Here, There and Everywhere, Chasing Fraudsters

An Indictment in a New York Slip and Fall Scheme raises concerns about Insurance Fraud

Howard Borlack,
Partner

May 2018

by Howard Borlack

Introduction

The United States Attorney's Office, Southern District of New York, has charged five individuals with defrauding businesses and insurance companies of more than $31.7 million in an elaborate slip and fall scheme dating back to 2013.¹

Peter Kalkanis, Bryan Duncan, Kerry Gordon, Robert Locust, and Ryan Rainford ("the accused") are charged with conspiracy to commit mail and wire fraud, mail fraud, and wire fraud.² Peter Kalkanis, the alleged "ringleader" of the scheme, is also charged with aggravated identity theft.³ These charges relate to how the fraud scheme was allegedly carried out, namely by mail and electronic means of communication.

The Indictment

The indictment contains details of the charges, which are only allegations at this time. The accused are presumed to be innocent until proven guilty.

According to the indictment, the accused recruited individuals to slip and fall in various locations around New York City. In some cases, an actual incident occurred, while in other cases, individuals were required to simply report that they slipped and fell.⁴ The accused would coach participants on how to "fake" their injuries.⁵

After the staged incidents, the accused instructed the participants to receive medical treatment from specific chiropractors and doctors. Transportation to and from medical appointments would be provided.⁷ Some individuals were even instructed to undergo surgery, for which they would receive a financial incentive.⁸ The treatments and surgeries would be used to support lawsuits against the owners of the incident sites and their insurance companies. Again, the accused referred participants to specific lawyers to commence these lawsuits.⁹

As a further measure, the accused arranged funding for the lawsuits through large litigation finance firms.¹⁰ The indictment alleges that Mr. Kalkanis even used one individual's identity to obtain such funding.¹¹ Overall, the indictment suggests that the accused were involved in almost all medical and legal aspects of these staged slip and fall incidents.

No doctors, lawyers, or finance firms have been accused of wrongdoing at this time.¹²

Raising Concerns about Insurance Fraud

According to the New York Times, a fraud scheme of this size is "more brazen than typical personal injury schemes".¹³ However, slip and fall incidents are common in large cities and have long been the subject of abuse in lawsuits. Insurance companies spend millions of dollars each year to identify and crack down on insurance fraud.¹⁴

In Ontario, efforts to crackdown on fraud have focused on motor vehicle accidents. The provincial government's Fair Auto Insurance Plan focuses specifically on practices that allow medical clinics and lawyers to take advantage of individuals involved in accidents.¹⁵ Based on recommendations in the Marshall Report, the Ontario government will introduce measures such as standard treatment plans and standard contingency fee arrangements to reduce overcharging.¹⁶

Finance Minister Charles Sousa stated that motor vehicle insurance fraud costs taxpayers an estimated $1.6 billion annually, with the net result of drivers "paying too much to offset the high cost of fraud."¹⁷

Conclusion

Despite the different contexts, there is a common goal and need to address fraud in personal injury cases. While fraud can cost insurance companies millions or billions of dollars, laying charges and introducing anti-fraud legislation are two means of cracking down on these costs. The effectiveness of these kinds of measures will likely become clearer once the outcomes have been observed and further studied.

¹ The United States Attorney's Office, 5 Members of Slip-And-Fall Scheme Charged With Defrauding New York City-Area Business and Their Insurance Companies Of More Than $31.7 Million (Southern District of New York: U.S. Attorney's Office, 2017).
² Ibid.
³ Ibid; Five New York Residents Charged in More Than $31.7M Fraud Scheme, Insurance Journal (20 April 2018).
⁴ Indictment, United States v Kalkanis et al, 18 CR 289, 1A.
⁵ Ibid, 3.
⁶ Ibid, 1B, 1D, 1E.
⁷ Ibid, 3.
⁸ Ibid, 1F.
⁹ Ibid, 1C.
¹⁰ Ibid, 1G.
¹¹ Ibid, 12.
¹² Mathew Goldstein and Jessica Silver-Greenberg, How a Web of Slip-and-Fall Cases Puts a New Spin on an Old-Fashioned Scheme, The New York Times (11 May 2018).
¹³ Ibid.
¹⁴ Ibid.
¹⁵ Kenyon Wallace and Michele Henry, Auto Insurance fraud has become an industry and it's time to stop it, The Star (5 December 2017).
¹⁶ Ministry of Finance, Ontario's Fair Auto Insurance Plan (Toronto: Minister of Finance, 2017), online: Minster of Finance.
¹⁷ Supra note 15.

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