December 15, 2009

Workers' Compensation Subject to Federal Racketeering Law?

In a recent article published in Business Insurance it was announced that the U.S. Supreme Court declined to review a Court of Appeals decision which allowed workers compensation claimants to sue an employer and its third-party administrator (TPA) under federal racketeering law. In October 2009 the 6th Circuit Court of Appeals held in Paul Brown vs. Cassens Transport Co. that several employees could pursue a claim for mail and wire fraud violations of RICO (Racketeer Influenced and Corrupt Organizations Act) against their employer and its third-party administrator.

Their allegations were based upon denials of their workers' compensation claims by the employer/self-insurer and third party administrator. Specifically, the plaintiffs alleged that Cassens Transport and its TPA used "unqualified doctors" to give fraudulent medical opinions in support of a denial of their workers compensation claims. The workers also alleged the company, the TPA and doctors committed mail and wire fraud in their communications about the claims.

As expected, employer groups have severely criticized the decision. The case has been remanded back to the trial court level, but if it stands this provides a precedent for federal courts to rule on workers comp claims. Equally as significant is what this may signal for the future. Will this mean communications between employers/insurers and medical providers fall under closer scrutiny, or become barred altogether? Will workers' compensation administrative law judges look closer at doctors providing medical care? Who is to determine whether a doctor is qualified or unqualified, and isn't that what independent medical evaluations (IMEs) and second opinions are for? If an employer and/or claims adjuster cannot effectively communicate with medical providers won't this be detrimental for the overall administration of workers' compensation claims?

The decision bears close watching as all states may be impacted by this decision. Stay tuned for more details.

David W. Willis, Esq.

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