Claims
Reinsurer Files New Staged-Accident Suit Against NY Injury Firm After RICO Defeat
By Insurance Wire Staff, . Insurance Wire.
A Bermuda-based reinsurer has gone back to federal court in New York with a new complaint against a personal injury law firm it accuses of running a staged-accident operation, even after a judge dismissed a nearly identical lawsuit earlier this year.
The reinsurer is Roosevelt Road Re, Ltd., which operates alongside Tradesman Program Managers, LLC. According to the complaint filed in the Eastern District of New York and published by Insurance Journal, the firm has been pursuing a wave of suits against New York plaintiff attorneys it says are manufacturing accidents and injuries to support meritless insurance claims. The complaint alleges that since at least 2018, certain defendants have been involved in arranging high-interest funding loans to claimants connected to the scheme.
What the courts have already decided
The new filing follows a significant legal setback. As Insurance News Net reported, federal judge Brian Cogan dismissed an earlier Roosevelt Road suit on February 18, ruling that the plaintiffs were too far removed from the alleged fraud to bring claims under the federal Racketeer Influenced and Corrupt Organizations Act, commonly known as RICO. RICO is a law originally designed to target organized crime that allows private parties to sue for treble damages when they are directly harmed by a pattern of criminal activity. The court found Roosevelt Road did not meet that direct-harm standard.
Law360 Insurance Authority reported that the Second Circuit Court of Appeals had also dismissed similar claims on the same standing grounds: the insurer lacked a direct enough injury to pursue a racketeering suit.
Why the new complaint matters
Filing again after two dismissals is not a routine move. The central legal problem Roosevelt Road faces is one of standing: RICO requires a plaintiff to show it was directly harmed by the racketeering conduct, not merely that it paid out on claims that were downstream of a fraud. Reinsurers, which provide insurance to insurance companies rather than directly to policyholders, sit one step further back in the chain, which is precisely why courts have twice found the connection too attenuated.
The new complaint appears to be an attempt to plead the facts differently, presumably to establish a closer causal link between the alleged scheme and Roosevelt Road's own losses. Whether that effort succeeds will depend on how the court reads the standing doctrine after the earlier rulings.
What to watch
The broader pattern here is the one that matters for the industry. Roosevelt Road has now launched multiple suits against New York plaintiff firms over alleged staged accidents, and has lost on procedural grounds each time without a court ever reaching the underlying fraud allegations. That record raises a practical question for carriers and reinsurers considering similar litigation: RICO is a powerful tool when it works, but the standing requirements make it difficult for anyone who is not the primary insurer, and sometimes even for the primary insurer, to use it against alleged claims fraud rings.
If the new complaint survives a motion to dismiss and reaches the merits, it could produce the first judicial assessment of whether the underlying conduct actually occurred. If it is dismissed again on standing, the result will likely push carriers toward state-law fraud claims or regulatory referrals rather than federal racketeering suits as their primary enforcement mechanism against organized accident staging.
Sources
1. Insurer Says NY Firm Staged Accidents For Suits, law360.com
2. COMPLAINT 1 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK, insurancejournal.com
3. Racketeering case against NYC injury lawyers dismissed - Insurance News, insurancenewsnet.com
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