RICO

RICO

We believe that RICO will supplant antitrust laws as a basis for challenging improper medical business practices, including peer review proceedings. (See Chapter 10 for a discussion of RICO.) As with the antitrust laws, RICO provides for treble damages plus attorney's fees. RICO actions are potentially much more threatening than antitrust actions because RICO does not require either market share or monopoly power. Physicians who engage in fraudulent peer review activities may be sued irrespective of the health care business's share of the relevant market. While RICO has been little used in medical law, its explosive growth in other areas makes it probable that it will soon reach medical businesses.

The predicate acts for a RICO action contesting a peer review decision could be commercial bribery, mail, and wire fraud. Commercial bribery laws prohibit using financial incentives to influence the decisions of physicians and other fiduciaries. Since these laws prohibit hospitals and third-party payers from providing financial incentives to influence physicians' decisions about their patients, physicians who receive these incentives are technically receiving bribes. If these incentives are involved in an improper peer review action, the injured physicians may claim under the RICO laws. An example would be a medical staff under a total capitation agreement that removed a physician for medically justified but financially troublesome admissions.

The mail and wire fraud statutes merely require plaintiffs to prove that the defendants used the mail or telephone ancillary to their fraudulent activities. The plaintiff does not need to prove that the use of the mail or wire was an essential element of the fraud. A peer review committee meeting that was scheduled by telephone or with a letter would satisfy the requirement for mail or wire fraud if the committee performed a fraudulent review.

RICO is not intended to provide a remedy for anticompetitive actions covered under the antitrust laws. It does apply if other fraudulent activities are involved with the antitrust violations. A medical staff committee that uses sham quality-of-care issues to deprive competitors of their medical staff privileges would be engaged in fraud beyond the anticompetitive activities. If these fraudulent activities involve the use of the mails or the telephone, they violate the federal mail or wire fraud statutes. Although it has not been specifically litigated, a hospital medical staff may satisfy the RICO definition of an enterprise. Combining this enterprise with a pattern of mail and wire fraud violations will subject all members of the medical staff committee and the hospital itself to liability for RICO violations.

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