• Providers' RICO and ERISA Claims against Insurance Companies Dismissed
  • November 6, 2008 | Author: Thomas H. Hawk
  • Law Firm: King & Spalding LLP - Atlanta Office
  • A group of out-of-network providers in Ohio filed suit against Medical Mutual of Ohio claiming that the insurer's practices violated the Racketeering Influenced and Corrupt Organizations Act (“RICO”) and Employee Retirement Income Security Act of 1974 (“ERISA”). The case is Riverview Health Institute, LLC v. Medical Mutual of Ohio, Case No. 3:07-cv-354. According to the providers, the insurer systematically "delayed, diminished and denied payment" submitted by out-of-network providers "through a scheme or artifice, utilizing the U.S. Mail and demonstrating a specific intent to defraud the patient-insureds…". In addition, the providers alleged that Medical Mutual of Ohio acted unlawfully and inaccurately to underestimate and reduce the "usual, customary and reasonable" amounts due out-of-network providers and inappropriately bundled the providers' services.

    Judge Thomas Roe of the U.S. District Court from the Southern District of Ohio granted Medical Mutual's motion to dismiss. With respect to the RICO claims, Judge Roe ruled that the McCarran - Ferguson Act "provides for 'reverse preemption' in the realm of regulating the insurance business. (citations omitted)." Because the RICO claims would frustrate the State of Ohio's regulatory scheme governing insurance and "invalidate, impair or supersede" a state statute governing insurance, the RICO claims were reverse preempted and were dismissed with prejudice. Judge Roe dismissed the ERISA claims because the providers had not exhausted the administrative remedies established under the ERISA plans pursuant to which the providers must assert their claims. Because the exhaustion requirement was not met, the ERISA claims could not be pursued and were dismissed without prejudice.