A claim for workers compensation benefits is property under RICO, and injury to that property is properly sued for under the statute. This ruling by the Sixth Circuit in Brown v. Cassens Transport, No 10-2334 (April 6, 2012), is the latest development in a very interesting suit claiming that an employer and a doctor it recruited systematically diminished the value of injured workers claims for workers compensation by means of fraud. The Sixth Circuit's prior ruling, Brown v. Cassens Transport, No 05-2089 (Oct. 23, 2008), was previously discussed on the Kentucky Employment Law Blog: Injured Workers May Sue Under Racketeering Law Based On Scheme To Deny Them Workers Compensation Benefits.
The plaintiffs claim they were injured on the job for Cassens. Cassens self-insures its workers compensation and contracts with Crawford & Company for claims administration. The plaintiffs claim that Cassens and Crawford solicited "fraudulent medical reports" from a third defendant, Dr. Saul Margules and used them as a fraudulent means to diminish the value of the plaintiffs' claims for workers compensation benefits. Interestingly, all of the plaintiffs but one had settled their workers compensation claims with Cassens; the other was subject of an undisclosed adjudication in the Michigan workers compensation scheme.
Reversing a dismissal by the district court for the second time the Sixth Circuit held "that the plaintiffs have alleged an injury to property because they allege the devaluation of either their expectancy of or claim for workers' compensation benefits." First, the court ruled that "applicants for workers' compensation benefits have a property interest in those benefits at the time that their employer becomes aware of the injury." This holding rests on language in the Michigan workers compensation law stating that "employees injured in the course of employment 'shall be paid compensation,' which is calculated according to a rigid schedule." The court rejected the argument that a property interest in the benefits did not accrue until the injured worker had proved their entitlement noting that "Michigan state law does not require injured employees to make such an initial showing before they receive benefits."
Second, the court further held that even if the expectation of workers compensation benefits is not a property interest, "the plaintiffs in this case may proceed by alleging injury to property in that their claim to benefits under the workers compensation scheme was damaged by the defendants' actions." Citing a prior Michigan decision, Williams v. Hofley Mfg. Co., 424 N.W.2d 278 (Mich. 1988), the court observed "the plaintiffs' claim is not necessarily about particular payments themselves, but also about the defendants' deception ... that deprived the plaintiffs of the ability to assert their claim for benefits under the statute in a fair forum."
Finally, the Sixth Circuit rejected the argument that an unfavorable adjudication or settlement by plaintiffs precluded their loss of a property interest, explaining as follows:
... losing or settling a case due to fraudulent medical reports does not extinguish the plaintiffs' property interest in bringing a claim free of fraud. ... plaintiffs should be allowed to proceed on their RICO claim and put on evidence that they would have received a better result in the underlying state agency proceedings had the defendants not submitted the fraudulent medical reports. The fact that the plaintiffs lost or settled in tainted proceedings is not evidence that the plaintiffs would have lost or settled if the proceedings had been fair.
Robert L. Abell
www.RobertAbellLaw.com
