Commercial Litigation and Arbitration

RICO — Financial Injury Wholly Derivative of Personal Injury ≠ Injury to Business or Property — Circuit Split as to Whether Certain Pecuniary Losses from Personal Injuries Confer RICO Standing

Alexander v Boone Hosp. Ctr., 2011 U.S. Dist. LEXIS 145354 (W.D. Mo. Dec. 19, 2011):

On April 16, 2010, Plaintiff filed this lawsuit alleging receipt of a defective pacemaker manufactured by former defendant Medtronic, Inc., and implanted at Boone Hospital Center in 2007. ***

Plaintiff brings two counts against current Defendants — Count II, which is a claim for medical negligence, and Count III, which is an action under the federal Racketeer Influenced and Corrupt Organizations ("RICO") Act. Plaintiff's criminal conspiracy claim under RICO alleges that Defendants Rothery, Tune, and Arnold knew or should have known that the pacemaker was defective, that Medtronic used bribery and false advertising to keep its product on the market, and that Defendants disregarded quality controls and procedures by intentionally allowing Plaintiff to receive the pacemaker, with the goal of ridding the hospital's inventory of the pacemaker, receiving a "mark-up profit" and remaining in a favorable relationship with Medtronic [Doc. # 1 at ¶ 31]. The damages sought by the Plaintiff in the Complaint include the $72,784.70 in costs associated with the implantation of the pacemaker, along with compensatory damages for non-economic losses and punitive damages. ***

Based on an examination of Plaintiff's complaint and briefing, Plaintiff appears to seek recovery under RICO for the expenses related to his surgery to implant the allegedly defective pacemaker, as well as non-economic damages. Even upon a broad reading of Section 1964(c), none of these injuries appear to be related to a business or property interest under RICO. First, Plaintiff's non-economic damages are presumably sought for his pain and suffering, which are clearly personal injuries excluded from the scope of RICO. See e.g. Reiter, 442 U.S. at 339. Second, Plaintiff's surgery expenses appear to represent a mere financial offshoot of the personal injury claim in Count II of Plaintiff's complaint. An injury wholly derivative of a personal injury claim is properly excluded from RICO's scope. See Munson v. Eli Lilly and Co., 1987 WL 20383, *5 (D. Minn. 1987) (holding that monetary injuries resulting from payment for an allegedly harmful drug and to treat alleged drug-induced injuries were the "normal accouterments of a personal injury suit" and thus fell outside the scope of § 1964(c)); Borskey v. Medtronics, Inc., 1995 WL 120098, at *3 (E.D. La 1995) (holding that plaintiffs' medical expenses to remove an allegedly defective drug pump were so closely tied to their alleged personal injuries that such expenses could not be covered under RICO).

Footnote 2. A circuit split has developed as to whether certain pecuniary losses from personal injuries may confer standing under RICO, with most courts thus far ruling that pecuniary losses stemming from personal injury claims are non-compensable under RICO. Compare Grogan v. Platt, 835 F.2d 844, 848 (11th Cir. 1988), cert. denied, 488 U.S. 981, 109 S. Ct. 531 (1988) (holding that recovery is not permitted under RICO "for those pecuniary losses that are most properly understood as part of a personal injury claim.") and Doe v. Roe, 958 F.2d 763 (7th Cir. 1992) ("The terms 'business or property' are, of course, words of limitation which preclude recovery for personal injuries and the pecuniary losses incurred therefrom.") with Diaz v. Gates, 420 F.3d 897 (9th Cir. 2005) (ruling that a false imprisonment causing loss of employment and employment opportunities was an injury to "business or property" under RICO as it represented "the property injury of interference with current or prospective contractual relations"). However, unlike the injury in Diaz v. Gates, Plaintiff's alleged injury in the present case appears to consist only of a personal monetary loss not relating to any further interest in business or property and thus falls outside the intended scope of RICO. There is no evidence that Plaintiff is seeking to recover for lost employment opportunities.

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