SIU Today Fall 2021 - 17

Law Update
By Eric Moch
" We've Got 'em Right Where we
Want 'em! (What Do We Do Now??) "
Extracting Recoveries from Organized Insurance Fraud
Perpetrators: Legal Remedies and Strategies
Author's Note: Usually, this column
explores legal developments and strategy
considerations within the context of
publicized SIU-relevant cases. In this issue,
however, I depart from that routine to discuss
legal strategy for affirmative litigation against
organized medical fraud rings, the type of
case that most often settles confidentially
and rarely is reported. Case law updates will
resume in future issues.
BACKGROUND
You are a medical fraud investigator with the special investigative
unit (SIU) of a large insurer. Your territory includes one of the
largest cities in the United States. You know from your training
and experience that a city of this size is susceptible to organized
medical fraud rings consisting of chasers, physicians, diagnostic
facilities, durable medical equipment and prescription medicine
providers, and surgical centers, among other players. And it
turns out, thanks to your good faith investigation, you have
identified one such enterprising ring that has operated thus far
without detection. You confer with your claims team and your
trusted legal counsel, and after analyzing years of claim data, it
becomes clear that this enterprise has targeted your company
with millions of dollars in paid and as-yet unpaid bills through
patterns of accident staging, patient recruiting, billing for
services not rendered, unbundling, upcoding, falsifying medical
records and charging for services with no medical necessity.
Your company wants to hold these bad actors accountable.
What are your legal options?
This column provides a general overview of the avenues that
we in the medical fraud investigation field travel most often
when pursuing recoveries against organized fraud perpetrators.
I highlight the statutory and common law causes of action
that we often rely upon to secure settlements. This is just an
overview, not a seminar or legal brief, and so I do not detail
all sub-elements and potential defenses or cite to specific case
authority. Nor is this an exhaustive list of all possible causes of
action. However, every investigation into suspected organized
fraud must proceed with an understanding of available
remedies. Let us look at three very good options.
FEDERAL RACKETEER INFLUENCED AND CORRUPT
ORGANIZATIONS ACT: CIVIL RICO
The Racketeer Influenced and Corrupt Organizations Act
(RICO) statute originated as a sweeping statutory remedy
that empowered federal prosecutors to prosecute organized
crime enterprises. Prior to RICO, prosecutors struggled to
investigate and convict the multiple players of organized crime
enterprises. RICO enables the prosecution of the players jointly
as part of one large enterprise, instead of forcing the far more
cumbersome path of individual prosecutions. RICO offers civil
remedies as well.
The essence of a RICO case is the allegation of conspiracy
among multiple defendants. To state a claim under RICO, a
plaintiff must establish: (i) that the defendant (ii) through the
commission of two or more acts (iii) constituting a pattern
(iv) of racketeering activity (v) directly or indirectly invests in,
maintains an interest in, or participates in (vi) an enterprise (vii)
the activities of which affect interstate or foreign commerce.
A plaintiff asserting a cause of action under RICO must
satisfy heightened, fact-specific pleading requirements under
applicable rules of civil procedure. In short, a plaintiff wishing
to pursue a medical fraud ring under RICO must be very
specific in his or her factual allegations. A RICO complaint
must provide each defendant with specific notice of the
alleged fraudulent activity, including the commission date
of each fraudulent claim and, if applicable, the date that the
defendant engaged the U.S. mail to further the fraud. Mail fraud
is a common allegation in civil RICO cases. To demonstrate
FALL 2021 | SIU TODAY 17
SIU Today Fall 2021

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