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.
The Corporate Compliance Plan, which is traditionally operated and well known in Medicare and Medicaid areas of practice, can have benefits in the area of no-fault billings and protections against no-fault insurance company lawsuits. The Plan can be set up to monitor fraud and abuse, patient privacy issues, and billing collection issues. However, since the no-fault carriers are not of themselves government entities, the protections of a Corporate Compliance Plan are not as clear at first. There is also less of an incentive to attempt to enforce criminal penalties as opposed to pursue civil lawsuits for fraud or for RICO actions against providers in the no-fault field.
The Compliance Plan in Medicare and Medicaid areas serves best to demonstrate a provider’s attempt at compliance with regulations and thus negate any potential criminal liability or civil penalties associated with an intentional act.
In recent years, much attention has been focused on the activities of physicians who operate with management companies and collection lawyers in the no-fault industry. Up until now, no-fault insurers would often file a civil RICO (Racketeer Influenced Corrupt Organizations Act) claim against a provider in order to go after additional fines and penalties that are permitted under this type of action.
This series of laws also permits the insurance companies to collect significant damages such as triple damages and an expanded ability to attach personal assets. In addition, it gives them the ability to go after and subpoena documents which they would otherwise not be able to in a regular fraud lawsuit.
It should come as no surprise to any provider that no-fault insurers use any means they can to withhold or delay payment of no fault claims. One of the most widely misused tactics is the EUO which permits an oral examination of the provider or the provider’s representative, to verify the claim. No fault insurance companies often misuse the EUO as a means to go on a “fishing expedition” to uncover reasons to withhold any outstanding payments to the provider. Often documents are requested that are outside the scope of the EUO. Since the State Farm Mutual Auto Insurance Co. v Malella 2005, 4 NYS 313 decision, insurance companies have had greater leeway, however they still misuse and often intentionally misinterpret the decision. The more recent case of Dynamic Medical Imaging v State Farm Mutual Auto Insurance Co. 2010, 29 Misc 3d 278 restricts no fault insurers with its ruling stating that the EUO is not intended to have the same scope as traditional discovery at trial. Insurance companies tend to ignore these decisions and similar case decisions in hopes that a provider will go along with their fishing expedition and over-reaching document request.