Court: Michigan Workers’ Comp Law Blocks Anti-Racketeering Suit

October 18, 2010

Michigan’s workers’ compensation statute blocks employee lawsuits against employers brought under federal anti-racketeering law, a federal judge has ruled.

Federal Judge Paul D. Boren for the second time has dismissed a suit brought by a group of employees at Cassens Transport Co. who alleged that the self-insured company and its claims administrator, Crawford & Co., hired unqualified medical personnel to screen and fraudulently deny workers’ compensation claims.

The plaintiffs sued for triple damages under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), citing alleged mail and wire fraud violations.

However, as he did in 2005, Boren granted the motion to dismiss the complaint because, he found, the Michigan workers’ compensation law pre-empts the federal claims under the McCarran Ferguson Act, which grants states the authority to regulate insurance.

The workers’ exclusive remedy “lies within the exclusive administrative scheme” set forth in the state’s workers’ compensation law, which designates the Michigan Workers Disability Compensation Bureau as the authority for settling all disputes between employees and employers, the court affirmed.

Boren’s previous dismissal had been appealed, but the Supreme Court declined to hear it, instead sending it back to the court of appeals for reconsideration.

The recent ruling also affirmed that the state workers’ compensation law does not recognize claims for infliction of emotional stress due to denial of claims.

The case is Brown v. Cassens Transport Co., Case No. 04-cv-72316; United States District Court, E.D. Michigan, Southern Division.

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Insurance Journal West October 18, 2010
October 18, 2010
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