Antitrust Law Daily Wrap Up, RICO—2d Cir.: Health care employees could not state RICO claims based on paychecks, (Jul 12, 2013)
Law Firms Mentioned:Epstein Becker & Green, P.C. | Thomas & Solomon LLP
Organizations Mentioned:Epstein Becker & Green, PC | New York-Presbyterian Healthcare System, Inc. | Thomas & Solomon
By Jody Coultas, J.D.
Current and former health care workers did not state Racketeer Influenced and Corrupt Organizations Act (RICO) class action claims against hospitals and health care systems based on underpayment in the health care system, the U.S. Court of Appeals in New York City has held (Nakahata v. New York-Presbyterian Healthcare System, Inc., July 11, 2013, Pogue, D.).
The health care employees alleged that various health care systems, hospitals, corporate heads, and affiliated entities violated RICO and other laws by failing to compensate employees for work performed during meal breaks, before and after scheduled shifts, and during required training sessions. Specifically, the employees alleged that their paychecks, delivered through the U.S. mail, misleadingly purported to pay for all hours worked and purportedly complete paychecks concealed a scheme to undercompensate employees. The federal district court in New York City had dismissed the four complaints for failing to state a claim.
RICO prohibits any person employed by or associated with any enterprise to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity. Mail fraud is an activity defined as racketeering.
The district court properly dismissed the RICO claims because the paychecks did not perpetuate a fraud, according to the court. The mailing of paychecks cannot further a fraudulent scheme because the paychecks would have revealed that the employees were not being paid for all their alleged compensable overtime. The claim was properly dismissed with prejudice.
The cases are Nos. 11-0734, 11-0710, 11-0713, and 11-0728.
Attorneys: Michael J. Lingle (Thomas & Solomon LLP) for Masahiro Nakahata. James S. Frank (Epstein Becker & Green, P.C.) for New York-Presbyterian Healthcare System, Inc.
Companies: New York-Presbyterian Healthcare System, Inc.
Cases: RICO ConnecticutNews NewYorkNews VermontNews