Federal Judge in Phoenix Says RICO Case May Move Forward

A federal district court judge ruled yesterday that nine fire department employees may maintain a civil action they had filed under the Racketeer Influenced and Corrupt Organizations [RICO] Act against York Risk Services Group, the third-party administrator hired by the City of Phoenix to handle workers’ compensation claims [Miller, et al. v. York Risk Servs. Group]. The plaintiffs have contended, among other things, that York colluded with the City so as to deny systematically their workers’ compensation claims in violation of the RICO Act. Sitting in Phoenix, the judge was not apparently swayed by York’s argument that the plaintiffs had not alleged that they were injured in “business or property”–as required under RICO–since their alleged injuries were “personal injuries” and were not “business related.”

York crafted that defense, at least in part, based on the success that Sedgwick Claims Management Services had in September in a separate RICO action before the Sixth Circuit Court of Appeals in Jackson v. Sedgwick Claims Management Servs., Inc., 2013 U.S. App. LEXIS 19495 (Sept. 24, 2013) [see my September post related to Sedgwick]. The district court judge determined that, at least for purposes of York’s motion to dismiss, plaintiffs possess a sufficient property right in their workers’ compensation benefits under state law to supply the property interest required under the RICO act.