Fraudulent Injury Lawsuits/Unnecessary Surgeries Exposed in Trip-and-Fall Scheme

Personal injury attorney George Constantine and orthopedic surgeon Andrew Dowd were convicted by a Manhattan federal jury late last year for knowingly profiting from a massive $31 million trip-and-fall accident scheme. Constantine reportedly filed nearly 250 fraudulent personal injury lawsuits, and Dowd performed hundreds of unnecessary knee and shoulder surgeries on patients referred to him through co-conspirators. In April of this year, U.S. District Judge Sidney H. Stein sentenced Constantine and Dowd to 8 1/2 years in prison.

Many of us laugh off the seriousness of fraudulent trip-and-fall accidents, believing that these staged accidents are typically the work of amateur fraudsters, who collect relatively paltry sums of money if successful. Surveillance video has sometimes captured clumsy attempts at this type of fraud, such as a New Jersey man who was caught on his own workplace camera filling a cup with ice, throwing the ice on the floor, and fake-falling in the office cafeteria for insurance money. The surveillance video became public – and went viral. See https://www.youtube.com/watch?v=8CpwqUJHNyI.

While similar amateurish (and failed) attempts at insurance fraud might not engender outrage, it is a mistake to downplay the prevalence of staged accidents and fraudulent personal injury lawsuits. Indeed, staged accidents and fraudulent personal injury lawsuits are often the result of large-scale, organized criminal activity affecting many businesses and their insurance companies.

With that said, this column will discuss one of the largest and most costly trip-and-fall insurance frauds of recent years – effectuated by teams of “runners” who were paid cash kickbacks to recruit patients to stage accidents, lawyers who filed fraudulent personal injury lawsuits, and healthcare providers who performed unnecessary surgeries and other medical procedures funded by litigation funding companies. This fraudulent scheme began just over a decade ago, with hundreds of individuals recruited to serve as alleged “victims” of orchestrated trip-and-fall accidents. Various indictments led to guilty pleas by two individuals and a 2019 conviction in the Southern District of New York of three participants in the fraud, followed by:

• The 2021 indictments of another set of five defendants;
• Various other guilty pleas and convictions;
• A three-week trial of a personal injury lawyer and orthopedic surgeon in late 2022; and, finally,
• The sentencing of key participants earlier this year.

The 2021 Charges

In August 2021, after two co-conspirators had pleaded guilty to various charges before Judge Stein, and after three others had been convicted of participating in the fraud, see https://www.justice.gov/usao-sdny/pr/3-members-trip-and-fall-scheme-convicted-defrauding-new-york-city-area-businesses-and, the U.S. Attorney’s Office for the Southern District of New York charged attorneys George Constantine and Marc Elefant and surgeons Andrew Dowd and Sady Ribeiro with conspiracy to commit mail and wire fraud, mail fraud, and wire fraud in connection with the fraudulent trip-and-fall scheme, see https://www.justice.gov/usao-sdny/pr/attorneys-and-doctors-new-york-charged-defrauding-businesses-and-insurance-companies.

The government alleged that, from in or about January 2013 up to and including in or about April 2018, the defendants engaged in an extensive scheme to defraud businesses and insurance companies by staging trip-and-fall accidents and by filing fraudulent lawsuits. In or about 2015, certain members of the fraud split from the original conspiracy and formed a separate conspiracy. According to the indictment, Constantine was the primary attorney who filed fraudulent lawsuits in the original conspiracy starting in 2013 and Elefant was the primary attorney who filed fraudulent lawsuits in the separate conspiracy that had been formed in or about 2015.

The government asserted that the fraud participants recruited individuals (the Patients) to stage or to falsely claim to have suffered injuries from trip-and-fall accidents at particular locations throughout the New York City area (the Accident Sites). Common Accident Sites used included cellar doors, cracks in concrete sidewalks, and purported potholes.

According to the indictment, after the staged trip-and-fall accidents, Patients were referred to specific attorneys, including Constantine and Elefant, who would file personal injury lawsuits (the Fraudulent Lawsuits) against the owners of the Accident Sites and/or the insurance companies for the owners of the Accident Sites (the Victims). During the course of the fraud, the defendants, together with others, attempted to defraud the Victims of more than $31 million, according to prosecutors.

The Patients also were instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including Dowd and Ribeiro, prosecutors said. The fraud participants advised the Patients that if they intended to continue with their lawsuits, they were required to undergo surgery. As an incentive to getting surgery, the recruited Patients were offered a payment of typically between $1,000 and $1,500 after they completed surgery (the Post-Surgery Payments). Patients generally were told to undergo two surgeries.

The government asserted that doctors involved in the fraud, including Dowd and Ribeiro, were expected to, and in fact did, conduct these surgeries regardless of the legitimate medical needs of the Patients. Fraud participants often recruited individuals who were extremely poor as Patients – individuals desperate enough to submit to surgeries in exchange for the small Post-Surgery Payments. It also was common for participants in the fraud to recruit Patients from homeless shelters in New York City, prosecutors said.

As alleged by the government, the Patients’ legal and medical fees usually were paid for by litigation funding companies (the Funding Companies), even if Patients maintained medical coverage through an insurance company or a government-subsidized program. The Funding Companies also paid the fraud scheme organizers and participants referral fees, typically $1,000 to $2,500, for each Patient who signed a funding agreement, according to the indictment. In exchange for funding Patients’ medical and legal costs, the Funding Companies charged the Patients high interest rates, sometimes up to 50% on medical loans and up to 100% on personal loans, prosecutors asserted.

The interest rates were so high, according to the government, that often the majority (if not all) of the proceeds that were awarded in the Fraudulent Lawsuits were paid to the Funding Companies, Constantine, Elefant, Dowd, Ribeiro, and others, with the Patients receiving a much smaller percentage of the remaining recovery.

In October 2021, two months after Constantine, Elefant, Dowd, and Ribeiro were indicted, prosecutors filed a superseding indictment that, among other things, charged Adrian Alexander, the owner of one of the Funding Companies, with conspiracy to commit mail and wire fraud, mail fraud, and wire fraud in connection with the fraudulent trip-and-fall scheme. See https://www.justice.gov/usao-sdny/pr/new-york-litigation-funder-and-fifth-member-31-million-dollar-trip-and-fall-fraud.

Prosecutors asserted that Alexander’s participation in the fraud, which included owning an MRI facility that performed MRIs on many of the Patients as well as funding Fraudulent Lawsuits and unnecessary medical procedures at high interest rates, was “extremely lucrative.” He allegedly had boasted to investors that his funding company had annual returns in excess of 30%.

Guilty Pleas

Guilty pleas did not take long.

Alexander pled guilty to one count of conspiracy to commit wire fraud on August 30, 2022. The following month, Ribeiro pled guilty to one count of conspiracy to commit mail fraud and one count of conspiracy to commit wire fraud. See https://www.justice.gov/usao-sdny/pr/new-york-doctor-who-performed-unnecessary-back-surgeries-pleads-guilty-participating.

Then, in October 2022, Elefant pled guilty to one count of conspiracy to commit wire fraud. See https://www.justice.gov/usao-sdny/pr/new-york-lawyer-pleads-guilty-participating-trip-and-fall-fraud-scheme.

Trial and Sentencing

Constantine and Dowd went to trial. The government presented evidence at trial that, after the staged trip-and-fall accidents, Constantine (and Elefante) commenced personal injury lawsuits that did not disclose that the Patients had either deliberately fallen or had never fallen at the Accident Sites. See USA v. Constantine, 21-cr-00530-SHS-3, Dkt. No. 200. Dowd was an essential player in the scheme, regularly communicating with a manager of the scheme, coordinating with runners who delivered patients, falsifying medical reports, and performing hundreds of unnecessary surgeries crucial to the success of the scheme. Id., Dkt. No. 226.

In December 2022, a jury found both Constantine and Dowd guilty of conspiracy to commit mail and wire fraud, mail fraud, and wire fraud. In post-trial proceedings, Dowd argued that there was no evidence that a patient told him directly that his or her accident was staged, and therefore no jury could find that he had knowledge of the nature of the scheme. The court disagreed, stating that the law does not require such explicit evidence and that a reasonable jury was entitled to infer that Dowd knew the purpose of the scheme – and his role in performing unnecessary surgeries and falsifying reports to inflate the value of repeated settlements with insurance companies – either through actual knowledge or conscious avoidance. Id., Dkt. No. 226.

Judge Stein imposed severe sentences on all five of these defendants. This past March, Ribeiro was sentenced to 36 months in prison and three years of supervised release. See https://www.justice.gov/usao-sdny/pr/new-york-doctor-who-performed-unnecessary-back-surgeries-part-trip-and-fall-fraud#:~:text=Damian%20Williams%2C%20the%20United%20States,and%20other%20compensation%20from%20fraudulent. Then, on April 13, Alexander was sentenced to 36 months in prison and three years of supervised release; he also was ordered to pay $659,011 in forfeiture. See https://www.justice.gov/usao-sdny/pr/new-york-litigation-funder-convicted-trip-and-fall-fraud-scheme-sentenced-36-months.

On April 25, Judge Stein sentenced Elefant, who as noted above had pled guilty to one count of conspiracy to commit wire fraud, to 24 months in prison and three years of supervised release; he also was ordered to pay $955,281.54 in forfeiture. Finally, Judge Stein sentenced both Constantine and Dowd, who as noted above had been convicted at trial, to 102 months in prison and three years of supervised release. Judge Stein also ordered Constantine to pay $4,774,709 in forfeiture and Dowd to pay $2,900,905 in forfeiture. See https://www.justice.gov/usao-sdny/pr/new-york-lawyers-and-doctor-sentenced-defrauding-new-york-city-area-businesses-and.

Conclusion

Staged trip-and-fall accidents are typically associated with the actions of individuals seeking a quick insurance payout rather than a well-organized and extensive scheme. But recent evidence suggests otherwise – and makes it clear that fraudulent personal injury lawsuits abound, effectuated by multiple participants including professionals such as lawyers and doctors seeking to defraud insurers and business owners out of substantial funds. Prosecutors, businesses that are potential victims, and insurance carriers should take note.

Reprinted with permission from the July 7, 2023, issue of the New York Law Journal^©, ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.