Many legal scholars have theorized that the civil Racketeer Influenced and Corrupt Organizations Act statutes (RICO), which are designed to go after businesses that are inherently manipulated and corrupted to the point that they function as criminal organizations, were not intended to be applicable to the healthcare industry. However, in the last 10 years, many insurance companies, particularly in the realm of no-fault insurance, have filed such claims against providers. Every so often one of the large insurance companies tends to file another RICO claim in an effort to “clean house” from providers that they feel are billing inappropriately or are operating with non-doctors in a “dummy doc,” or “doc in the box” situation.
Typically, civil RICO claims put a huge amount of pressure on the defendant. This is due to the far reaching ability of a plaintiff to look beyond just the defendant and individuals or the entity in the lawsuit. An insurance company bringing such a suit also has the ability to look into the payments and finances of third parties and the relationship of third parties with the defendant and its owners. This means that any claim of fraud under a civil RICO action could potentially expose any entity, in addition to a management company or other organization that is regularly doing business with the practice (such as a landlord that holds the lease and provides specific services), to scrutiny or inclusion in the civil RICO lawsuit.
Additionally, the penalties in a civil RICO action permit the possibility of triple damages, as well as the ability of a plaintiff insurance company to trace the funds from the allegedly corrupt defendant individual or defendant entity to any source. For example, if the proceeds were taken from a medical practice that allegedly committed fraudulent billing repeatedly, creating a scheme that is covered by the RICO statutes, and then said proceeds were invested in a building, the insurance company could attempt to reach that building since the proceeds of the alleged criminal enterprise can be subject to forfeiture under the civil RICO statutes.
Just the mere filing of such a suit creates a huge unfair advantage for the insurance company, who has larger financial resources with which to pursue claims than most professionals and practices. Coupled with the additional powers and exposure that a civil RICO claim affords them, many physicians faced with RICO allegations settle before the case advances too far. Unfortunately, these settlements do not contain very favorable terms for the doctor.