UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

CLIFTON E. JACKSON and

CHRISTOPHER M. SCHARNITZKE, on

behalf of themselves and other persons

similarly situated,

Plaintiff(s),

v.

SEDGWICK CLAIMS MANAGEMENT

SERVICES, INC., and COCA COLA

ENTERPRISES, INC., foreign corporations,

and DR. PAUL DROUILLARD, jointly and

severally,

Defendant(s).

 /

Case No. 09-11529

Honorable Nancy G. Edmunds

OPINION AND ORDER GRANTING DEFENDANTS’ MOTIONS TO

DISMISS [15, 21, 39] AND DENYING PLAINTIFFS’ MOTIONS FOR

LEAVE TO AMEND [31, 44]

This matter comes before the Court on Plaintiffs’ second and fifth motions to amend

their First Amended Complaint and Defendants’ motions to dismiss or alternatively for a

stay of proceedings. For the reasons set forth below, Plaintiffs’ motions for leave to amend

are DENIED and Defendants’ motions to dismiss are GRANTED. 

I. Facts

The named Plaintiffs in this case, who seek to represent a class of similarly situated

individuals, allege injuries related to an improper denial of workers’ compensation benefits

under a scheme to defraud by Defendants Sedgwick Claims Management (Sedgwick),

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 1

 As a matter of convenience, allegations from the proposed Second Amended

Complaint, [Docket Text # 31], and from the proposed Second Amended Complaint

(Second Revision), [Docket Text # 44], are also summarized here. Such proposed

amendments are identified as such.

2

Coca Cola Enterprises, Inc. (Coca Cola), and Dr. Paul Drouillard (Drouillard) stemming

from Plaintiffs’ claimed work-related disabilities incurred while employed by Coca Cola. 

The following allegations are summarized from the Complaint.1

A. Parties

1. Defendants

Coca Cola is, or was, the employer of each Plaintiff. Coca Cola has self-insured its

obligations under Michigan’s Workers Disability Compensation Act (WDCA), Mich. Comp.

Law § 418.101, et seq. 

Sedgwick administers workers’ compensation benefit claims filed by Coca Cola

employees and also adjusts those claims for Coca Cola. 

Drouillard, a board certified orthopedic surgeon, provides independent medical

examinations (IME) for Sedgwick. Drouillard has performed IMEs on numerous Coca Cola

employees who have filed workers’ compensation benefit claims, including one of the

named Plaintiffs and one of the proposed Plaintiffs in this action.

2. Plaintiffs

a. Jackson

Plaintiff Clifton Jackson alleges that he suffered a lumbosacral spinal injury on

September 17, 2007 while employed by Coca Cola. He was treated by Dr. Shlomo Mandel,

a back specialist with the Henry Ford Hospital System. Dr. Mandel determined that Jackson

had been disabled by his claimed work-related back injury since the date of that injury and

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 2

 Plaintiffs claim that the letter was fraudulent in that no IME was to be conducted

because Drouillard was not “independent.” Plaintiffs allege that Drouillard was hired by

Sedgwick for this evaluation—like many others he performed for Sedgwick in which

Drouillard was paid hundreds of thousands of dollars—to fraudulently and dishonestly

deprive Jackson, and the other workers’ compensation claimants, of their entitlement to

benefits. Plaintiffs conclude that Drouillard was financially dependent on the IMEs and the

related dispositions and, thus, was not “independent.” (Am. Compl. ¶ 31A.) Plaintiffs further

allege that Drouillard, by phone or facsimile, communicated with Lewis and “conspired with

her to conduct a fraudulent examination of ... Jackson, in which he would conclude,

regardless of the facts, that ... Jackson had no work related disability.” (Proposed Sec. Am.

Compl. ¶ 31A; Pls.’ Renewed Mot. at 9 [Docket Text # 31].)

3

continuing forward. Sedgwick—as part of its adjustment obligations to Coca

Cola—requested that Jackson receive two separate IMEs, the first of which was conducted

in May 2008. Both IMEs were performed by Dr. Terry Weingarden. Following each IME, Dr.

Weingarden also determined that Jackson was disabled. 

On January 6, 2009, LaTara Lewis, an employee of Sedgwick, sent Jackson a letter

notifying him that another IME2

 had been scheduled for January 14, 2009—this time with

Drouillard. According to Plaintiffs, Drouillard is not a back surgeon, but a surgeon

specializing in knees, shoulders, and other joints. Drouillard performed the IME and mailed

his report, dated January 14, 2009, to Sedgwick. Sedgwick, in turn, mailed a copy to

Jackson. Plaintiffs allege that “[t]he report contained lies” concerning the pain reported by

Jackson, including an erroneous characterization of Jackson’s self-reported pain as

substantially more manageable. Drouillard’s report also stated that “[t]here are thick

calluses in the palms over both hands ... suggestive of ongoing manual labor despite

[Jackson’s] historical account,” which Plaintiffs deny existed. Drouillard reviewed an MRI

of Jackson’s spine, opined that “[t]here was no evidence of disc herniation,” and concluded

that Jackson could return to work unrestricted. 

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 On August 13, 2007, Scharnitzke went to see his personal orthopedic surgeon, Dr.

Marc Milia, complaining of pain associated with overhead activity and heavy pushing and

pulling at work. Dr. Milia ordered an MRI and diagnosed Scharnitzke with acromioclavicular

arthritis. Dr. Milia treated Scharnitzke and released him for work on February 23, 2008. 

 4

 Scharnitzke claims that—in 2004, 2006 and 2007—he informed his family doctor, Dr.

Marcia Vanderbock, that he was experiencing left shoulder pain when performing heavy

lifting at work. 

4

Plaintiffs claim that Drouillard’s diagnosis was outside the scope of his specialty and

was part of a scheme to fraudulently deprive Jackson of workers’ compensation benefits

to which he was entitled. Plaintiffs also contend that Drouillard’s conclusion—that Jackson

could return to work unrestricted—was fraudulent, as “it was not within the reasonable

range of [the] medical opinion and was made part of a scheme to assist insurers in

depriving [Jackson] and others of their workers compensation benefits by writing

examination reports that insurers could use to cut off or deny benefits.” 

Relying on Drouillard’s report, Sedgwick cut off Jackson’s benefits. As a result,

Plaintiffs claim that Jackson suffered damages in the form of medical and related expenses,

attorney fees and deprivation of workers’ compensation benefits. (Am. Compl. ¶ 31A.)

b. Scharnitzke

Plaintiff Christopher Scharnitzke alleges that he suffered a left shoulder injury while

employed by Coca Cola as a delivery driver. Scharnitzke claims that he was injured as a

result of the repetitive nature of his work. 

Scharnitzke acknowledges that he was “disabled for a time beginning in August 2007

and returned to work in Feb[ruary] 2008.”3

 He did not file a claim for workers’ compensation

benefits for that period of disability, although he did inform his personal doctors of that

injury and its cause.4

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After Scharnitzke returned to work in February 2008, he did not experience any similar

shoulder problems until March 4, 2008. On that date, while lifting a 300 pound cart up a

flight of stairs, he felt a sharp pain in his left shoulder. That same day, he was sent to Coca

Cola’s industrial clinic, Concentra Medical Services (Concentra). 

On March 11, 2008, Concentra’s Dr. Morisetty examined Scharnitzke. Dr. Morisetty

recorded left shoulder pain and a chronic shoulder problem. Scharnitzke’s medical records

from Concentra noted that he “was disabled from work due to the condition of his left

shoulder.” Concentra then referred Scharnitzke to his orthopedic surgeon, Dr. Milia.

On March 18, 2008, Sedgwick mailed a Notice of Dispute to the WDCA and to

Scharnitzke asserting its belief that Scharnitzke’s injury was not work-related but, instead,

derived from chronic arthritis. Plaintiffs allege that “Sedgwick did not have information from

which it could honestly and fairly conclude that [Scharnitzke’s] disability in March 2008 was

due to ... arthritis, and was not work related. Instead it had information from Concentra

stating ‘minor work aggravation.’ ... Furthermore, it did not have information that the ...

arthritis which preceded the work injury of March 4, 2008, was not work-related.”

On July 22, 2008, Coca Cola and Sedgwick mailed a Carrier’s Response to

Scharnitzke and the WDCA denying that Scharnitzke was disabled or that his disability was

work-related. Plaintiffs allege that such a denial was fraudulent “in that defendants

possessed information that [Scharnitzke] was disabled, and no information that [he] was

not disabled.”

Since March 18, 2008, Plaintiffs allege that Sedgwick and Coca Cola have repeatedly

denied workers’ compensation benefits to Scharnitzke despite having received proof that

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 Plaintiffs claim that Coca Cola and Sedgwick received the following: (1) an office note

from Dr. Milia on May 8, 2008 which noted an “MRI demonstrate[d] posterior shoulder

labral tear;” (2) an IME report in November 2008 from “Dr. Michael Holda, which stated

plaintiff was disabled due to a shoulder injury and did not say that the disability was not

work-related;” (3) another note from Dr. Milia, dated March 29, 2009, which stated “I am the

orthopedic surgeon who has treated Mr. Scharnitzke’s left shoulder since 2007. His current

shoulder disability (from March 3, 2008 to April 2009) was caused by the 13 years of

repetitive heavy lifting and pulling required by Mr. Scharnitzke’s job at Coca Cola, and was

also caused by the injury at work on 3/3/08.”

 6

 Proposed additional Plaintiff. (See Proposed Sec. Am. Compl. ¶ 31C; Pls.’ Renewed

Mot. at 10-13 [Docket Text # 31].)

6

he had suffered a work-related injury.5

 Plaintiffs claim that Coca Cola “and Sedgwick’s

actions [we]re part of a scheme to fraudulently deprive [him] of his workers[‘] compensation

benefits regardless of facts, and without regard to the duties imposed on it by Michigan

law.” As a result, Scharnitzke suffered damages in the form of medical and related

expenses, attorney fees and deprivation of workers’ compensation benefits. (Am. Compl.

¶ 31B.)

c. Lulek6

Proposed Plaintiff Paul Lulek, a driver for Coca Cola, alleges that he injured his right

knee while delivering product on March 12, 2007. Lulek admits to having previously injured

that knee, and tearing his ACL, in a sports-related injury dating back to 1975, but contends

that the prior injury did not affect his employment at Coca Cola. 

Business Health Services (BHS), Coca Cola’s industrial clinic, treated Lulek for a

sprain and a torn meniscus in his right knee and imposed work restrictions of “no lifting

more than 10-20 lbs., no squatting and no kneeling.” 

Upon receipt of the report from BHS, LaTara Lewis, an employee of Sedgwick,

allegedly contacted Drouillard to schedule an IME with Lulek. On April 17, 2007, Drouillard

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 Plaintiffs claim that these letters were fraudulent in that no IME was to be conducted

because Drouillard was not “independent.” Again, Plaintiffs allege that Drouillard was hired

by Sedgwick for this evaluation—like many others he performed for Sedgwick in which

Drouillard was paid hundreds of thousands of dollars—to fraudulently and dishonestly

deprive Lulek, and the other workers’ compensation claimants, of their entitlement to

benefits. Plaintiffs conclude that Drouillard was financially dependent on the IMEs and the

related dispositions and, thus, was not “independent.”

7

sent Lulek a letter notifying him that an IME had been scheduled. Plaintiffs also allege that

Lewis mailed Lulek a similar notice to appear for the IME to be conducted by Drouillard.7

Drouillard conducted the IME and mailed his report, dated April 23, 2007, to Sedgwick

stating “at this time [Lulek] can return to work in his former capacity without restriction [and]

no other treatment is necessary in regards to any work injury.” Drouillard, thus, concluded

that Jackson could return to work unrestricted. 

On May 7, 2007, Sedgwick mailed Lulek and the WDCA a Notice of Dispute which

stated “per IME of 4-23-2007 Dr. Drouillard has stated that Mr. Lulek has reached MMI for

his 3-12-2007 [sic] as it was a minor strain. Any further treatment should be directed to his

private doctor. Benefits terminated as of 5-3-07.”

Lulek disputed Drouillard’s medical conclusions and sought an evaluation by Dr. Farjo,

an orthopedic surgeon. Dr. Farjo determined that Lulek’s injury was work-related and

required surgery, which Dr. Farjo performed on May 30, 2007. 

Lulek claims that, despite receiving reports and other information regarding Lulek’s

injury and related surgery, “Sedgwick continued to refuse to reinstate workers

compensation ... and did not fairly and fully review all medical documents.” Lulek claims

that Sedgwick and Drouillard, in setting up a fraudulent IME and in denying him benefits,

conspired to deny him of workers’ compensation benefits to which he was entitled. Lulek

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8

also alleges that “[t]he fraudulent scheme and conspiracy by Sedgwick and ... Drouillard

proximately caused [him] to lose workers compensation benefits.” Like the other named

Plaintiffs, Lulek seeks treble damages, plus attorney fees and costs. Unlike the other

named Plaintiffs, Lulek seeks such damages only against Sedgwick and Drouillard, jointly

and severally, but not against Coca Cola. (Proposed Sec. Am. Compl. ¶ 31C; Pls.’

Renewed Mot. at 10-13 [Docket Text # 31].)

B. Plaintiffs’ Allegations

Plaintiffs claim that Defendants, in setting up fraudulent IMEs and in denying workers’

compensation benefits to eligible claimants, fraudulently schemed and illegally conspired

to deny them of, or cut them off from, the benefits to which they were entitled—for reasons

known to be false—breaching duties owed under state law in violation of federal law.

1. State Law Duties Breached

Plaintiffs claim that Defendants violated duties owed to Plaintiffs under the WDCA,

Mich. Comp. Laws § 418.101 et seq., and the Michigan Uniform Trade Practices Act

(MUTPA), Mich. Comp. Laws § 500.2001 et seq., that required Defendants to give due

consideration to the treating doctors’ evaluations in making their decisions. (Am. Coml. ¶¶

16-17A.) 

Plaintiffs allege that Coca Cola, Sedgwick and “other defendants” violated their duties

under the WDCA to be honest in the administration of workers’ compensation claims, and

not to “unreasonably fail to pay promptly claims for compensation for which it shall become

liable.” Mich. Comp. Laws § 418.631. These duties “required defendants to weigh in good

faith the report of a doctor they hired to examine a claimant against the reports and records

of a claimant’s treating doctors, and all other medical records, where the treating doctor

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 8

 Plaintiffs’ have not asserted any state law claims in this action, only federal RICO

claims.

 9 Plaintiffs also alleged in their First Amended Complaint violations of 18 U.S.C. §§

1962(a) and (b). Plaintiffs, however, in their Amended Motion for Leave to File Second

Amended Complaint Second Revision (Amended Motion) proposed to withdraw those

counts. (Pls.’ Am. Mot. [Docket Text # 44.].)

9

found a work-related disability.” (Am. Compl. ¶ 16.) According to Plaintiffs, Defendants—in

using the mails and wires to further their fraudulent scheme—failed to perform their duties

under the WDCA. 

Plaintiffs also allege that Coca Cola, Sedgwick and “other defendants” violated the

MUTPA: (1) in failing to promptly pay eligible claims; (2) by using unfair or deceptive acts

or practices in the business of insurance; and (3) in issuing false reports. See Mich. Comp.

Laws §§ 500.2006, .2026, .2062.

Plaintiffs allege that Defendants may be held liable for their breaches of these

Michigan statutory duties8

 under the federal Racketeer Influenced and Corrupt

Organizations Act (RICO), 18 U.S.C. § 1961 et seq.

2. RICO Claims

According to Plaintiffs, Defendants conspired to violate, and also violated, RICO.

Specifically, Plaintiffs allege that Defendants’ conduct violated 18 U.S.C. §§ 1962(c) and

(d).9 Plaintiffs claim that Defendants comprise an enterprise(s) that intended, conspired,

and implemented a scheme to fraudulently deny Plaintiffs, and others similarly situated, of

workers’ compensation benefits to which they were entitled.

Plaintiffs allege that the corporate Defendants (Coca Cola and Sedgwick) specifically

selected “cut-off” doctors, like Drouillard, to conduct IMEs which they knew would not be

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 10 According to Plaintiffs, in Michigan alone, there are “perhaps a dozen” doctors who

fraudulently perform IMEs. Plaintiffs allege that these doctors are “corrupt in that they lie

in their reports and find no work-related disability at a rate much, much higher than that

found by treating doctors or even by their fellow IME doctors. (An IME doctor who finds

work-related disability too often is no longer hired by insurers and claims adjusters.)” (Am.

RICO Case Statement at 4 [Docket Text # 8].) 

In particular, Plaintiffs claim that “Drouillard is a cut off doctor par excellence.”

Plaintiffs allege that Drouillard performs approximately 1,100 IMEs per year, (Am. Compl.

¶ 22), and “earns $600,000 or more per year doing IMEs. He always or nearly always finds

no work-related disability. He finds no work-related disability far more often than any other

IME doctor hired by the insurance companies. He finds no work-related disability far, far,

far more often than a claimant’s treating surgeon (who don’t do IMEs for insurers) ... On

information and belief, he finds no work-related [disability] in 98% of his examinations,

whereas treating physicians find disability in 100% of claimants (by definition; claimants are

people who have been cut off or denied workers compensations, but do have a workrelated disability according to their treating doctors). Other IME doctors find disability or

work-related disability in 30-50% of claimants.” (Am. RICO Case Statement at 3 [Docket

Text # 8].)

In this case, Plaintiffs allege that Drouillard “committed fraud for Coke and Sedgwick

and upon ... Jackson and ... upon other Coke employees ... by writing ... reports over a

period of years (1) stating he examined a claimant or a body part of a claimant when he did

not; (2) stating a claimant said something to him which the claimant did not say; (3) stating

a claimant failed to disclose a fact which the claimant did disclose, and or (4) stating

dishonestly and without reasonable medical basis that a claimant did not have a workrelated disability.” (Am. Compl. ¶ 19.) 

10

independent, as represented to the claimants, but would be biased toward finding no workrelated injury.10 That is, the corporate Defendants knew these cut-off doctors “would reliably

write them a report stating a claimant did not have a work-related disability whether or not

such disability actually existed,” despite other medical opinions to the contrary. (Am. Comp.

¶¶ 13, 15, 18.) Plaintiffs also allege that Defendants communicated with each other their

desire to obtain such a biased report so the corporate Defendants “could [then] ... cut off

or deny workers compensation benefits, or ... defeat litigation claiming benefits.” (Id. ¶ 13.)

Once the IME was completed, the corporate Defendants exclusively relied on it—and

disregarded conflicting reports and records from a claimant’s treating doctor—as grounds

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 11 Plaintiffs also contend that “[o]n information and belief, discovery will reveal that

Michigan workers compensation defense counsel assisted their clients, Coke and

Sedgwick, in identifying and recommending for their clients cut off doctors such as

Drouillard ... These attorneys recommended or hired Drouillard ... in many other cases for

other clients, for many years; they knew Drouillard ... and other doctors would write cut off

reports. They knew Drouillard ... [was] dishonest, or so biased toward finding no workrelated disability that their clients could not fulfill their duties under Michigan law to fairly,

honestly, and in good faith decide the claims of Coke employees.” (Am. RICO Statement

at 5 [Docket Text # 8].) “[T]hose attorneys communicated by mail and wire with Coke and

Sedgwick the tactic of using doctors who could be relied on [with extreme confidence] to

write a report that would state a worker did not have a work-related disability regardless of

the facts, and the attorneys gave to Coke and Sedgwick the name and contact information

for such doctors, such as ... Drouillard.” (Am. Compl. ¶ 20C.) Plaintiffs, however, have not

named a single “John Doe” attorney as a Defendant in this matter.

11

to deny or cut off workers’ compensation benefits and to justify filing Notices of Dispute with

the WDCA. (Id. ¶¶ 13-14.) The “[d]ecisions regarding paying or denying Michigan workers

compensation claims, and selecting doctors to do medical examinations of claimants, were

made by Sedgwick and[/]or Coke, [with the assistance of attorneys].”11 (Id. ¶ 8.) 

Plaintiffs conclude that Defendants’ fraudulent scheme was accomplished through the

use of the United States mails and by electronic communications, thereby violating RICO.

(Am. Compl. ¶ 23.) Plaintiffs, in support, allege that Defendants

committed mail fraud, wire fraud and or conspiracy to defraud, in a repeated

and continuing pattern extending over years applicable to plaintiffs and other

Mi[chigan] employee[s] of Coke, by fraudulently terminating or denying

benefits, by writing fraudulent medical reports and giving fraudulent

deposition testimony, by hiring a doctor such a ... Drouillard who defendants

knew would frequently give false testimony and or write false medical reports,

by failing to honestly and in good faith review a claim as required by Michigan

statute before denying the claim, and or by fraudulently terminating benefits

because a person refused to settle a claim for the amount offered by Coke

and Sedgwick. Defendants used the mails and wires in furtherance of this

scheme, by mailing, emailing and or faxing Notices of Dispute and other

communications. 

(Am. Compl. ¶ 12.) Some of the acts of mail and wire fraud allegedly 

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 12 These allegations, like many of the allegations contained in the Complaint, are based

on “information and belief,” as “plaintiffs do not have these communications.” (Am. Compl.

¶ 20C.)

12

consisted of communications between defendants, or between defendants

and the IME “cut off” doctors whose reports defendants relied upon in

terminating or denying plaintiffs’ benefits, or between defendants and their

workers compensation defense attorneys ... In their communications, Coke

and Sedgwick and perhaps their attorneys discussed means—such as using

cut off doctors like Drouillard—of cutting off plaintiffs’ benefits or forcing them

to take settlements at less than true value, even though Coke and Sedgwick

and their workers compensation defense attorneys possessed medical

reports from treating doctors and doctors chosen by defendants stating

plaintiffs did have work-related disabilities.

(Am. Compl. ¶ 20C.)12 Plaintiffs also allege that Drouillard—in performing IMEs, in giving

related depositions, and in issuing fraudulent IME reports—“violated duties arising under

his medical licenses, oaths and standards, under the WDCA, ... under Michigan common

law,” and used the “mails and wires in furtherance of this scheme.” (Proposed Sec. Am.

Compl. ¶ 18A; Pls.’ Renewed Mot. at 4-5 [Docket Text # 31].)

3. Damages

Plaintiffs seek treble damages, costs and attorney fees, and injunctive relief “(1)

forbidding ... Drouillard from doing IMEs for Coke and Sedgwick; (2) forbidding Coke and

Sedgwick from using a doctor for IMEs who in the overwhelming number of exams does

not find a work-related injury; (3) requiring Coke and Sedgwick to keep detailed and public

records of all deliberation and communications regarding every decision (a) to pay or deny

workers compensation benefits, and (b) to select a doctor for an examination of a

M[ichigan] workers compensation claimant, and (4) requiring Liberty and UPS [sic] to adjust

and handle claims as required by the Michigan Insurance Code and the Workers Disability

Compensation Act.” (Am. Compl. ¶¶ 31-32.) 

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 13 Plaintiffs’ Renewed Motion for Leave to File Second Amended Complaint (Renewed

Motion) was filed on July 23, 2009. [Docket Text # 31.] Plaintiffs’ Amended Motion for

Leave to File Second Amended Complaint Second Revision (Amended Motion) was filed

on August 17, 2009. [Docket Text # 44.] Plaintiffs had previously filed a motion to amend

on July 17, 2009 and Judge Lawson, to whom this case was previously assigned,

dismissed it without prejudice for failure to seek concurrence. (See Order denying Motion

for leave to file second Amended Complaint [Docket Text # 27].) Between the filing dates

of the two motions to amend at issue here, Plaintiff filed two other motions to amend that

were both dismissed, again, for failure to seek concurrence. (See Order denying Motions

35 and 38 for Leave to File Second Amended Complaint [Docket Text # 43].)

 14 The Complaint was originally filed on April 23, 2009. [Docket Text # 1.] Plaintiffs filed

a First Amended Complaint on April 29, 2009 correcting the spelling of Plaintiffs’ name.

[Docket Text # 2.]

13

II. Leave to Amend the Pleadings

A. Plaintiffs’ Motions for Leave to Amend the Pleadings

This matter is before the Court on Plaintiffs’ second and fifth motions13 to amend their

First Amended Complaint.14 Plaintiffs seek to add a count of conspiracy and an aiding and

abetting theory, a claim by a new plaintiff, and additional factual allegations against

Defendants. Defendants filed several responses to Plaintiffs’ motions to amend arguing that

Plaintiffs’ motions should be denied because the amendments would be futile because,

inter alia, the Complaint as amended could not survive a motion to dismiss. Defendants

also contend that Plaintiffs’ practice of “testing” the strength of their claims in the face of

Defendants’ motions to dismiss is in bad faith—particularly where Plaintiffs had knowledge

of the facts underlying their requested amendments when they filed the original Complaint.

Alternatively, Defendants argue that Plaintiffs’ motions to amend should be denied, at least

for the time being, under the Burford abstention doctrine as at least one Plaintiff has a claim

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 15 Jackson’s claim is currently pending before the WDCB. Per oral argument at the

February 23, 2010 hearing on this motion, the Court was informed that Scharnitzke also

has a claim currently pending before the WDCB.

14

for workers’ compensation benefits currently pending before the Workers Compensation

Disability Board (WDCB).15

1. Renewed Motion [Docket Text # 31]

In their Renewed Motion, Plaintiffs seek leave to amend the First Amended Complaint

to: (1) correct the spelling of Sedgwick’s name in the case caption; (2) add the medical

practice of Drouillard as an enterprise; (3) describe the alleged enterprises as “associating

in fact,” in response to the recent Supreme Court decision in Boyle v. United States, 556

U.S. ___, 129 S. Ct. 2237 (2009); (4) allege additional predicate acts by Drouillard; (5)

allege that certain communications between Drouillard and Sedgwick employee LaTara

Lewis constituted efforts to conspire to conduct fraudulent IMEs; (6) allege that Drouillard

committed wire fraud during his treatment of Jackson; (7) allege a conspiracy count under

18 U.S.C. § 1962(d) against all Defendants; (8) allege an aiding and abetting theory against

Coca Cola and Drouillard; and (9) add another plaintiff, Paul Lulek, with claims against

Sedgwick and Drouillard only. (Pls.’ Renewed Mot. at 3-13 [Docket Text # 31].) 

In their brief accompanying the Renewed Motion, Plaintiffs argue that Defendants “will

not be handicapped in any way by an amendment taking place even before they have filed

their answer.” (Pls.’ Renewed Mot. at 17 [Docket Text # 31].) Plaintiffs also argue that the

added count of conspiracy should not be considered prejudicial because the RICO statute

itself creates liability for conspiracy. (Id. (citing Salinas v. United States, 522 U.S. 52

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 16 Coca Cola argues that Plaintiffs’ 1962(d) conspiracy claim fails as a matter of law

because, inter alia, the conduct that Coca Cola allegedly conspired to commit does not

amount to a RICO violation. 

Regarding Plaintiffs attempt to bolster their 1962(c) claim by adding allegations that

Coca Cola aided and abetted other Defendants in the commission of predicate acts, Coca

Cola argues that—even with the addition of these aiding and abetting

allegations—Plaintiffs’ claims still fail as a matter of law for two reasons. First, a defendant

is only liable under section 1962(c) if it actually commits the predicate acts itself, as civil

liability under that statute may not rest upon an aiding and abetting theory. Second, the

proposed aiding and abetting allegations are insufficient on their face. (Def. Coca Cola’s

Resp. to Pls.’ Renewed Mot. at 7-10 [Docket Text # 32].)

15

(1997), Smith v. Berg, 247 F.3d 532 (3rd Cir. 2001), and 18 U.S.C. § 1962(d)).) Plaintiffs,

however, offer no substantive arguments to support their other proposed amendments.

Coca Cola was the only Defendant to file a response to Plaintiffs’ Renewed Motion.

(Def. Coca Cola’s Resp. to Pls.’ Renewed Mot. [Docket Text # 32].)

Coca Cola argues that Plaintiffs “should not be permitted to amend its Complaint to

add claims that could not survive a motion to dismiss.” (Id. at 2.) Coca Cola claims that its

pending motion to dismiss demonstrates that each of Plaintiffs’ RICO claims—18 U.S.C.

§§ 1962(a), (b), and (c)—fail as a matter of law. (See Def. Coca Cola’s Mot. to Dismiss

[Docket Text # 21].) Coca Cola also contends that Plaintiffs are now, through their

Renewed Motion, merely attempting to “side-step” both Coca Cola and Drouillard’s

previously filed motions to dismiss by adding a new claim—conspiracy to commit a RICO

offense in violation of 18 U.S.C. § 1962(d)—and by adding allegations of aiding and

abetting to bolster Plaintiffs’ previously filed 1962(c) claims.16 Coca Cola concludes that,

notwithstanding the proposed amendments, Plaintiffs’ claims still fail as a matter of law and,

thus, such amendments are futile. (Def. Coca Cola’s Resp. to Pls.’ Renewed Mot. at 4-10

[Docket Text # 32].)

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16

Plaintiffs did not file a reply to Coca Cola’s response. Instead, Plaintiffs filed another

motion for leave to amend.

2. Amended Motion [Docket Text # 44]

In their Amended Motion, Plaintiffs seek leave to amend the proposed Second

Amended Complaint to include additional allegations to support the count of conspiracy and

the aiding and abetting theory that were introduced in the Renewed Motion. Plaintiffs also

seek to withdraw Paragraph 24 from the Complaint, which alleged violations of 18 U.S.C.

§§ 1962(a) and (b). (Pls.’ Am. Mot. at 2-5 [Docket Text # 44].) 

In their brief accompanying the Amended Motion, Plaintiffs argue that they propose

to add this language in response to Coca Cola’s response to their Renewed Motion, in

which Coca Cola argued that the proposed Second Amended Complaint failed to plead the

existence of an agreement to engage in conduct that would amount to a RICO violation

and, thus, failed to plead a conspiracy. (See Def. Coca Cola’s Resp. to Pls.’ Renewed Mot.

at 7 [Docket Text # 32].) Plaintiffs conclude that this version of the Complaint “sufficiently

alleges a conspiracy” because it now alleges an agreement to defraud, which is “the

essence of a conspiracy.” (Pls.’ Am. Mot. at 8-9 [Docket Text # 44] (citing United States v.

Phillips, 664 F.2d 971 (5th Cir. 1981).) Plaintiffs further argue that 

the conspiracy allegations in the earlier versions of the Second Amended

Complaint were sufficient to allege a RICO conspiracy. Plaintiffs need not

have made the additional allegations in second revision of the Second

Amended Complaint. However, rather than argue the sufficiency of the earlier

conspiracy language, plaintiffs now add allegations in response to Coca

Cola’s brief—adding suspenders even though they believe the belt was

sufficient to hold up the conspiracy claim.

(Pls.’ Am. Mot. at 10 [Docket Text # 44].) Plaintiffs similarly argue that their pleading as to

the aiding and abetting theory, which was also challenged by Coca Cola in its response to

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 16 of 69 Pg ID 900
17

the Renewed Motion, was sufficient to meet the relevant legal standard. (See Def. Coca

Cola’s Resp. to Pls.’ Renewed Mot. at 9 [Docket Text # 32].) Nevertheless, “[i]n case this

court believe these allegations are insufficient, plaintiffs seek to add” factual allegations.

(Pls.’ Am. Mot. at 11 [Docket Text # 44].) 

Each Defendant individually filed a response to Plaintiffs’ Amended Motion. Plaintiff,

however, only replied to Coca Cola’s response.

Coca Cola, in its response, argues that Plaintiffs’ Amended Motion should be denied

for three reasons. First, Coca Cola contends that 

Plaintiffs’ latest motion to amend stretches the liberal standards for amending

pleadings far beyond their breaking point. The Federal Rules of Civil

Procedure simply do not allow a plaintiff to file an unending stream of

proposed amendments every time one defendant in a multi-defendant case

points out a flaw in the then-operative Complaint. Yet that is exactly what the

Plaintiffs here have done. They have filed and/or proposed to file several

amended Complaints—all before the Court has had an opportunity to assess

the viability of the claims (i) in the First Amended Complaint (which is the

currently-operative Complaint) and/or (ii) in the other amended Complaints

proposed by Plaintiffs. And every time that one of the Defendants highlights

the flaws in the Plaintiffs’ pleadings, Plaintiffs simply “go back to the drawing

board” and gin up another version of the Complaint.

(Def. Coca Cola’s Resp. to Pls.’ Am. Mot. at 6 [Docket Text # 46].) Second, Coca Cola

argues that Plaintiffs’ proposed amendments are futile, as they would not cure the

deficiencies in the pleadings to survive a motion to dismiss. 

For instance, the latest proposed revision purports to cure defects in

Plaintiffs’ conspiracy and aiding and abetting claims against Coke. But the

proposed revisions actually perpetuate the flaws in these claims. Even with

the proposed revisions, the conspiracy claim still fails to allege that Coke

agreed to commit acts that violate the RICO statute, and the aiding and

abetting claim contains no allegations that Coke actively supported or

encouraged mail or wire fraud. Simply put, the proposed amendments are

futile and should not be permitted because—for the reasons explained in all

three Defendants’ motions to dismiss—all of Plaintiffs’ claims would be

subject to dismissal even if the latest amendments were allowed.

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 17 of 69 Pg ID 901
18

(Id.) Finally, Coca Cola argues that “the proposed amendments are futile because even

with the amendments, the proper course of action here (if the Court choose not to dismiss)

would be to abstain under the Burford abstention doctrine.” (Def. Coca Cola’s Resp. to Pls.’

Am. Mot. at 6 [Docket Text # 46].)

Plaintiffs replied to Coca Cola’s response arguing that they should be permitted to

amend the pleadings because “[t]he proposed Second Amended Complaint (Second

Revision) adds ‘insurance’ against dismissal in the form of additional predicate acts by all

defendants; a new plaintiff; and new allegations (conspiracy and aiding and abetting).” (Pls.’

Reply at 5 [Docket Text # 48].) Plaintiffs conclude that the pleadings, as amended, state

a RICO claim sufficient to defeat Defendants’ multiple motions to dismiss. Plaintiffs also

contend that Burford is inappropriate here. (Id. at 11-12.)

Drouillard, in his response, argues that Plaintiffs’ Amended Motion should be denied

for four reasons. 

First, [the Medical Malpractice Act], the Witness Immunity Doctrine, the

Morgan and Dryer cases and all of the public policy that supports the doctrine

and cases preclude liability against ... Drouillard for the conclusions he

reached in conducting an IME. The proposed amended complaint does

nothing to change that. 

Second, for a number of reasons the proposed amended complaint still fails

to state a valid RICO claim against ... Drouillard, and if leave to amend the

complaint were granted he would still be entitled to dismissal. 

(Def. Drouillard’s Resp. to Pls.’ Am. Mot. at 6 [Docket Text # 50].) Third, Drouillard argues

that the pleadings, not only fail to meet the particularity required under Federal Rules of

Civil Procedure 9(b), but also fail to meet the standard established in Ashcroft v. Iqbal, ___

U.S. ___, 129 S. Ct. 1937 (2009). (Id. at 12-14.) Finally, Drouillard argues that “Plaintiffs

should not be allowed to repeatedly add and change alleged facts to survive [Defendants]

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 18 of 69 Pg ID 902
19

motions [to dismiss], particularly where the alleged facts upon which the proposed

amendments are based were all known to plaintiffs when the original Complaint was filed.

If this latest amendment is allowed, it will not only be futile, but it will require the defendants

to spend additional money to file new motions to dismiss.” (Id. at 12.)

Sedgwick, in its response to Plaintiffs’ Amended Motion, argues that “[t]he proposed

amendments ... would be futile because (1) Plaintiffs cannot state a claim for violations of

18 U.S.C. § 1962(d) when they fail to state a cause of action under 18 U.S.C. § 1962(a),

(b), or (c); and (2) the allegations regarding ... Lulek further underscore Plaintiffs’ inability

to plead facts that establish a pattern of racketeering activity.” (Def. Sedgwick’s Resp. to

Pls.’ Am. Mot. at 4 [Docket Text # 51].)

B. Standard: Amend the Pleadings

Pursuant to Federal Rule of Civil Procedure 15(a), leave to amend is freely granted

where justice so requires. However, a motion to amend should be denied if the amendment

is brought in bad faith or for dilatory purposes, results in undue delay or prejudice to the

opposing party, or would be futile. See Foman v. Davis, 371 U.S. 178 (1962).

C. Analysis: Plaintiffs’ Motions for Leave to Amend the Pleading

Defendants argue that both proposed amendments, Plaintiffs’ Renewed Motion and

Amended Motion, should be denied under two alternate grounds: (1) undue delay; and (2)

futility. The Court will address each in turn.

1. Undue Delay and Prejudice

Delay alone is not sufficient to deny a motion to amend the complaint, there must also

be prejudice to the defendant. See, e.g., Security Ins. Co. of Hartford v. Kevin Tucker &

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 19 of 69 Pg ID 903
20

Assoc., Inc., 64 F.3d 1001, 1009 (6th Cir. 1995) (“Delay alone, however, does not justify

the denial of leave to amend. Rather, the party opposing a motion to amend must make

some significant showing of prejudice to prevail.”). Prejudice may result from delay, but

“[d]elay by itself is not sufficient reason to deny a motion to amend. Notice and substantial

prejudice to the opposing party are critical factors in determining whether an amendment

should be granted.” Brooks v. Celeste, 39 F.3d 125, 130 (6th Cir. 1994) (citing Head v.

Jellico Hous. Auth., 870 F.2d 1117, 1123 (6th Cir. 1989) (quoting Hagerman v. Signal L.P.

Gas, Inc., 486 F.2d 479, 484 (6th Cir. 1973))); see also Security Ins. Co. of Hartford, Inc.,

64 F.3d at 1009 (“Delay that is neither intended to harass nor causes any ascertainable

prejudice is not a permissible reason, in and of itself to disallow an amendment of a

pleading.”) (internal quotations and citations omitted). Thus, the Court considers

Defendants’ arguments regarding delay in conjunction with its claims of prejudice.

“Although Rule 15(a) indicates that leave to amend shall be freely granted, a party

must act with due diligence if it intends to take advantage of the Rule’s liberality.” United

States v. Midwest Suspension and Brake, 49 F.3d 1197, 1202 (6th Cir. 1995). Thus, where

an “amendment is sought at a late stage in the litigation, there is an increased burden to

show justification for failing to move earlier.” Wade v. Knoxville Utilities Bd., 259 F.3d 452,

459 (6th Cir. 2001). Failure to plead an available claim in a timely manner deprives an

opposing party of “notice that it would have to defend” against the new claim. Id. This is not

a situation where leave to amend is sought on the eve of trial after the discovery period has

long passed. Here, Plaintiffs have filed their motions to amend before Defendants filed an

answer and within five months of the initial filing. Although Defendants began to file motions

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 20 of 69 Pg ID 904
 17 The Court does, however, recognize the merit in Defendants’ argument that Plaintiffs

appear to be using Defendants’ motions to dismiss as an opportunity to test the strength

of their claims at Defendants’ expense—suggesting that the motions to amend are made

in bad faith. 

21

to dismiss prior to Plaintiffs filing their motions to amend, the proceeding is in its early

stages—as discovery has not yet begun.17

Leave to amend may also be withheld “if the moving party knew the facts on which the

claim or defense sought to be added were based at the time the original pleading was filed

and there is no excuse for his failure to plead them.” 6 Charles A. Wright et al., Federal

Practice and Procedure, § 1487, at 651 (2d ed. 1990); see also Wade, 259 F.3d at 459

(finding undue delay, in part, where the plaintiff knew the facts forming the basis of the

amended claims but failed to plead the claims in the original complaint). The Court finds

Defendants’ argument—that Plaintiffs knew of the additional facts, including Lulek’s

allegations, proposed in the amendments at the time of their initial filing—unpersuasive.

The record does not support such a conclusion.

As the Sixth Circuit has observed, it would be error to deny leave to amend when “the

rejection would preclude plaintiff’s opportunity to be heard on the merits of facts which are

well known to the parties and which were pleaded at the outset.” Moore v. City of Paducah,

790 F.2d 557, 562 (6th Cir. 1986). Accord, Hagerman, 486 F.2d at 484 (affirming grant of

leave to amend where the defendant “was aware of the fact situation upon which the

amended complaint was based”). Here, Defendants were aware of the fact situation upon

which the conspiracy count and the aiding and abetting theory are based. Defendants—as

they were on notice of the RICO claims alleged against them—will not be unfairly

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 21 of 69 Pg ID 905
 18 See Parry v. Mohawk Motors of Michigan, Inc., 236 F.3d 299, 306-07 (6th Cir. 2000)

(upholding the denial of leave to amend where the “motion to amend ... came almost nine

months after he filed his first amended complaint and well over a year after he filed his

original complaint. Moreover, at the time Plaintiff filed his motion to amend, the district court

had granted summary judgment to Defendants two and one-half months earlier as well as

denied Plaintiff’s motion for reconsideration”); Wade, 259 F.3d at 459 (upholding the denial

of leave to amend where “the amendments proposed by plaintiff would result in significant

prejudice to the defendant, [t]he dispositive motion deadline ha[d] already past, ...

defendant has filed a motion for summary judgment on all claims alleged in the original

complaint, [and where] ... significant discovery ha[d] been completed including more than

20 depositions”); Midwest Suspension and Brake, 49 F.3d at 1202 (affirming the denial of

the defendant’s motion to amend its answer because the defendant’s undue delay in filing

its motion one month before trial and 18 months after discovery had been completed would

unduly prejudice the plaintiff who had relied on the defendant’s previous answer and would

have to undertake a “new and expensive round of discovery” to rebut the new claim shortly

before trial).

22

prejudiced even if such an amendment would require Defendants to modify their defense

strategy.

Other factors to consider include whether the amendments will require the party to

expend additional resources to defend against new claims and this stage of the

proceeding.18 Here, Defendants complain that they will be prejudiced by the increased

burden and costs associated with defending these additional claims. Other courts have

rejected similar arguments, observing that “‘the adverse party’s burden of undertaking

discovery, standing alone, does not suffice to warrant denial of a motion to amend a

pleading.’” Midwest Suspension, 49 F.3d at 1202 (quoting United States v. Continental III.

Nat’l. Bank & Trust Co. of Chicago, 889 F.2d 1248, 1255 (2d Cir. 1989). Defendants have

not shown that they must expend significant additional resources to adequately respond

to Plaintiffs’ pending motions or to defend against the additional claims nor have they

shown that the amendment, if allowed, would significantly delay the resolution of this

dispute.

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23

The Court concludes, upon its review of the record, that Plaintiffs’ motions to amend

were not filed with undue delay and that Defendants have not demonstrated sufficient

prejudice that would result from these amendments. Accordingly, this Court declines to

deny Plaintiffs’ motions to amend on undue delay or prejudice grounds. 

2. Futility

The question of futility, on the other hand, demands a different result. “A proposed

amendment is futile if the amendment could not withstand a Rule 12(b)(6) motion to

dismiss.” Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir. 2000). Thus,

whether the proposed amendments would be futile depends on whether the additional

allegations in the motions to amend could defeat Defendants’ motions to dismiss.

Defendants argue that the proposed amendments would be futile for two reasons: (1)

the proposed amendments would not cure the deficiencies in the pleadings to survive a

motion to dismiss; and (2) because at least one of the Plaintiffs has a claim for workers’

compensation benefits currently pending before the WDCB, the proper course of action

would be to abstain under the Burford abstention doctrine and stay the proceeding. 

As discussed below, this Court finds that—because the additional allegations in the

motions to amend could not defeat Defendants’ motions to dismiss—the amendments

would be futile. Accordingly, Plaintiffs’ motions for leave to amend the pleadings are denied.

III. Motion to Dismiss

This matter is also before the Court on Defendants’ motions to dismiss under Federal

Rules of Civil Procedure 12(b)(1) and 12(b)(6). The Court assumes that Plaintiffs’ factual

allegations, including those proposed in their motions to amend, are true. And, in viewing

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 23 of 69 Pg ID 907
 19 Def. Drouillard’s Mot. to Dismiss [Docket Text # 15]; Def. Coca Cola’s Mot. to Dismiss

[Docket Text # 21]; and Def. Sedgwick’s Mot. to Dismiss [Docket Text # 39]. 

 20 Drouillard performed the IME on “Jackson on January 14, 2009, and opined that he

could return to work. ... Drouillard’s opinion came after other physicians had released him

to return to work and after ... Jackson admitted to playing basketball on a fairly regular

basis.” (Def. Drouillard’s Mot. to Dismiss at 14 [Docket Text # 15].) 

24

such allegations in a light most favorable to Plaintiffs, the Court finds that these allegations

would not withstand Defendants’ motions to dismiss.

A. Defendants’ Motions to Dismiss

Each Defendant individually filed a motion to dismiss.19 The three motions to dismiss

and the multiple responses to Plaintiffs’ motions to amend contain similar and overlapping

arguments. This Court first summarizes the Defendants’ motions, then addresses the

various arguments contained therein.

1. Drouillard [Docket Text # 15]

Drouillard, in his motion to dismiss, presents three main arguments to support

dismissal of the claims alleged against him. (Def. Drouillard’s Mot. to Dismiss at 14 [Docket

Text # 15].)

First, Drouillard claims that the witness immunity doctrine “renders him immune from

liability for his medical reports, examinations [IMEs] and anticipated testimony.” (Def.

Drouillard’s Mot. to Dismiss at 2 [Docket Text # 15].) Drouillard admits that he performed

an IME on one of the named Plaintiffs, Jackson.20 It is also alleged that Drouillard

performed an IME on one of the proposed Plaintiffs, Lulek. Drouillard also states that he

will offer testimony as to his medical conclusions in the pending state administrative

proceedings before the WDCB. (Id. at 14.) Because Plaintiffs “are seeking to impose

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 24 of 69 Pg ID 908
 21 Jackson’s “WDCA claim is still at a preliminary stage. The WDCA magistrate has not

yet made a determination as to whether or not Jackson is entitled to benefits.” (Def.

Drouillard’s Mot. to Dismiss at 14 [Docket Text # 15].) “Jackson has not exhausted the

worker’s disability compensation process. His attorney is only in the discovery stage of his

proceeding. He has not yet proceeded to trial before a worker’s compensation magistrate.

Therefore, it is not known yet who all the witnesses will be in that matter, how the trial will

progress or what decision the magistrate will ultimately make. If the magistrate finds that

... Jackson is not entitled to benefits, he has the right to appeal that decision to the

Appellate Commission. If the Appellate Commission also concludes that he is not entitled

to benefits, that decision can be appealed to the Michigan Court of Appeals or the Michigan

Supreme Court. In short, there is a well ordered process to determine if plaintiffs are

disabled such as to be entitled to WDCA benefits, to challenge ... Drouillard’s ... medical

conclusions, and to appeal any adverse finding.” (Id. at 16-17.)

25

liability against ... Drouillard for an expert report and future testimony in an underlying

WDCA action,” Drouillard concludes that he is “immune from liability related to his medical

examination and future testimony” under the witness immunity doctrine. (Id. at 23.)

Drouillard next argues that Plaintiffs have failed to allege a RICO cause of action. He

contends that dismissal is appropriate because Plaintiffs have failed to plead: (1) that

Drouillard committed two predicate acts; (2) that an enterprise existed separate and distinct

from the pattern of racketeering activity alleged; (3) that Drouillard engaged in a pattern of

racketeering activity; or (4) that his conduct was connected to the operation or

management of the alleged enterprise or that he had control over it. (Id. at 2.)

Third, Drouillard argues that jurisdiction is not proper in this Court, under either the

primary jurisdiction doctrine or the Burford abstention doctrine because Plaintiffs’ RICO

claims depend, in part, on whether they are actually entitled to workers’ compensation

benefits—a determination that has not yet been made. As one of the Plaintiffs, Jackson,

is currently involved in a proceeding under the WDCA to determine his entitlement to

workers’ disability benefits,21 Drouillard argues that these doctrines operate to dismiss

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 25 of 69 Pg ID 909
26

Plaintiffs’ claims, or alternatively demand a stay pending final resolution of the state

administrative proceedings. 

2. Coca Cola [Docket Text # 21]

Coca Cola, in its motion to dismiss, adopts Drouillard’s arguments and also raises

several additional arguments. The additional arguments to support its motion to dismiss

include: 

a. No plaintiff may assert a RICO claim based upon the allegedly fraudulent

violation of a statutory duty where the statute that creates the duty also (I)

establishes a specialized administrative scheme to enforce and regulate the

duty and (ii) prescribes the exclusive remedy for any breach of the duty.

Here, Michigan’s Workers Disability Compensation Act (I) establishes a

specialized administrative scheme to enforce and regulate the duty to pay

benefits to injured employees under the Act and (ii) prescribes the exclusive

remedy for an injured employee and for an employee whose claim for

benefits has been disputed—even if disputed in bad faith. Plaintiffs cannot

use their RICO claim as an “end run” around the WDCA; 

b. The breach of statutory duties created under certain comprehensive

administrative statutes—even when fraudulent—does not give rise to a RICO

claim. The duties created under the WDCA to pay benefits to injured

employees and to do so on a timely basis are just such duties; even the

fraudulent breach of these duties cannot support a RICO claim; ...

e. Plaintiffs assert a claim against Coke for violating 18 U.S.C. § 1962(c) ...

Plaintiffs failed to sufficiently allege the existence of any enterprise, failed to

sufficiently allege that Coke participated in the affairs of the enterprise, and

failed to allege that Coke committed any predicate acts.

(Def. Coca Cola’s Mot. to Dismiss at 2-3 [Docket Text # 21].)

3. Sedgwick [Docket Text # 39]

In its motion to dismiss, Sedgwick joins the arguments raised by Drouillard and Coca

Cola. Sedgwick also argues that its motion should be granted for two additional reasons.

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27

First, Sedgwick argues that Plaintiffs’ claims fail as a matter of law because Plaintiffs

do not have standing under RICO, as their claims are not ripe. Sedgwick claims that

“Plaintiffs are trying to ‘fit a square peg into a round hole’ by squeezing a dispute over

entitlement to workers compensation benefits into a civil RICO action.” (Def. Sedgwick’s

Mot. to Dismiss at 14 [Docket Text # 39].)

Second, Sedgwick argues that Plaintiffs have failed to state a claim because: (1) the

allegations do not support a violation of either the federal wire or mail fraud statutes; (2) the

alleged violations of statutory rights under the WDCA will not support a predicate act of mail

or wire fraud; and (3) the allegations fail to demonstrate a pattern of racketeering activity.

Sedgwick, in its reply, also argues that Plaintiffs have failed to meet the pleading

requirements set forth under Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937 (2009).

B. Standards: Motions to Dismiss

1. Rule 12(b)(1) Standard

Subject matter jurisdiction is governed by Fed. R. Civ. P. 12(b)(1). A motion to dismiss

pursuant to Rule 12(b)(1) may either attack the claim of jurisdiction on its face or it can

attack the factual basis of jurisdiction. Golden v. Gorno Bros., Inc., 410 F.3d 879, 881 (6th

Cir. 2005). When a defendant challenges subject matter jurisdiction on a factual basis, the

plaintiff has the burden of proving jurisdiction in order to survive the motion. Moir v. Greater

Cleveland Regional Transit Authority, 895 F.2d 266, 269 (6th Cir. 1990). 

2. Rule 12(b)(6) Motion to Dismiss Standard

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the

sufficiency of a complaint. In a light most favorable to the plaintiff, the court must assume

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28

that the plaintiff’s factual allegations are true and determine whether the complaint states

a valid claim for relief. See Albright v. Oliver, 510 U.S. 266 (1994); Bower v. Fed. Express

Corp., 96 F.3d 200, 203 (6th Cir. 1996). To survive a Rule 12(b)(6) motion to dismiss, the

complaint’s “[f]actual allegations must be enough to raise a right to relief above the

speculative level on the assumption that all of the allegations in the complaint are true.” Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and emphasis

omitted). See also Ass’n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d

545, 548 (6th Cir. 2007). “[T]hat a court must accept as true all of the allegations contained

in a complaint is inapplicable to legal conclusions. Threadbare recitals of all the elements

of a cause of action, supported by mere conclusory statements do not suffice.” Ashcroft v.

Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949 (2009) The court is “not bound to accept as true

a legal conclusion couched as a factual allegation.” Id. at 1950 (internal quotation marks

and citation omitted). Moreover, “[o]nly a complaint that states a plausible claim for relief

survives a motion to dismiss.” Id.

“Determining whether a complaint states a plausible claim for relief will . . . be a

context-specific task that requires the reviewing court to draw on its judicial experience and

common sense. But where the well-pleaded facts do not permit the court to infer more than

the mere possibility of misconduct, the complaint has alleged–but it has not shown–that the

pleader is entitled to relief.” Id. (internal quotation marks and citation omitted). Thus, “a

court considering a motion to dismiss can choose to begin by identifying pleadings that,

because they are no more than conclusions, are not entitled to the assumption of truth.

While legal conclusions can provide the framework of a complaint, they must be supported

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 28 of 69 Pg ID 912
 22 Brown v. Cassens Transp. Co., 409 F.Supp.2d 793 (E.D. Mich. 2005) (rev’d in part

on other grounds by Brown v. Cassens Transp. Co., 546 F.3d 347 (6th Cir. 2008)) and

Moon v. Harrison Piping Supply, 375 F.Supp.2d 577 (E.D. Mich. 2005) (rev’d in part on

other grounds by Moon v. Harrison Piping Supply, 465 F.3d 719 (6th Cir. 2006)).

 23 Although the Moon and Brown court held that “[t]he threshold requirements for the

applicability of the primary-jurisdiction doctrine [we]re met here [and that] [t]he

primary-jurisdiction doctrine’s twin rationales [we]re also met,” it was unclear to the court

“whether the primary-jurisdiction doctrine may apply in favor of a state administrative

agency where the claim at issue arises under federal law and there are no competing

federal forums.” Brown, 409 F.Supp.2d at 799-800. Accord, Moon, 375 F.Supp.2d at 586-

29

by factual allegations. When there are well-pleaded factual allegations, a court should

assume their veracity and then determine whether they plausibly give rise to an entitlement

to relief.” Id. In sum, “[t]o survive a motion to dismiss, a complaint must contain sufficient

factual matter, accepted as true, to state a claim for relief that is plausible on its face.” Id.

at 1949 (internal quotation marks and citation omitted). 

C. Analysis: Defendants’ Motions to Dismiss

1. Applicability of Abstention Doctrines

Defendants contend that Plaintiffs’ RICO claims depend, in part, on whether they are

actually entitled to workers’ compensation benefits—a determination that has not yet been

made, as at least one of the Plaintiffs has a claim for workers’ compensation benefits

currently pending before the WDCB. Defendants conclude that because the WDCB has

exclusive jurisdiction over the issue of entitlement to workers’ compensation benefits, this

Court should stay the action pending resolution of the state administrative proceedings

under two abstention doctrines: primary jurisdiction and Burford abstention. 

Judge Borman, in two RICO cases22 factually similar to this matter, addressed the

applicability of primary jurisdiction23 and the Burford abstention doctrine.24 The Court finds

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 29 of 69 Pg ID 913
587. Ultimately, Judge Borman did not rule on the issue of primary jurisdiction, because he

determined that the Burford abstention doctrine “would compel the stay of Plaintiffs’ RICO

claims pending the WDCB’s determination of Plaintiffs’ entitlements to workers’

compensation benefits.” Id. at 801.

 24 Regarding the Burford abstention, the Moon and Brown court held that the doctrine

applied to stay the plaintiffs’ RICO claims until there was a final determination by the WDCB

as to the plaintiffs’ entitlement to workers’ compensation benefits. 

Comparatively-speaking, in contrast to its substantial interest in resolving the

federal-law issues of Plaintiff’s RICO claims, this federal forum would have

minimal interest in determining Plaintiff’s entitlement to workers’

compensation benefits. Thus, the Court would stay Plaintiff’s RICO claims if

they survived the instant motion, based on Plaintiff’s claim of entitlement to

workers’ compensation benefits, pending a final determination of Plaintiff’s

entitlement to those benefits via Michigan’s workers’ compensation scheme.

Moon, 375 F.Supp.2d at 590. Accord, Brown, 409 F.Supp.2d at 803.

 25 Plaintiffs, on the other hand, argue that the Sixth Circuit determined, on remand in

Brown, 546 F.3d 347, that the Burford abstention doctrine did not apply. However, the

section of the opinion quoted by Plaintiffs addressed the issue of preemption under the

McCarran-Ferguson Act and by its own language does not discuss the abstention issue.

See Brown, 546 F.3d at 361-63. The Court disagrees with Plaintiffs’ over-broad

interpretation that “the Sixth Circuit’s reasoning in Brown [regarding reverse preemption

30

Judge Borman’s reasoning and analysis persuasive. The Michigan legislature has

established a comprehensive state administrative framework to determine eligibility for

workers’ compensation benefits and to administer workers’ compensation claims, and such

a scheme is precisely the sort of state system that Burford protects from federal

interference. The WDCB and the WDCA appellate process is in the best position to

determine a claimant’s entitlement to workers’ compensation benefits, and—as Plaintiffs’

RICO claims depend, in part, on whether they are actually entitled to workers’

compensation benefits—this Court finds that a stay would be appropriate here to avoid

interfering with the ongoing state administrative process, to promote comity, and to avoid

unnecessarily deciding or complicating the issues in the present case.25

2:09-cv-11529-NGE-VMM Doc # 59 Filed 03/11/10 Pg 30 of 69 Pg ID 914
under the McCarran Ferguson Act] ... applies here to knock out the Burford abstention

doctrine.” (Pls.’ Resp. to Def. Drouillard’s Mot. to Dismiss at 30 [Docket Text # 30].) The

Sixth Circuit did not address the question of whether Burford applies to stay a proceeding

pending final determination of a previously filed, and currently pending, workers’

compensation benefit claim under the WDCA.

 26 Plaintiffs do not dispute that the WDCB should determine the question of entitlement

to workers’ compensation benefits. In response to Drouillard’s motion to dismiss Plaintiffs

state: “Whether plaintiff has a claim for benefits should be decided by the Bureau of

Workers Disability Compensation. But whether defendants have fraudulently conspired to

deprive him of benefits in violation of RICO may only be decided by this court. The Bureau

has no jurisdiction over such a [fraud] claim.” (Pls.’ Resp. to Def. Drouillard’s Mot. to

Dismiss at 33 [Docket Text # 30] (emphasis in original).)

 27 As the Court is dismissing Plaintiffs’ RICO claims on other grounds, it need not reach

the merits of Defendants other arguments supporting dismissal including: (1) that the

witness immunity doctrine bars all claims against Drouillard; (2) that the McCarran31

Accordingly, the Court would stay Plaintiffs’ RICO claims—if they survive the instant

motions to dismiss—pending a final determination of Plaintiffs’ eligibility for workers’

compensation benefits under the WDCA.26

2. RICO Claims Cannot Survive Motion to Dismiss

The Court finds that Plaintiffs’ RICO claims, inclusive of the allegations contained in

the Amended Complaint and all proposed amendments, cannot survive the instant motions

to dismiss. As discussed below, Plaintiffs’ RICO claims are dismissed under three alternate

grounds: (1) RICO does not provide a remedy for the fraudulent denial of benefits because

an injured worker may not use RICO as an “end run” around the exclusive procedures and

remedies prescribed by the WDCA, or alternatively because a violation of the administrative

duties created by statute under the WDCA, even when fraudulent, does not amount to mail

or wire fraud sufficient to give rise to RICO liability; (2) Plaintiffs’ claims are not ripe; and

(3) Plaintiffs have failed to state a claim for relief under RICO.27

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Ferguson Act preempts Plaintiffs’ RICO claims; (3) the remedy that Plaintiffs

seek—compensation for personal injuries—is not recognized under RICO; and (4) that

Plaintiffs’ have failed to plead mail fraud, as Plaintiffs have not demonstrated that anyone

was “deceived” by Defendants actions.

 28 Plaintiffs allege that Defendants violated duties owed to them “under the Michigan

Workers Disability Compensation Act” and “under the Michigan Uniform Trade Practices

Act.” (Am. Compl. ¶¶ 16-17.) Defendants contend, and Plaintiffs do not argue to the

contrary, that they did not owe Plaintiffs any duties under the MUTPA. See Blackwell v.

Citizens Ins. Co., 579 N.W.2d 889, 894 (1998) (“the duties outlined in the UTPA run to [an]

employer rather than [to an] employee.”). Moreover, Plaintiffs appear to concur with

Defendants’ position. (See Pls.’ Resp. to Def. Sedgwick’s Mot. to Dismiss at 13 [Docket

Text # 47] (“Sedgwick claims the [MUTAPA] creates not [sic] duties applicable here. True,

the UTPA may not create a duty ...”.) Thus, the only duties on which Plaintiffs’ claims can

possibly be based are those duties created by the WDCA. 

32

a. RICO Does Not Provide Remedy for the Fraudulent Denial of Benefits

Plaintiffs allege that they are entitled to workers’ compensation benefits, and some

Plaintiffs have challenged the denial of their claims under the administrative scheme

established by the WDCA and also in this matter. Here, Plaintiffs claim that Defendants

fraudulently breached their duties under the WDCA28 “to be honest in the administration of

a workers compensation claim” and “not to unreasonably fail to pay promptly claims for

compensation for which [they] shall become liable.” (Am. Compl. ¶¶ 16-17.) But, according

to Defendants, federal courts have consistently rejected RICO claims arising out of alleged

fraudulent violations of duties created by statutes like the WDCA under two alternate

rationales.

[F]irst, that a plaintiff may not assert a RICO claim based upon the violation

of a statutory duty where the statute that creates the duty also (a) establishes

a specialized administrative scheme to enforce and regulate the duty and (b)

prescribes an exclusive administrative remedy for breach of the duty, see,

e.g., Miller v. Norfolk Southern Railway, 183 F.Supp.2d 996, 1000 (N.D. Ohio

2002) (dismissing RICO claim based upon allegedly fraudulent violation of

employees’ rights under Railway Labor Act); and, second, that the breach of

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33

administrative duties created by statutes like the WDCA—even when

fraudulent—does not amount to mail or wire fraud sufficient to give rise to

RICO liability. See, e.g., Ayres v. General Motors Corp., 234 F.3d 514,

521-22 (11th Cir. 2000) (dismissing RICO claim based upon allegedly

fraudulent violation of the National Traffic and Motor Vehicle Safety Act). 

(Def. Coca Cola’s Mot. to Dismiss at 14-15 [Docket Text # 21].) Defendants conclude

that—because both alternate rationales are present here—the Court should, therefore,

dismiss Plaintiffs’ RICO claims. The Court agrees, and discusses each in turn.

(1) RICO May Not be Used as an “End Run” Around WDCA

As to Defendants’ first argument—that an injured worker may not use RICO as an

“end run” around the exclusive procedures and remedies prescribed by the

WDCA—Defendants contend that Plaintiffs 

have filed this action in an attempt to convert their workers compensation

disputes into a federal RICO case—the basis of which is the Defendants’

allegedly-fraudulent violation of the WDCA. Plaintiffs’ effort to convert their

disputes over benefits into RICO claims, while creative, must be rejected.

Plaintiffs’ RICO claims seek to expand RICO far beyond its intended reach.

As the federal courts have repeatedly held, a plaintiff may not use a RICO

claim as an “end run” around a comprehensive, specialized, and exclusive

administrative scheme like the scheme established by the WDCA. Yet that

is precisely what these Plaintiffs seek to do.

(Def. Coca Cola’s Mot. to Dismiss at 10 [Docket Text # 21].) The holding in Danielsen v.

Burnside-Ott Aviation, 746 F.Supp. 170 (D. D.C. 1990), aff’d 941 F.2d 1220 (D.C. Cir.

1991), is representative of federal court decisions to dismiss RICO claims that attempt to

bypass comprehensive and exclusive administrative schemes like the WDCA. See id. at

176. (“[C]ourts have held that RICO is preempted by a variety of statutes that establish

comprehensive administrative schemes.”). 

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34

The plaintiffs in Danielsen alleged that the defendants “engaged in a scheme to

defraud employees of the minimum wages and fringe benefits to which they were entitled”

under the McNamara-O’Hara Services Contract Act, 41 U.S.C. 351, et seq. (SCA), “in

violation of the civil provisions of ... RICO.” Danielsen, 746 F.Supp. at 171. Notwithstanding

the fact that the plaintiffs had no private right of action under the SCA and even though

federal law assigned exclusive authority to address violations of the SCA to the Department

of Labor, the plaintiffs brought a RICO claim based upon the alleged SCA violations. The

court rejected the plaintiffs’ effort to convert SCA violations into a RICO claim:

Here, the fraudulent scheme alleged by the plaintiffs is an underpayment of

wages and fringe benefits due them pursuant to the SCA. Plaintiffs’ RICO

claims are all premised on alleged violations of the SCA. However, the SCA

expressly assigns the responsibility for determining and enforcing wage

levels and other employee benefits to DOL. Allowing plaintiffs to proceed with

their RICO claims would not only upset the careful blend of administrative

and judicial powers that Congress has created under the SCA, but also

overturn well-established precedent that employees have no private right of

action under the Act.

Id. at 176. The district court held that the facts alleged in the purported RICO action fell

within the SCA and that the administrative remedy provided by that Act was an exclusive

one, barring any private civil action. See id. at 174 (“The Court concludes that to permit

plaintiffs to enforce the SCA through a RICO suit such as this would destroy the

administrative scheme established by the SCA.”).

On appeal, the D.C. Circuit affirmed. See Danielsen, 941 F.2d 1227 (“We agree with

the District Court that the statutory scheme for administrative relief set forth ... in the SCA

leaves no room for a RICO action on the present allegations.”). The D.C. Circuit held:

We agree ... that the implication of a private right under the SCA would

undercut the specific remedy [it] prescribed ... [W]hat plaintiff will pursue his

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35

administrative remedies under the Act where more direct and expeditious

relief is available in a private suit? How much more the case where plaintiffs

couch their complaint in terms of RICO to give them, not a remedy equal to

that provided under the SCA, but three times that remedy? How much more

still where their attorneys would be extracting their fees not from their clients

but from the other side? Thus, the ingenious pleading of the action in RICO

terms rather than in straight SCA language cuts against the implication of the

right of action rather than in its favor. ...

To call the violation of the SCA “a pattern of racketeering” does nothing to

persuade this Court that Congress intended the SCA to create a private

cause of action. ... In short, by all authority and reason, it is plain that the

SCA creates no private remedy.

To frame the action for such remedy in terms of RICO adds nothing. ... RICO,

in fact, does recite a list of statutes the breach of which will constitute

racketeering. See 18 U.S.C. § 1961(1). Conspicuously, however, the SCA is

not one of those statutes. Thus, we conclude that the District Court was

correct in holding that the private civil action, even couched in RICO terms,

will not lie for an alleged breach of the SCA.

Id. at 1228-29 (internal quotations and citations omitted).

Similarly the district court in Livingston v. Shore Slurry Seal, Inc., 98 F.Supp.2d 594

(D. N.J. 2000), dismissed a RICO claim based upon violations of another comprehensive

statute that created exclusive administrative procedures to remedy violations. The plaintiffs

in Livingston alleged that the defendants had violated, and conspired to violate, the

Davis-Bacon Act, 40 U.S.C. § 276a et seq., by fraudulently failing to pay employees the

prevailing wage on public contracts. Livingston, 98 F.Supp.2d at 596. Even though the

Davis-Bacon “Act sets forth a detailed administrative scheme to enforce violations of its

provisions,” the plaintiffs brought a RICO action. Id. The district court rejected the plaintiffs’

attempt to convert their Davis-Bacon Act dispute into a civil RICO case: “Plaintiffs’ claim

under the Davis-Bacon Act must be dismissed because there is no private right of action

under the Act.” Id. The court held that the plaintiffs “could not base their RICO claims on

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 29 Moreover, Congress has expressed its intention to limit federal jurisdiction over claims

related to alleged violations of state workers’ compensation statutes in 28 U.S.C. § 1445(c),

which prohibits removal of any civil action “arising under the workmen’s compensation

laws” of the states. “Although styled as RICO claims, Plaintiffs’ claims arise under the

WDCA because (1) Plaintiffs’ entitlement to relief depends upon their allegation that they

qualified for benefits under the WDCA, (2) the primary relief Plaintiffs seek is an award of

benefits allegedly owing under the WDCA, and (3) as noted above, the WDCA provides a

specific remedy for the alleged wrongful denial of benefits that Plaintiffs challenge here.

Plaintiffs’ claims are thus precisely the type of claims that Congress intended to keep out

of the federal courts.” (Def. Coca Cola’s Mot. at 20 [Docket Text # 21].) Defendants

recognize that this action, however, is not subject to 28 U.S.C. § 1445(c) because it was

not removed to this Court, but argue that § 1445(c) “should guide this Court’s interpretation

and application of the RICO statute.” (Id.)

36

defendants’ alleged violation of the Davis-Bacon Act” because “[t]he detailed administrative

scheme created by the Act is the exclusive remedy for the alleged underpayment of wages

for work performed on federal construction projects.” Id. at 600. The court further explained

that the “plaintiffs’ sole remedy ... is the administrative remedy set forth” under the DavisBacon Act—not a RICO cause of action. Id. at 601. See also id. at 600 (“At its core,

plaintiffs’ Amended Complaint alleges that defendants paid plaintiffs less than the prevailing

wage. However, a violation of a state or federal prevailing wage statute is not a predicate

act for purposes of RICO liability. Absent specific allegations of fraud or deceit, plaintiffs

cannot transform their claims into a federal RICO claim through the creative invocation of

the wire and mail fraud statutes.”).

The courts’ reasoning in Danielsen and Livingston is applicable here and likewise

requires dismissal of Plaintiffs’ RICO claims.29 Like the statutes at issue in those cases, the

WDCA establishes a comprehensive and exclusive administrative scheme that governs

workers’ compensation benefits, including the adjudication of whether a claimant is entitled

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 30 The WDCA provides for review of a disputed claim by a mediator or at a hearing

before workers compensation magistrate, Mich. Comp. Laws § 418.847, and then allows

for review of the magistrate’s decision by the Workers Compensation Appellate

Commission, Mich. Comp. Laws § 418.859(a), and also provides for subsequent judicial

review of that decision, Mich. Comp. Laws § 418.861(a).

 31 The WDCA provides that a disability insurer must pay a penalty $50.00 per day if, in

the absence of a dispute over the claimant’s entitlement to benefits, it fails to pay benefits

within 30 days of when they become due and owing and limits the total penalty to

$1500.00. Mich. Comp. Laws § 418.801(2). The WDCA also provides that a self-insurer,

like Coca Cola, can lose its privilege if it “repeatedly or unreasonably fails to pay promptly

claims for compensation for which it shall become liable.” Mich. Comp. Laws § 418.631.

37

to such benefits.30 Not only does the WDCA provide the exclusive remedy for an employee

seeking benefits, it also provides the exclusive remedy for an employee claiming that his

employer failed to pay benefits in bad faith.31

On at least two occasions, the Michigan Court of Appeals has addressed this very

issue: that the WDCA provides the exclusive remedy for an employee claiming that his

employer failed to pay benefits in bad faith. Twice it held that an employee may not recover

more than the statutory limit—even where an employer disputes a claim for benefits in bad

faith. See Warner v. Collavino Bros., 347 N.W.2d 787, 790 (Mich. Ct. App. 1984) (affirming

administrative ruling that “an employer [who] disputed a claim in bad faith will not justify the

assessing of a penalty [beyond the limited penalty set forth in the WDCA] against the

employer”); Couture v. General Motors Corp., 335 N.W.2d 668, 670 (Mich. Ct. App. 1983)

(reversing administrative award of penalty damages above the statutory limit because it

determined that the Legislature intended to limit an employer’s liability for all failures to pay

benefits—even those in “bad faith”). An injured employee seeking workers’ compensation

benefits, therefore, must utilize the comprehensive administrative process established by

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38

the WDCA and has no private right of action to recover benefits: the WDCA is his

“exclusive remedy.” Mich. Comp. Laws § 418.131 (“The right to the recovery of benefits as

provided in this act shall be the employee’s exclusive remedy against the employer for a

personal injury or occupational disease. The only exception to this exclusive remedy is an

intentional tort.”).

Plaintiffs argue that the Sixth Circuit’s discussion of the McCarran-Ferguson reversepreemption in Brown forecloses Defendants’ argument here. See Brown, 546 F.3d at 362-

63. The Court finds Plaintiffs’ reliance on Brown misplaced for two reasons. First, the

portion of the opinion upon which Plaintiffs rely is dicta: the Sixth Circuit prefaced that

section of its Opinion by noting that it had already “dispose[d] of” the matter. Id. at 361-62.

As the Sixth Circuit has repeatedly acknowledged, its dicta is not binding. See, e.g.,

Hinchman v. Moore, 312 F.3d 198, 204 (6th Cir. 2003). Second, there is no indication that

the Sixth Circuit considered the Michigan Court of Appeal cases which held that the WDCA

strictly limits an employer’s liability for disputing a workers’ compensation claim—even

those made in bad faith. See Couture, 335 N.W.2d 668; Warner, 347 N.W.2d 787. As the

Michigan Court of Appeals explained in those cases, the Michigan Legislature made a

policy decision to circumscribe an employer’s liability—even when they contest or deny

claims in bad faith. See Warner, 347 N.W.2d at 790 (“From our reading of similar statutes,

we infer that the Legislature was aware that prompt payment of compensation benefits

could be encouraged by imposing a penalty for bad faith denial of payments,” but the

Legislature nonetheless chose to preclude the assessment of a penalty for bad faith

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 32 Michigan courts have also rejected attempts by plaintiffs to bring an action for tortious

denial of workers’ compensation benefits. See, e.g., Wright v. DaimlerChrysler Corp., 220

F.Supp.2d 832, 845 (E.D. Mich 2002) (“Additionally, the denial of workers’ compensation

benefits, even in bad faith, is not tortious. Other lawsuits against employers and insurance

companies for canceling or refusing to pay insurance benefits are brought as intentional

infliction of emotional distress claims. In that context, courts hold that wrongful, bad faith

termination of benefits is not sufficiently outrageous to support a claim for intentional

infliction of emotional distress. Therefore, wrongful, even bad faith refusal to offer benefits

to which Plaintiff is entitled is not tortious.”) (internal quotations and citations omitted).

39

denials).32 Thus, allowing Plaintiffs here to proceed with their RICO claims based upon

Defendants’ alleged fraud in disputing their workers’ compensation benefit claims would

frustrate legislative intent. Moreover, the Brown court did not address the question of

whether an injured worker may use RICO as an “end run” around the procedures and

remedies prescribed by the WDCA. Instead, the Sixth Circuit addressed the narrow issue

of whether, under the McCarran-Ferguson Act, the WDCA “reverse preempted” the

plaintiffs’ RICO claims, and analyzed specific objections to the manner in which the

plaintiffs pleaded their RICO claims.

Plaintiffs also contend “that the WDCA is not ‘comprehensive’ and ‘exclusive,’ and

does not prevent the bringing of a RICO claim for fraudulent denial of benefits.” (Pls.’ Resp.

to Def. Coca Cola’s Mot. to Dismiss at 7 [Docket Text # 34] (emphasis in original).) Federal

courts, however, have specifically rejected the artificial distinction Plaintiffs attempt to draw

between a wrongful denial of statutory benefits and a “fraudulent” denial of benefits: with

respect to both types of denials, the essence of the harm to the claimant is the deprivation

of benefits to which he is allegedly entitled. See, e.g., Butchers Union Local No. 498 v. SDC

Inv., Inc., 631 F.Supp. 1001, 1011 (E.D. Cal.1986) (“Bluntly put, no matter how you cut the

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40

complaint, the only conceivable ‘fraud’ is the deprivation of plaintiffs’ rights under the labor

law. Since defendants’ liability, under the mail and wire fraud statutes, if any, is wholly

dependent on the labor laws, judgement of defendants’ conduct ... lies exclusively with the

[National Labor Relations Board].”); Danielsen, 941 F.2d at 1229 (“To frame the action for

such a remedy [an award of statutory benefits] in terms of RICO [fraud] adds nothing.”).

Courts have consistently concluded that where a comprehensive and exclusive

administrative scheme exists to address the denial of benefits—whether the denial was

fraudulent or otherwise wrongful—that scheme provides an appropriate and sufficient

remedy to the claimant. See id. Here, the gravamen of Plaintiffs’ claims is that they did not

receive the workers’ compensation benefits to which they were allegedly entitled. Plaintiffs’

use of the label “fraudulent” does not change the fact that they are simply claiming that

Coca Cola or Sedgwick should have paid their benefits. The WDCA creates both an

administrative forum for the adjudication of Plaintiffs’ claimed entitlement to benefits and

a remedy for the denial of those benefits. Plaintiffs, therefore, may not avoid the WDCA’s

comprehensive procedures and exclusive remedies simply by characterizing a denial of

benefits as “fraudulent.” 

RICO was never intended to create a path into courts for litigants who would otherwise

be limited to exclusive administrative remedies and procedures, and subject to strict

damages limitations. The Court finds that Plaintiffs may not use their RICO claim to reform

Michigan’s workers’ compensation law—allowing them to do so would be an unwarranted

intrusion into Michigan state law and procedure. Because Plaintiffs’ sole remedies are

those set forth under the WDCA, Plaintiffs’ RICO claims are dismissed.

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41

(2) Violation of WDCA Does Not Amount to Mail or Wire Fraud

As to the second argument—that a violation of the administrative duties created by

statute under the WDCA, even when fraudulent, does not amount to mail or wire fraud

sufficient to give rise to RICO liability—Defendants contend that Plaintiffs’ RICO claims rest

upon two erroneous assumptions. First, that Defendants fraudulently breached duties owed

to Plaintiffs under the WDCA (i.e., the duties to fairly and honestly evaluate their claims)

and second, that Defendants’ fraudulent breach of those duties amounts to mail and wire

fraud sufficient to trigger RICO liability. 

The first assumption is wrong as a matter of fact, but, more importantly for

purposes of this motion, the second assumption is wrong as a matter of law.

(Def. Coca Cola’s Mot. to Dismiss at 20-21 [Docket Text # 21].) According to Defendants,

the breach of a legal duty, even when fraudulent, does not amount to mail or wire fraud

where: (1) the breached duty is wholly a creature of statute; (2) the statute creating the duty

establishes a comprehensive and exclusive administrative scheme to enforce the duty; and

(3) the statute does not provide for a private right of action or criminal penalties. This Court

agrees: even if Defendants fraudulently violated the WDCA, such a violation does not

amount to mail or wire fraud sufficient to give rise to RICO liability.

The Eleventh Circuit’s decision in Ayres v. General Motors Corp., 234 F.3d 514 (11th

Cir. 2000), makes this very point. The plaintiffs in Ayres brought a claim against General

Motors under the Georgia civil RICO statute. The plaintiffs alleged that General Motors

violated RICO through a pattern of mail and wire fraud by fraudulently failing to disclose

information that it was required to disclose under the National Traffic and Motor Vehicle

Safety Act, 49 U.S.C. § 30118, et seq. The Eleventh Circuit assumed that General Motors

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42

had violated the statute as alleged by plaintiffs. But the court held that such a violation did

not amount to mail fraud because the Safety Act “was not meant to create the kind of duty,

a breach of which would create criminal liability or civil liability under RICO statutes.” Ayres,

234 F.3d at 521-22. The court explained:

The Safety Act establishes its own extensive array of administrative remedies

for a violation of its notification obligations ... [and] the Safety Act does not

make violation of the notification requirements criminal. In light of this

extensive administrative scheme, we think it clear that Congress did not

intend to equate a violation of the Safety Act’s notification requirements in

and of itself with the felony of mail or wire fraud. Moreover, given the limits

on the civil penalties, the absence of a private right of action, and the option

of private parties to petition for administrative action, it is also clear that

Congress did not intend for a violation of the Safety Act’s notification

requirements to be the basis for a private civil RICO action, which would

permit unlimited, treble damages. ... 

To permit plaintiffs to convert non-compliance with the notification

requirement found in the Safety Act, a regulatory statute with its own

administrative remedies, into mail and wire fraud and thereby to maintain a

civil RICO action would upset the purposes and contradict the intent of the

statute.

Id. at 522-25. Cf. Danielsen, 941 F.2d at 1229 (expressing “doubt” that an allegedly

fraudulent violation of the SCA could amount to mail fraud sufficient to trigger RICO liability,

the court stated “[t]he very fact that Congress enacted the SCA with its complex framework

for administrative recovery suggests that Congress did not contemplate that violation of

SCA constituted the criminal felony of mail fraud”).

The WDCA, like the statute in Ayres, “was not meant to create the kind of duty, a

breach of which would create criminal liability or civil liability under RICO statutes.” Ayres,

234 F.3d at 522. As discussed above, the WDCA “establishes its own extensive array of

administrative remedies for a violation” of the duty to pay claims. Id. An injured employee

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43

does not have a private right of action under the WDCA; on the contrary, the WDCA

abolished an employee’s right to sue and required them to exclusively pursue its

administrative remedies. See Mich. Comp. Laws § 418.131. Furthermore, the WDCA does

not provide for criminal penalties for violations of the duties it imposes; on the contrary, the

WDCA contains a strict limitation of liability that applies even where an employer disputes

a claim in bad faith. The WDCA—and the duties and remedies it creates—are directly

analogous to those in Ayres, the violation of which does not give rise to RICO liability.

Plaintiffs contend that this argument, too, was addressed in—and foreclosed by—the

Sixth Circuit in Brown. (See Pls.’ Resp. to Def. Coca Cola’s Mot. to Dismiss at 11 [Docket

Text # 34] (“None of the cases Coke cites in support of its argument apply specifically to

a RICO claim asserting fraudulent denial of benefits due under the ... WDCA. Brown does.

... Most critically, the arguments Coke makes are akin to the arguments for McCarranFerguson reverse preemption and Brown rejected those arguments. Coke cites to Ayres

to argue that RICO would impair or impede the WDCA and would provide remedies not

provided in the WDCA, and this argument is foreclosed by Brown.”).) Again, Plaintiffs

reliance on dicta in Brown is unpersuasive: the Sixth Circuit simply did not address, in its

analysis of McCarran-Ferguson reverse-preemption, the question of whether a violation of

administrative duties created by the WDCA—even if fraudulent—amounts to mail or wire

fraud sufficient to give rise to liability under the RICO. And, this Court holds that it does not.

Accordingly, Plaintiffs’ RICO claims are dismissed.

b. Plaintiffs’ Claim are Not Ripe

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44

Defendants also contend that Plaintiffs’ claims are not ripe because their injuries have

not been established—as Plaintiffs’ eligibility for workers’ compensation benefits has not

yet been determined.

Plaintiffs’ injuries and alleged damages are not “clear and definite” (let alone

established or likely) and their RICO claims therefore are premature. ...

A RICO defendant cannot be liable for all potential damages, but only those

actually suffered by the plaintiff. Those damages can only be measured after

the plaintiff has exhausted all remedies available to redress the alleged fraud.

Plaintiffs ... cannot allege their pecuniary loss with the requisite certainty

because the [WDCB] has not determined whether Plaintiffs are entitled to

benefits under the WDCA, let alone the amount of benefits to which they are

entitled. ... Plaintiffs cannot plead the amount of “out of pocket loss” or even

that they have suffered any out of pocket loss. ... Until Plaintiffs have

exhausted the administrative and legal process, ... they cannot plead either

injury or damages with the certainty necessary to establish standing under

RICO. 

(Def. Sedgwick’s Mot. to Dismiss at 15-16 [Docket Text # 39].) This Court agrees: to the

extent Plaintiffs’ RICO claims are predicated on an entitlement to workers’ compensation

benefits—a determination that has not yet been made, as at least one of the Plaintiffs has

a claim for workers’ compensation benefits currently pending before the WDCB—their

claims are not ripe for adjudication because it is uncertain whether they will sustain any

injury cognizable under RICO.

RICO provides a private civil cause of action:

Any person injured in his business or property by reason of a violation of

section 1962 of this chapter may sue therefor in any appropriate United

States district court and shall recover threefold the damages he sustains and

the cost of the suit, including a reasonable attorney’s fee.

18 U.S.C. § 1964(c). From this language, courts have extracted the elements that a plaintiff

must allege to satisfy § 1964(c): (1) a violation of section 1962; (2) an injury to business or

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 33 Moreover, their injury is not “concrete and particularized” nor is it “actual or

imminent”—it is simply conjectural and hypothetical. “In Lujan v. Defenders of Wildlife, 504

U.S. 555 (1992), the Supreme Court set forth the elements inescapably necessary to

confer standing under Article III of the Constitution’s ‘case or controversy’ requirement: 

[T]he irreducible constitutional minimum of standing contains three elements:

First, the plaintiff must have suffered an ‘injury in fact’-an invasion of a

legally-protected interest which is (a) concrete and particularized, ... and (b)

45

property; and (3) causation of the injury by the violation. See, e.g., O’Malley v. O’Neill, 887

F.2d 1557, 1561 (11th Cir. 1989); Hecht v. Commerce Clearing House, Inc., 897 F.2d 21,

23 (2d Cir. 1990). Thus, a RICO plaintiff “only has standing if, and can only recover to the

extent that, he has been injured in his business or property by the conduct constituting the

violation.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985). Here, Plaintiffs are

unable to establish an “injury to business or property,” as their entitlement to workers’

compensation benefits has not yet been determined, and their RICO claims are therefore

premature. 

Plaintiffs contend that their RICO claims were ripe for suit the moment Defendants

denied them of, or cut off them off from, workers’ compensation benefits, regardless of

whether their entitlement to those benefits had been adjudicated in the first instance.

Plaintiffs acknowledge that a determination has not yet been made as to their entitlement

to the underlying benefits, however, they assert an injury based on the allegedly fraudulent

denial of those benefits. The Court finds Plaintiffs’ attempt to assert a RICO claim prior to

a determination of eligibility for workers’ compensation benefits to be insufficient to support

an allegation of injury under RICO. Until such time as a determination is made as to

Plaintiffs’ eligibility for workers’ compensation benefits, they are unable to sufficiently

establish an injury.33

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actual or imminent, not conjectural or hypothetical.... Second, there must be

a causal connection between the injury and the conduct complained of. ...

Third, it must be likely, as opposed to merely speculative, that the injury will

be redressed by a favorable decision.

Id. at 560-61.” Adult Video Ass’n v. U.S. Dept. of Justice, 71 F.3d 563, 565-66 (6th Cir.

1995).

46

The proposition that a plaintiff’s claims are not ripe until an injury is establish is

exemplified in First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763 (2d Cir. 1994). See

id. (“[A]s a general rule, a cause of action does not accrue under RICO until the amount of

damages becomes clear and definite.”). In Gelt, the plaintiff-bank brought a RICO claim

alleging that the defendant-borrowers misrepresented the value of property that secured

certain loans. Specifically, the plaintiff alleged damages in the form of “excess loan loss”

measured by the difference between what it actually lost on the loans in default and the

amount it would have lost, had it originally loaned the defendants money based on the true

value of the collateralized property. The district court dismissed the plaintiff’s claims and

the Second Circuit affirmed holding that, because not all of the loans at issue had been

foreclosed, the plaintiffs could not sufficiently allege their injury under RICO. See id. at 767-

68. In reaching this holding, the Gelt court dismissed the plaintiff’s argument that its RICO

claims were ripe as soon as it closed the loan based on the false valuations submitted by

the defendants. See id. at 768 (“Thus, a plaintiff who claims that a debt is uncollectible

because of the defendant’s [fraudulent] conduct can only pursue the RICO treble damages

remedy after his contractual rights to payment have been frustrated.”). The court also

refused to accept the plaintiff’s contention that any amounts it collected upon foreclosure

could be deducted from their damages as mitigation and, therefore, their damages could

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 34 The Court is not persuaded by Plaintiffs’ contention that they have sufficiently alleged

an injury in the form of attorney fees and expenses incurred in pursuit of their alleged

entitlement to workers’ compensation benefits. It is unclear how such damages would be

recoverable if the Plaintiffs cannot first establish an entitlement to those underlying benefits.

Unless and until it is determined that Plaintiffs are entitled to workers’ compensation

benefits, Plaintiffs cannot sufficiently allege an injury.

 35 Notwithstanding Plaintiffs’ attempt to dismiss their 18 U.S.C. §§ 1962(a) and (b)

claims in their Amended Motion, (Pls.’ Am. Mot. [Docket Text # 44.]), the Amended

Complaint nevertheless fails to state a claim. 

To state a claim for violation of 18 U.S.C. § 1962(a), a plaintiff must allege “injuries

47

be calculated at trial. See id. (“Because the fraud defendant is not liable for all losses that

may occur, but only for those actually suffered, only after the lender has exhausted the

bargained-for remedies available to it can the lender assert that it was damaged by the

fraud, and then only to the extent of the deficiency.”). The Gelt court concluded that the

plaintiff had “not allege[d] actual injury by simply claiming that it incurred additional risk of

loss as a consequence of the fraud ... [and it] reject[ed] [the plaintiff’s] novel theory that it

was damaged simply by being undersecured when, with respect to those loans not yet

foreclosed, the actual damages it will suffer, if any, are yet to be determined.” Id.

In this case, like Gelt, the injury Plaintiffs may suffer in the denial of workers’

compensation benefits—that have not been established—cannot yet be determined. Only

when Plaintiffs’ are able to establish an injury (i.e., after their eligibility for benefits has been

determined) will their claims be ripe for suit.34 Thus, Plaintiffs’ RICO claims are dismissed.

c. Failure to State a Claim under Fed. R. Civ. P. 12(b)(6)

Defendants, in their motions to dismiss, make numerous arguments that Plaintiffs

have failed to state a claim under RICO.

(1) 18 U.S.C. § 1962(c)35

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stemming directly from the defendant’s alleged use or investment of their illegally obtained

income.” Craighead v. E. F. Hutton Co., Inc., 899 F.2d 485, 494 (6th Cir. 1990). The

alleged injuries necessary to support a claim under § 1962(a) must be “separate” from the

“injuries traceable to the alleged predicate acts.” Id. Here, Plaintiffs allege that their injuries

were caused by the alleged predicate acts of fraud (i.e., from the alleged bad faith denial

of the Plaintiffs’ claims for workers’ compensation benefits), and Plaintiffs do not identify

any non-conclusory facts to establish an injury that flowed from any alleged use or

investment of the fraud proceeds. Thus, Plaintiffs’ claim under § 1962(a) fails as a matter

of law. Although Plaintiffs allege that “monies received from the pattern of racketeering

activity alleged herein ... were used or invested in the operation of the RICO enterprise ...

which proximately injured plaintiffs as alleged herein,” (Am. Compl. at ¶ 24), such a

conclusory allegation is insufficient to survive a motion to dismiss brought under Fed. R.

Civ. P. 12(b)(6). See Ass’n of Cleveland Fire Fighters, 502 F.3d at 548 (quoting Twombly,

550 U.S. at 555); Iqbal, 129 S. Ct. at 1949. 

To state a claim for violation of 18 U.S.C. § 1962(b), a plaintiff must allege that the

defendant “acquire[d] or maintain[ed] an interest in, or control of, an enterprise through (or

by way of) the pattern of racketeering activity.” Advocacy Org. for Patients v. Auto Club Ins.

Co., 176 F.3d 315, 328 (6th Cir. 1999) (emphasis in original). It is not enough to allege that

the defendants “associated together in order to engage in the pattern of racketeering

activity.” Id. (emphasis in original.) Moreover, a plaintiff must specifically allege how the

defendants “acquired or maintained an interest in or control of the enterprise ... through the

alleged racketeering activity.” Id. at 329. Plaintiffs’ Complaint provides only conclusory

allegations, (see, e.g., Am. Compl. ¶ 24), to support its § 1962(b) claims and these are

insufficient to survive a motion to dismiss brought under Fed. R. Civ. P. 12(b)(6). See Ass’n

of Cleveland Fire Fighters, 502 F.3d at 548 (quoting Twombly, 550 U.S. at 555); Iqbal, 129

S. Ct. at 1949. 

48

The RICO Act provides a civil remedy to “[a]ny person injured in his business or

property by reason of a violation of [18 U.S.C. § 1962].” 18 U.S.C. § 1964(c). Under RICO,

it is

unlawful for any person employed by or associated with any enterprise

engaged in, or the activities of which affect, interstate or foreign commerce,

to conduct or participate, directly or indirectly, in the conduct of such

enterprise’s affairs through a pattern of racketeering activity or collection of

unlawful debt.

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49

18 U.S.C. § 1962(c). Thus, to state a claim under section 1962(c), Plaintiffs “must plead the

following elements: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering

activity.” Moon, 465 F.3d at 723 (internal quotations and citations omitted).

(a) Enterprise

i) Existence of an Enterprise

The Supreme Court recently addressed RICO’s “enterprise” requirement in Boyle v.

United States, ___ U.S. ___,129 S.Ct. 2237 (2009). The Court held that an enterprise must

have a “structure,” but “an ascertainable structure beyond that inherent in the pattern of

racketeering activity in which it engages” was not necessary. Id. at 2241.

This [statutory] enumeration of included enterprises is obviously broad,

encompassing any group of individuals associated in fact. The term “any”

ensures that the definition has a wide reach, and the very concept of an

association in fact is expansive. In addition, the RICO statute provides that

its terms are to be liberally construed to effectuate its remedial purposes. ...

[A]n enterprise includes any union or group of individuals associated in fact

and ... RICO reaches a group of persons associated together for a common

purpose of engaging in a course of conduct. Such an enterprise ... is proved

by evidence of an ongoing organization, formal or informal, and by evidence

that the various associates function as a continuing unit.

Id. at 2243 (internal quotations and citations omitted). “From the terms of RICO, it is

apparent that an association-in-fact enterprise must have at least three structural features:

a purpose, relationships among those associated with the enterprise, and longevity

sufficient to permit these associates to pursue the enterprise’s purpose.” Id. at 2244.

Further, “the existence of an enterprise is an element distinct from the pattern of

racketeering activity and proof of one does not necessarily establish the other.” Id. at 2245

(internal quotation and citation omitted).

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50

Here, Plaintiffs allege the existence of six separate enterprises, where “[t]wo or more

... may have acted together to defraud one or more plaintiffs of their workers compensation

benefits.” (Am. Compl. ¶ 11.) 

The predicate acts and violations of RICO alleged herein were committed by

one or more of the following enterprises. ... Drouillard participated in the

conduct and management of the RICO enterprise of ... Drouillard, and or

participated in the conduct of one of the following enterprises, and or

conspired with an enterprise in violation of 18 USC 1962(d).

(1) The workers compensation personnel at the workers compensation

claims departments at Sedgwick and Coke, handling Michigan workers

compensation claims and associating in fact, formed an “enterprise” for

purposes of ... RICO claims in this case. These persons included, inter alia,

La Tara Lewis. Because they worked together regularly in adjusting and

handling workers compensation claims for Coke Michigan workers, they

formed an organization. The personnel at Sedgwick who handled Coke’s

Michigan workers compensation claims, and the Michigan defense attorneys

who worked with Sedgwick on those claims, also handled Michigan workers

compensation claims for other employers, such as DHL Holdings. The names

of other persons in the enterprise are not known to plaintiffs. Additionally or

alternatively, the following persons or entities are an “enterprise” which acted

to defraud plaintiffs of their workers compensation benefits:

(2) the workers compensation claims personnel at Sedgwick who handled

Michigan claims;

(3) the workers compensation claims personnel at Sedgwick who handled

Michigan claims, plus Dr. Drouillard, associating in fact;

(4) the workers compensation claim personnel at Coke and Sedgwick

handling Michigan claims, plus Dr. Paul Drouillard, associating in fact;

(5) the medical business and practice of Dr. Paul Drouillard, which treats

patients and which also generates what Dr. Drouillard fraudulently call

“independent medical examinations;’ for years Dr. Drouillard, by means of

this enterprise, has supplied hundreds or thousands of fraudulent IME reports

to Coca Cola, Sedgwick, UPS, Liberty Mutual, Ajax Paving, and to other

Michigan employers and workers compensation insurers. 

(6) the workers compensation defense attorneys may be and may have been

part of the enterprise.

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51

(Proposed Sec. Am. Compl. (Sec. Rev.) ¶ 9; Pls.’ Am. Mot. [Docket Text # 44].) Plaintiffs

also allege that these enterprises “existed not only for the purpose of defrauding plaintiffs

of their workers compensation benefits; the enterprise engaged in other activities, such as

the administration of workers compensation claims and the examination of individuals

claiming workers compensation and other benefits.” (Am. Compl. ¶ 10.) 

Although the Complaint provides a recessitation of the elements of an enterprise, it

is questionable whether Plaintiffs have plead the existence of an enterprise sufficient to

survive Defendants’ motions to dismiss. The six different enterprises alleged is illustrative

of Plaintiffs’ inability to plead non-conclusory allegations, allegations that are “enough to

raise a right to relief above the speculative level.” Ass’n of Cleveland Fire Fighters, 502

F.3d at 548 (quoting Twombly, 550 U.S. at 555). The notion—that “labels and conclusions,

and a formulaic recitation of the elements of a cause of action will not do”—is further

supported by Plaintiffs’ allegation that: “[t]wo or more enterprises may have acted together

to defraud one or more plaintiffs of their workers compensation benefits.” (Am. Compl. ¶

11 (emphasis added).) Although Plaintiffs allege a number of different possible enterprises,

they have not arguably alleged one plausible enterprise. See Iqbal, 129 S. Ct. at 1950

(“Only a complaint that states a plausible claim for relief survives a motion to dismiss.”).

Assuming arguendo Plaintiffs have sufficiently alleged the existence of an enterprise, they

have not established conduct connected to the operation, management or control over the

enterprise for each participant.

ii) Operations, Management or Control 

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52

In Reves v. Ernst & Young, 507 U.S. 170, 185 (1993), the Supreme Court adopted the

“operation or management test.” The Court held that, to have “conducted or participated,

directly or indirectly, in the conduct of [an] enterprise’s affairs” for the purposes of §

1962(c), a person must have had an operational or management role in the enterprise. Id.

at 178. Plaintiffs contend that each Defendant “conducted or participated, directly or

indirect, in the conduct of [an] enterprise’s affairs.” The Court finds that, regarding Coca

Cola and Drouillard, Plaintiffs have failed to allege non-conclusory facts to establish

conduct connected to the operations or management of the enterprise or control over the

enterprise.

a) Coca Cola’s Participation 

Coca Cola contends that Plaintiffs have failed to sufficiently plead its participation in

the operational or management affairs of the enterprise, or control over it. This Court

agrees. 

Plaintiffs allege that the enterprise “existed ... for the purpose of defrauding plaintiffs

of their workers compensation benefits,” (Am. Compl. ¶ 10), however, Plaintiffs concede

that Coca Cola did not handle the administration of their claims—Sedgwick did. Moreover,

Plaintiffs have not alleged non-conclusory facts to demonstrate that Coca Cola participated

in the denial of those claims. Plaintiffs’ allegations—that “[d]ecisions regarding paying or

denying Michigan workers compensation claims, and selecting doctors to do medical

examinations of claimants, were made by Sedgwick and or Coke, or by Sedgwick after

consulting with Coke and with workers compensation defense attorneys, or were ratified

by Coke after being made by Sedgwick in consultation with its workers compensation

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 36 Plaintiffs’ proposed addition of Drouillard’s medical practice and business as a

defendant does not alter the Court’s analysis here.

53

defense attorneys”—are conclusory at best. (Am. Compl. ¶ 8.) Such speculative allegations

are insufficient to survive a motion to dismiss brought under Fed. R. Civ. P. 12(b)(6). See

Ass’n of Cleveland Fire Fighters, 502 F.3d at 548 (quoting Twombly, 550 U.S. at 555);

Iqbal, 129 S. Ct. at 1949. 

b) Drouillard’s Participation36

Drouillard contends, and this Court agrees, that Plaintiffs have failed to sufficiently

allege its participation in the operation and management of the enterprise. In Reves, the

Supreme Court noted that the term “participate” in § 1962(c) had a narrower meaning than

merely to “aid and abet.” Reves, 507 U.S. at 178. To participate, a defendant must have

“conducted or participated in the conduct of the ‘enterprise’s affairs,’ not just their own

affairs.” Id. at 185 (emphasis in original). 

Plaintiffs have not alleged that Drouillard had any involvement in the actual decision

to deny or cut off workers’ compensation benefits—there are only allegations that Coca

Cola and Sedgwick made such decisions. (See Am. Compl. ¶¶ 8, 16.) It is alleged that

Drouillard was hired by the corporate Defendants to perform “fraudulent” IMEs and provide

corresponding reports and testimony—he had no part in the alleged decisions to deny or

cut off benefits nor was he even informed what decision would be made. (See Am. Compl.

¶¶ 12-13.) Such conduct is demonstrative, not of an enterprise’s affairs, but of his own

affairs. Plaintiffs’ allegations that Drouillard was involved in the communications regarding

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 37 See, e.g., Am. Compl. ¶ 18 (“Drouillard and Sedgwick misrepresented to the claimants

in this case, and to workers compensation claimants ...that ... Drouillard was conducting

an “independent” medical examination of the claimants. ... Drouillard and Sedgwick knew

this representation to be false because they intended ... Drouillard to write reports favoring

Coke, Sedgwick and other employers and insurers; they knew he was not “independent”

but biased towards the employer and insurer in that he almost always found that a claimant

did not have a work-related disability and that he was paid hundreds of thousands of dollars

a year by workers compensation insurers, defendants and claims administrators.”). See

also Am. Compl. ¶¶ 19, 25, 31A; (Proposed Sec. Am. Compl. (Sec. Rev.) ¶¶ 9, 30A; Pls.’

Am. Mot. [Docket Text # 44].)

54

the decision to write fraudulent IME reports that would favor Coca Cola37 are simply

insufficient to establish that Drouillard had any operational or management role in the

enterprise or control over it. 

The allegations show little more than that the corporate Defendants sought out and

relied on Drouillard to perform individual IMEs and that Drouillard often returned reports

favorable to the corporate Defendants. The Court finds that Plaintiffs’ allegations regarding

Drouillard’s participation in the alleged enterprise are conclusory and speculative, and

insufficient to survive a motion to dismiss brought under Fed. R. Civ. P. 12(b)(6). See Ass’n

of Cleveland Fire Fighters, 502 F.3d at 548 (quoting Twombly, 550 U.S. at 555); Iqbal, 129

S. Ct. at 1949. 

(b) Through a Pattern of Racketeering Activity

“Racketeering activity” is defined as acts that constitute a violation of enumerated

criminal laws. The enumerated acts include “any act which is indictable under any of the

following provisions of title 18, United States Code: ... section 1341 [18 U.S.C. § 1341]

(relating to mail fraud), section 1343 [18 U.S.C. § 1343] (relating to wire fraud).” 18 U.S.C.

§ 1961(1).

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 38 As discussed above, the Court determined that the conduct Defendants allegedly

committed is not actionable under RICO because: (1) Plaintiffs cannot use the RICO

statute as an “end run” around the exclusive and comprehensive procedures and remedies

established by the WDCA; (2) Defendants’ alleged violation of the duties created by the

WDCA—even if fraudulent—does not amount to mail or wire fraud sufficient to give rise to

RICO liability; and (3) Plaintiffs’ claims are not ripe. Notwithstanding those determinations,

and for the sole purpose of evaluating Plaintiffs’ § 1962(c) RICO claim, the Court assumes,

without so holding, that Plaintiffs have plead predicate acts of wire or mail fraud.

 39 Plaintiffs also allege that Coca Cola “aided and abetted the predicate acts committed

by the other defendants, because (1) Sedgwick acted as agent for Coke, and the actions

of its agent are attributable to Coke, and (2) on information and belief, employees of Coke

knew of the predicate acts planned by the defendants on behalf of Coke and permitted

them to take place by silent or express approval, and by failing to stop the pattern of

racketeering though it had knowledge of same. Coca Cola and Sedgwick, through the

actions of their employees involved in the handling of Michigan workers compensation

claims, and Dr. Drouillard, agreed to participate in the commission of the predicate acts

which are alleged in this complaint. These employees of Coca Cola and Sedgwick knew

Dr. Drouillard and other ‘independent medical examiners’ wrote reports which were used

to deny or cut off workers compensation benefits, and knew Dr. Drouillard and other

‘independent medical examiners’ were doctors who could be relied on to write a fraudulent

report - finding a workers compensation claimant had no work-related disability regardless

55

i) Predicate Acts

RICO also provides that a “‘pattern of racketeering activity’ requires at least two acts

of racketeering activity, one of which occurred after [October 15, 1970] and the last of

which occurred within ten years (excluding any period of imprisonment) after the

commission of a prior act of racketeering activity.” 18 U.S.C. § 1961(5).

a) Alleged Predicate Acts of Mail and Wire

Fraud38

Plaintiffs attempt to establish a pattern of racketeering activity by alleging predicate

acts of mail and wire fraud. The alleged acts of mail and wire fraud, identifiable from the

pleadings, are as follows: 

1) Coca Cola39

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of the truth - yet these employees agreed to the use of Dr. Drouillard and others as

‘independent medical examiners,’ and to the use of their report to cut off or deny benefits,

or to settle a claim for less than its true value due to the fraudulent reports of Dr. Drouillard

and other fraudulent independent medical examiners, knowing that the mails and wires

would be used in furtherance of this fraudulent scheme. The identities of the Coke

employees and the dates of their actions and the dates they learned of the planned

predicate acts are not known to plaintiff. Dr. Drouillard aided and abetted the predicate acts

committed by LaTara Lewis and other employees of Sedgwick by (1) communicating with

them personally or through agents to set up the so-called ‘independent medical

examinations,’ and (these communications, if by mail or wire, are also acts of mail and wire

fraud by Dr. Drouillard), and (2) by doing those exams to aid Sedgwick’s goal of cutting off

or denying benefits. The allegations of this paragraph are based on information and belief,

and are likely to have evidentiary support after a reasonable opportunity for investigation

and discovery.” (Proposed Sec. Am. Compl. (Sec. Rev.) ¶ 32; (Pls.’ Am. Mot. [Docket Text

# 44].)

56

1. “On or about May 1, 2009, it mailed, by and through the agency of its attorney T.

F. Felker, Jr, to the Workers Compensation Agency in Lansing MI, a Carrier’s Response

and Defendant’s Answer.” (Proposed Sec. Am. Compl. (Sec. Rev.) ¶ 31A; Pls.’ Am. Mot.

[Docket Text # 44].) 

2. “On or about May 1, 2009, it mailed to Marshall Lasser, workers compensation

attorney for Mr. Jackson, a Carrier’s Response and Defendant’s Answer.” (Proposed Sec.

Am. Compl. (Sec. Rev.) ¶ 31A; Pls.’ Am. Mot. [Docket Text # 44].) 

3. “On or about July 22, 2008, Coke and Sedgwick mailed to the Agency and to

plaintiff or his counsel a Carrier’s Response, which denied that plaintiff was disabled; that

denial was false, in that defendants possessed information that plaintiff was disabled, and

no information that plaintiff was not disabled. The Response also denied that the disability

was work related, and that denial was false, in that defendants had sufficient proof from

plaintiff’s medical records of a work related disability, and no proof the disability was not

work related.” (Am. Compl. ¶ 31B.)

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57

2) Sedgwick

4. “[O]n Jan. 6, 2009, LaTara Lewis of Sedgwick mailed plaintiff a letter stating, ‘I have

scheduled an Independent Medical Evaluation for you with Dr. Drouillard on Jan. 14, 2009.’

The letter was fraudulent in that Dr. Drouillard was not an “independent” doctor but was

hired and paid by Segwick, not by a person or entity with no financial stake in the outcome

of plaintiff’s claim.” (Am. Compl. ¶ 31A.)

5. “Sedgwick mailed to the Agency and to plaintiff on March 18, 2008 a Notice of

Dispute stating ‘medical treatment not related to injury.....IW [injured worker] has been

diagnosed with acromioclavicular arthritis.’ Sedgwick did not have information from which

it could honestly and fairly conclude that plaintiff’s disability in March 2008 was due to

acromioclavicular arthritis, and was not work-related.” (Proposed Sec. Am. Compl. (Sec.

Rev.) ¶ 31B; Pls.’ Am. Mot. [Docket Text # 44].) 

6. “On or about July 22, 2008, Coke and Sedgwick mailed to the Agency and to

plaintiff or his counsel a Carrier’s Response, which denied that plaintiff was disabled; that

denial was false, in that defendants possessed information that plaintiff was disabled, and

no information that plaintiff was not disabled. The Response also denied that the disability

was work related, and that denial was false, in that defendants had sufficient proof from

plaintiff’s medical records of a work related disability, and no proof the disability was not

work related.” (Proposed Sec. Am. Compl. (Sec. Rev.) ¶ 31B; Pls.’ Am. Mot. [Docket Text

# 44].) 

7. “Upon receipt of the Discharge Report, LaTara Lewis of Sedgwick conspired with

Dr. Drouillard and perhaps with others to cut off Mr. Lulek’s worker’s compensation, and

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58

acted in furtherance of that conspiracy. ... [O]n or about April 17, 2007, when they

communicated by mail or wire to set up an ‘independent medical exam’ by Dr. Drouillard;

Dr. Drouillard, or the person at MES Soluations [sic] who acted as agent for him who

handled the communication.” (Proposed Sec. Am. Compl. ¶ 31C; Pls.’ Renewed Mot.

[Docket Text # 31].)

8. “April 17, 2007, when LaTara Lewis mailed to Lulek a notice to appear for

Drouillard’s examination.” (Proposed Sec. Am. Compl. ¶ 31C; Pls.’ Renewed Mot. [Docket

Text # 31].)

9. “May 7, 2007, when LaTara Lewis of Sedgwick mailed to Lulek ... and to the

Workers Compensation Agency in Lansing, MI, a Notice of Dispute, which stated, ‘per IME

of 4-23-2007 Dr. Drouillard has stated that Mr. Lulek has reached MMI for his 3-12-2007

[sic] as it was a minor strain. Any further treatment should be directed to his private doctor.

Benefits terminated as of 5-3-07.’” (Proposed Sec. Am. Compl. ¶ 31C; Pls.’ Renewed Mot.

[Docket Text # 31].)

3) Drouillard

10. “On or about Jan. 6, 2009, Dr. Drouillard violated 18 USC 1343 (wire fraud) when

in a phone conversation and or a facsimile communication from his office in Garden City

Michigan with LaTara Lewis of Segwick CMS at her office in Chicago, IL, he conspired to

conduct a fraudulent examination of Clifton Jackson, in which he would conclude,

regardless of the facts, that Mr. Jackson had no work related disability.” (Proposed Sec.

Am. Compl. ¶ 31A; Pls.’ Renewed Mot. [Docket Text # 31].)

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59

11. “Dr. Drouillard mailed a report of his examination dated Jan. 14, 2009 to Sedgwick,

and Sedgwick mailed or emailed a copy to plaintiff. The report contained lies.” (Am. Compl.

¶ 31A.)

12. “Upon receipt of the Discharge Report, LaTara Lewis of Sedgwick conspired with

Dr. Drouillard and perhaps with others to cut off Mr. Lulek’s worker’s compensation, and

acted in furtherance of that conspiracy. ... [O]n or about April 17, 2007, when they

communicated by mail or wire to set up an ‘independent medical exam’ by Dr. Drouillard;

Dr. Drouillard, or the person at MES Soluations [sic] who acted as agent for him who

handled the communication.” (Proposed Sec. Am. Compl. ¶ 31C; Pls.’ Renewed Mot.

[Docket Text # 31].)

13. “[O]n or about April 17, 2007, when Dr. Drouillard mailed or directed to be mailed

from MES Solutions ... a notice for appear for examination. The notice was part of the

scheme to defraud plaintiff, and also fraudulently stated, ‘I am an independent doctor.’ This

statement was fraud.” (Proposed Sec. Am. Compl. ¶ 31C; Pls.’ Renewed Mot. [Docket Text

# 31].)

14. “April 23, 2007, when Dr. Drouillard mailed to Sedgwick CMS in Chicago a report

fraudulently stating, inter alia, (1) ‘at this time he [Lulek] can return to work in his former

capacity without restrictions,’ and (2) ‘no other treatment is necessary in regards to any

work injury.’ In fact. Mr. Lulek could not return to work without restriction and did need

treatment for a work injury.” (Proposed Sec. Am. Compl. ¶ 31C; Pls.’ Renewed Mot.

[Docket Text # 31].)

b) Pleading Mail and Wire Fraud with

Particularity

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 40 Federal Rule of Civil Procedure 9(b) states:

In all averments of fraud or mistake, the circumstances constituting fraud or

mistake shall be stated with particularity. Malice, intent, knowledge, and other

condition of mind of a person may be averred generally.

To meet the particularity requirements of Rule 9(b), Plaintiff must “(1) specify the

statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state

where and when the statements were made, and (4) explain why the statements were

fraudulent.” Frank v. Dana Corp., 547 F.3d 564, 569-70 (6th Cir. 2008) (quoting Gupta v.

Terra Nitrogen Corp., 10 F.Supp.2d 879, 883 (N.D. Ohio 1998). At a minimum, Plaintiff

“must allege the time, place and contents of the misrepresentations upon which they

relied.” Id.

60

For a civil action under RICO to lie, Plaintiffs must also prove each element of the

predicate act or “racketeering activity.” Central Distributors of Beer, Inc. v. Conn, 5 F.3d

181, 183-84 (6th Cir. 1993). “To allege a violation of the mail fraud statute, it is necessary

to show that: 1) the defendants formed a scheme or artifice to defraud; 2) the defendants

used the United States mails or caused a use of the United States mails in furtherance of

the scheme; and 3) the defendants did so with the specific intent to deceive or to defraud.”

Id. at 184 (citing Schreiber Distributing v. Serv-Well Furniture, 806 F.2d 1393, 1399 (9th

Cir. 1988)). Moreover, where a plaintiff relies upon mail or wire fraud to constitute a

predicate act, Federal Rule of Civil Procedure 9(b) requires the party to allege—at a

minimum—the time, place, and contents of the fraudulent communications. Bender v.

Southland Corp., 749 F.2d 1205, 1216 (6th Cir. 1984).

Defendants, in their motions to dismiss, contend that the Complaint fails to plead the

predicate acts of wire or mail fraud underlying the RICO claims with the particularity that

Federal Rule of Civil Procedure 9(b) requires.40 Specifically, Defendants contend that the

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Complaint fails to plead the time, place, and contents of the communications underlying the

alleged predicate acts of mail and wire fraud.

The Complaint pleads the time, place, and contents of the communications that

underlie at least nine alleged predicate acts of mail fraud, per paragraphs numbered 1-5,

8-9, 13-14 above. For each, the Complaint alleges the time of each mailing, the sender and

recipient of each mailing, and the contents of each mailing underlying the alleged predicate

acts of mail or wire fraud. (See Proposed Sec. Am. Compl. ¶¶ 4, 7-8, 31, 31A-C.) Thus,

Plaintiffs have pleaded with sufficient particularity at least nine 

predicate acts, which are comprised of allegedly fraudulent communications

by mail and wire, including communications among the defendants and

communications from the defendants to the plaintiffs relating to each of the

plaintiffs’ injuries and claims for benefits under the WCDA. Therefore,

plaintiffs have met the predicate acts requirement. See 18 U.S.C. § 1961(5);

H.J. Inc., 492 U.S. at 237.

Brown, 546 F.3d at 354-55.

ii) Pattern

Predicate acts standing alone, however, do not necessarily constitute a pattern. 

[T]he Supreme Court held that while two predicate acts are necessary, they

may not be sufficient. Beyond setting forth the minimum number of predicate

acts required to establish a pattern, § 1961(5) assumes that there is

something to a RICO pattern beyond simply the number of predicate acts

involved. Congress intended to take a flexible approach to satisfying

whatever is required beyond the minimum number of predicate acts, and

envisaged that a pattern might be demonstrated by reference to a range of

different ordering principles or relationships between predicates, within the

expansive bounds set. Within the numerous sorts of relationships that can

constitute a pattern, two elements must be shown: that the racketeering

predicates are related, and that they amount to or pose a threat of continued

criminal activity.

Brown, 546 F.3d at 353 (internal quotations and citations omitted) (emphasis in original).

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a) Relatedness

Predicate acts are considered related “when they have the same or similar purposes,

results, participants, victims, or methods of commission, or otherwise are interrelated by

distinguishing characteristics and are not isolated events.” Brown, 546 F.3d at 354 (internal

quotations and citations omitted). The relatedness of the predicate acts alleged by Plaintiffs

is a close call. 

The predicate acts have the same purpose: to reduce or eliminate Coca Cola’s

payment obligations for workers’ compensation benefits by fraudulently denying workers’

compensation benefits to which the employees are allegedly entitled. They also have the

same result: to deny or cut-off workers’ compensation benefits to certain Coca Cola

employees. And, they have the same victims: alleged in the complaint are certain Coca

Cola employees who are eligible for workers’ compensation benefits. See Brown, 546 F.3d

at 355. 

On the other hand, as discussed below, the predicate acts do not involve the same

participants for each individual Plaintiff: the predicate acts, as to each Plaintiff, were

committed by a different set of participants. Further, the methods of commission vary from

Plaintiff to Plaintiff: some were denied benefits following an IME while others were denied

benefits on the basis that the injury was not work-related. Each Plaintiff, however, alleges

that Defendants fraudulently misapplied the legal standards set forth in the WDCA in

denying or cutting off workers’ compensation benefits to Coca Cola’s employees. 

Even if Plaintiffs could establish relatedness, Plaintiffs are unable to demonstrate a

pattern as the Complaint fails to establish continuity. 

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b) Continuity 

In addition to relatedness, Plaintiffs must also allege that the predicate acts amount

to or pose a threat of continued criminal activity.

“Continuity” is both a closed- and open-ended concept, referring either to a

closed period of repeated conduct, or to past conduct that by its nature

projects into the future with a threat of repetition. Continuity may be

demonstrated in a number of ways. Closed-ended continuity can be shown

by proving a series of related predicates extending over a substantial period

of time. Determining whether open-ended continuity has been established

requires a court to probe the specific facts of each case. A RICO pattern may

surely be established if the related predicates themselves involve a distinct

threat of long-term racketeering activity, either implicit or explicit. Even when

the number of related predicates involved may be small and they may occur

close together in time, if the racketeering acts themselves include a specific

threat of repetition extending indefinitely into the future, this supplies the

requisite threat of continuity. A threat of continuity may also be established

by showing that the predicate acts or offenses are part of an ongoing entity’s

regular way of doing business. Therefore, the threat of continuity is

sufficiently established where the predicates can be attributed to a defendant

operating as part of a long-term association that exists for criminal purposes.

In addition, the continuity requirement is likewise satisfied where it is shown

that the predicates are a regular way of conducting defendant’s ongoing

legitimate business (in the sense that it is not a business that exists for

criminal purposes), or of conducting or participating in an ongoing and

legitimate RICO “enterprise.” 

Brown, 546 F.3d at 354 (internal quotations and citations omitted). The Court finds that

Plaintiffs have failed to allege sufficient facts to establish continuity under either an openor closed-ended theory.

1) Closed 

“Plaintiffs may prove closed continuity by showing a series of past related predicates

occurring over an extended period of time, generally more than a few months.” Brown, 546

F.3d at 355 (internal quotations and citation omitted). “Although there are no rigid rules

regarding what amounts to ‘a substantial period of time,’ racketeering activity lasting only

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‘a few weeks or months and threatening no future criminal conduct’ is insufficient.” Moon,

465 F.3d at 725 (quoting H.J. Inc., 492 U.S. at 242); see also Vemco, Inc. v. Camardella,

23 F.3d 129, 134 (6th Cir. 1994), cert. denied, 513 U.S. 1017 (1994) (holding that predicate

acts alleged over 17 months did not satisfy the closed period analysis); Gotham Print, Inc.

v. American Speedy Printing Centers, Inc., 863 F.Supp. 447 (E.D. Mich. 1994) (holding that

“isolated acts of alleged wire/mail fraud which occurred, at the longest, over an 18-month

period” did not satisfy pattern element of RICO).

In any event, even if the racketeering activity lasted for two-and-a-half years,

as Moon insists, facts establishing a closed period of continuity are still

lacking. Moon has pleaded that the Defendants embarked upon a

coordinated scheme to wrongfully terminate his workers’ compensation

benefits. All of the predicate acts—the mailing of the Notice and Second

Notice cutting off his benefits and the mailing of Dr. Ray’s fraudulent medical

report—were keyed to Defendants’ single objective of depriving Moon of his

benefits. No other schemes, purposes, or injuries are alleged, and there are

no facts suggesting that the scheme would continue beyond the Defendants

accomplishing their goal of terminating Moon’s benefits. In circumstances

such as these, the purported racketeering activity does not bear the markings

of the “long-term criminal conduct” about which “Congress was concerned”

when it enacted RICO. H.J., Inc., 492 U.S. at 242.

Moon, 465 F.3d at 725-26. 

Here, Plaintiffs have alleged predicate acts spread over a nineteen-month

period—between May 2007 and January 2009, the dates that Plaintiffs claim their workers’

compensation benefits were either denied or cut-off. The predicate acts, however, do not

establish closed-ended continuity. Like Moon, “[n]o other schemes, purposes, or injuries

are alleged, and there are no facts suggesting that the scheme would continue beyond the

Defendants accomplishing their goal of terminating [Plaintiffs’] benefits.” Moon, 465 F.3d

at 726. In other words, once the individual cases of each Plaintiff is resolved, there is no

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evidence that Defendants will continue the alleged scheme. The purported racketeering

activity, here, “does not bear the markings of the long-term criminal conduct about which

Congress was concerned when it enacted RICO.” Moon, 465 F.3d at 726 (internal

quotations and citation omitted).

The Court’s conclusion that Plaintiffs have failed to demonstrated a closed period of

continuity is further supported by the fact that each Plaintiff has allegedly been injured by

separate and distinct enterprises. For example, Jackson claims that he was denied benefits

as part of a scheme to defraud involving Coca Cola, Sedgwick and Drouillard; Scharnitzke’s

claims involve only Coca Cola and Sedgwick; and Lulek’s pertain only to Sedgwick and

Drouillard. The predicate acts alleged by each individual Plaintiff involve different

participants employing dissimilar methods to accomplish the alleged fraudulent activities.

These disparate allegations do not establish a pattern of racketeering activity. In this

regard, Plaintiffs’ allegations are also distinguishable from those in Brown, where the

plaintiffs alleged that the same participants involved in a single conspiracy used the same

modus operandi to fraudulently deny the plaintiffs of workers’ compensation benefits to

which they were entitled. Brown, 546 F.3d at 355.

2) Open

Plaintiffs’ allegations do not give rise to a finding of open-ended continuity either. An

open period of continuity “turns on whether the plaintiff has pleaded facts suggesting the

threat of continued racketeering activities projecting into the future.” Moon, 465 F.3d at 726.

Open-ended continuity may be plead through facts showing that “the predicates are a

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regular way of conducting defendant’s ongoing legitimate business.” H.J. Inc., 492 U.S. at

243. 

Plaintiffs have not alleged sufficient facts (i.e., non-conclusory allegations) to

demonstrate that the legitimate business of Defendants—addressing its employees

workers’ compensation claims for Coca Cola, workers’ compensation claim administration

on behalf of Coca Cola for Sedgwick, and offering IME and medical opinions and reports

on workers’ compensation claims for Drouillard—is regularly conducted by fraudulently

denying benefits to which employees are entitled. Although Plaintiffs’ claim, “based on

information and belief ... [that is] likely to have evidentiary support after a reasonable

opportunity for investigation and discovery, ... [that the] allegations describe a pattern of

racketeering spread over several years, continuing in the present and likely to continue into

the future”; such conclusory allegations are insufficient to survive a motion to dismiss. See

Ass’n of Cleveland Fire Fighters, 502 F.3d at 548 (quoting Twombly, 550 U.S. at 555);

Iqbal, 129 S. Ct. at 1949.

The Sixth Circuit, in Moon, held that similar allegations plead by one plaintiff were

insufficient to support an inference that the defendants’ regular way of doing business was

to fraudulently deny workers’ compensation claims. 

Moon has not pleaded any allegations to the effect that the fraudulent

termination of workers’ compensation benefits is Defendants’ regular way of

doing business. True, Moon pleads that “Dr. Ray was known to defendants,

through their attorney Thaddeus Felker, as a doctor who could be relied upon

to write ‘cut off’ reports in workers compensation cases; defendants and/or

their attorney had relied upon him in the past to issue ‘cut off’ reports.” Moon

also pleads that “[o]n information and belief, one or more members of the

enterprise engaged in similar acts to defraud other persons of their workers’

compensation benefits.” These allegations do not reasonably support the

notion that the alleged fraud of which Moon complains is Defendants’ regular

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way of doing business. ... Moon’s allegations regarding open-ended

continuity amount to the following: (1) Moon-the only plaintiff in this case-was

denied workers’ compensation benefits as a result of Defendants’ scheme to

use Dr. Ray to fraudulently deny benefits; (2) Defendants had used Dr. Ray

for this purpose in the past; and (3) at some point, Defendants treated some

other people similarly to Moon. Moon does not allege the sort of longstanding

relationship that would give rise to a threat of continued racketeering activity.

Drawing all reasonable inferences in Moon’s favor may lead us to conclude

that several instances of similar conduct have occurred, but they do not

support a systematic threat of ongoing fraud. In short, the leap from Moon’s

allegations to the conclusion that Defendants customarily bilked employees

out of workers’ compensation benefits is too great, even drawing all

reasonable inferences in favor of Moon.

Moon, 465 F.3d at 727-28. Here, although there are three Plaintiffs who have allegedly

been defrauded of benefits, there is insufficient evidence to demonstrate that such

fraudulent activity is Defendants regular way of doing business. As discussed above, each

denial of benefits was based on independent reasons, involving different participants, using

dissimilar methods. Plaintiffs simply have not provided any non-conclusory allegations that

such fraudulent conduct was the normal business practice of Defendants or a threat that

such conduct would continue. 

(2) 18 U.S.C. § 1962(d)

RICO also provides that “[i]t shall be unlawful for any person to conspire to violate any

of the provisions of subsection (a), (b), or (c) of this section.” 18 U.S.C.§ 1962(d). To

demonstrate a conspiracy to violate 18 U.S.C. § 1962(c), Plaintiffs allege:

By means of the actions described in the complaint, each of the defendants

conspired to violate 18 U.S.C. 1962 (a through c), and conspired with one or

more of the other defendants, and or the employees of Coca Cola and

Sedgwick, and or with other persons, to violate 18 U.S.C. 1962 (a through c).

Coca Cola and Sedgwick, through the actions of their employees involved in

the handling of Michigan workers compensation claims, and ... Drouillard,

agreed to participate in the commission of the predicate acts which are

alleged in this complaint. These employees of Coca Cola and Sedgwick knew

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... Drouillard and other “independent medical examiners” wrote reports which

were used to deny or cut off workers compensation benefits, and knew ...

Drouillard and other “independent medical examiners” were doctors who

could be relied on to write a fraudulent report—finding a workers

compensation claimant had no work-related disability regardless of the

truth—yet these employees agreed to the use of ... Drouillard and others as

“independent medical examiners,” and to the use of their report to cut off or

deny benefits, or to settle a claim for less than its true value due to the

fraudulent reports of ... Drouillard and other fraudulent independent medical

examiners, knowing that the mails and wires would be used in furtherance

of this fraudulent scheme.

(Proposed Sec. Am. Compl. (Sec. Rev.) ¶ 30A; Pls.’ Am. Mot. [Docket Text #44].)

As this Court has already determined, Plaintiffs have not adequately plead the

substantive elements of their RICO claims—for example Plaintiffs have not established, for

each participant, conduct connected to the operations or management of the enterprise,

or control over the enterprise; and Plaintiffs have failed to sufficiently allege a pattern of

racketeering activity—and those pleading failures “dooms any claim [Plaintiffs] might assert

arising under § 1962(d).” Katzman v. Victoria’s Secret, 167 F.R.D. 649, 658 (S.D. N.Y.

1996) (dismissing claim under § 1962(d) because plaintiff “fail[ed] to adequately plead facts

that would satisfy the pleading requirements of §§ 1962(a), 1962(b), or 1962(c)”); see also

Griffin v. NBD Bank, 43 F.Supp.2d 780, 794 (W.D. Mich. 1999) (“Because Plaintiffs have

failed to allege a ‘pattern of racketeering,’ they have also failed to prove a claim under

§1962(d).”).

Plaintiffs’ final RICO claim alleges the existence of a conspiracy, in violation

of section 1962(d). Plaintiffs’ conspiracy claim cannot stand in light of the

dismissal of their other RICO counts. We note that this claim also fails to

plead the existence of an agreement to engage in conduct that would amount

to a RICO violation. Thus, while plaintiffs have pleaded the conclusory

allegation that the defendants “conspired,” they have failed to plead the

elements of a conspiracy.

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Craighead v. E.F. Hutton & Co., 899 F.2d 485, 496 (6th Cir. 1990). Because the

misconduct that Defendants allegedly agreed to commit does not amount to a RICO

violation, Plaintiffs’ RICO conspiracy claim fails as a matter of law.

IV. Conclusion

For the foregoing reasons, Plaintiffs’ motions for leave to amend are DENIED and

Defendants’ motions to dismiss are GRANTED.

s/Nancy G. Edmunds 

Nancy G. Edmunds

United States District Judge

Dated: March 11, 2010

I hereby certify that a copy of the foregoing document was served upon the parties and/or

counsel of record on March 11, 2010, by electronic and/or ordinary mail.

s/Carol A. Hemeyer 

Case Manager

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