RICO Suits To Disappear As WC Bad Faith Claim


Synopsis: RICO Claims To Disappear from U.S. Workers’ Comp World And Good Riddens.

Editor’s comment: If you don’t know, the Federal RICO concept was, in my opinion, created to stop Mafia folks from defrauding and extorting money from our citizens. The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a private civil cause of action for acts performed as part of an ongoing criminal organization. The RICO Act focused specifically on racketeering, and it allows the leaders of a syndicate to be tried for the crimes which they ordered others to do or assisted them in doing, closing a perceived loophole that allowed a person who instructed someone else to do the act and then be exempt from the trial because he did not actually commit the crime personally.

About ten-fifteen years ago, WC Claimant lawyers in Michigan decided to bring RICO into the world of workers’ comp. Several lawsuits were filed and a heated battle ensued.

Now a Michigan Federal Court just again ruled RICO may not be used for workers’ comp bad faith claims. Citing two earlier precedents, a U.S. District Court in Michigan has once again ruled, in pertinent part, that racketeering activity leading to a loss or diminution of workers’ comp benefits a plaintiff expects to receive under a state workers compensation system does not constitute an injury to “business or property” under the Racketeer Influenced and Corrupt Organizations (“RICO”) Act. Accordingly, where an injured worker alleged a claims conspiracy, pursuant to which the workers’ compensation insurance provider hired IME or other doctors to write allegedly fraudulent reports for the purpose of denying his workers’ compensation benefits, the worker stated no demonstrable cause of action.  

In Gucwa v. Lawley, the worker sought to distinguish earlier decisions—Jackson v. Sedgwick Claims Management Services, 731 F.3d 556, 563–64 (6th Cir. 2013) (en banc), and Brown v. Cassens Transport Co., 546 F.3d 347, 354 (6th Cir. 2008)—on the grounds in his own case, he alleged tortious activity by “independent medical examiners.” The U.S. District Court held the worker’s argument was meritless and a motion to dismiss granted.

As I have advised my readers on many occasions, if RICO were to come into the world of workers’ comp, the same sword could cut both ways. We could see aggressive and upset employers filing RICO actions against phony and/or questionable claimants seeking treble damages and attorney’s fees. If that happened, it would be very hard for the Claimant bar to step up and fight back—Federal RICO litigation is very, very expensive to defend.

The foregoing was originally published on the Keefe, Campbell, Beiry  Blog  and is reproduced here with permission of the author. No further republication is permitted without the author’s consent.

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