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Federal Court allows injured workers to sue employer, insurer and "independent" [IME] doctors for fraud

A group of Cassens Transport Company employees who had been injured on the job sued Dr. Saul Margules, Cassens, and Cassens' self-insured claims manager, Crawford & Company, alleging that the three conspired to deny benefits to injured workers.  The suit alleged that Crawford consistently retained unqualified and biased physicians to render fraudulent reports disputing the workers' injuries or medical condition.

The District Court initially dismissed the claim at the Defendants' request, holding that the federal Racketeer Influenced and Corrupt Organizations Act [RICO] was pre-empted in the context of Michigan's workers compensation scheme.  On appeal, the Sixth Circuit rejected this upside-down analysis, noting that the Michigan Legislature did not enjoy the power to invalidate a federal statute.  The appellate court noted that the RICO claim of conspiracy to defraud injured workers, if proven, did not conflict with the goals, policy or procedures of a valid workers compensation scheme or its "exclusive remedy" provision limiting workers' available benefits.
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