Employers Face RICO Claims For Workers Comp Denials
Insidecounsel.com reported on January 28, 2009 that the latest organized "crime," according to the 6th Circuit, is conspiring to defraud injured employees of their workers compensation benefits.
In the first decision of its kind, the appeals court recently stunned employment attorneys across America by holding that employers alleged to have schemed with their insurance carriers and/or physicians to wrongfully deny workers compensation benefits can now be sued for treble damages and attorneys fees under the civil fraud provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO).
Although RICO originally targeted criminal organizations such as the Mafia and Hells Angels, the decision in Brown v. Cassens Transport Co. exposes businesses to RICO litigation and extensive discovery into their handling of workers compensation claims.
The 6th Circuit revived the RICO civil fraud claims of six truckers. They allege that their self-insured employer, Cassens Transport Co., along with the Cassens claims adjuster and the doctor who found them ineligible for benefits, committed mail and wire fraud in a scheme to wrongfully deny them benefits under the Michigan Workers’ Disability Compensation Act (WDCA).
The plaintiffs contend that the company deliberately selected doctors who could be relied upon to provide medical opinions supporting decisions to cut off or deny benefits..
The 6th Circuit paved the way for the suit to proceed by overturning a 2005 ruling by the U.S. District Court for the Eastern District of Michigan dismissing the action for failing to state a claim for available relief. The unanimous appeals panel ruled Oct. 23 that the plaintiffs had sufficiently alleged at least 13 predicate acts involving fraudulent communications by mail and wire, and that the plaintiffs lost workers compensation benefits and incurred medical care and attorneys fees due to the defendants’ alleged "pattern of racketeering activity."
