Against RICO

United Healthcare, one of the nation's largest health insurers, is being sued under the Racketeering Influenced Corrupt Organizations Act (RICO), commonly known as the organized crime law. I have no problem with having private civil causes of action for systemic conduct of white collar crimes, which is what civil RICO suits usually involve.

But, RICO is popular because it has harsh penalties included because it was originally meant to combat organized crime gangs. Organized crime gangs should be subject to harsh penalties, of course. So what's the problem?

The problem is that RICO's definition of organized crime gangs is very different from the popular conception that drives the harsh penalties for violations of the federal criminal statute and the related civil penalties.

The sine qua non of organized crime in the popular imagination is the coordinated use of violence or threats of violence to secure ill gotten gains. The classic organized crime offenses are extortion, murder and assault.

Now, organized crime rings generally don't make a lot of their money from the violent offenses per se. They use the violent offense to create a climate in which crimes involving financial gain, such as loan sharking and vice, can prosper. But, no organization which regularly violates the law is really an organized crime ring unless its organization depends upon or has a pattern of using violence or the threat of violence to achieve its ends.

However fradulent United Health or any other business corporation devoted primarily to a legal trade or business (which may be conducted in violation of the law) may be, this alone does not suffice to make it an organized crime ring in any place but a U.S. District Court. Nobody is accusing United Health of sending Guido out to intimidate doctors or rough up troublesome insureds.

But, because RICO lumps corrupt organizations in with true organized crime rings, it punishes the corrupt activities more harshly than the drafters of the law or the public would feel was appropriate if the conduct being punished was described more honestly. RICO is one of a number of laws that contributes to unjustifiably harsh sentences for non-violent property crimes which bloat our prisons.

RICO also aggravates the civil justice system in these cases. It encourages fierce, sometimes questionable defenses, in order to avoid what is often rightly perceived as a risk of unduely harsh penalties. It also unduly taints those accused with associations with the Gambino families of the world, which is undeserved and poisons the well against any reasonable and prompt settlement.