Jon Gelman’s newly revised and updated 2018 treatise on Workers’ Compensation Law is now available from by West Group of Egan, MN within the next few weeks. The treatise is the most complete work available on NJ Workers’ Compensation law and integrated with WESTLAW™, the "most preferred online legal research service.'"
Showing posts with label RICO. Show all posts
Showing posts with label RICO. Show all posts
Saturday, February 10, 2018
Tuesday, May 27, 2014
US 6th Circuit Holds Loss Of Employee Benefits Not Actionable Under RICO
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
JAY BROWN, Plaintiff-Appellant,
v.
AJAX PAVING INDUSTRIES, INC.; AMERICAN CONTRACTORS INSURANCE GROUP, INC.; WARD NORTH AMERICA, LP; VERICLAIM, INC.; NOVAPRO RISK SOLUTIONS, LP; NOVAPRO US RISK, LLC; PAUL DROUILLARD, Defendants-Appellees.
No. 11-1391
Appeal from the United States District Court for the Eastern District of Michigan at Detroit
No. 2:10-cv-10137—Gerald E. Rosen, Chief District Judge. Decided and Filed: May 19, 2014
BEFORE: SUTTON and COOK, Circuit Judges; MARBLEY, District Judge.*_________________
COUNSEL
ON BRIEF: Marshall Lasser, MARSHALL LASSER, P.C., Southfield, Michigan, for
Appellant. James J. Urban, Paul M. Mersino, BUTZEL LONG, Lansing, Michigan for Appellee
Ajax Paving. Joseph A. Fink, Jeffery V. Stuckey, D. Lee Khachaturian, DICKINSON WRIGHT
PLLC, Lansing, Michigan, for Appellees American Contractors, Ward North, VeriClaim and
NovaPro. Daniel B. Tukel, BUTZEL LONG, Detroit, Michigan, Michael F. Smith, THE
SMITH APPELLATE LAW FIRM, Washington, D.C., for Appellee Drouillard.
*
The Honorable Algenon L. Marbley, United States District Judge for the Southern District of Ohio, sitting
by designation.
_______________
OPINION
_________________
SUTTON, Circuit Judge. This case began as a dispute over who should pay for Jay
Brown’s shoulder injury. Brown claimed that he suffered the injury while paving a road for his
employer Ajax Paving, and that the company as a result owed him workers’ compensation. At
the workers’ compensation hearing, however, Ajax introduced medical testimony suggesting that
the injury occurred outside of work. While the case remained pending before the Michigan
administrative agency, Brown and Ajax settled.
Unlike most settlements, this one did not end the controversy. Brown thought that Ajax
had introduced false medical testimony in order to deny or at least diminish his benefits and that
it had done the same thing to other employees. As a result, he sued Ajax and its alleged
accomplices—insurers, claims administrators and the doctor—under the Racketeer Influenced
and Corrupt Organizations Act. The district court dismissed the complaint.
In order to sue under the Act, Brown must show that illegal racketeering activities have
“injured [him] in his business or property.” 18 U.S.C. § 1964(c); see also id. § 1962. Brown
attempts to meet this requirement by arguing that his employer’s use of false testimony prompted
him to accept a small settlement, and so cost him some of the workers’ compensation benefits he
otherwise deserved. Not long ago this theory of injury might have worked. This circuit used to
treat “expected [workers’ compensation] benefits” as “property” under the Act. Brown v.
Cassens Transp. Co., 675 F.3d 946, 951 (6th Cir. 2012).
But last year, while the appeal in this case lay pending, the court reversed course while
sitting en banc. In Jackson v. Sedgwick Claims Management Services, a carbon copy of this
case, we turned back a lawsuit challenging a scheme to introduce false testimony at workers’
compensation hearings. 731 F.3d 556, 558 (6th Cir. 2013) (en banc). We held that “loss or
diminution of benefits the plaintiff expects to receive under a workers’ compensation scheme
does not constitute an injury to ‘business or property’ under RICO.” Id. at 566. We gave two
key reasons for our holding. One was that workers’ compensation compensates for personal
injury. The Act, which puts its spotlight on “business or property,” does not cover losses that
flow from personal injuries. Id. at 565–66. The other was that a contrary rule would allow the
Act to police fraud in the workers’ compensation system, planting the national banner on land
traditionally patrolled by the States. The Act does not speak with enough clarity, we reasoned, to
authorize such an intrusion. Id. at 566–69.
Unfortunately for Brown, Jackson resolves this appeal. Brown’s alleged injury consists
of getting less workers’ compensation than he deserved. Because “loss or diminution” of
expected workers’ compensation “does not constitute an injury to ‘business or property,’” id. at
566, Brown’s claims must fail.
In response to all of this, Brown makes a partial but not a complete retreat. He submits
that Jackson applies only to disputes between employer and employee, leaving in place his
claims against the insurers, the claims administrators and the doctor. Yet this argument
overlooks what happened in Jackson itself. The defendants in that case included not only an
employer, but also a claims administrator and a doctor (in fact the same doctor sued in this case).
The court rejected the claims against all of the defendants. See id. at 558–59. To limit Jackson
to lawsuits against employers is to rewrite history.
This argument not only slights Jackson’s outcome, but it also disrespects its reasoning.
Jackson explained that expected workers’ compensation benefits stand outside the Act’s
perimeter because they flow from personal injuries. It added that extending the Act to expected
workers’ compensation benefits would clash with the States’ customary control of their workers’
compensation systems. Each argument applies with equal force whether an employee sues his
employer or somebody else. Changing the defendant neither weakens the link between the
benefits and personal injury nor dims the respect owed to the States’ authority over workers’
compensation.
Last but not least, Brown’s attempted distinction between employers and others collides
with the statute Congress enacted. The Act’s applicability turns on the nature of the injury—that
the plaintiff was “injured in his business or property.” 18 U.S.C. § 1964(c). It does not turn on
the nature of the defendant. We do not see how the same harm, loss of expected workers’
compensation benefits, could count as an injury to business or property against some defendants
but not against other defendants.
Brown complains that our decision “immunize[s] any insurer, claim adjuster or medical
examiner who fraudulently denied or conspired to deny” workers their benefits. Reply Br. at 5.
That is an overstatement. States can and do impose liability upon people—employers as well as
others—who defraud the workers’ compensation system. Brown’s own brief tells us that
Michigan’s courts would entertain claims that “an insurer, claim adjuster or medical examiner
tortiously interfered with an employee’s receipt of . . . benefits.” Id. at 3. And the commission
that heads the Michigan workers’ compensation system punishes abuses of the workers’
compensation process. See Mich. Comp. Laws Ann. § 418.861b. Our decision does not
“immunize” anyone from these exercises of state power. Our decision means only that federal
judges may not use the Act to seize this power for themselves. That of course was the whole
point of Jackson.
The defendants’ alleged actions in short did not injure Brown “in his business or
property.” 18 U.S.C. § 1964(c). Because this flaw undoes all of Brown’s claims, we need not
decide whether Brown’s settlement with Ajax covers this case. Nor need we consider whether
Brown has satisfied other requirements imposed by the Act.
For these reasons, we affirm.
Pursuant to Sixth Circuit I.O.P. 32.1(b)
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
JAY BROWN, Plaintiff-Appellant,
v.
AJAX PAVING INDUSTRIES, INC.; AMERICAN CONTRACTORS INSURANCE GROUP, INC.; WARD NORTH AMERICA, LP; VERICLAIM, INC.; NOVAPRO RISK SOLUTIONS, LP; NOVAPRO US RISK, LLC; PAUL DROUILLARD, Defendants-Appellees.
No. 11-1391
Appeal from the United States District Court for the Eastern District of Michigan at Detroit
No. 2:10-cv-10137—Gerald E. Rosen, Chief District Judge. Decided and Filed: May 19, 2014
BEFORE: SUTTON and COOK, Circuit Judges; MARBLEY, District Judge.*_________________
COUNSEL
ON BRIEF: Marshall Lasser, MARSHALL LASSER, P.C., Southfield, Michigan, for
Appellant. James J. Urban, Paul M. Mersino, BUTZEL LONG, Lansing, Michigan for Appellee
Ajax Paving. Joseph A. Fink, Jeffery V. Stuckey, D. Lee Khachaturian, DICKINSON WRIGHT
PLLC, Lansing, Michigan, for Appellees American Contractors, Ward North, VeriClaim and
NovaPro. Daniel B. Tukel, BUTZEL LONG, Detroit, Michigan, Michael F. Smith, THE
SMITH APPELLATE LAW FIRM, Washington, D.C., for Appellee Drouillard.
*
The Honorable Algenon L. Marbley, United States District Judge for the Southern District of Ohio, sitting
by designation.
_______________
OPINION
_________________
SUTTON, Circuit Judge. This case began as a dispute over who should pay for Jay
Brown’s shoulder injury. Brown claimed that he suffered the injury while paving a road for his
employer Ajax Paving, and that the company as a result owed him workers’ compensation. At
the workers’ compensation hearing, however, Ajax introduced medical testimony suggesting that
the injury occurred outside of work. While the case remained pending before the Michigan
administrative agency, Brown and Ajax settled.
Unlike most settlements, this one did not end the controversy. Brown thought that Ajax
had introduced false medical testimony in order to deny or at least diminish his benefits and that
it had done the same thing to other employees. As a result, he sued Ajax and its alleged
accomplices—insurers, claims administrators and the doctor—under the Racketeer Influenced
and Corrupt Organizations Act. The district court dismissed the complaint.
In order to sue under the Act, Brown must show that illegal racketeering activities have
“injured [him] in his business or property.” 18 U.S.C. § 1964(c); see also id. § 1962. Brown
attempts to meet this requirement by arguing that his employer’s use of false testimony prompted
him to accept a small settlement, and so cost him some of the workers’ compensation benefits he
otherwise deserved. Not long ago this theory of injury might have worked. This circuit used to
treat “expected [workers’ compensation] benefits” as “property” under the Act. Brown v.
Cassens Transp. Co., 675 F.3d 946, 951 (6th Cir. 2012).
But last year, while the appeal in this case lay pending, the court reversed course while
sitting en banc. In Jackson v. Sedgwick Claims Management Services, a carbon copy of this
case, we turned back a lawsuit challenging a scheme to introduce false testimony at workers’
compensation hearings. 731 F.3d 556, 558 (6th Cir. 2013) (en banc). We held that “loss or
diminution of benefits the plaintiff expects to receive under a workers’ compensation scheme
does not constitute an injury to ‘business or property’ under RICO.” Id. at 566. We gave two
key reasons for our holding. One was that workers’ compensation compensates for personal
injury. The Act, which puts its spotlight on “business or property,” does not cover losses that
flow from personal injuries. Id. at 565–66. The other was that a contrary rule would allow the
Act to police fraud in the workers’ compensation system, planting the national banner on land
traditionally patrolled by the States. The Act does not speak with enough clarity, we reasoned, to
authorize such an intrusion. Id. at 566–69.
Unfortunately for Brown, Jackson resolves this appeal. Brown’s alleged injury consists
of getting less workers’ compensation than he deserved. Because “loss or diminution” of
expected workers’ compensation “does not constitute an injury to ‘business or property,’” id. at
566, Brown’s claims must fail.
In response to all of this, Brown makes a partial but not a complete retreat. He submits
that Jackson applies only to disputes between employer and employee, leaving in place his
claims against the insurers, the claims administrators and the doctor. Yet this argument
overlooks what happened in Jackson itself. The defendants in that case included not only an
employer, but also a claims administrator and a doctor (in fact the same doctor sued in this case).
The court rejected the claims against all of the defendants. See id. at 558–59. To limit Jackson
to lawsuits against employers is to rewrite history.
This argument not only slights Jackson’s outcome, but it also disrespects its reasoning.
Jackson explained that expected workers’ compensation benefits stand outside the Act’s
perimeter because they flow from personal injuries. It added that extending the Act to expected
workers’ compensation benefits would clash with the States’ customary control of their workers’
compensation systems. Each argument applies with equal force whether an employee sues his
employer or somebody else. Changing the defendant neither weakens the link between the
benefits and personal injury nor dims the respect owed to the States’ authority over workers’
compensation.
Last but not least, Brown’s attempted distinction between employers and others collides
with the statute Congress enacted. The Act’s applicability turns on the nature of the injury—that
the plaintiff was “injured in his business or property.” 18 U.S.C. § 1964(c). It does not turn on
the nature of the defendant. We do not see how the same harm, loss of expected workers’
compensation benefits, could count as an injury to business or property against some defendants
but not against other defendants.
Brown complains that our decision “immunize[s] any insurer, claim adjuster or medical
examiner who fraudulently denied or conspired to deny” workers their benefits. Reply Br. at 5.
That is an overstatement. States can and do impose liability upon people—employers as well as
others—who defraud the workers’ compensation system. Brown’s own brief tells us that
Michigan’s courts would entertain claims that “an insurer, claim adjuster or medical examiner
tortiously interfered with an employee’s receipt of . . . benefits.” Id. at 3. And the commission
that heads the Michigan workers’ compensation system punishes abuses of the workers’
compensation process. See Mich. Comp. Laws Ann. § 418.861b. Our decision does not
“immunize” anyone from these exercises of state power. Our decision means only that federal
judges may not use the Act to seize this power for themselves. That of course was the whole
point of Jackson.
The defendants’ alleged actions in short did not injure Brown “in his business or
property.” 18 U.S.C. § 1964(c). Because this flaw undoes all of Brown’s claims, we need not
decide whether Brown’s settlement with Ajax covers this case. Nor need we consider whether
Brown has satisfied other requirements imposed by the Act.
For these reasons, we affirm.
Saturday, August 31, 2013
Second Circuit to consider petition to reassign federal judge in Chevron RICO case
The U.S. Court of Appeals for the Second Circuit will consider a petition to reassign a federal judge overseeing a case stemming from a $19 billion judgment against oil giant Chevron Corp.
In a notice filed Aug. 14, the Second Circuit set Sept. 26 for oral argument on the petition to reassign Judge Lewis Kaplan for the U.S. District Court for the Southern District of New York.
Kaplan is currently presiding over a RICO lawsuit that Chevron filed against a group of Ecuadorians and their lawyers. The fraud case was filed by the company in the New York federal court in 2011.
New York attorney Steven Donziger and Ecuadorian plaintiffs Javier Piaguaje and Hugo Camacho filed a petition for writ of mandamus with the federal appeals court in June. They want the judge to be removed from the case for his alleged bias.
In a rare move, the court asked Kaplan for a legal brief in his defense. However, the judge “respectfully declined” the court’s invitation, according to a letter last month.
The U.S. Chamber of Commerce has filed an amicus brief in the case.
“The Chamber is concerned that improper resolution of Petitioners’ tactical use of a request for judicial reassignment could set a dangerous precedent with long-standing effects,” former U.S. Attorney General Michael Mukasey wrote in the brief, filed July 29.
The Chamber’s Institute for Legal Reform owns Legal Newsline.
This week, Donziger and the Ecuadorian...
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Wednesday, April 11, 2012
Federal RICO Claim Not Preempted by a State Workers Compensation Act
The US 6th Circuit Court of Appeals, in a landmark case of widespread significance, has held that a State may not preempt a Federal cause of action under the RICO [Racketeer Influenced and Corrupt Organizations Act] statute by asserting that workers' compensation claims are exclusive to State jurisdiction. In long and convoluted history, workers in Michigan have asserted that their employer and its workers' compensation carrier, Crawford & Company, and its experts, ie. "cut off doctor," sought to conspire to defeat their pending claims, "property interest," for benefits under the Michigan state workers' compensation act.
Click here to read: Brown et al. v. Cassens Transport Co. et al., 6th Cir Ct of Appeals,http://www.ca6.uscourts.gov/opinions.pdf/12a0095p-06.pdf Decided, April 6, 2012 (Michigan).
"The flaw with the defendants’ argument is that the predicate offense for the RICO action is mail fraud, not the denial of worker’s compensation. “The gravamen of [a] RICO cause of action is not the violation of state law, but rather certain conduct, illegal under state law, which, when combined with an impact on commerce, constitutes a violation of federal law. Therefore, it is not alleged that [the defendants are] subject to ‘liability under’ the [state law]; their liability . . . stems from RICO.” Williams v. Stone, 109 F.3d 890, 895 (3d Cir.), cert. denied, 522 U.S. 956 (1997). The district court here erred when it stated that this case does not “involve[] a separate and independent tort (theft or conversion or some similar claim)” because the plaintiffs “cannot disentangle their RICO claim from their underlying claim for benefits.” 743 F. Supp. 2d at 666, 668."
.....
Click here to read: Brown et al. v. Cassens Transport Co. et al., 6th Cir Ct of Appeals,http://www.ca6.uscourts.gov/opinions.pdf/12a0095p-06.pdf Decided, April 6, 2012 (Michigan).
"The flaw with the defendants’ argument is that the predicate offense for the RICO action is mail fraud, not the denial of worker’s compensation. “The gravamen of [a] RICO cause of action is not the violation of state law, but rather certain conduct, illegal under state law, which, when combined with an impact on commerce, constitutes a violation of federal law. Therefore, it is not alleged that [the defendants are] subject to ‘liability under’ the [state law]; their liability . . . stems from RICO.” Williams v. Stone, 109 F.3d 890, 895 (3d Cir.), cert. denied, 522 U.S. 956 (1997). The district court here erred when it stated that this case does not “involve[] a separate and independent tort (theft or conversion or some similar claim)” because the plaintiffs “cannot disentangle their RICO claim from their underlying claim for benefits.” 743 F. Supp. 2d at 666, 668."
For over 3 decades the Law Offices of Jon L. Gelman 1.973.696.7900 jon@gelmans.com have been representing injured workers and their families who have suffered work related accident and injuries.
Related articles
Monday, March 28, 2011
Colorado Court Allows RICO Case to Proceed Against Wal-Mart
A partial summary judgment motion was denied by Judge Robert E. Blackburn in a pending Colorado case against Wal-Mart where the plaintiff alleged that the employer, working in concert with other defendants "dictated and interfered unlawfully " with employees who were entitle to medical treatment flowing from occupational accidents.
The Court stated that, "The plaintiffs allege that the defendants improperly required, and continue to require, treatment providers to follow protocol notes that improperly direct and/or restrict the medical treatment provided to injured Wal-Mart workers under the Act. The plaintiffs allege that the policies implemented by the defendants result in delays in the injured workers' receipt of treatment, denial of prescribed medical treatment, withholding of benefits, and/or the inability of the injured workers to obtain prescribed medical treatment."
The case involves a certified class of plaintiffs. The defendants had sought to limit the number of claimants by shortening the statute of limitations for the viability of the claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961-1968. Since the relevant time periods were not evident on the face of the complaint, and the defendants did not offer proof to establish it, the Court denied the motion.
Gianzero v. Wal-Mart Stores Inc., 2011 WL 1085647 (D. Colo. 2011) Decided March 24, 2011.
Friday, March 19, 2010
The Limited Application of a RICO Claim
A Federal District Court in Michigan has dismissed a RICO [Racketeer Influenced and Corrupt Organizations Act] claim against Sedwick Claims Management Services. The plaintiffs alleged that the insurance company, "....'engaged in a scheme to defraud employees of the minimum wages and fringe benefits to which they were entitled' under the McNamara-O'Hara Services Contract Act, 41 U.S.C. 351,et seq. (SCA), 'in violation of the civil provisions of ... RICO.'"
In dismissing the case, the court reasoned, "an injured worker may not use RICO as an 'end run' around the exclusive procedures and remedies prescribed by the WDCA [Michigan's Workers Disability Compensation Act] -Defendants contend that Plaintiffs have filed this action in an attempt to convert their workers compensation disputes into a federal RICO case-the basis of which is the Defendants' allegedly-fraudulent violation of the WDCA. Plaintiffs' effort to convert their disputes over benefits into RICO claims, while creative, must be rejected. Plaintiffs' RICO claims seek to expand RICO far beyond its intended reach. As the federal courts have repeatedly held, a plaintiff may not use a RICO claim as an 'end run' around a comprehensive, specialized, and exclusive administrative scheme like the scheme established by the WDCA. Yet that is precisely what these Plaintiffs seek to do."
"....RICO was never intended to create a path into courts for litigants who would otherwise be limited to exclusive administrative remedies and procedures, and subject to strict damages limitations. The Court finds that Plaintiffs may not use their RICO claim to reform Michigan's workers' compensation law-allowing them to do so would be an unwarranted intrusion into Michigan state law and procedure."
In dismissing the case, the court reasoned, "an injured worker may not use RICO as an 'end run' around the exclusive procedures and remedies prescribed by the WDCA [Michigan's Workers Disability Compensation Act] -Defendants contend that Plaintiffs have filed this action in an attempt to convert their workers compensation disputes into a federal RICO case-the basis of which is the Defendants' allegedly-fraudulent violation of the WDCA. Plaintiffs' effort to convert their disputes over benefits into RICO claims, while creative, must be rejected. Plaintiffs' RICO claims seek to expand RICO far beyond its intended reach. As the federal courts have repeatedly held, a plaintiff may not use a RICO claim as an 'end run' around a comprehensive, specialized, and exclusive administrative scheme like the scheme established by the WDCA. Yet that is precisely what these Plaintiffs seek to do."
"....RICO was never intended to create a path into courts for litigants who would otherwise be limited to exclusive administrative remedies and procedures, and subject to strict damages limitations. The Court finds that Plaintiffs may not use their RICO claim to reform Michigan's workers' compensation law-allowing them to do so would be an unwarranted intrusion into Michigan state law and procedure."
Jackson v. Sedgwick Claims Management Services, Inc., 2010 WL 931864, E.D. Mich. 2010, March 11, 2010.
Click here to read more RICO claims and workers' compensation.
Click here to read more RICO claims and workers' compensation.
Monday, December 7, 2009
US Supreme Court Turns Down RICO Appeal- Good News for Injured Workers
Good news was message to injured workers' from the US Supreme Court today. The Court upheld a favorable RICO decision of the Court of Appeals that permits injured workers to institute federal Racketeer Influenced and Corrupt Organizations Act(RICO) claims against employers, insurance carriers and defense medical experts. It upheld the 6th Cir. decision that Michigan's Workers' Compensation Disability Act (WDCA) did not reverse preempt, under the federal McCarran-Ferguson Act by engaging in predicate acts of mail fraud and wire fraud, in order to deny the injured employees' valid claims for workers' compensation benefits.
The motion of MI Self-Insurers Association for leave to file
a brief as amicus curiae is granted. The motion of American
Trucking Associations, Inc. for leave to file a brief as amicus
curiae is granted. The motion of DRI - The Voice of the Defense
Bar for leave to file a brief as amicus curiae is granted. The
motion of National Council of Self-Insurers, et al. for leave to
file a brief as amici curiae is granted. The petition for a
writ of certiorari is denied."
Cassens Transport Co. v. Brown, --- S.Ct. ----, 2009 WL 1269080, 77 USLW 3635, 78 USLW 3011 (U.S. Dec 07, 2009) (NO. 08-1375)
a brief as amicus curiae is granted. The motion of American
Trucking Associations, Inc. for leave to file a brief as amicus
curiae is granted. The motion of DRI - The Voice of the Defense
Bar for leave to file a brief as amicus curiae is granted. The
motion of National Council of Self-Insurers, et al. for leave to
file a brief as amici curiae is granted. The petition for a
writ of certiorari is denied."
Cassens Transport Co. v. Brown, --- S.Ct. ----, 2009 WL 1269080, 77 USLW 3635, 78 USLW 3011 (U.S. Dec 07, 2009) (NO. 08-1375)
Click here to see the Workers' Compensation Blog for additional articles on RICO matters and workers' compensation.
Click here to read more about the late Judge Harold Ackerman who sat below on the 6th Cir. By Designation. That decision was affirmed by the US Supreme Court. Judge Ackerman was a former NJ Workers' Compensation Judge(1955-1965), the Federal Judge who managed the entire, original, asbestos litigation docket in the 1980's (ie. Austin v. Johns-Manville Products Corp., 672 F.2d 902 (C.A.3 (N.J.) 1981)). Judge Ackerman passed away last week at age 81.
Friday, December 4, 2009
US Supreme Court About to Rule on RICO Case
The US Supreme Court has placed Cassens Transport Co., et al., Petitioners v, Paul Brown, et al., No. 08-1375 on its conference agenda for December 4, 2009. At that time the Justices will review the Petition for Certiorari.
Pending before the US Supreme Court is a petition for a writ of certiorari to review a decision where: the employer, insurance company and their experts were found to have conducted themselves in violation of the RICO Act.
In this reverse preemption case, Public Citizen filed a brief which crystallizes the issues before the Court.
Deepak Gupta and Allison Zieve of Public Citizen are co-counsel for the respondent.
"Respondent’s Brief in Opposition to the Petition for Certiorari.
The McCarran-Ferguson Act, 15 U.S.C. § 1012(b), “precludes application of a federal statute” that would “invalidate, impair, or supersede” a state law “enacted * * * for the purpose of regulating the business of insurance.” The questions presented in this case are:
1. Whether a state workers’ compensation law that transfers the risk of workplace injuries to employers, and requires that employers secure their ability to assume those risks either by purchasing of insurance or by self insuring, regulates the “business of insurance” within the meaning of the McCarran-Ferguson Act.
2. Whether a State’s exclusive, administrative remedial scheme for handling contested workers’ compensation benefit determinations is impaired within the meaning of the McCarran-Ferguson Act by the availability of suits under the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., contesting the denial of worker’s compensation claims."
Click here to see the Workers' Compensation Blog for additional articles on RICO matters and workers' compensation.
Pending before the US Supreme Court is a petition for a writ of certiorari to review a decision where: the employer, insurance company and their experts were found to have conducted themselves in violation of the RICO Act.
In this reverse preemption case, Public Citizen filed a brief which crystallizes the issues before the Court.
Deepak Gupta and Allison Zieve of Public Citizen are co-counsel for the respondent.
"Respondent’s Brief in Opposition to the Petition for Certiorari.
The McCarran-Ferguson Act, 15 U.S.C. § 1012(b), “precludes application of a federal statute” that would “invalidate, impair, or supersede” a state law “enacted * * * for the purpose of regulating the business of insurance.” The questions presented in this case are:
1. Whether a state workers’ compensation law that transfers the risk of workplace injuries to employers, and requires that employers secure their ability to assume those risks either by purchasing of insurance or by self insuring, regulates the “business of insurance” within the meaning of the McCarran-Ferguson Act.
2. Whether a State’s exclusive, administrative remedial scheme for handling contested workers’ compensation benefit determinations is impaired within the meaning of the McCarran-Ferguson Act by the availability of suits under the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., contesting the denial of worker’s compensation claims."
Click here to see the Workers' Compensation Blog for additional articles on RICO matters and workers' compensation.
Saturday, October 24, 2009
US Supreme Court Allows More Time in RICO Case
Review of a Petition for Certiorari has been delayed by the US Supreme Court. Time has been extended by the Court until November 2, 2009 to file responsive papers to the Petition.
Pending before the US Supreme Court is a petition for a writ of certiorari to review a decision where: the employer, insurance company and their experts were found to have conducted themselves in violation of the RICO Act.
Pending before the US Supreme Court is a petition for a writ of certiorari to review a decision where: the employer, insurance company and their experts were found to have conducted themselves in violation of the RICO Act.
Click here to see the Workers' Compensation Blog for additional articles on RICO matters.
Friday, October 16, 2009
RICO Claim Alleging Underlying Workers Compensation Fraud Dismissed
A Federal Judge dismissed a case where the alleged misrepresentation of employment status in an underlying State court workers’ compensation case was pleaded as an alleged basis of a RICO (Racketeer Influenced and Corrupt Organizations Act) action18 U.S.C. § 1961(c). The court held that a federal racketeering action, filed as a RICO action arising out of a workers’ compensation claim utilizing mail and wire, must demonstrate multiple verifiable activity of facts demonstrating fraudulent action in order to sustain the burden of proof.
The Court reasoned:
"It is well established that “misrepresentations of the law are not actionable as fraud, including under the mail and wire fraud statutes because statements of the law are considered merely opinions and may not be relied upon absent special circumstances.” Sosa v. DIRECTV, Inc., 437 F.3d 616, 621 (9th Cir.2006). Therefore, Plaintiff’s allegations that the Macedos Defendants committed wire and mail fraud by virtue of falsely claiming that Defendant Jose Moreira was an employee of the Macedos Construction Co., Inc. in order obtain Workers’ Compensation benefits is not actionable as mail and wire fraud."
Virginia Sur. Co., Inc. v. Macedo, Slip Copy-Unpublished, 2009 WL 3230909, D.N.J., September 30, 2009 (NO. CIV.A.08-5586JAG)
Tuesday, October 6, 2009
Supreme Court Declines to Review a RICO Case
On the eve of the new US Supreme Court Term, the Court declined to review a claim involving a RICO allegation. Schoedinger v. United Healthcare of Midwest, Inc., 557 F.3d 872, RICO Bus.Disp.Guide 11,648, 46 Employee Benefits Cas. 1283 (8th Cir.(Mo.), Mar 05, 2009) (NO. 07-3317) was denied certification.
In Schoedinger a Petition for Certiorari had been filed to the US Supreme Court in a RICO claim involving a medical provider who claims an insurance company committed fraud in processing the provider's bills for services. George Schroedinger, MD had filed a Petition to seek review of a Eight Circuit decision that over turned a favorable RICO action against United Healthcare of the Midwest, Inc.
Whether this is predictive of the outcome of the pending workers' Compensation RICO matter remains unknown. A Petition for Certiorari was also filed in Brown v. Cassens Transport Co., 546 F.3d 347 (6th Cir. Oct 23, 2008) (NO. 05-2089), following the rehearing and rehearing en banc denied (Jan 05, 2009). Brown is a landmark decision of immense national significance, the US Sixth Circuit Court of Appeals ruled that a RICO claim brought by injured workers against their employer, insurance carrier and employer medical expert could proceed. The Brown case was scheduled for a Supreme Court conference on September 29, 2009.
See the Workers' Compensation Blog for additional articles on this topic.
Saturday, July 25, 2009
Injured Workers Assert Class Action Claiming Wal-Mart Violated RICO Act
Several injured Wal-Mart workers' have claimed that the company, in defending their workers' compensation claims, violated the Federal RICO Act. The employees of Wal-Mart have alleged that the company conspired with the insurance carrier and claims adjuster to "dictate, withhold, delay, deny and/or interfere with" the type and duration of their medical care.
The employees have filed a motion for class action certification in their Federal RICO claim against: Wal-Mart, Concentra Health Services, Claims Management, Inc. and Home Assurance Co. (the workers' compensation insurance carrier). The complaint alleges the defendants' activity violated the Colorado's Consumer Protection Act [Colo. Rev. Stat. Section 6-1-105(1)(b),(c),(e) and (u)], and that there were also violations of the federal Racketeer Influenced and Corrupt Organization Act [18 U.S.C. Sec. 1961-1968.] The Class Action Complaint was filed on March 24, 2009. Gianzero v Wal-Mart Stores, Inc. , et al., US DCT (D. Colorado) No. 09-cv-00656 REB BNB.
Wal-Mart's workers' compensation has been critically reviewed in the Seattle Weekly. The publication indicates that the Washington Department of Labor and Industries, in an Order, indicated that, .... “Over the last seven years, Wal-Mart has “repeatedly and unreasonably” delayed giving injured workers the benefits they were owed under workers’ compensation laws, and, in some cases, Wal-Mart employees were not allowed to file workers’ comp claims at all.”
The expansion of RICO actions arising out of workers' compensation claims is an issue to be addressed by the US Supreme Court should two pending Petitions for Certiorari be granted in other pending matters. See the Workers' Compensation Blog for additional articles on this topic.
Friday, July 24, 2009
Medical Provider Claims Viable RICO Action Against Insurance Company in Petition to US Supreme Court
A Petition for Certiorari has been filed to the US Supreme Court in a RICO claim involving a medical provider who claims an insurance company committed fraud in processing the provider's bills for services. George Schroedinger, MD has filed a Petition to seek review of a Eight Circuit decision that over turned a favorable RICO action against United Healthcare of the Midwest, Inc.
The medical provider alleges that United's computer system "often inappropriately grouped and down coded, improperly suspended claims, unnecessarily requested plaintiffs claims that United continued to classify" the medical provider.
This Petition follows a Petition for Certiorari has been filed in Brown v. Cassens Transport Co., 546 F.3d 347 (6th Cir. Oct 23, 2008) (NO. 05-2089), following the rehearing and rehearing en banc denied (Jan 05, 2009). Brown is a landmark decision of immense national significance, the US Sixth Circuit Court of Appeals ruled that a RICO claim brought by injured workers against their employer, insurance carrier and employer medical expert could proceed. The Brown case is scheduled for a Supreme Court conference on September 29, 2009.
| George Schoedinger, et al., Petitioner v. United Healthcare of the Midwest, Inc, No. 09-80 (July 16, 2009) |
Thursday, June 25, 2009
Defense Bar Floods the US Supreme Court With Amicus Briefs in RICO Case
In a RICO case which will have profound impact on the national workers' compensation system, the defense bar has inundated the US Supreme Court with applications to submit amicus briefs. Pending before the US Supreme Court is a petition for a writ of certiorari to review a decision where: the employer, insurance company and their experts were found to have conducted themselves in violation of the RICO Act.
Motions for leave to file Amicus briefs in support of the defense position have been filed by: MI Self-Insurers Association; Michigan Defense Trial Counsel; DRI - The Voice of the Defense Bar; American Trucking Associations, Inc.; Chamber of Commerce of the United States of America; and National Council of Self-Insurers.
The US Court of Appeals for the Sixth Circuit denied rehearing on January 5, 2009 and a Petition for a writ of certiorari was filed on May 6, 2009. On May 26, 2009 US SUpreme entered an Order extending time to file a response to petition to and including June 29, 2009.
Tuesday, May 12, 2009
RICO Case Goes to the US Supreme Court
A Petition for Certiorari has been filed in Brown v. Cassens Transport Co., 546 F.3d 347 (6th Cir. Oct 23, 2008) (NO. 05-2089), following the rehearing and rehearing en banc denied (Jan 05, 2009). The Petition was filed on May 6, 2009. In a landmark decision of immense national significance, the US Sixth Circuit Court of Appeals ruled that a RICO claim brought by injured workers against their employer, insurance carrier and employer medical expert could proceed.
The application states:
"The Sixth Circuit's ruling that the WDCA does not involve the business of insurance is hardly a model of clarity, but it plainly rests on two central and essential elements. First, the court held that workers' compensation categorically is not insurance because, in the Sixth Circuit's view, workers' compensation does not involve a “contractual insurance relationship.” App., infra, 20a. Second, the court regarded as irrelevant Michigan's regulation of the nature of the workers' compensation benefits that must be provided by employers - including requirements imposed identically on employers who self-insure their workers' compensation risks and on those who purchase insurance of those risks - because Cassens self-insures and the court believed that self-insurance does not involve the business of insurance under the McCarran-Ferguson Act. Id. at 22a-24a. But both aspects of this analysis are wrong. They depart from this Court's precedent, will lead to inconsistent treatment of identically situated businesses, and will frustrate state policy regarding both insurance and workers' compensation."
"The issues presented here are ones of enormous practical importance: the court of appeals' holding reads significant limits into the McCarran-Ferguson Act, threatening to interfere with state insurance regulation and overturn the balance struck by States *31 in their workers' compensation systems. Most obviously, by categorically holding that state regulation of employers who self-insure their workers' compensation liability is outside the scope of the McCarran-Ferguson Act, the holding below invites a proliferation of RICO strike suits brought by aggrieved workers' compensation claimants. The attractiveness of RICO's remedies - including treble damages and attorney's fees, e.g., 18 U.S.C. § 1964(c) - and the extraordinarily burdensome nature of RICO discovery assures that an ever-increasing volume of workers' compensation litigation will find its way to federal court for decision under federal law. See, e.g., Cristin Schmitz, Employers Face RICO Claims For Workers Comp Denials, Inside Counsel (Feb. 1, 2009) (RICO permits “wide-open” discovery; plaintiffs' counsel states that if case goes to trial, “I am going to discover every single comp claim that ever existed in the past four years *** so it's going to open a real can of worms”). To the extent that settlements are not compelled in such suits, federal courts will have to pass on the merits of the underlying workers' compensation claims, creating the potential for overlapping (and possibly conflicting) adjudication of eligibility for workers' compensation benefits."
Citation:
2009 WL 1265298 (U.S.) (Appellate Petition, Motion and Filing)
Supreme Court of the United States.
CASSENS TRANSPORT COMPANY, Crawford & Company, and Dr. Saul Margules, Petitioners,
v.
Paul BROWN, William Fanaly, Charles Thomas, Gary Riggs, Robert Orlikowski, and Scott Way, Respondents.
No. 08-1375.
May 6, 2009.
Tuesday, March 24, 2009
6th Circuit Allows RICO Decision Against Employer to Stand
The Sixth Circuit Court of Appeals permitted its favorable decision for employees and against an employer, its workers' compensation insurance carrier and its examining physician to stand. The Court, on January 5, 2009, denied a Rehearing and a Rehearing En Banc request made by the defendant who were held to be in violation of the Racketeer Influence and Corrupt Organization Act (RICO).
The Court held that 13 original predicated acts constituted a pattern of racketeering activity. The workers were not required to plead or prove reliance on the misrepresentations. The Circuit Court also ruled that the Michigan workers' compensation act did not reverse preempt RICO under the McCarran-Ferguson Act.
Brown v Cassens Transport Co. 546 F.3d 347 (6th Cir. 2009).
The Court held that 13 original predicated acts constituted a pattern of racketeering activity. The workers were not required to plead or prove reliance on the misrepresentations. The Circuit Court also ruled that the Michigan workers' compensation act did not reverse preempt RICO under the McCarran-Ferguson Act.
Brown v Cassens Transport Co. 546 F.3d 347 (6th Cir. 2009).
Tuesday, October 28, 2008
Injured Workers' RICO Claim to Proceed Against Employer and Insurance Company
In a landmark decision of immense national significance, the US Sixth Circuit Court of Appeals ruled that a RICO claim brought by injured workers against their employer, insurance carrier and employer medical expert could proceed. Several injured workers brought the Federal Racketeer Influenced and Corrupt Organizations Act (RICO) against their employer, Crawford & Company and [cut-off treatment doctor] Dr. Saul Margules.
The allegations included that, ".....Cassens and Crawford deliberately selected and paid unqualified doctors, including Margules, to give fraudulent medical opinions that would support the denial of worker’s compensation benefits, and that defendants ignored other medical evidence in denying them benefits. The plaintiffs claimed that the defendants made fraudulent communications amongst themselves and to the plaintiffs by mail and wire in violation of 18 U.S.C. §§ 1341, 1343, which serve as the predicate acts for their RICO claims."
The decision authored by Judge Karen Nelson Moore held "...that plaintiffs’ RICO claims [may go forward] because the WDCA [Michigan Workers' Compensation Disability Act] does not preempt their RICO claims and because plaintiffs have sufficiently pleaded a pattern of racketeering activity given that reliance is not an element of a civil RICO fraud claim."
The Court concluded, "...Our conclusion that worker’s compensation benefits are not insurance and our conclusion that the WDCA was not "enacted . . . for the purpose of regulating the business of insurance," each independently foreclose the defendants’ argument that the WDCA reverse preempts RICO under the McCarran-Ferguson Act.
Of additional signifiance is that sitting by designation on the panel with Judge Moore and Judge Gibbons, was The Honorable Harold A. Ackerman, US District Court Judge for the District of NJ. Judge Ackerman has long and knowledge history of RICO actions was a former NJ Workers' Compensation Judge.
Brown, et al. v. Casses Transport Co., et al., 6th Cir. 2008, Decided October 23, 2008
The allegations included that, ".....Cassens and Crawford deliberately selected and paid unqualified doctors, including Margules, to give fraudulent medical opinions that would support the denial of worker’s compensation benefits, and that defendants ignored other medical evidence in denying them benefits. The plaintiffs claimed that the defendants made fraudulent communications amongst themselves and to the plaintiffs by mail and wire in violation of 18 U.S.C. §§ 1341, 1343, which serve as the predicate acts for their RICO claims."
The decision authored by Judge Karen Nelson Moore held "...that plaintiffs’ RICO claims [may go forward] because the WDCA [Michigan Workers' Compensation Disability Act] does not preempt their RICO claims and because plaintiffs have sufficiently pleaded a pattern of racketeering activity given that reliance is not an element of a civil RICO fraud claim."
The Court concluded, "...Our conclusion that worker’s compensation benefits are not insurance and our conclusion that the WDCA was not "enacted . . . for the purpose of regulating the business of insurance," each independently foreclose the defendants’ argument that the WDCA reverse preempts RICO under the McCarran-Ferguson Act.
Of additional signifiance is that sitting by designation on the panel with Judge Moore and Judge Gibbons, was The Honorable Harold A. Ackerman, US District Court Judge for the District of NJ. Judge Ackerman has long and knowledge history of RICO actions was a former NJ Workers' Compensation Judge.
Brown, et al. v. Casses Transport Co., et al., 6th Cir. 2008, Decided October 23, 2008
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