RICO Claims Against Insurer May Proceed

RICO Claims Against Insurer May Proceed

Description The Supreme Court held that the McCarran-Ferguson Act does not prohibit enforcement of federal statutes, including RICO, that do not conflict with the purpose of the Act to grant the states power to regulate insurance.

Topic Criminal Law

Key Words RICO, McCarran-Feguson Act, Health Insurance

C A S E S U M M A R Y

Facts Plaintiffs had health insurance policies in Nevada issued by Humana, under which they received care at a Humana-owned hospital. Insurance covered 80% of hospital charges after deductible, insured paid 20%. Unknown to insureds, the hospital gave insurer a discount, which meant it paid well under the supposed 80%. Insureds sued, contending that RICO had been violated through a pattern of racketeering activity via fraud. Humana contended the suit could not go forward because RICO, a federal statute, conflicts with the delegation of insurance regulation to the states under the McCarran-Ferguson Act. Conflicting rulings came from the lower courts.

Decision McCarran-Ferguson precludes application of a federal statute in the face of state law related to insurance regulation. However, McCarran does not preclude application of federal law that does not directly conflict with state regulation and would not frustrate any state policy concerning insurance regulation. Since suit under RICO would not impair Nevada insurance regulation, it was not precluded by McCarran. Action against Humana could proceed as RICO's private right of action complements Nevada's statutory and common-law claims for relief.

Citation Humana, Inc. v. Forsyth, 119 S.Ct. 710 (1999)

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RICO Claims Against Insurer May Proceed
Description	The Supreme Court held that the McCarran-Ferguson Act does not prohibit enforcement of federal statutes, including RICO, that do not conflict with the purpose of the Act to grant the states power to regulate insurance.
Topic	Criminal Law
Key Words	RICO, McCarran-Feguson Act, Health Insurance
C A S E S U M M A R Y
Facts	Plaintiffs had health insurance policies in Nevada issued by Humana, under which they received care at a Humana-owned hospital. Insurance covered 80% of hospital charges after deductible, insured paid 20%. Unknown to insureds, the hospital gave insurer a discount, which meant it paid well under the supposed 80%. Insureds sued, contending that RICO had been violated through a pattern of racketeering activity via fraud. Humana contended the suit could not go forward because RICO, a federal statute, conflicts with the delegation of insurance regulation to the states under the McCarran-Ferguson Act. Conflicting rulings came from the lower courts.
Decision	McCarran-Ferguson precludes application of a federal statute in the face of state law related to insurance regulation. However, McCarran does not preclude application of federal law that does not directly conflict with state regulation and would not frustrate any state policy concerning insurance regulation. Since suit under RICO would not impair Nevada insurance regulation, it was not precluded by McCarran. Action against Humana could proceed as RICO's private right of action complements Nevada's statutory and common-law claims for relief.
Citation	Humana, Inc. v. Forsyth, 119 S.Ct. 710 (1999)