Subin Fraud & TPLF Funding Appeal

Our firm is proud and excited to share that we have recently filed two appeals on issues of first impression in the State of New York on the fraud situation, as well as the disclosure of third-party funding agreements in personal injury actions.  Our hope is that the Courts begin to take the lead on helping solve the issue of fraud in our court system.  To date, because of the limitations of discovery and evidentiary rules – as well as an obvious unwillingness by the plaintiff’s firms to disclose the fraud – little progress has been made in identifying anything truly concrete.  Moreover, the disclosure of Third-Party Litigation Funding Agreements in any action is crucial, given that currently, these liens are almost never disclosed until at a mediation or trial, making it even harder to settle the lawsuit. If a defendant’s insurance policy must be disclosed, shouldn’t the existence of funding or loan be revealed?

The first appeal, Labanda v. Xolle Demo LLC (App. Div. Docket Number: 2025-04339), involves a prominent personal injury firm that broadcasted in open court that it had fraud in its referral process.  That firm then proceeded to walk away from hundreds of personal injury cases based on undisclosed ethical reasons, and without attorney charging liens.  Our appeal asks the Appellate Division – based on our intensive legal research, and with the support of a well-known ethics expert – to: compel that firm to come back to court withdraw, fix, and correct any false statements or pleadings that it made to the Court; to state on the open record what, if any, fraud occurred in the matter; and for the Court to perform its own independent investigation into this case and the similarly situated cases to identify and purge the fraud from the court system.

The second appeal, Izquierdo v. Amsterdam Avenue (Case Numbers: 2024-04853 and 2025-01578), addresses for the very first time by the appellate courts of our state whether third-party litigation funding agreements and related documents are discoverable in New York State.  We argued that they must be disclosed because: of New York’s exceedingly broad disclosure standard; the agreements are relevant to the nature and extent of plaintiff’s alleged damages; because the agreements are liens on the personal injury actions and their disclosure will help facilitate New York’s strong public policy of encouraging settlements; to help the Court fulfill its obligation to check for conflicts of interest; the agreements are a potential collateral source under CPLR 4545; because the agreements are often usurious, predatory, and threaten to consume plaintiff’s recovery; and because the litigation funding companies often acquire partial or total control over vulnerable plaintiff’s, making the companies the real party in interest.

We also discuss the danger of TPLF agreements that have been tied to alleged fraud in the personal injury field where several prominent insurers have commenced federal Racketeer Influenced and Corrupt Organizations (“RICO”) Act actions against a litany of prolific New York personal injury plaintiff attorneys and professional medical testifiers, detailing a conspiracy to stage accidents or amplify the value of personal injury suits by performing unnecessary and highly invasive surgeries through TPLF companies. In fact, federal courts routinely require TPLF agreements to be disclosed in personal injury actions, and we ask the New York State to follow this trend.