As Director of Litigation for Tradesman Program Managers, Don Orlando has been a key figure in bringing lawsuits against various individuals involved in orchestrating the rash of staged construction accidents in New York State. Tradesman, a Poughkeepsie-based company that specializes in underwriting and managing insurance programs for contractors, has taken a particular interest in rooting out this growing trend of fraud in the state by employing the powerful Racketeer Influenced and Corrupt Organizations (RICO) Act, a federal law which is aimed at tackling organized crime.
BTEA President Elizabeth Crowley spoke with Don about the concerning trend of staged construction accidents and what Tradesman is doing to try to hobble the practice.
BTEA: Could you walk us through the scope of the RICO cases Tradesman has brought against those orchestrating staged construction accidents?
Tradesman has brought five civil racketeering cases against various law firms, doctors and runners. Runners are people who recruit people to file lawsuits and help them get in touch with the lawyers. Those lawsuits are in federal court in the Eastern District. There’s also about 30 fraud cases floating out there from other agencies, other carriers and insurers.
BTEA: What patterns or tactics have you uncovered in these fraudulent schemes that the public, and our members, might not be aware of?
These cases are almost all identical. They’re orchestrated by foreign actors who prey upon migrants to execute their schemes. People come over the U.S. border, get to New York City, and then are set up with a construction job by one of the runners or cartels.
On day one or two on the job, these workers stage a fall, often by going on a step ladder and falling from the first or second rung, which triggers Section 240 of the New York State Labor Law [the Scaffold Law] and its absolute liability penalty against the owner and general contractor. These workers are then represented by the same lawyers. They’re treated by the same doctors. They routinely receive the same treatment pattern. Some say they injured their hand, and then, all of a sudden, they’re having neck and back surgeries. Most of the approximately 2,000 cases we have identified as being fraudulent are they’re very similar and generally involve the same group of doctors and lawyers.
BTEA: Why are you seeking to use the RICO statute to combat this fraud instead of going through the traditional insurance fraud or civil channels?
If you go through the civil channel and you do a one-off case, you may be able to make a little headway, but the state courts are pretty liberal. They typically will sanction a defendant if you so much as mention the word fraud, which is odd, even though you believe you can prove it. Whereas if you go through the federal statutes and RICO, it’s a whole different story. The courts who handle these cases interpret the laws with a much stricter lens. a lot stricter. Also, if you go case-by-case, rather than taking a macro approach like we are, and you’re dealing with 2,000 cases, that’s a crazy amount of work. Under the racketeering statute, we have to prove our case in only a few of them. If you succeed in doing so, it imputes the fraud across all the cases and takes care of them on a global basis. So, RICO is a stronger methodology to employ from a legal standpoint.
BTEA: What practical steps can contractors take to identify and protect themselves from unscrupulous actors looking to stage accidents on their job sites?
You have to make sure you know who your employees are. And you have to make certain that when you’re doing your toolbox talks, you let everyone know that fraud is a serious crime in the United States and you’ll prosecute people if they engage in these schemes.
Cameras are a great way to protect yourself. Nowadays, most of our contractors have hidden cameras on job sites. They have open cameras too, and they don’t miss many areas on the site. Fortunately, we’ve captured many staged accidents on camera and the proof is in the pudding when you catch them on video.
You also want to look for someone suspicious who’s on your job, who may be the internal runner, someone who is actually staging the accidents or orchestrating them. Employers have to be really, really careful with who their employees are. Put cameras on the job sites and make certain that if an accident isn’t legitimate that you fight these bad actors.
BTEA: What role has the Scaffold Law played in fostering this epidemic of stage accidents?
It has made it easy. We’re the only state that has a law like this. Most of these cases, if you were in a state like New Jersey, they would be taken care of by workers’ compensation. The main reason this scheme that these cartels are running has been successful is because they have the absolute liability standard put in place by the Scaffold Law to exploit.