On February 18, 2026, the U.S. District Court for the Eastern District of New York dismissed a civil RICO action brought by Roosevelt Road Re, Ltd. and Tradesman Program Managers, LLC, against a personal injury law firm and various medical providers arising out of workers’ compensation claims after considering a motion by Garfunkel Wild and other law firms on behalf of our clients and the other defendants.
In Roosevelt Road Re, Ltd. and Tradesman Program Managers, LLC v. William Schwitzer & Associates, P.C., et al., Case No. 25-cv-3386 (BMC), the Court held that the plaintiffs were not properly situated to bring claims under the Racketeer Influenced and Corrupt Organizations Act (RICO).
The Allegations
In support of its case, Roosevelt, a reinsurer, alleged that defendants engaged in a coordinated scheme to stage or exaggerate construction-related injuries and direct claimants to specific medical providers in order to inflate workers’ compensation settlements and benefits. According to plaintiffs, these alleged practices caused them financial losses in the form of increased claims payments and related expenses.
The Court’s Ruling
Although the Court did not reach the merits of the alleged scheme, it held that plaintiffs were not permitted to bring the action in the first instance.
As a reinsurer, Roosevelt does not issue policies or bear direct responsibility to claimants or their insured employers. The Court concluded that, due to this commercial structure, Roosevelt is “multiple steps” removed from the alleged misconduct and therefore outside RICO’s reach.
The Court further held that plaintiffs were barred from relitigating this issue because it had already been rejected in a prior related action. As a result, the RICO claims were dismissed with prejudice, and the remaining state law claims were dismissed without prejudice.
Why This Matters
This decision is significant for several reasons:
- It sharply limits the ability of reinsurers to pursue civil RICO claims based on alleged fraud in underlying workers’ compensation matters.
- It reinforces that derivative, indemnity-based losses generally fall outside RICO’s reach.
- It provides a strong standing-based defense for medical providers and law firms named in similar actions.
- It may have ripple effects across other pending lawsuits asserting nearly identical theories.
For health care providers and defense counsel navigating the evolving landscape of workers’ compensation-related fraud litigation, this ruling reflects meaningful judicial scrutiny of expansive RICO theories tied to layered insurance structures.
Garfunkel Wild is proud to represent numerous medical providers in these actions and to have the Court adopt arguments advanced by its attorneys.
We will continue to monitor these proceedings and similar RICO cases to provide updates as further rulings are issued. If you have any questions about this decision or its potential impact on your business or practice, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].
