Tradesman Program Managers and captive insurer Ionian Re filed a joint complaint against 44 defendants Friday, in the latest of a series of lawsuits submitted under the Rico act alleging staged construction site accidents in New York.
Among others, the latest complaint adds a new law firm, Liakas Law, to the list of plaintiffs’ attorneys that the two insurers have accused of orchestrating a “fraud scheme” involving NY construction workers.
The complaint claimed that Liakas was involved in “thousands of lawsuits” related to purported construction work injuries since at least 2018.
Its storyline is similar to the previous Rico suits filed since March 2024: so-called “runners” recruited construction workers who were groomed to stage fake accidents; the workers were then referred to medical institutions providing “unnecessary” healthcare services and high-interest litigation funding loans, according to the complaint.
As such, medical providers were included in the list of defendants, as well individual “runners” and funding companies that were not named in the suit.
The plaintiffs accused Liakas of connecting claimants to the funding companies.
In exchange, the complaint alleged that the funding companies possessed the “right to receive the majority of or a significant part” of the claimants’ portion of the settlement proceeds from workers’ compensation claims or personal injury lawsuits.
“The funding defendants distributed the remaining proceeds of the high-interest funding loan directly, and/or indirectly through the Liakas defendants, to the runner defendants, the medical provider defendants and the Liakas defendants,” the complaint read.
This is Tradesman’s fourth and Ionian Re’s third Rico suit related to workers’ compensation and general liability claims in the NY construction space.
Part of the issue has been a state-specific scaffold law that imposes a strict liability statute applicable to construction work.
According to the NYC Department of Buildings, in 2023 the city saw an increase of over 17% in the number of ladder falls, stair falls and tripping accidents on construction sites where inspectors did not find unsafe or illegal conditions.
On Friday, Tradesman, Ionian Re, their legal representative Willis Law, construction trade organizations, and NY Congressman David Weprin gathered in front of the Brooklyn Federal court building in protest.
The trade organization’s representatives stressed that insurance fraud was not only hurting carriers, but also small business owners in the contractors and construction space.
For example, the cost to insure a $100mn-project tripled to 12% of project cost in 2024, up from 4% in 2010 and 8.5% in 2020, according to Elizabeth Crowley, president of the Building Trades’ Employers Association.
In January 2024, Weprin, who is also chair of the insurance committee, and several other co-sponsors introduced the “Staged Accidents Bill”, which could make the staging of a construction site accident for insurance fraud a class E felony. The bill is currently pending in the assembly committee.
“This act is crucial in safeguarding the integrity of our construction and insurance industries and mitigating the financial housing burden for our citizens,” Weprin said.