UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

CLIFTON E. JACKSON, et al 

v. Case No. 09-11529 

 Hon. David M. Lawson 

SEDGWICK CLAIMS MANAGEMENT Mag. Judge Virginia M. Morgan 

SERVICES, INC., et al, 

 Defendants. 

 

SEDGWICK CLAIMS MANAGEMENT SERVICES, INC.’S REPLY IN SUPPORT OF 

COMBINED RULE 12(B)(1) AND RULE 12(B)(6) MOTION TO DISMISS FIRST 

AMENDED COMPLAINT

Plaintiffs accuse Sedgwick Claims Management Services, Inc. (“Sedgwick”) of “lying” 

in Sedgwick’s Combined Rule 12(b)(1) and Rule 12(b)(6) Motion to Dismiss First Amended 

Complaint (“Motion”) because Sedgwick drew attention to incurable defects in Plaintiffs’ First 

Amended Complaint (“Complaint”). In doing so, Plaintiffs repeat the tactic they used in their 

effort to fit Sedgwick’s “square peg” business decision into the “round hole” of a RICO claim. 

Plaintiffs believe that through strident language, a disagreement over the validity of Plaintiffs’ 

claims becomes “lying”, just as they hope that through mischaracterization they can turn 

Sedgwick’s decision to contest Plaintiffs’ workers compensation claim into “fraud.” Their 

efforts fail as a matter of law. 

A. The Court cannot take as true Plaintiffs’ legal conclusions or implausible 

theories. 

Plaintiffs argue that because they labeled the allegations of their Complaint as “fraud” the 

Court must accept that characterization as true for purposes of Sedgwick’s motion to dismiss. 

The United States Supreme Court disagrees. In Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009), 

the Supreme Court clarified the standard applicable to Rule 12(b)(6) motions and held 

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definitively that a federal court is “not bound to accept as true a legal conclusion couched as a 

factual allegation.” Id citing Bell Atlantic Corp. v. Twombly, 127 S.Ct 1955 (2007). Instead, the 

initial review of a complaint for failure to state a claim is “a context-specific task that requires

the reviewing court to draw on its judicial experience and common sense.” Iqbal, 129 S.Ct at

1950. Thus, deciding whether the facts pled, take as true, state a claim under RICO requires the 

Court to consider Defendants’ denial of workers compensation benefits in context and to 

determine whether the denial of benefits constitutes “fraud” when, as here, there has been no 

determination that Plaintiffs were ever entitled to benefits in the first place. The Complaint falls

woefully short of stating a claim under this (the correct) standard of review. 

B. There is no claim for mail fraud where no one was deceived by the conduct 

alleged. 

Plaintiffs argue that “the allegation of fraudulent deception is not a requirement for a civil 

RICO case under 18 U.S.C. 1962(c).” See Response at p. 10. This statement misses the point 

raised in the Motion and instead argues a point of law that is not in dispute. While the RICO 

statute itself does not require an act of “fraudulent deception”, the predicate acts of mail and wire 

fraud do require that someone be deceived by the alleged scheme even if (as Plaintiffs correctly

note) the crime does not require the material elements of a common law claim for fraud. United 

States v. Gold Unlimited, Inc., 177 F.3d 472, 479 (6th Cir. 1999) (mail fraud requires that 

someone be deceived by the scheme). As the United States Supreme Court held in a case

improperly cited by Plaintiffs for the opposite proposition, the “gravamen” of the charge of mail 

fraud “is the scheme to defraud.” Bridge v. Phoenix, 128 S.Ct. 2131, 2138 (2008) (emphasis 

added). The Bridge court found that the allegations in that case established a violation of the 

mail fraud statute, because the defendants were alleged to have used the mails to rig an auction. 

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These actions defrauded the plaintiffs and others out of their right and opportunity to participate 

in a fair auction. 

No one was defrauded out of anything in the scenario pled in the instant Complaint. 

Sedgwick contested Plaintiffs’ entitlement to benefits. This decision did not deprive Plaintiffs of 

any benefits, it merely required Plaintiffs to raise the question of their entitlement to benefits

with Michigan’s Workers Compensation Agency (“WCA”). This Court’s judicial experience 

and common sense allow it to ignore the label Plaintiffs placed on Sedgwick’s decision and to

see it for what it was: a routine disagreement with an allegedly injured worker over whether the 

worker is entitled to compensation for the alleged injury. 

Plaintiffs’ confusion on their obligation to plead facts that establish Plaintiffs were

defrauded out of benefits as part of the predicate act of mail fraud stems from Plaintiffs’

assumption that Sedgwick is arguing that a litigant must plead that the communications sent 

through the mails must themselves be fraudulent. See Response at pp. 11 – 12. This is not 

Sedgwick’s contention. Rather, the scheme a defraud that is a material to the charge of mail 

fraud requires deception, something that is utterly missing in this case but was present in all of

the authority cited by Plaintiffs in their brief. See e.g., Tabas v. Tabas, 47 F.3d 1280, 1294 (3rd

Cir. 1995) (plaintiffs alleged defendants fabricated expenses to support fraudulent withdrawals

from partnership assets); Abels v. Farmers Commodities Corp., 259 F.3d 910 (8th Cir. 2001) 

(plaintiffs were induced to enter into futures contracts based on false representations concerning 

risk). 

Plaintiffs continue their campaign of misdirection by insisting that Brown v. Cassens

Transport Co., 546 F.3d 347 (6th Cir. 2008) reached the issue of whether contesting a claimants’ 

entitlement to benefits under the Workers Disability and Compensation Act (“WDCA”) by use

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of the mails will support the predicate acts of mail and wire fraud. Brown never reached the 

issue. Rather, Brown held that the McCarran-Ferguson Act’s prohibition on federal laws 

interfering with a state’s efforts to regulate the “business of insurance” did not bar a RICO claim 

premised on the denial of workers compensation benefits. This is a narrow holding addressed to 

a specific preemption argument based on a particular federal statute. Sedgwick’s argument relies 

on the well-established principal that a person is not defrauded out of his rights to benefits 

conferred by statute when, as here, he has the ability to pursue his right to those benefits through 

an exclusive remedy created in the statute that conferred the benefits. Plaintiffs make no effort 

to distinguish that authority nor do they even discuss the principal. Instead, they attempt to 

stretch the holding in Brown to stand for propositions that were not even contemplated by the 

Brown court. 

C. Plaintiffs lack standing. 

The WCA, and not Sedgwick or Plaintiffs’ counsel, determines whether Plaintiffs are 

entitled to the benefits in the first place. The WCA has not made a determination. Unless the 

WCA determines that the Plaintiffs are not entitled to benefits, Plaintiffs have no cognizable, 

concrete defined injury. Plaintiffs argue that they have actual damages in the form of attorneys’

fees and costs incurred in pursuit of their alleged entitlement to workers compensation benefits.

Plaintiffs’ rely on an affidavit in support of that proposition that does not in fact even mention 

damages. Moreover, the attorneys’ fees and expenses incurred in perusing Plaintiffs’ rights 

under the WCDA are only recoverable if Plaintiffs establish they are entitled to benefits in the 

first place. They have not done that and cannot do it until the WCA makes its determination.

The defense costs and expenses thus are contingent, inchoate damages that will not support 

standing under RICO. 

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Further, Plaintiffs contend that Brown stands for the proposition that plaintiff has 

standing “if he has incurred a definite financial injury, even if the amount is indefinite.” See 

Response at p. 7. Plaintiffs did not provide a page cite to Brown for this proposition because 

Brown never discussed the issue. The Brown court was not asked to decide whether the injuries 

alleged in that case were compensable under RICO and Plaintiffs cannot cite Brown for that

proposition. 

Finally, Plaintiffs contend that their injuries are statutory, not personal injuries. Even if

the impairment of a statutory entitlement was an interest to “business or property” under RICO 

(and Plaintiffs cited no authority for this proposition), the characterization underscores that

Plaintiffs’ statutory “rights” must be determined by the process set forth in the WDCA. This has

not occurred and the damages cannot be alleged with the requisite specificity. 

D. Conclusion. 

Plaintiffs failed to discuss meaningfully (let alone distinguish) the controlling and 

persuasive authority cited in Sedgwick’s motion that compel the dismissal of this case. Instead,

Plaintiffs rely on Brown as a panacea for all of Plaintiffs’ pleading defects and cite Brown as 

dispositive of issues not even addressed in that case. Taken as true, Plaintiffs allege only that 

Sedgwick contested Plaintiffs’ entitlement to workers compensation benefits when Plaintiffs

contend they should have been awarded benefits. This is not the type of long-term criminal 

conduct proscribed by RICO and the Complaint must be dismissed accordingly. 

___/s/ Kathleen H. Klaus_________________ 

 MADDIN HAUSER WARTELL ROTH & HELLER, P.C. 

 Kathleen H. Klaus (P67207) 

Attorneys for Defendant Sedgwick Claims

Management Services, Inc. 

 28400 Northwestern Highway, 3rd Floor 

 Southfield, MI 48034 

 (248) 359-7520 

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CERTIFICATE OF SERVICE

I hereby certify that on August 31, 2009, I electronically filed SEDGWICK CLAIMS 

MANAGEMENT SERVICES, INC.’S REPLY IN SUPPORT OF COMBINED RULE 12(B)(1) 

AND RULE 12(B)(6) MOTION TO DISMISS FIRST AMENDED COMPLAINT with the 

Clerk of the Court using the ECF system which will send notification of such filing to all counsel

of record. 

___/s/ Kathleen H. Klaus_________________ 

Kathleen H. Klaus (P67207) 

Attorneys for Defendants 

28400 Northwestern Hwy., 3rd Floor 

Southfield, Michigan 48034 

 (248) 354-4030 

 [P67201] 

DATED: August 31, 2009 Primary E-mail: khk@maddinhauser.com

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