This post comes only from the Cozen O’Connor side of the blog.
For years, many courts have treated RICO as a sprawling monster, awkwardly extending its civil reach into areas and transactions for which RICO was seemingly never intended, including healthcare litigation. For over fifteen years, the Third Circuit resisted this trend. Until now. With its decision in In re Avandia Marketing, Sales Practices & Prod. Liab. Litig., 2015 U.S. App. LEXIS 18633 (3d Cir. Oct. 26, 2015), the Third Circuit scuttled its previous good work and stretched RICO’s arms all the way out to reach consumer disputes with pharmaceutical manufacturers.
Fifteen years ago, the Third Circuit looked at things very differently. In Maio v. Aetna, Inc., 221 F.3d 472 (3d Cir. 2000), it upheld the dismissal of a class action complaint in which HMO members tried to turn allegations that Aetna’s HMO didn’t provide the promised quality of healthcare into RICO claims seeking financial damages. Plaintiffs claimed that Aetna restricted doctors’ ability to provide quality care, in fact offering them financial incentives to withhold quality service, even though Aetna had represented to plaintiff that it would provide high quality care from HMO doctors incentivized to do so. Id. at 475. Plaintiffs made clear, however, that they were not claiming injuries suffered through a denial of benefits or subpar treatment. Id. They were alleging only financial losses—that is, the difference in worth between the plan that they got and the one they were promised. But this created a disconnect. By failing to allege denial of or substandard care, plaintiffs had alleged no concrete financial injury. They got what they paid for. Id. at 483, 490. RICO’s requirement of a concrete financial injury is intended to prevent plaintiffs from converting every ordinary tort claim into a RICO claim for the purpose of trying to win treble damages. The Third Circuit focused on that requirement and upheld dismissal of plaintiffs’ RICO claim.