The RICO suit against 15 members of the IUOE International Executive Board has been expanded to charge the defendants with breach of fiduciary duty and violation of California’s Business and Professions Code § 17200.
The additional charges arise from allegations that the defendants pushed through an agreement to accept a bid from Caremark to fulfill prescriptions through the Pension and Health & Welfare Plans despite lower bids from competitors. Caremark is associated with Horizon Blue Shield, where former President Vince Giblin is on the Board.
In addition to securing an unnecessarily expensive contract with Caremark, the plaintiffs also allege that rebates that should have been returned to the Local’s Health and Welfare Fund were directed to the International’s accounts and never properly distributed.
California’s Business and Professions Code § 1700 is a civil code covering fair business practices, which prohibits unfair competition like unfair or fraudulent business acts and deceptive or misleading advertising. The plaintiffs allege that Caremark, through its ill-gotten contract with the local, “received ill-gotten gains […] as a result of acts and omissions” including the bid rigging, changing contractual billing rates, and collecting unauthorized prescription payments.
Several additional plaintiffs, primarily spouses of several original plaintiffs, have been added to the lawsuit, as they were also negatively impacted by the breaches involving the Pension and Health & Welfare Funds.