On March 14th, 2010 a federal judge entered a default judgment for the amount of $2,264,690.68 against 86 workers’ compensation claimants in a Racketeer Influenced and Corrupt Organizations Act (RICO) action filed by the New Jersey employer.
After being laid off due to a plant closing, all 86 former employees filed for workers’ compensation benefits and were represented by the same law firm. All employees claimed similarly vague injuries after having a medical examination. The company then served a RICO lawsuit against the employees. None of the employees responded to the complaint and, as a result, the default judgment was entered.
The Plaintiffs’ attorneys were also sued but opted to settle out of court for an undisclosed amount.
My Two Cents:
This is the first RICO case arising out of the workers’ compensation context to result in a judgment. Since it was a default judgment, none of the defenses raised in currently pending RICO cases against employers were raised. Therefore, it still remains to be seen whether RICO lawsuits arising out of workers’ compensation cases will ever make their way to a jury.
Two More Cents:
This case is interesting because it shows the 2 sides of the RICO coin. Up until now, the focus has been on RICO claims against employers, insurers, third party administrators, and doctors. We now see that the RICO statute can be used just as effectively in the other direction. The most notable difference is that an employer, insurer, administration company, or doctor can either afford to defend themselves or has insurance to defend them in a RICO claim. It is doubtful, however, that claimant employees will have the financial resources to pay for a defense in a federal RICO lawsuit. This may have been the reason for the 86 default judgments.