Federal Court of Appeals Rejects RICO Litigation

From Larry Holt of the National Council of Self-Insurers

Sent: Wednesday, September 25, 2013 9:35 AM

Subject: RICO Case Decided

Members of National Council of Self-Insurers:

I have happily received the following information from Jerry Marcinkoski, Executive Secretary of the Michigan Self-Insurers Association. His words are from an email Jerry sent to his Board of Managers.

The federal sixth circuit court of appeals has ruled that the RICO statute does NOT apply to a workers' compensation claimant who alleges fraud by the employer and its third party administrator in the handling of the workers' compensation claim. The case is JACKSON, et al v SEDGWICK CLAIMS MANAGEMENT SERVICES, et al (Case No. 10-1453). This is an en banc decision rendered by the entire bench of the sixth circuit court of appeals over a dissent.

You will recall there has been a persistent effort by employees, particularly in Michigan federal courts, to claim under the RICO racketeering statute that employees' claims were wrongly denied via a fraudulent conspiracy by the employer, the employer's third party administrator, and IME doctors. The employees' RICO claims over the years have sometimes met with success. Now, the sixth circuit court of appeals has rejected the RICO theory advanced by the employees.

The sixth circuit held there was no injury to the employees' property or business, a requirement for triggering RICO, because the employees' claims were based on personal injuries meant to be litigated exclusively in a state's workers' compensation system. The court said: "The RICO theory advanced by the plaintiffs in this case throws the viability of these (state workers' compensation) schemes into doubt by allowing any employee who believes the employer denied his workers' compensation claim through fraud to recast this dispute as a RICO claim."

This is a most welcome decision. We will see if the plaintiffs appeal the decision to the United States Supreme Court.

Jerry Marcinkoski

Executive Secretary

The case of Jackson, et al v Sedgwick Claims Management et al began in mid-2009. In 2010, the National Council of Self-Insurers contributed $15,000 toward an amicus brief in support of Sedgwick Claims Management et al. The brief was coordinated by Bruce Wood, Associate General Counsel and Director of Workers’ Compensation at the American Insurance Association.

Larry Holt

Executive Director