Clifton Jackson v. Sedgwick Claims Management Servs.
2013 U.S. App. LEXIS 19495
| 6th Cir. | 2013Background
- Jackson and Scharnitzke, Coca-Cola employees, sought Michigan workers’ compensation benefits via Sedgwick, Coca-Cola’s claims administrator.
- Sedgwick disputed the claims and allegedly stopped or denied benefits, prompting RICO claims against Coca-Cola, Sedgwick, and Dr. Drouillard.
- The district court dismissed under Rule 12(b)(6); a panel of this court reversed, citing Brown II.
- The case was reheard en banc; the court overruled Brown II and affirmed dismissal, holding plaintiffs failed to plead injury to business or property under § 1964(c).
- Michigan WDCA creates a comprehensive benefits scheme with multiple review tiers intended to prevent fraud, and benefits become due after notice of disability.
- The majority adopt a federalist, narrow construction of RICO’s injury requirement, restricting recoverable damages to injuries to business or property caused by fraud in the benefits process.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs allege injury to business or property under RICO | Jackson/Scharnitzke allege statutory entitlements to WDCA benefits are property; fraud devalued those entitlements. | Injury must be an injury to business or property flowing from a personal injury; WDCA entitlements are not such property. | Yes, plaintiffs allege injury to property under RICO; but governing panel held otherwise (majority held against standing). |
| Whether WDCA entitlements constitute a property interest for RICO purposes | WDCA benefits and expectancy create property interests under Michigan/federal due process. | WDCA entitlements are not cognizable property interests for RICO; injury is personal or from the injury itself. | Property interests in both receipt and expectancy of WDCA benefits can be cognizable; issue remains whether they satisfy RICO injury requirement. |
| Whether federalism and the Supremacy Clause permit federal RICO review of state workers’ compensation schemes | RICO can supplement or vindicate rights under state WDCA where fraud occurs; federal remedy exists alongside state regime. | Congress did not clearly authorize RICO to override or intrude on Michigan’s WDCA scheme. | Court declines to reach broader implications; majority emphasizes lack of clear intent to reinscribe federal review over state scheme. |
| What standard governs whether a property injury is cognizable under § 1964(c) | Injury to statutory entitlements is injury to property; flow from personal injury is not controlling. | Traditional “flowing from” personal injury limits apply; personal injury injuries do not translate to property injury for RICO. | Court adopts a restrictive reading consistent with RICO’s limits, requiring property injury independent of personal injury flow. |
Key Cases Cited
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (Supreme Court 1985) (RICO to be read broadly; remedial purpose)
- Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258 (Supreme Court 1992) (proximate cause framework for § 1964(c))
- Reiter v. Sonotone Corp., 442 U.S. 330 (Supreme Court 1979) (injury to business or property; personal injuries excluded)
- Evans v. City of Chicago, 434 F.3d 916 (7th Cir. 2006) (damages flowing from personal injury not recoverable under § 1964(c))
- Brown v. Cassens Transp. Co., 743 F.Supp.2d 651 (E.D. Mich. 2010) ( WDCA framework; exclusive remedy; pre-Brown II context)
- Brown II, 675 F.3d 946 (6th Cir. 2012) (rejected broader RICO standing for WDCA-related damages)
- Fleischhauer v. Feltner, 879 F.2d 1290 (6th Cir. 1989) (personal injury not cognizable under civil RICO)
- Gregory v. Ashcroft, 501 U.S. 452 (Supreme Court 1991) (plain statement rule for federalism concerns)
- Castle Rock v. City of Champaign, 545 U.S. 748 (Supreme Court 2005) (clear statement principle in federalism analysis)
- Apex Hosiery Co. v. Leader, 310 U.S. 469 (Supreme Court 1940) (federalism concerns in remedial statutes)