A shocking ABC News investigation has found New York City trial lawyers are able to abuse the court system, using potentially false injury claims to sue small businesses for millions. The result is skyrocketing insurance premiums and higher costs for consumers.

How the fraud works, according to Steve Katz, a 50 year veteran of the New York construction industry, is an employee fakes a fall on the job, and then the trial lawyers swoop in to sue for fraudulent damages:

According to Katz, his concerns over fraud started eight years ago when one of his employees claimed to have fallen from a fire escape. After doctors said the employee was fine and could return to work, the man never came back, according to Katz, adding that his insurance company settled for $3.6 million.

Don Orlando, of Tradesman Program Managers, echoes what Katz has experienced, highlighting that the true victims are the small business who have to bear the brunt of these fake allegations:

“It isn’t a victimless crime,” Don Orlando of Tradesman Program Managers, which represents property owners and construction contractors, told ABC News. “These are small businesses that are getting victimized.”

Orlando alleges that hundreds of construction site incidents involving reported injuries were actually staged as part of a widespread conspiracy — and he said surveillance cameras are capturing some of these alleged fraudulent falls.

Underscoring the fraudulent nature of these claims, reporting by ABC found dozens of claimants were  living at the same address:

“One apartment building in the Bronx was home to 30 plaintiffs, while a two-story building nearby was listed as the home of 21 plaintiffs. In Queens, at least half a dozen people living in a six-unit apartment building said in court documents that they were injured on the job at construction sites.” 

According to Katz, the end result of these phony lawsuits is higher costs for consumers: 

We just raise our rates. The insurance companies raise their rates, and the cost of doing work skyrockets.

This is a system that desperately needs legal reform. Otherwise, fraudsters and trial lawyers will continue to profit at the expense of everyday New Yorkers.