Worker’s Compensation Denial: RICO Claim Recognized

The Sixth Circuit Court of Appeals has allowed a lawsuit based on the Racketeer Influenced and Corrupt Organizations Act (RICO) based on an alleged fraudulent wrongful deprivation of an employee’s entitlement to benefits under Michigan’s Worker’s Disability Compensation Act.  Brown v. Cassens Transport Co., 6thCir., No. 10-2334, 4/6/12)
Six current or former employees of the trucking company, Cassens Transport Co., alleged that the defendants (the employer and a doctor) colluded to deny them workers’ compensation benefits by making fraudulent communications amongst themselves and to the plaintiffs by mail and wire in violation of RICO. Triple damages are available under RICO.
The district court held that the plaintiffs did not allege an injury to property, as required by RICO; noting that the Michiganstatue provided W.C. as the employees’ exclusive remedy for on the job injuries.
The appellate court reversed, finding that federal law recognizes that the recipient of a statutory entitlement has a property interest in the continued receipt of those benefits, such that an “injury to such statutory entitlements is an injury to property within the meaning of RICO.”
Although this case is limited to an interpretation of Michigan’s workers’ compensation laws, the rationale could be extended by other cases to other state worker’s compensation schemes.

If this precedent is expanded to other Circuits, it should serve as a wake-up call for employers, workers’ compensation adjustors and, indeed, medical professionals who perform workers’ compensation medical evaluations in all states. These parties in the W.C. process should review their communications and confidences with an eye toward the potential need to prove, in defense of a RICO conspiracy accusation, that their communications and recommendations are independent and at an arm’s length.

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