For years, consumer advocates and reform-minded policymakers have warned that the personal injury legal system isn’t just generating fraudulent claims: it’s generating fraudulent medical procedures. Nowhere is that more visible than in the growing body of evidence around unnecessary spinal surgeries performed on staged accident victims to inflate lawsuit payouts. A recent court ruling in New York offers the latest confirmation that regulators and judges are beginning to catch up to a scheme that has been hiding in plain sight for a very long time. Newsday had the story:
New York’s Schenectady County Supreme Court Justice Thomas Buchanan recently rejected a petition by Dr. Vadim Lerman, associate director of spine surgery at Total Orthopedics & Sports Medicine, to reinstate his authorization to treat patients covered by workers’ compensation. The state Workers’ Compensation Board had previously denied Lerman’s renewal application, citing five cases in which he performed “highly invasive” surgeries without medical justification, “billing irregularities,” and inadequate recordkeeping. Lerman had argued the denial was “arbitrary, capricious and unlawful.”
The board, he wrote, had identified a “pattern of premature or contraindicated recommendations for invasive surgery with potential adverse consequences for patients,” and the denial focused “squarely on patient safety and care.”
The ruling is significant not only for what it says about Lerman, but for what it reveals about a broader ecosystem of abuse that has long connected personal injury law firms, lien-based medical providers, and surgical specialists in a closed loop designed to maximize settlement payouts, not patient outcomes.
How the Scheme Works
The pipeline is straightforward once you know what to look for. Individuals, often recruited by “runners” paid to solicit clients at accident scenes, hospitals, or even social services offices, are directed to personal injury law firms. Those firms then refer clients to networks of medical providers, including spinal surgeons, who operate on a lien basis, meaning they agree to be paid from the proceeds of a future settlement rather than through insurance. That arrangement creates a powerful financial incentive: the more extensive the treatment, the higher the projected settlement, and the larger the eventual payday for everyone in the chain except the patient.
Court records reviewed by Newsday allege that surgeons at Total Orthopedics would see patients, typically litigants in lawsuits stemming from alleged accidents in Brooklyn, Queens, and the Bronx, and then direct them to spinal surgery at Nassau University Medical Center, a safety net public hospital already more than $1 billion in debt. Because many of these individuals lacked insurance, the cost of the expensive procedures was absorbed by the hospital itself. NUMC’s newly configured state-led board of directors has since launched a review of all surgical cases performed by Total Orthopedics surgeons, and Lerman has not held medical staff privileges at the facility since June 2025.
As Newsday outlines:
“Lerman is not the first Long Island surgeon accused of participating in a staged accident scheme to be barred by the board from treating patients — or to challenge and, ultimately, fail to have the court reverse the decision.”
This is not an isolated operation. In April 2025, the Workers’ Compensation Board similarly rejected an application by Dr. Joseph Weinstein, an orthopedic surgeon associated with Comprehensive Orthopedic & Spine Care, who has also been named as a defendant in multiple staged accident RICO suits. Weinstein appealed, arguing the board was acting as part of a “broader campaign” by insurance companies. The same judge, Justice Buchanan, denied his petition as well, finding that the “sinister implications asserted by petitioner simply do not find support in the record.”
This Problem Is Not New
It would be a mistake to read these rulings as evidence that the problem has only recently emerged. Unnecessary spinal surgeries as a mechanism for inflating personal injury settlements have been documented for years across multiple states.
PACT’s own reporting has highlighted how lien-based medical providers operate nationwide, with the Wall Street Journal noting that “some doctors treating accident victims are taking a page from plaintiffs’ lawyers, agreeing to get paid only after a lawsuit wraps up,” and that the arrangement can lead to “higher fees for doctors than they would get from insurance companies.” The R Street Institute has documented that “there may be fraud as well in cases where expensive soft tissue procedures, such as laminectomies, spinal fusions and imaging are billed but never performed,” alongside “the performance of unnecessary procedures to drive up the billing.”
In New Orleans, a federal investigation named “Operation Sideswipe” uncovered a network of attorneys and associates staging truck accidents to secure large insurance settlements. WWL reported that some defendants “admitted not only faking their injuries but also going as far as getting major back and neck surgeries to increase their chances of a jackpot settlement.” The same playbook: staged accident, recruited participant, unnecessary surgery, inflated settlement, appears from Louisiana to Long Island.A 170-page federal RICO complaint filed in October 2025 by Merchants Mutual Insurance Company alleged that personal injury attorneys, medical providers, and third-party litigation funders in New York conspired to inflate settlements, extend cases, and divert funds from injured clients. The complaint described funders paying “upfront amounts to medical providers, including Medical Provider Defendants, to induce performance of surgeries,” with the structure incentivizing “the prolonging of lawsuits and rendering of unnecessary care, often leaving Claimants as the party receiving the smallest portion of recovery.” In one documented case, a recovery of $3.75 million left the injured client with just 13 percent of the total award after attorneys, funders, and medical providers took their cuts.
The scheme documented in the Lerman and Weinstein cases is the same scheme. It has the same structure, the same incentives, and the same victims.
What Reform Must Address
Courts are doing their part. Regulators are doing their part. But individual licensing decisions and civil RICO suits, while important, address symptoms rather than the underlying disease. As long as lien-based medical arrangements remain unregulated, as long as third-party litigation funding operates without disclosure requirements, and as long as there are no meaningful constraints on the referral relationships between law firms and medical providers, the financial incentives that drive unnecessary surgeries will persist. The American Tort Reform Association has identified phantom damages, lawsuit recoveries calculated using billed medical costs rather than amounts actually paid, as “one of the primary contributors to growing litigation costs,” and the proliferation of lien arrangements has made the problem significantly worse.
Florida’s lawsuit abuse reforms, which have delivered measurable rate reductions and a dramatic decline in abusive litigation, demonstrate that structural reform works. Georgia’s SB 68, now signed into law, directly addressed phantom damages, lien arrangements, and third-party litigation funding transparency. Other states should follow.
Policymakers at every level should take note of what courts in New York are now finding: that behind the billboard attorney ads and the promised jackpot settlements, real patients are being subjected to surgeries they do not need, real hospitals are absorbing costs they cannot afford, and a system that was designed to deliver justice is being used, systematically, to deliver profit to everyone except the people it was meant to serve.
The Lerman and Weinstein rulings are a start, but accountability cannot rest solely with licensing boards and individual judges. Lawmakers everywhere must close the loopholes that allow lien-based medical networks, third-party litigation funders, and personal injury law firms to operate as a single profit-sharing enterprise at the expense of patients and consumers. Real reform means requiring disclosure of lien arrangements, regulating third-party litigation funding, addressing phantom damages in medical billing, and ensuring that the people who profit from lawsuits are held to the same standards of transparency as everyone else.
The courts have spoken. This problem must end.