Date: Thu, 10 Sep 1998 10:57:16 -0400
[Note (by WCH): See also Previous RICO material,
and On Extortion by Insurance Companies.]

Subject: Overview of RICO Part 1

Don't know the source of this article.  Must be from Hawaii as there are
references to Hawaii's Little RICO law.  My comments in brackets.

RICO in General and how it applies to UNUM (this also summarizes what
I've read in RICO litigation texts and Civil and Criminal RICO cases
brought by both private citizens and US Gov.)

In individual DI cases, there may be greater benefit to suing without
RICO because RICO allows treble damages but not  punitive, however 1)
this may be the ideal solution to the ERISA problem, 2) even if it's an
individual claim, I've been reading cases where State causes of action
(breach of contract, etc. that do carry punitive damages) are included in
the same lawsuit.

Although the Supreme Court is now currently looking at a RICO case
against Humana, I don't see how they will be able to exclude use of RICO,
even with the McCarren-Ferguson laws since the M-F laws are mainly about
regulation not breaking of criminal laws, AND since the major problem
with ERISA is it's use in Federal not state courts (McCarren-Fergeson is
used to transfer cases back to state court from Federal), it would be
simply against common sense (yes, courts do occasionally invoke common
sense), to transfer a case to Federal Court because it involved ERISA,
only to remand to state court due to McCarren-Fergeson.  After all back
in state court, you CAN get punitive damages even on a group claim, so it
wouldn't make any sense.  The criminal charges that are predicate acts
under even Civil RICO claims would NOT be pre-empted by ERISA.

RICO has not been much used on insurance companies because 1) the body of
egregious offenses and lack of remedies due to HMO's and ERISA had simply
not reached critical mass yet, 2)people and lawyers for some reason
manage to talk themselves out of the obvious without even trying.  You
should no more be worried about having to pay the winning sides legal
fees by filing a RICO claim than you would be by filing the standard
breach of contract claim.

Here's the overview:

It's from United States Code Annotated USCA 18 Sections 1961-1968.

Act was designed to "punish the financial infiltration of legitimate
business operations affecting interstate commerce by organized crime."

Congress intended RICO "to be an aggressive initiative to fight organized
crime as well as provide a far reaching civil enforcement scheme."

The elements of RICO are:

1)conduct through an enterprise [using UNUM as an  example, the
"enterprise" is there claims management division,  specifically that in
the Portland, Maine office, their Special Investigations Units (SIU),
antifraud divisions, Complex Claims Units, or whatever they may be
calling them these days.]

2)through a pattern [with UNUM we have many patterns and schemes
involving the creation of fraudulent statements, misinterpretation of
policy provisions, using the legal system as a threat and intimidation,
gag orders to hide their crimes, corporate bribery of IME doctors and
Medical Directors, and collusion with regulators]

3)of racketeering [we'll get to what constitutes this later]

4)that the enterprise be engaged in or affect interstate or foreign
commerce. [UNUM
is clearly involved in interstate commerce].

Section 1962(c) of RICO makes it "unlawful for any person associated with
any enterprise engaged in interstate commerce to conduct the affairs of
the enterprise 'through a pattern of racketeering activity.'"

In UNUM's case the racketeering activity includes "among other things",
activity indictable under the mail fraud and wire fraud statutes.  "The
mail fraud statute prohibits any scheme or artifice to defraud, or for
obtaining money or property by means of false or fraudulent pretenses,
representations, or promises.." [i.e. what they mean is that if the mail
or wire (phone) are used in ANY way in the scheme to defraud, even
sending your denial letters through the mail and talking to you on the
phone as PART of the scheme - IT IS MAIL/WIRE fraud - it's very simple,

The RICO act provides for treble damages and attorney fees; for any
person injured in his business or property by reason of a violation of
section 1962 of this chapter.

[ Being deprived of money rightfully due us, intimidated or coerced into
not exercising our rights to that money, being deprived of the USE of
that money, all constitute pecuniary losses as defined by RICO.  Some of
you have also suffered losses to your person in the form of emotional and
physical deterioration as a result of dealing with UNUM, requiring
increased medication, doctors' visits and counseling for stress.]

Most RICO cases so far have been filed against banks with the RICO charge
used to enhance existing state and federal  consumer protection laws or
common law remedies for deceit, misrepresentation and breach of fiduciary
duty. [the very State remedies currently being denied plaintiff's under
ERISA].  Many of these cases have involved subtle and complicated unjust
enrichment schemes, far more complicated, hidden and difficult to prove
than anything UNUM is doing to us.

They comment in this article that many defendants would prefer to settle
rather than be labelled as a "racketeer."  I am hoping that RICO lawsuits
on ERISA claims will get much more reasonable settlements for claimants
that you are otherwise getting.
Although I must say, insurance companies don't particularly seem to care
about the label of "racketeer".  I, of course, wouldn't propose calling
them racketeers unless, by virtue of my experiences and extensive legal
research, am firmly convinced that the should squarely fits.  I am having
a very difficult time understanding why, despite my reasoned
explanations, others can't see this.  I fear it is because the truth is
so awful that people, including lawyers, would rather deny it than face

The good news is the statute of limitations is FOUR years from the last
racketeering act, or from the time the plaintiff became aware that what
was going on was racketeering (as opposed to the 3 years, and sometimes
less, statutes for breach of contract and other causes of action.)  That
would mean, at a minimum the clock starts running when you receive your
denial letters and they start stonewalling you, NOT, as UNUM will try to
claim, when you are required to present "proof of loss.'"  This
eliminates the problem of  UNUM dragging out the claims and appeals
processes specifically to use up the statute of limitations.  I also read
another interesting case regarding statutes of limitations recently.  If
a person has a CONTINUOUS disability you can say the statute starts to
run EACH MONTH, since checks are paid monthly, that the claimant would be
required to prove disability in order to collect.  SO even if they
haven't paid for 5 years, if you are still disabled and still have a
valid claim and still have doctors attesting to your disability, you
still have a valid claim.  IN FACT it was a UNUM case that proved this
where UNUM ran a scam with the short term DI carrier so the plaintiff was
being paid for 3 years and then told it was the short term carrier that
was paying, not UNUM.  This poor guy had no idea his checks weren't
coming from UNUM until three years later when they cut him off.  UNUM
actually got the lower court to grant them summary judgement based on the
three year statute.  Fortunately the appeals court had some common sense.
 It's just a shame that the suit was ONLY FOR benefits and not for
deceit, misrepresentation, emotional distress, and including evidence of
the pattern that might have gotten this fellow at least treble damages
and maybe punitive.  The case was Gregery Williams v. UNUM.
DC No. CV-94-00980, Ninth Circuit court of Appeals, Pasadena, CA.
Interestingly this case, UNUM also used the same law firm as the Fogel
case - Bannan, Green, Frank.

In RICO, plaintiff must prove two things - 1) violation of 18 USC [these
would be the predicate acts of mail fraud, wire fraud, extortion,
practicing medicine without a license, corporate bribery, etc.], 2)
injury to plaintiff's business or property as a direct result [easy to
prove - we were deprived of money that was rightfully ours and deprived
of it's use directly as a result of the predicate acts listed above.

Here's some reassuring stuff in RICO. "There is NO requirement that the
person (the defendents) have connections with organized crime or that the
RICO plaintiff allege or prove that the defendent has been criminally
convicted of the underlying predicate acts. [It is enough that the
criminal acts can be proven by the Civil litigant.  It was obviously
Congress's intent here to let the civil justice system augment and do the
work of the beleagered, understaffed and underfunded criminal justice

More reassuring stuff from RICO.  "The definition of 'enterprise' is
EXTREMELY BROAD [in fact in some cases, the RICO 'enterprise' is just 3
or 4 people getting together in a scheme to defraud] and includes
individuals, partnerships [whether official or unofficial], associations
and other legal and non-legal entities.  The enterprise may have a formal
or informal structure. [As I said before UNUM enterprise actually has a
formal structure of it's SIU and CCU units, and other divisions engaging
in the fraudulent and extortionate acts that constitute RICO, including
their legal division which engages in fraudulent misrepresentations,

The RICO act was intended "to reach those peripherally involved with the
enterprise as well as those who direct its activities.'" [In other words
everyone from Robert Orr and Elaine Rosen to your individual claims
adjusters and possibly your insurance agents, are RICO defendents in this
massive scheme.]

End part 1

Date: Thu, 10 Sep 1998 10:50:53 -0400
Subject: Fw: RICO in a nutshell Part 2

The pattern of RICO is extraordinarily simple, in fact, you only need TWO
predicate acts to constitute a pattern, although more is better. So if
you have two separate instances of mail fraud [i.e. they send you a
denial letter based on fraud, and they later send you a denial of the
appeal, you have two separate acts of mail fraud].

"to have a pattern of racketeering activity a plaintiff or prosecuter
must show that the racketeering predicates are related, and that they
amount to or pose a threat of continuing criminal activity" [this will be
a piece of cake re: UNUM as each of us has multiple predicates in each of
our cases, plus the summation of our multiple cases clearly shows a
threat of continuing activity, as well as UNUM's stanch denial of any
wrongdoing when they are clearly guilty. The relation is clearly the
denial of legitimate claims to increase corporate, shareholder and
executive compensation.]

We also as I mentioned before not only have multiple acts but multiple
schemes.  As UNUM likes to say, they deal with each case on an individual
basis.  But there is plenty of similarity in the schemes and the acts to
fit RICO requirements.  It's better if the acts arise over a period of
more than a year, a requirement easily met here.

Examples of predicate acts and schemes used by UNUM's 'enterprise' that
would fulfill RICO:

Mail fraud - using the mail to send denial letters that are based on
fraud.  The fraud doesn't even have to be part of the letter, although in
UNUM's case, it usually is.  Merely that the mail is USED in the scheme.
"The definition of mail fraud is very broad."  Essential element of mail
fraud - "The statute does not forbid merely the use of mails to
perpetrate an act made criminal by state or federal law; it reaches ANY
PLAN, consumated by the use of the mails, where artifice or deceit is
employed to obtain something with value with the intention of depriving
the owner of his property."

"The measure of fraud is it's departure from moral uprightness,
fundamental honesty, fair play and candid dealings in the general life of
members of society, US v. Kreimer, 609 F 2dd 126, 128 (9th Cir. 1980),
involving the use of the mails."

"There are very limited defenses to mail fraud."

Wire fraud - Phony phone calls with our doctors that then fraudulently
transcribed and sent in the MAIL. Also something as simple as using the
phone to assist in the scheduling of IME's that are then fraudulently
conducted, even if no fraud occurred in the telephone scheduling.  The
phone was still used in the scheme.

Corporate bribery- bribing or giving bonuses, perks, promotions to
adjusters, IME's and medical directors to falsify reports.  Payment of
the huge fees (upwards of $500 to $800) for those short fraudulent IME's
would clearly qualify if the report was skewed to what UNUM wanted.

Extortion - I refer you to The Extortion Theory.  Each case where a
legitimate claim is delayed or denied fraudulently, in particular where
defamation and fear are involved, be it fear of financial duress,
bankruptcy, homelessness, loss of privacy or loss of needed health
insurance or treatments is an attempted or completed act of extortion,
depending if the benefit or treatment was ultimately received and if
there was or was not harm from the delay.  And while UNUM will claim that
their tactics are not extortion, but merely "hard nosed business," we
have a case (don't have it handy) stating not only that if it  looks,
smells, and acts like extortion, it's still extortion, but also that by
definition, extortion is a CRIME OF VIOLENCE even if no violence if

Now this is what I'm hoping will happen - Under RICO it is unlawful for
1)any person who received any income derived, directly OR  INDIRECTLY
from ANY racketeering activity or through collection of an unlawful debt,
proceeds of such income, or the acquisition of any interest in, or the
establishment of , any enterprise

2) for any person through a racketeering activity or through collection
of an unlawful debt to acquire or maintaim directly OR INDIRECTLY, ANY
INTEREST IN OR CONTROL of any enterprise

3) for any person employed by or ASSOCIATED WITH any enterprise to
conduct or participate in the conduct of the affairs of the enterprise
through racketeering activity or the collection of an unlawful debt.

[I believe what this means is that UNUM's entire operation is being run,
in part, with racketeering proceeds, their employees are buying homes and
cars with bonuses based on racketeering proceeds, even their stockholders
are benefiting from racketeering proceeds, especially since I wrote to
every person in UNUM's upper management and the Chairpeople of the
Stockholders organization in July 1997 AND TOLD THEM UNUM was engaged in
illegal activity [at the time I didn't know the definitions of extortion
and racketeering, But still they did nothing and the pattern of
racketeering activity is continuing unabated].  As an individual civil
litigant I am only entitled ot treble damages, but if the government
filed a RICO claim against UNUM,it could OWN them AND have legal standing
to also attach private possessions of employees, executives and
stockholders that were purchased with funds obtained INDIRECTLY through
racketeering activity.]

In a civil RICO action, the plaintiff may also sue not just for the
federal claims but also may "litigate state claims as pendent to the
federal RICO claim."  That means I can sue for treble damages under RICO
and punitive damages under state law, as could most of you, ERISA or

The plaintiff's burden of proof in a RICO action is "preponderance of the
evidence" standard rather than the standards of clear and convincing
evidence or beyond a reasonable doubt.  [I've been told this means that
if it's more likely than not that my allegations are true, I win,
something like a 51:49% standard rather than the 95% confidence necessary
to win criminal convictions]

In conclusion, we still have the problem that "most federal judges are
loath to adjudicate civil RICO  claims" but the end of such lawsuits is
not in sight.  However loathe they are though, just as they have
previously claimed their hands are tied by ERISA, so they are tied by the
provisions of RICO which leaves the courts with "minimal means of
restraint" since the landmark Sedima case which extended rather than
restricted RICO's reach.

Although critics and insurance companies will, of course, claim they are
RICO targets because they are "deep pockets"  I think even these lame
excuses will fall in view of the rising number of newpaper, television,
court cases and other exposes of absolutely unconsciounable behavior on
the part of our health insurance corporations, too long hidden behind
confusing and intimidating laws.

I'm hoping that UNUM will be hit with a RICO claim on EVERY case that was
fraudulently denied based on a pattern of fraud and extortion emanating
from the Portland, Maine office whether group or individual, and in fact,
I'd like to see some of the settled cases re-opened under RICO claiming
extortion forced them to settle.

There is little to fear that UNUM will go bankrupt especially since we
can attach and sue for joint and several liability the executives,
employees and stockholders.  UNUM has re-insurance, and state agencies to
pay claims if they cannot. But only if they have to worry about actually
being held accountable for their unrepentent fraud, harassment and
intimidation, is there any hope for it to stop. Not just UNUM
corporation, but each and every individual employee, executive,
subcontractor and shareholder who is benefitting directly or INDIRECTLY
from their Racketeering Schemes.



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Created: September 15, 1998
Last Updated: May 28, 2000