RICO AS AN EXCEPTION TO EXCLUSIVE REMEDY: TWO IS BETTER THAN ONE

The Texas Labor Code proscribes employer interference in the claims process and presumably still provides for penalties for Carrier’s permitting such interference. “[administrative violation for Carrier which] allows an employer, other than a self-insured employer, to dictate the methods by which and the terms on which a claim is handled and settled;” Tex. Lab. Cd. 415.002(6).  Recent litigation in Michigan, Colorado and Arizona indicates that the Racketeer Influenced and Corrupt Organizations Act (RICO) provides an avenue of address for injured workers to address multiple such acts of interference.

Property Casualty 360 recently detailed Challenges to the Grand Bargain of Workers Compensation, including RICO.

RICO was originally codified to address organized crime.  It is now used to address civil conspiracy. Section 1961(5) of RICO provides the statutory definition of a “pattern of racketeering activity” as requiring “at least two acts of racketeering activity . . . the last of which occurred within ten years after the commission of a prior act of racketeering activity.”

For Employers whose relationships with their workers’ compensation carrier, claims administrator, case managers, and any physicians who provide care to employees injured on-the-job is less than  “arms-length” , RICO may be a deterrent to such interference—provided the injured worker can prove the pattern required.

My colleague John Pringle doubts that the 5th Circuit will allow an exception to exclusivity in a thorough analysis.  Given that the supremacy clause will allow for its application despite state laws on exclusivity, the exception could be applied in particularly egregious situations, which I believe abound.  This may be particularly true for workers, such as transportation workers, who pay part of or all their own premiums.  In a similar case, a district court in the Southern District of Florida held that patients had standing to sue their managed care insurance companies (“MCOs”) for alleged misrepresentations and omissions that allegedly caused them to overpay for coverage.  In re Managed Care Litig., 150 F. Supp. 2d 1330, 1339 (S.D. Fla. 2001).