Florida Record

Sunday, January 19, 2020

Companies must prove 'enterprise' to invoke RICO

By Mike Helenthal | Oct 24, 2016

General court 10

MIAMI -- Corporations are allowed to invoke federal Racketeer Influenced and Corrupt Organization statutes to litigate fraud claims, but they have to prove that those accused were acting in collusion, says a Miami attorney and expert on the Racketeer Influenced and Corrupt Organization Act.

“Basically, you have to show the fraud is being committed by a so-called enterprise,” William Hill, a commercial trial lawyer with the Miami-based law firm Gunster whose practice focuses on complex business litigation and international arbitration, told the Florida Record.

“There has to be proof of some concerted effort working together,” Hill told the Florida Record.

The insurance company GEICO (Government Employees Insurance Company) is trying to do just that after filing a RICO case earlier this year against five companies and several individuals they say defrauded the company in a complex scheme that involved submitting bogus claims.

The case, Government Employees Insurance Company v. Jason Fry, was filed in U.S. District Court for the Middle District of Florida.

“GEICO has a zero tolerance policy when it comes to insurance fraud,” GEICO vice president of claims Ryan West recently told Business Newswire. “Fraud against insurance companies is not a victimless crime; it hurts consumers through increased premiums and can unfairly harm the reputation of legitimate companies.

West said that legislative reform was long overdue, and that the company would not hesitate to invoke RICO when the situation calls for it. According to West Palm Beach-based Pike and Lustig law firm's website, the claims in question were all in relation to glass repair bills.

"GEICO believes that the defendants took the insurance information of customers and used that information to create fake invoices for non-existent glass repair claims," the website said. "These claims were then submitted to the insurance company, generally without the consent or knowledge of the actual insured customer.”

Hill said RICO was not initially envisioned to be used by private companies for fraud cases.

“The origin of the RICO statute was as a tool of the federal government to break up organized crime,” he said.

In the 1980s, he said, provisions were added to RICO to include a civil component allowing private rights of action.

“After that, the statute kind of exploded with private lawsuits,” he said.

The ballooning number of cases being filed under RICO for “garden-variety” cases led to a tightening of language, but it still allows companies to invoke it when organized fraud is suspected.

“It has allowed judges to look at RICO claims with much more scrutiny,” he said. “It’s not at all unusual as long as they meet the basic elements. It’s a nuclear option, but it’s not unlikely or that unusual.”

Hill said RICO certification requirements for the Florida secretary of state’s office were loosened earlier this year, allowing the secretary of state to utilize its provisions for consumer fraud enforcement. 

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Organizations in this Story

GunsterGEICO Insurance Company