Someone may have filed a lawsuit, but it should not have gone anywhere. I can't judge whether it was deserved or mistaken, but even a mistaken ban has no legal recourse. UO's ToS are pretty clear, and it's very similar wording for other games, because any company offering such a product needs to protect itself. They have the final say, not a player, not a judge or jury. "Electronic Arts reserves the right to terminate your Membership if it determines in its sole discretion that you have engaged in any impermissible conduct whether or not such conduct violates the Rules of Conduct." The common phrase "reserves the right" is extremely important in its implication. Like Jefferson's "We hold these truths to be self-evident," the phrasing indicates existence prior to the document. Whether we like EA or not, it's their ballpark, and they don't even have to watch someone to hit him with a ban hammer.
Yes, eventually someone may run into the same IP, but UO at its subscription peak was a fraction of a percent of any region's population. Today, it's even more rare that someone will create a new account and happen to have the same IP as someone recently banned, just like it's rare that someone with no stake in a company should suddenly buy a lot of call options just before a tender offer. Each situation is improbable enough to be worth a look by a human, and in UO, a follow-up a few weeks later can see character and guild names. I know for a fact that that, um, "one person" was able to come back with ease. Do you remember that every time he'd choose that infamous name, and make a guild with that abbreviation?
I don't expect EA to be perfect, but a little effort can go a long way. "Player happiness in a years-old online game," though, isn't the biggest of their business model, and their profit is principally coming from other things. And as far as Uncle Bernie, I don't recall that exact phrase, but it was no doubt prior to his conviction.