In a remarkable 170-page federal complaint submitted on October 20, 2025, Merchants Mutual Insurance Company has accused one of New York’s most prominent plaintiff firms, along with a network of doctors and litigation-funding organizations, of operating what it terms a coordinated racketeering enterprise. The case, Merchants Mutual Insurance Co. v. William Schwitzer & Associates, P.C., et al., claims that personal-injury attorneys, medical providers, and third-party funders allegedly conspired to inflate settlements, extend cases, and divert funds from injured clients.
The filing portrays not merely a group of wrongdoers but rather a system: one that has adeptly transformed the mechanics of “access to justice” into a profit-sharing operation.
“‘Funders’ are litigation finance companies which advance money to claimants during the pendency of a claim and/or lawsuit as a ‘purchase of receivables.’ Funders will also frequently pay upfront amounts to medical providers, including Medical Provider Defendants, to induce performance of surgeries. Advances are structured so as to be considered non-recourse advances and not ‘loans,’ as they are provided at rates which would in other circumstances be usurious. This structure incentivizes the prolonging of lawsuits and rendering of unnecessary care,often leaving Claimants as the party (in theory supposed to be recovering near 66.6%) receiving the smallest portion of recovery.”
A particularly striking example is the case of Santos S. Sanchez Fuentes v. YJL Broadway Hotel LLC, where a recovery of $3.75 million saw a funder named Case Cash receiving $1,782,934.86, the attorneys taking $950,000, while the claimant was left with only $500,000. Though from the outside $500,000 appears like a lot of money, the client was left with a mere thirteen percent of the total award…the client who was actually injured, while the lawyers, funders, and doctors were generously compensated for maintaining the case’s duration.
The complaint continues by presenting a transcribed dialogue with an alleged “runner” who recounts being instructed to recruit accident victims with assurances of monetary compensation and prearranged medical narratives.
“Mr. Schwitzer also employs runners that would go to accident scenes and signup clients as well. One of these runners is [REDACTED] who would sign clients up at either the hospital, accident scenes or doctor appointments…William Schwitzer also uses runners in all 5 boroughs and I am familiar with [REDACTED] from Staten Island who brings in labor law cases…”
In the New York filing, the purported runner is cited as informing potential clients that they could earn between $2,000 and $3,000 for engaging with the named law firm, adding that “they [the attorneys] are responsible for communicating with the doctors and obtaining consent for the surgeries you will undergo, everything.”
The emerging narrative depicts not a fervent representation but rather a systematic business model to take advantage of the consumer by integrating the medical treatment into the litigation product. The case highlights “illegal doc-in-a-box schemes” concentrated at 410 Ditmas Avenue in Brooklyn and associated clinics such as Community Medical Imaging and Total Orthopedics. The insurer asserts that these clinics were financially and operationally linked to the same attorneys directing patients to them, thereby establishing a closed-loop system of diagnosis, surgery, and billing.
“’Non-physician owners’ utilize ‘doc-in-a-box’ schemes, wherein a non-physician will unlawfully invest in, open, and subsequently exercise control over a professional corporation or PLLC, through use of an ‘on-paper’ physician or otherwise licensed owner, permitting them to bill otherwise inaccessible channels including no-fault and Workers’ Comp.”
According to Merchants Mutual, the outcome was a network of self-referrals and fabricated injuries that inflated settlements while further encumbering consumers. They contend that by directing certain patients to New Jersey hospitals such as Hudson Regional to evade detection, the involved parties “walked into a bear trap,” exposing themselves to further statutory liability.
At its essence, the Merchants Mutual lawsuit revolves around a breakdown of boundaries. Allegations suggest that lawyers guided doctors; financiers purportedly funded both parties; and patients were treated as collateral. When lawyers, physicians, and financiers all partake in the same resources, justice is reduced to a commodity and consumers are taken advantage of. The individuals who are ostensibly at the heart of the process, the injured and the vulnerable, are left with mere remnants. As the complaint states, these arrangements have converted “claimants into conduits for capital.”
This filing reveals a collusive ecosystem that flourishes in the ambiguous territory between law and commerce, prompting a more challenging question: how many additional cases will be necessary before the system acknowledges its complicity in the scheme?