Racketeering case against NYC injury lawyers dismissed

A New York judge has dismissed a racketeering lawsuit against lawyers accused of driving up insurance costs by faking accidents, saying the plaintiff insurance companies lacked standing to bring such a case.

Roosevelt Road Re and Tradesman Program Managers sued William Schwitzer & Assoc. under the federal Racketeer Influenced and Corrupt Organizations (RICO) statute, saying the law firm participated in a widespread scheme to recruit plaintiffs, many of them illegal immigrants, to file fraudulent injury suits. The insurers have filed RICO claims against several other law firms, saying they foot the legal defense costs every time one of their customers is sued.

But federal judge Brian Cogan ruled in a Feb. 18 decision plaintiffs are too far removed from the scheme to file RICO claims. Roosevelt Re is an offshore reinsurer not licensed to do business in New York and Tradesman merely manages claims, the judge ruled.

While both ultimately incur costs related to the alleged scheme, the judge said, the immediate victims are New York insurers who pay the bills and then seek reimbursement.

The RICO statute requires a “direct relationship” between the racketeering scheme and a plaintiff’s damages and Roosevelt and Tradesman were at least one step removed, Judge Cogan said.

It was the second defeat for Roosevelt Road, which has launched a wave of similar suits against New York plaintiff attorneys it says are faking accidents and inducing clients to have unnecessary surgeries. The judge based his decision largely based on the fact Roosevelt Road had already lost on the same legal question in a lawsuit against the Subin law firm. The judge allowed Roosevelt Road to revise its petition in this case, but that effort failed.

“Plaintiffs litigated that issue extensively before and lost,” the judge wrote. “Accordingly, plaintiffs are estopped from relitigating this issue, and the court therefore dismisses the RICO claims with prejudice.”

Greater New York Mutual Insurance Company sued Liakas Law, Jumpstart Funding and several health care practices last week in New York federal court earlier this month, making similar claims. Liakas Law, is notable, as Ali Najmi is special counsel there. New mayor Zohran Mamdani has selected Najmi to head a committee that picks judges.