Roosevelt and Tradesman file lawsuit over alleged fraudulent WC claims

Bermuda-based Roosevelt Road Re and its affiliate managing general agency Tradesman Program Managers (TPM) have filed a lawsuit to recover funds from 46 individuals and companies who made “potentially fraudulent claims” related to alleged New York City construction accidents

The filed Racketeer Influenced and Corrupt Organizations Act (RICO) suit came after Tradesman started an investigation in late 2020 which included the review of numerous attorneys, medical providers and other parties who were involved in the fraudulent scheme.

Tradesman stated: “As a result of our efforts we have uncovered information suggesting a systemic affront to the judicial process that has in essence “hijacked” both the New York construction and habitational markets.

“We believe that outside organizations have created, aided and/or have perpetrated staged accidents and unnecessary medical treatments. These staged accidents and unnecessarily medical treatments have resulted in the exposure of billions of dollars to our customers”

According to the MGA, the fraudulent scheme started at some point prior to 2018 and has continued uninterrupted since then. Tradesman started the investigation when it noticed its overall Workers’ Compensation payouts were increasing exponentially.

This was followed by a significant increase in tort claims alleging various workplace related ‘violations’ as the cause of purported injury, all of which also impacted reinsurer Roosevelt.

Moreover, the investigation revealed that the companies and individuals involved deceived undocumented workers to participate in their schemes, using invalid Gorayeb-sponsored Spanish-language OSHA safety training cards as part of their actions.

“The migrant markets have been exploited by selecting, grooming and coercing undocumented workers to participate in their schemes. Our investigation has also revealed a pattern of foreign-born plaintiffs that typically use counterfeit identification, alias names stolen or fraudulent social security cards/numbers and other false documentation to gain employment on construction sites,” Tradesman continued.

“Additionally we have identified patterns of using invalid OSHA safety training cards that are often falsely and illegally issued by training classes sponsored by entities having an interest in exploiting the workers, contractors and contractors’ insurers.”

According to the MGA, as a result of this fraudulent scheme, Tradesman has incurred damages of more than $1mn and the loss of substantial business when one of its significant general liability carrier clients Accredited, stopped writing insurance policies in New York due to the impact caused by this fraudulent pattern.

It stated: “Tradesman has therefore suffered significant injury to its property in the form of moneys paid on as part of the fraudulent scheme, and further to its business, due to the cessation of insurance carrier(s) writing Worker’s Compensation and/or general liability policies in the State of New York, thereby rendering it impracticable for Tradesman to continue providing the services to which it was contracted but for the fraudulent scheme…”

Roosevelt did not have any knowledge of the fraudulent activity until Tradesman identified the potential pattern and began its review and investigation.