Wal-Mart and Workers Compensation RICO Claim

On March 24, 2009, a class action lawsuit was filed in Colorado against Wal-Mart, Concentra Health Services (Wal-Marts preferred medical provider), Claim Management, Inc. (Wal-Marts third party administrator), and Home Assurance Company (Wal-Mart’s insurance company). The lawsuit, brought by several injured Wal-Mart employees, is known as Gianzero v Wal-Mart Stores, Inc., et. al., US DCT (D. Colorado) No. 09-cv-00656 REB BNB. While lawsuits against deep-pocket Wal-Mart are common, this one has a different twist. The injured Wal-Mart employees are claiming that Wal-Mart violated the Federal Racketeer Influenced and Corrupt Practices Act (RICO) by denying any part of their claims.

In Colorado (which has a very active plaintiff’s workers compensation bar), the employer is allowed to select the treating physician for an injured employee. Wal-Mart, by RICO, Wal-Mart and Workers Compensation the act of defending itself against workers compensation claims with doubtful compensability, or by accepting the physician’s assessment of the employee’s injury over the employees own assessment of the injury, is accused in the lawsuit of conspiracy with the insurance company and the claims adjusters to “dictate, withhold, delay, deny and/or interfere with” the medical treatment the employee’s attorney or the employee desires.

Plaintiff attorneys in the workers compensation section of the Colorado Bar Association did their homework to locate an attorney to lead this lawsuit. Instead of selecting an attorney from the state of Colorado, they selected one of the leading class action attorneys in the country, Solomon Cera of the San Francisco office of Gold, Bennett, Cera & Sidener. A section of the Gold, Bennett, Cera & Sidener website reflects the numerous class action settlements they have obtained from the $320 million settlement of the Rubber Chemicals Antitrust Litigation down to the modest settlement of $10 million from the Textainer Sec. Litigation. All total, Mr. Ceras firm has “recovered” over $1.6 billion (that’s billion with a B) from employers and their insurance companies. Mr. Cera has already indicated that if his firm should prevail in this matter, that he would like to pursue the same litigation in numerous other states including Texas, New York, Arizona, Wisconsin, Oklahoma and Iowa.

Initially there was a stay on certifying the class action, but on July 1, 2010, U.S. District Judge Robert Blackburn approved the plaintiff’s motion for class certification. The certified class of Wal-Mart employees may total as many as 6,900 employees in Colorado who can alleged that Wal-Mart, its insurance company, third party administrator and preferred medical provider conspired to deny them medical treatment for their on-the-job injuries.

While Wal-Mart obviously has a lot of resources to fight this class action lawsuit, what makes it a dangerous lawsuit for Wal-Mart, and all employers if Wal-Mart loses the lawsuit, is:

1. If the employer loses on the allegation of a RICO violation (even a small, unintended violation), the employer and/or the employer’s insurer is liable for triple damages under RICO
2. The exclusive remedy of workers compensation will be severely compromised
3. Even a baseless RICO-based lawsuit will expose the employer and insurer to extensive legal fees and expense defending the lawsuit, placing the insurer in the position of either paying groundless and fraudulent claims, or spending even larger amounts defending it self.
4. If RICO lawsuits over workers’ compensation become common place, every employers work comp premiums will skyrocket, putting a lot of small employers out of business.
5. You combine triple damages from a RICO win with thousands of employees; the payday for a successful plaintiff’s attorney is astronomical.

In December, 2009, plaintiffs attorneys in the Gianzero v. Wal-Mart class action lawsuit and class action lawyers everywhere got a boost in their effort to turn work comp claim denials into RICO lawsuits. In a Michigan case, the US Supreme Court denied a petition by the defendant to rehear a Sixth Circuit Courts in Brown vs. Cassens Transport Company. The Sixth Circuit Court had uled the plaintiffs could proceed with a workers compensation lawsuit based on alleged violations of RICO.

In the Wal-Mart case, the plaintiffs having an affidavit from a physician who worked for Concentra Health Services which states he felt pressured by his superiors to change his recommendations for the medical care of Wal-Mart employees. If true, the plaintiffs may have a shot at the RICO compensation. It is alleged that Concentra doctors were given “protocol notes” on how to handle work comp claims of Wal-Mart employees including types of treatment that were not covered by work comp and instructions to call the claims office before referring the employees to specialist or before requesting more than five physical therapy sessions.

Employers and insurers, if they are not already doing so, should review their policies to be sure their efforts to control the cost of workers compensation do not cross the line into denial or delay of legitimate injury claims. There are several steps employers and insurers can take to protect themselves from a RICO-based lawsuit. This includes:

1. Insurers should review with their claim staffs the need to pay every valid claim while documenting precisely why a non-compensable claim is denied. Also, and if any medical treatment is requested, and denied, the claim file needs to be precisely documented as to why the medical treatment requested was not appropriate.
2. A thorough investigation should be completed and documented in the claim file if the claim is questionable, suspicious or fraudulent before the claim is denied.
3. Employers and adjusters, who are not doctors, should not make the determination of the necessity of any type of medical care. A determination of the necessity of medical care should be made by a qualified physician.
4. Employers should make sure all their vendors – insurers, third party administrators, defense attorneys, nurse case managers and other managed care vendors, and medical service providers – are aware of the ramifications of RICO.
5. When the necessity of medical care is debatable, the claims office needs to have a broad list of available doctors for independent medical examinations. (It is common practice by work comp adjusters to stick with two or three doctors they are familiar with and who have provided prompt and accurate independent medical evaluations. While both the adjusters and doctors have acted in good faith, a limited number of doctors for independent medical examinations allow plaintiffs lawyers to argue the adjuster is in collusion or conspiring with the doctor to deny the employee the medical care the employee or the employees attorney wants). It is also good business sense to have a large number of qualified doctors to turn to when the employees medical care is in question.

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The resolution of Gianzero v. Wal-Mart Stores, Inc. make take several years as the litigation is complex and the discovery necessary by both sides of the class action lawsuit will be extensive. In the meantime, smart employers and insurers should be reviewing their claim handling practices to make sure the denial of non-compensable claims and the denial of inappropriate or unnecessary medical treatment are based on documented facts, not just a desire to protect the employer from medical cost they do not owe.

Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.
Contact: [email protected] or 860-553-6604.

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