Rico Allegations Allowed Against Carrier

This is a different type of case than is normally reported in this newsletter. Generally the newsletter deals with cases that originate before the Workers’ Compensation Appeals Board(WC AB). In general the WorkersCompensation Act’s (ACT) exclusive remedy provisions will not allow certain actions that can be presented before the WCAB.

This case involved licensed medical groups that provide medical-legal services and medical management companies under license to the medical groups. The defendants were 28 insurance carriers. “At a meeting in 1991, defendants decided to put plaintiffs out of business by delaying payment or refusing to pay for services rendered by plaintiffs to injured workers.” They agreed to keep the meeting secret.

Later they made up “hit-lists”. The appeals court in this case analogized this to the carrier in the John Grisham novel “The Rainmaker”, Great Benefit Insurance Company. The defendants accused plaintiffs publicly of being “fraud mills” and advised other insurance companies not to pay the ‘ plaintiff’s lien claims. The tactics proved quite effective.

Plaintiff’s filed suit alleging a number of actions including fraud and RTCO.  The Defendants tried to have the case thrown out alleging the exclusive remedy provisions of the ACT. A judge eventually agreed and that is how this case came up on appeal.

The appeals court looked at each allegation. The court determined mat the abuse of process and fraud claims are within the jurisdiction of the WCAB. However, these may constitute crimes under Insurance Code sections 1871 and 1871.4.

The Cartwright Act “makes unlawful any trust”: “Because a Cartwright Act claim requires a motive mat violates a fundamental public policy rooted in a statutory provision, it is not encompassed within the compensation bargain. Therefore, the exclusive remedy does not apply.

The court next determined that the pattern of racketeering that is needed to establish a RICO allegation also falls outside the compensation bargain and the exclusive remedy does not apply. The court indicated RICO claims are never subject to the exclusive remedy provisions.

The court then looked at plaintiffs claims of tortious interference with business relations and unfair competition law. The court determined this allegations were barred by the exclusive remedy where they were individual acts of ah individual insurance carrier. However, acts where more man one defendant conspire are not covered by the exclusive remedy provisions. The viability of these claims was not determined Just their right to proceed.

Case: Vacanti V. SCIF

Harvey Brown
3501 Jamboree Rd. Suite 602
Newport Beach, CA 92660

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