New York is grappling with a severe affordability challenge, and a largely unnoticed contributor is the surge in lawsuits intended to perpetrate insurance fraud. These fabricated legal battles siphon billions from residents annually. Despite sensational headlines and prominent arrests, the state’s civil liability framework continues to incentivize and facilitate such unscrupulous activities, drawing in sophisticated fraud networks.

Legal exploitation occurs when civil liability statutes, meant to shield those genuinely harmed by negligence, are manipulated for profit. As unethical lawyers and financiers amass wealth, the general public bears the brunt through escalating bills, increased rents, business closures, and job losses.

From courtroom strategies that sway jurors to award disproportionate damages to referral kickback schemes with deceitful medical practitioners and dubious litigation financing deals, the cycle of lawsuit manipulation churns out exaggerated and fraudulent cases, impacting virtually every economic sector in the state.

Staged incidents, like slip-and-falls at small enterprises, residential complexes, and fabricated construction mishaps, are inundating the courts, leading to rising costs for everyone. Many of these claims start with vague pain complaints reported to emergency responders or hospital staff.

Often, plaintiffs are pushed into drastic spinal surgeries and invasive treatments that credible medical authorities deem unnecessary and misaligned with standard care practices. In these scenarios, attorneys guide clients to colluding doctors and facilities to fabricate or magnify diagnoses, solely to boost settlement amounts and jury awards.

Fraud schemes frequently target vulnerable groups, including immigrants and the homeless, coercing them to stage accidents with promises of substantial payouts. Tragically, these individuals are often left impoverished, disabled, and suffering from unnecessary medical procedures.

In 2022, a New York attorney, doctor, and lawsuit financier were convicted of recruiting hundreds of plaintiffs and defrauding insurers and businesses of more than $31 million. This case offers a disturbing glimpse into how organized and profitable these fraud operations have become. Fraud cost the average family between $4,000 and $7,000 over the last decade, the FBI estimates.

It is no coincidence that New York is repeatedly designated a top “Judicial Hellhole,” ranking second nationwide in both 2024 and 2025 — a reflection of weak laws that do not merely enable lawsuit abuse, but actively incentivize it.

Gov. Hochul recently proposed tackling runaway lawsuit costs that increase auto insurance premiums. This is encouraging news, but reform efforts should address the full system — not just auto claims — and confront the broader liability environment affecting housing, construction, health care, small businesses, and local governments.

Criminalizing “staging accidents” and requiring full transparency in third-party lawsuit financing would be a good start. Today, when outside funders bankroll plaintiffs and their attorneys, judges and defendants are often left completely in the dark.

Hochul recently signed positive legislation to curb predatory litigation-lending practices, but more needs to be done to ensure these funding contracts do not remain hidden from courts and those involved in the litigation. Given the role of lawsuit financiers in funding fraud — including the 2022 Justice Department case — shining a light on these arrangements would give judges and defendants insights as to who is pulling the strings behind the scenes.

I urge Albany to increase scrutiny on these nefarious practices to build a more prosperous New York — one free of fraud and exploitation.

Heck is chairman, president, and chief executive officer of Greater New York Insurance Companies.