Merchants Insurance Group Files RICO Case to Protect New Yorkers from Widespread Fraud Scheme

Business Wire

Company targets alleged downstate fraud scheme driving up insurance costs across New York

BUFFALO, N.Y.--(BUSINESS WIRE)--
Merchants Insurance Group (Merchants Mutual Insurance Company), headquartered in Buffalo, New York, has filed a federal civil action under the Racketeer Influenced and Corrupt Organizations Act (RICO) to expose and stop an extensive insurance fraud operation targeting New York’s construction industry.

The lawsuit, filed on October 20, 2025 by The Willis Law Group, alleges that since at least 2018, groups of individuals have orchestrated schemes involving staged or exaggerated construction site accidents, false injury claims, and unnecessary medical treatments — all designed to increase insurance settlements and profit at the expense of vulnerable workers and business owners.

While the alleged conduct described in the lawsuit primarily occurred downstate, Merchants emphasized the implications insurance fraud has on workers, employers, and consumers across New York State.

“Insurance fraud has consequences beyond the immediate parties involved. It doesn’t just affect insurance companies — it hurts everyone who depends on a fair system,” said Charles Makey, President & CEO of Merchants Insurance Group. “When false claims are used to line the pockets of a few, it drives up costs for employers and takes resources away from genuinely injured workers. We filed this case to help preserve the integrity and affordability of insurance for consumers throughout New York. It’s our responsibility to protect the people who do things the right way.”

According to the complaint, participants in the fraud network allegedly preyed upon construction workers to take part in staged or exaggerated incidents, turned minor injuries into “full-body” claims, submitted false medical documentation, and billed for medically unnecessary or excessive procedures. These tactics inflated settlement values and undermined the workers’ compensation system — ultimately increasing costs for businesses and straining support for legitimate injured workers. Workers were allegedly coerced into undergoing unnecessary operations, including spinal surgeries, by those organizing the fraud scheme.

Insurance fraud costs U.S. consumers an estimated $308.6 billion each year, according to the Coalition Against Insurance Fraud – leading to premium increases of $4,000 to $7,000 over a ten-year period for the average American family. Merchants noted that, as a New York-based insurer founded and headquartered in downtown Buffalo, it considers safeguarding the stability of the state’s insurance system to be part of its broader responsibility to policyholders and communities statewide.

“Although we’ve filed this case downstate, the potential effects of fraud are not limited by geography,” Makey added. “This case is about accountability and fairness everywhere. We owe it to the construction workers who risk their safety every day and to the small businesses that play by the rules to make sure the system works for them — not against them.”

As part of its broader anti-fraud commitment, Merchants continues to strengthen its partnerships with law enforcement, regulators, and industry peers to detect and deter fraudulent activity. The company is also investing in advanced data analytics and claims review tools to stop fraud before it affects policyholders.

Founded in downtown Buffalo, New York in 1918, Merchants Insurance Group is a leading regional property and casualty insurance carrier specializing in commercial lines. Merchants partners exclusively with independent insurance agents because they have the expertise to match the company’s portfolio of quality products, and to ensure customers’ assets are properly protected. The large network of Merchants’ independent agent partners spans across Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, and Vermont. For more information about Merchants Insurance Group, visit www.merchantsgroup.com.

The information contained in this release is for general informational purposes only and does not constitute a full statement of the facts or legal positions in the referenced matter. The case remains ongoing.