A new investigative report has uncovered explosive allegations in New York’s personal injury industry. According to Legal Newsline, an increasing number of lawsuits and news accounts show how undocumented immigrants, litigation lenders, and even gangs such as MS-13 are taking advantage of loopholes in the state’s personal injury and workers’ compensation systems. Migrants, often arriving in debt to smugglers, are quickly funneled into lawsuits for staged or exaggerated accidents — sometimes with the assistance of law firms that openly advertise to undocumented clients.

According to the investigation, unscrupulous billboard attorneys convince potential plaintiffs to receive loans against “the future value” of their lawsuits. These lawyers then unjustifiably inflate the potential settlements by tapping into a “network” of medical providers who perform unnecessary procedures: 

To make these cases more valuable, insurers say, plaintiff lawyers tap into a network of surgeons, radiologists and other medical providers who often perform unnecessary procedures to transform what would otherwise be nuisance cases into multimillion-dollar settlements. 

Significantly, because of the structure of these so-called loans, exorbitant interest rates, sometimes “above 50%” are legally charged to victims:

At the bottom of the pyramid is the plaintiff, often a poor and undocumented immigrant, who signs off on open-ended loans in exchange for a modest amount of cash up front. Since the loans are contingent upon winning a case, New York doesn’t enforce its 16% interest cap on consumer loans. Rates are frequently above 50% a year.

The result is that victims often walk away with only a fraction of the compensation they were promised, while the attorneys, lenders, and associated players capture much of the financial benefit. What emerges is a system that too often enriches its operators at the expense of the very people it purports to defend.