Is your insurance company guilty of racketeering?

Insurance companies can use underhanded tactics when delaying or denying claims. But do their actions rise to the level of organized crime?

Maybe. The Racketeer Influenced and Corrupt Organizations Act of 1970, commonly called RICO, is a federal law that provides for enhanced penalties in criminal and civil proceedings. You may be able to file a RICO lawsuit against your insurance company for a fraud or bad faith claim.

What is the RICO Act?

Congress enacted the RICO Act as a way to prosecute mob bosses, who like Tony Soprano put layers of subordinates between themselves and illegal activities. The RICO Act allows the government to prosecute mob bosses for crimes committed by their underlings. A number of states, including Georgia, have adopted state RICO laws.

Under RICO, anyone who commits a pattern of criminal activities (from a long list of offenses) can be charged with racketeering if the activities were for an organization. What works for the Mafia also works for Prudential or American Family Insurance. Prosecutors have long used RICO indictments as a hammer against corporate wrongdoers. In many cases, the threat of a RICO indictment has persuaded corporate executives to plead guilty to lesser charges.

RICO and Insurance Bad Faith

Georgia's RICO law is fairly liberal, allowing attorneys to use it in civil cases against corporations. An insurance bad faith claim can morph into a RICO case if the insurance company engaged in certain illegal activities, such as sending a deceptive commercial e-mail. This can be a powerful negotiating tool for plaintiffs' lawyers. In RICO cases, injured parties may file suit for three times the actual damages sustained, plus punitive damages.

Few insurance company executives would want to risk a RICO indictment, as damages from RICO lawsuits are not insurable.

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