When Calculating the Average Weekly Wage for Workers’ Compensation Benefits, It is No Longer Assumed that Periods of Unemployment Will be ExcludedMarch 28, 2010
Charles D. Smith & Associates officially opens in ColumbusJuly 22, 2011
The Racketeer Influenced and Corrupt Organizations Act (RICO) is typically associated with organized crime. However, the Sixth Circuit Court of Appeals recently held that the wrongful deprivation of an employee’s entitlement to benefits under Michigan’s Workers’ Disability Compensation Act can be the basis of a violation of RICO. Brown v. Cassens Transport Co. (CA 6 2012), No. 10-2334.
The Brown case has a long history. RICO charges were originally filed on June 22, 2004 by five employees claimed to be injured on the job while working for their employer, Cassens Trasport Co. These employees claimed that the defendants conspired to wrongfully deny them their workers’ compensation benefits, and the conspiracy was orchestrated by mail or wire. Specifically, the plaintiffs alleged that their employer and its claims adjudicator solicited fraudulent medical reports. The district court originally dismissed their RICO claims; a decision which was affirmed by the Sixth Circuit Court of Appeals. However, the U.S. Supreme Court vacated the judgment. On remand, the district court again dismissed the plaintiffs’ RICO charge, finding that Michigan’s workers’ compensation laws offered them an exclusive state remedy and that RICO claims were foreclosed. This time, the Sixth Circuit Court of Appeals reversed the district court’s dismissal.
The Court held that RICO provides the plaintiffs with a “distinct cause of action,” because it centers on mail fraud, not the denial of workers’ compensation benefits. As such, Michigan law does not preempt a federal RICO claim. The Court next found that the plaintiffs had alleged an injury to “property” under RICO (i.e., the devaluation of either their expectancy of or claim for workers’ compensation benefits). The Court remanded the case for further proceedings consistent with its opinion. Whether the plaintiffs inBrown ultimately recover the damages they are seeking remains to be seen.
While the Brown case involves Michigan workers’ compensation law, Ohio employers should take note of this decision since the Sixth Circuit Court of Appeals has appellate jurisdiction over Ohio courts. Especially concerning is the fact that recovery under RICO includes triple damages and attorney fees.