New York City is no stranger to national scrutiny when it comes to its courts, but the 2024–2025 Judicial Hellholes® report hit especially hard. Ranked the No. 2 “Judicial Hellhole” in the country, New York City has been flagged as a jurisdiction where abusive litigation flourishes unchecked, leaving businesses, insurers, and ordinary citizens footing an extraordinary bill.
According to the American Tort Reform Foundation (ATRF) New York's excessive litigation costs drain nearly $89 billion annually from the state's economy.[i] That translates into an invisible tax of more than $2,300 for every New Yorker along with 418,000 lost jobs.[ii]
The frank reality is the crisis runs deeper than economics. We are facing what many now call a “fraudemic”—a pervasive, organized system of litigation fraud that manipulates the legal system, exploits vulnerable populations, and corrodes public trust in the courts. This is not a series of isolated bad cases. It is an industrialized scheme, a cottage industry with billion-dollar revenues, built on staged accidents, manufactured medical claims, and the abuse of statutes like New York’s Labor Law § 240 (“Scaffold Law”).[iii]
We are all paying for it. Premiums skyrocket. Businesses close. Construction slows. Workers are recruited into schemes that destroy their health and leave them far from whole, even as others profit from their suffering.
New York stands at a crossroads. Either it confronts the fraudemic head-on with aggressive litigation, statutory reform, and exposure of the bad actors, or it resigns itself to an ever-deepening cycle of abuse that threatens the very fabric of civil justice.
The Rise of the Fraudemic
For years, defense attorneys saw troubling patterns: the same clinics, the same plaintiff attorneys, the same accident fact patterns recycled endlessly. Suspicion grew that these were not coincidences, but suspicion is not proof.
Suspicion turned into evidence with Tradesman's groundbreaking RICO filings[iv], which began to expose the machinery behind fraudulent litigation. Through civil racketeering claims, Tradesman mapped out the connections between corrupt doctors, unscrupulous attorneys, staged-accident “runners,” litigation funders, and even elements of organized crime.
These RICO filings did more than defend against individual claims. They pulled back the curtain and revealed systematic fraud on a massive scale, coordinated for maximum financial extraction from insurers and businesses.
Scaffold Law: From Worker Protection to Fraud Factory
Nowhere is this fraudemic more apparent than under New York’s notorious Labor Law § 240, commonly known as the Scaffold Law. Originally designed to protect construction workers from unsafe conditions, it imposes absolute liability on property owners and contractors for elevation-related injuries, regardless of the worker’s own negligence.
What began as a well-intentioned law has morphed into a billion-dollar fraud factory.[v] Studies have estimated that the Scaffold Law adds about $785 million annually to the cost of construction and infrastructure projects across New York.[vi]
Reading the RICO filings initiated by Tradesman is akin to a John Grisham novel. Fraud rings now exploit the strict liability standard to stage accidents, recruit claimants, and push cases that are virtually impossible for defendants to contest on liability grounds.
The scheme works like this:
- Vulnerable individuals—often immigrants, low-income workers, or people down on their luck—are approached and persuaded to participate.
- “Accidents” are staged at construction sites or fabricated through paperwork.
- The individuals are steered to “friendly” doctors who recommend invasive, unnecessary surgeries, often spinal or orthopedic, designed to inflate case value.
- These individuals undergo life-altering procedures—not to make them whole, but to maximize potential settlement figures.
The tragedy is twofold: on one side, workers are left permanently harmed, their lives forever changed; on the other, businesses, carriers, and ultimately the public, pay the bill.
This is not worker protection—it is systemized human exploitation, weaponizing the law for profit. The Scaffold Law has become a fraud multiplier, and its repeal or reform is no longer a policy debate but a moral necessity.
The Human Cost of Fraud
Too often, fraud is measured in dollars. The real cost is human. The fraudemic thrives by preying on people at their lowest points.
Imagine being told that if you “play along” with a staged accident, you could make tens of thousands of dollars. Imagine being convinced, or even pressured, into undergoing an invasive spinal surgery, not because you need it, but because it will inflate the settlement value of a lawsuit. Imagine trusting professionals who should protect you—lawyers and doctors—only to realize you were merely a pawn in a scheme that left you disabled, dependent, and discarded once your usefulness was spent.
These stories are not hypothetical. They are happening in real time, unfolding every day in New York's courts. Fraud is not victimless. It exploits people at their weakest moments and leaves them broken.
The Economic Toll: Everyone Pays
Beyond the personal tragedies lies the massive economic fallout. ATRF’s estimate of $89 billion in annual excess legal costs is not abstract. It manifests as:
- Insurance premium spikes that make coverage unaffordable.
- Higher construction costs that slow infrastructure and housing development.
- Job losses as businesses buckle under litigation risk.
- Consumer price increases passed along to the public.
In effect, fraud acts as an invisible tax on every New Yorker—and indeed, every American—who buys goods, pays rent, or seeks insurance coverage. The fraudemic is not just a legal problem; it is a societal one.[vii] [viii]
Practice Pointers: Fighting Fraud in the Trenches
It has been talked about for years. Typically, when fraud is suspected or documented through the course of litigation, the complaint is dismissed. A closed file is a good file, so there was no penalty, no consequence. That has to change. So how do defense attorneys, carriers, and businesses push back? The following strategies are essential:
- Investigate Early and Aggressively
- Do not accept claims at face value. Dig into medical records, employment histories, and accident reports for inconsistencies.
- Early fraud detection can save years of litigation and millions in exposure.
- Leverage Surveillance and Independent Experts
- Video surveillance is incredibly powerful. We live in an era where there are cameras everywhere. Buildings insured by Tradesman have cameras everywhere, and this is best practices. Nothing says fraud like a faked accident, watching it over a video.
- Biomechanical experts, and forensic accountants can expose staged events or exaggerated claims.
- Neutral, respected experts carry credibility in front of juries and judges
- Employ RICO and Creative Litigation Tools
- Follow the lead of Tradesman: use civil RICO statutes to map out and expose fraud networks. Uber is taking leadership by filing a RICO claim in California.[ix] Uber also filed a RICO suit in California in July 2025. Targeting law firms and medical providers over alleged unnecessary surgeries and inflated billing.[x]
- Tradesman has had massively positive results from its aggressive stance. Fewer accidents at buildings that proudly display a “insured by Tradesman”, and loss ratios are down massively. There is an incentive for other businesses and carriers to follow the leadership of Tradesman.
- When fraud is systemic, the response must also be systemic.
- Challenge Abusive Statutes Head-On
- Push back against the overreach of the Scaffold Law. Argue aggressively for reform in court and in legislative hearings.
- Highlight how the law incentivizes fraud and harms both businesses and workers.
- Push for Litigation Funding Transparency
- Third-party funding often fuels abusive litigation. Demand disclosure of who is really bankrolling cases and profiting from fraud.
- Collaborate with Prosecutors and Regulators
- Share findings with law enforcement. Fraud is not just a civil issue; it is a crime.
- Build partnerships that move cases from the civil docket to the criminal docket where they belong.
A Call for Reform
To restore fairness in New York's courts, three reforms are essential:
- Repeal or Reform Scaffold Law
- No other state imposes strict liability for elevation injuries. This statute is out of step with modern construction, fosters fraud, and punishes legitimate businesses.
- Transparency in Litigation Funding
- Hidden financiers profit off human suffering while driving up costs. Sunlight is the best disinfectant.
- Aggressive Prosecution of Fraud
- Fraudulent claims should not be treated as mere exaggerations. They are deliberate crimes, and they should be prosecuted as such.
An Inflection Point
New York City has been branded a Judicial Hellhole, but that label should not be accepted as destiny. Instead, it should serve as a wake-up call.
The fraudemic is real. It is not victimless. It destroys lives, siphons billions from the economy, and undermines public confidence in the justice system. Thanks to the pioneering efforts of Tradesman and others, the curtain has been pulled back on the bad actors. Now the question is whether we will act.
We must expose fraud aggressively. We must protect vulnerable people from being used as pawns. We must reform statutes like the Scaffold Law that create perverse incentives. And we must remind the public that litigation fraud is theft—stealing from businesses, carriers, and ultimately from every citizen.
This is our inflection point. The choice is stark: either confront the fraudemic with the full weight of the law and legislative reform or allow New York’s courts to remain a playground for those who profit from deception.
The time to act is now.
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[i] Judicial Hellholes® 2024-2025 Report, American Tort Reform Foundation. Executive Summary, Dec. 2024. https://judicialhellholes.org/reports/2024-2025/2024-2025-executive-summary/
[ii] Judicial Hellholes® 2024-2025, "New York City Entry." https://judicialhellholes.org/hellhole/2024-2025/new-york-city/
[iii] New York Consolidated Laws, Labor Law- LAB§240. Scaffolding and Other Devices for Use of Employees. https://codes.findlaw.com/ny/labor-law/lab-sect-240/
[iv] Insurance Journal. Racketeering Suit Alleges NY Insurance Fraud. July 7, 2025. https://www.insurancejournal.com/magazines/mag-features/2025/07/07/829907.htm
[v] Id.
[vi] Scaffold Law Reform Press Release: Business and Civic Leaders Launch Statewide 'Build More New York' Coalition to Support Jobs, Construction, and Development by Reforming Antiquated Scaffold Law. Sept. 4, 2025. https://www.scaffoldlaw.org/news/press-release-business-and-civic-leaders-launch-statewide-build-more-new-york-coalition-to-support-jobs-construction-amp-development-by-reforming-antiquated-scaffold-law
[vii] Judicial Hellholes® 2024-2025 Report, American Tort Reform Foundation. Executive Summary, Dec. 2024. https://judicialhellholes.org/reports/2024-2025/2024-2025-executive-summary/
[viii] ATRF Press Release: "NYC Climbs to NO. 2 Judicial Hellhole Amid Rampant Fraudemic," Dec. 2024. https://atra.org/nyc-climbs-to-no2-judicial-hellhole-amid-rampant-fraudemic
[ix] Insurance Journal. "Uber Sues New York Doctors, Lawyers Alleging $120M Insurance Fraud." Jan. 3, 2025. https://www.insurancejournal.com/news/east/2025/01/31/810277.htm
[x] "Uber's Lawsuit Hits Los Angeles: The California RICO Case That Could Reshape Injury Law," July 2025. https://www.hhlawfirm.law/ubers-lawsuit-hits-los-angeles-the california-rico-case-that-could-reshape-injury-law/.