Denis Paul Juge on RICO and the Exclusive Remedy

 "The world of workers' compensation was knocked off course recently by an asteroid from the U.S. Sixth Circuit striking at the very core of the system - the exclusive remedy", writes Denis Paul Juge. "Former employees of a Michigan employer filed a civil RICO action (treble damages and attorney fees) against the employer, its workers' compensation third party administrator and a physician alleging that the defendants committed mail and wire fraud in a scheme to deprive them of their workers' compensation benefits. The federal district court dismissed the suit on defendants' motion to dismiss for failure to state a claim [Brown v. Cassens Transport Company, 409 F. Supp. 2d 793 (E. D. Mich. 2005)]."

 "On appeal to the Sixth Circuit, a divided court affirmed the dismissal on the grounds that the plaintiffs must allege detrimental reliance on the mail and wire fraud [Brown v. Cassens Transport Company, 492 F. 3d 640 (6th Cir. 2007)]," the author reports.  "The U.S. Supreme Court granted writs and in keeping with its recent decision in Bridge v. Phoenix Bond and Indemnity Co., 553 U.S. 639, 128 S. Ct. 2131, 170 L. Ed. 2d 1012 (which held that the RICO plaintiff is not required to allege detrimental reliance on the mail or wire fraud) vacated judgment and remanded to the Sixth Circuit. On remand the Sixth Circuit reversed the district court's dismissal of the plaintiffs' RICO suit [Brown v. Cassens Transport Company, 546 F. 3d 347 (6th Cir. 2008), rehearing denied 1/5/09)]. The defendants filed writs to the United States Supreme Court. Despite a flood of Amicus briefs, the Supreme Court denied writs on December 7, 2009 [175 L. Ed. 2d 575, 130 S. Ct. 795, 2009 LEXIS 8760 (12/7/09)].

 "But like the Phoenix the hopes of employer may ultimately rise from the ashes of the Brown decision," predicts Juge. "Shortly after writs were denied by the Supreme Court a class action RICO/workers' compensation complaint was dismissed by the United States district judge in Michigan. In Clifton E. Jackson and Christopher M. Scharnitzke, on behalf of themselves and other persons similarly situated v. Sedgwick Claims management Services, Inc., and Coca Cola Enterprises, Inc., and Dr. Paul Drouillard, the court dismissed the suit without relying on the defenses that failed in the Brown case."

This commentary will introduce the workers' compensation practitioner to the RICO statute with a primary emphasis on the provisions permitting a civil action under the RICO statute. The author then reviews the defenses raised in Brown and Jackson and the impact of these decisions on the exclusive remedy defense.

   Denis Paul Juge is a director in the law firm of Juge, Napolitano, Guilbeau, Ruli, Frieman & Whiteley located in Metairie. He received his B.A. and M.A. degrees in Political Science from the University of New Orleans and his Juris Doctor degree in 1976 from Loyola University School of Law, where he was a member of the Law Review. He has authored numerous articles in the Loyola and Louisiana State University Law Reviews as well as professional publications on insurance law and workers' compensation. From 1982 to 2005, he was an adjunct professor with the Loyola University School of Law where he has taught insurance and workers' compensation law. Mr. Juge has been involved in legislative drafting and lobbying efforts on behalf of the Louisiana Association of Business and Industry (LABI) since the major revisions to the workers' compensation law in 1983. He is a member of the Louisiana State Bar Association, the Mississippi Bar Association, the International Association of Defense Counsel, and has served as chairman of the Workers' Compensation Committee for the Defense Research Institute. Mr. Juge also serves on the Larson's National Workers' Compensation Advisory Board.

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