Antitrust Law Daily Wrap Up, RICO—2ndCir: Mailing of Pay Stubs Containing Allegedly Inadequate Wages Could Not Violate RICO, (Mar 4, 2013)
Law Firms Mentioned:Putney, Twombly, Hall & Hirson LLP | Thomas & Solomon LLP
Organizations Mentioned:Catholic Health System | Putney Twombly Hall & Hirson | Thomas & Solomon
By Jody Coultas, J.D.
Former employees of hospitals and healthcare providers could not state Racketeer Influenced and Corrupt Organizations Act (RICO) claims against the companies for allegedly failing to pay for compensable work, according to the U.S. Court of Appeals in New York City (Lundy v. Catholic Health System of Long Island Inc., March 1, 2013, Jacobs, D.).
A respiratory therapist and two nurses alleged that a collection of hospitals, healthcare providers, and related entities failed to compensate them adequately for time worked during meal breaks, before and after scheduled shifts, and during required training sessions in violation of RICO. The employees argued that the hospitals used the mails to defraud them by sending them their payroll checks. A district court dismissed for failure to state a claim.
To establish a civil RICO claim, a plaintiff must allege the conduct of an enterprise through a pattern of racketeering activity caused an injury to business or property. A pattern of racketeering activity must consist of two or more predicate acts of racketeering. RICO claims of mail fraud are subject to the heightened pleading standard of Federal Rule of Civil Procedure 9(b).
The employees failed to state a RICO claim against the hospitals, according to the court. The employees argued that the mailings deliberately concealed that the employees were not receiving compensation for all compensable work that they performed and misled them into believing that they were being paid properly. There was no evidence of any particular actions taken by the hospitals to advance the RICO scheme. The employees also failed to pled particular details regarding the alleged fraudulent mailings. Also, the employees failed to establish that the mailings were in furtherance of any fraudulent schemes. Mailing pay stubs cannot further the fraudulent scheme because the pay stubs would have revealed rather than concealed that the employees were not being paid for all of their alleged compensable overtime.
The case is No. 12-1453.
Attorneys: Michael J. Lingle (Thomas & Solomon LLP) for Dennis Lundy. James E. McGrath, III (Putney, Twombly, Hall & Hirson LLP) for Catholic Health System of Long Island Incorporated.
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