PKNW Defeats Provider's Claim of RICO Violations and Conspiracy Against the Insurance Industry for Challenging Medical Liens
On February 6, 2006, PKNW, along with counsel for various carriers and employers, were successful in urging the Second Appellate District for the Court of Appeals of the State of California to reverse a Superior Court decision in favor of Premier Medical Management Systems. As a result, the Court of Appeals ordered dismissal of all claims of conspiracy, violation of the Racketeer Influenced Organizations Act (18 US Code ‘ 1961, et seq RICO), Business & Professions Code 17200, the Cartwright Act (Business & Professions Code 16720, as well as claims of interference with contractual and prospective economic relations.
The case arose from the efforts of various insurance carriers to challenge medical, chiropractic and physical therapy charges of Premier Medical Management Systems as illegal fee sharing in violation of Business and Professions Code Section 650. These insurers sought to consolidate the liens of Premier Medical Management before the Workers’ Compensation Appeals Board and try that consolidated issue, thereby eliminating the liens of Premier on the basis that they were false, fraudulent, and the corporate practice of medicine.
Premier responded to these efforts by filing a Superior Court lawsuit against these carriers and California Insurance Guarantee Association alleging that they conspired to contest the claims of Premier for the improper purpose of delaying payment. This in spite of the fact that the stay of proceeding on all Premier liens had been ordered by the Workers’ Compensation Appeals Board.
Once the Superior Court lawsuit was filed the various workers’ compensation insurers, as well as California Insurance Guarantee Association and various employers, filed a SLAPP motion to dismiss the claims (Strategic Lawsuit Against Public Participation, Code of Civil Procedure, Section 425.16). It was the position of all carriers and employers that the act of consolidating these cases was protected activity under California law.
The Court of Appeals found in fact that the act of various insurers in seeking recourse before the Workers’ Compensation Appeals Board by consolidating these cases was protected conduct under the “Noerr-Pennington Doctrine” which protects the rights of citizens to advance their causes before administrative agencies and the courts. That doctrine applies to both commercial speech and competitive activity and the immunity applies to virtually any tort, including unfair competition and interference with contract.
Pointing out that this RICO/Interference with Contractual Relations case was filed after the WCAB consolidation, the carriers and employers were successful in convincing the Court of Appeals to strike the lawsuit filed by Premier Medical Management, Inc. and award legal fees to the defendant insurance companies, employers and CIGA.
The case has applicability beyond the Premier Medical Management liens and is an endorsement of the right of insurance carriers and employers to use valid process to challenge conduct before the Workers’ Compensation Appeals Board.
Click to review copy of the Decision: Premier.pdf