are this detrimental to my life. I cannot fraud the pain and suffering I have endured for the past 9 years."

Martinez told defense attorney Kenneth Danielson in court that the surgeries he had on his spine “never helped” and that he “wished he did not have them.”