Opinion ID: 626814
Heading Depth: 5
Heading Rank: 1

Heading: Property Interest in Worker's Compensation Benefits

Text: As an initial matter, both Michigan law and federal law recognize that the recipient of a statutory entitlement has a statutorily created property interest in the continued receipt of those benefits. Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 60, 119 S.Ct. 977, 143 L.Ed.2d 130 (1999) (citing Goldberg v. Kelly, 397 U.S. 254, 262 & n. 8, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970)); Perry v. Sindermann, 408 U.S. 593, 601, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972); Logan, 455 U.S. at 428, 102 S.Ct. 1148; Mathews v. Eldridge, 424 U.S. 319, 332, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976); see also Williams v. Hofley Mfg. Co., 430 Mich. 603, 424 N.W.2d 278, 282, 283 n. 16 (1988) (relying on federal due process law articulated in Logan, 455 U.S. at 428, 102 S.Ct. 1148). A recipient of Michigan worker's compensation benefits undoubtedly has a property interest under state law in the continued receipt of those benefits. We hold today that injury to such statutory entitlements is an injury to property within the meaning of RICO. [4] Congress provided in 18 U.S.C. § 1964(c) that [a]ny 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. The statute offers no further guidance on the meaning of business or property. When faced with interpreting similar language in the context of the Clayton Act, the Supreme Court acknowledged that the inclusion of the word business works to narrow the definition of property from its otherwise naturally broad meaning. Reiter v. Sonotone Corp., 442 U.S. 330, 338, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979). Congress must have intended to exclude some class of injuries by the phrase `business or property.' Id. at 339, 99 S.Ct. 2326. This construction is equally applicable to the language in RICO. For example, money is a species of property under state law, but to hold that all monetary losses are covered by RICO would render the word business superfluous. Therefore, whereas damage to a building is an obvious property injury, purely pecuniary losses are sometimes indicative of property injury and sometimes not, depending on whether the pecuniary loss is to a legal entitlementi.e., property. See id. at 340, 99 S.Ct. 2326 ([T]he fact that petitioner [ ] was deprived of only money, albeit a modest amount, is no reason to conclude that she did not sustain a `property' injury.). Against this backdrop, the Sixth Circuit has held that [r]ecovery for physical injury or mental suffering is not allowed under civil RICO because it is not an injury to business or property. Fleischhauer v. Feltner, 879 F.2d 1290, 1300 (6th Cir.1989), cert. denied, 493 U.S. 1074, 110 S.Ct. 1122, 107 L.Ed.2d 1029 (1990); see also Drake v. B.F. Goodrich Co., 782 F.2d 638, 644 (6th Cir.1986); Evans v. City of Chicago, 434 F.3d 916, 930-31 (7th Cir.2006); Grogan v. Platt, 835 F.2d 844, 847 (11th Cir.), cert. denied, 488 U.S. 981, 109 S.Ct. 531, 102 L.Ed.2d 562 (1988). The Supreme Court similarly excluded recovery for purely personal injuries under the Clayton Act, as such injuries are not inherently injury to any entitlement we would deem property. Reiter, 442 U.S. at 339, 99 S.Ct. 2326. Any pecuniary losses proximately resulting from a personal injury caused by a RICO violation, e.g. attorney fees, lost wages, and medical expenses, are also not recoverable because they, too, do not implicate harm to any legal entitlement. [5] The defendants, the district court, and the dissent all focus on language in these cases rejecting pecuniary losses flowing from personal injuries to argue that any pecuniary losses downstream from a personal injury are categorically personal in nature and unrecoverable under RICO. See, e.g., Evans, 434 F.3d at 926. In doing so, they skip over the first and most fundamental question at issuehas any legal entitlement been harmed. They are correct that but for the personal injury, the plaintiffs here would have had no interest in any benefits. But there is nothing in the text of RICO or the cases they point to that provides for ignoring damage to an intervening legal entitlement because it arose following a personal injury. The defendants ask us to be the first circuit to read RICO as preventing recovery for injuries to property by reason of a RICO violation solely because the property interest itself would not have existed but for an unrelated personal injury. We decline to take this approach for three reasons. First, a plain reading of the text of RICO provides no support for excluding certain categories of property interests based on how the interest itself originated. Recognizing statutory entitlements as property under RICO does not render any term of the act superfluous. See Reiter, 442 U.S. at 338-39, 99 S.Ct. 2326. Nor does the text reject recovery for certain legal entitlements because they accrued following a personal injury wholly unrelated to the RICO offense at issue. Congress's only other express limitation is that the injury to property must be by reason of a § 1962 violation; the text narrows recovery based on the origin of the injury, not the origin of the property. Based on the plain language of § 1964, we see no reason to exclude statutory entitlements to worker's compensation benefitswhich are recognized as property under state lawfrom the category protected by RICO. Second, focusing on the predicate injury that gave rise to the property interest ignores the Supreme Court's instruction to interpret RICO broadly. Section 1964 places no restrictions ... on the words `injured in his property.' The statute does not limit standing to those `directly injured in his property,' or `injured only in his property.' Comment, Patrick Wackerly, Personal Versus Property Harm and Civil RICO Standing, 73 U. Chi. L. Rev. 1513, 1520-21 (2006). To the contrary, the language reads that `any' injured party has standing to sue. Id. The Supreme Court has repeatedly refused to graft additional requirements onto the plain language of both this statute and the identical language in the Clayton Act when doing so would defeat Congress's intent that the statute have broad and inclusive application. See Reiter, 442 U.S. at 339, 99 S.Ct. 2326 (rejecting argument that Clayton Act requires injury to commercial property interests); Sedima, S.P.R.L., 473 U.S. at 497, 105 S.Ct. 3275 (rejecting argument that RICO applies only to organized crime). The dissent urges a narrow reading of the word property, but points to nothing in the text of RICO or statements of Congress to justify that approach. Because Congress intended us to interpret RICO broadly, Sedima, S.P.R.L., 473 U.S. at 497, 105 S.Ct. 3275, we see no reason to preclude RICO suits that are based on injury to property, not the predicate physical injury that gave rise to the property interest in the first place. Third, such an approach would yield inconsistent results. The defendants do not argue statutory entitlements or claims to benefits generally are not property under RICO, but they argue such interests may be RICO `property' only when the wrong to be vindicated by the cause of action is an injury to business or property. Appellee Cassens Br. at 26 (capitalization omitted). [6] Such an approach would have us hold that a plaintiff could recover under RICO for the fraudulent devaluation of welfare benefits, which do not arise following a personal injury, but not for the fraudulent devaluation of worker's compensation benefits, solely because the latter do. A plaintiff could recover for the loss of a cause of action for wrongful termination, but not for the loss of a cause of action for wrongful death. Nothing in the text of RICO evinces an intent by Congress to draw such arbitrary distinctions among property interests, nor do we find any support for the exclusion of these claims from the protections of RICO. Such an approach is incompatible with RICO because it qualifies the term property without a basis to do so in the RICO statute. See Reiter, 442 U.S. at 338-39, 99 S.Ct. 2326 (rejecting interpretation of business or property as business or business property). Classifying property interests according to their origins creates untenable distinctions. The dissent makes the same mistake that the district court did by misconstruing the meaning of language from our sister circuits that pecuniary losses flowing from [personal] injuries are insufficient to establish injury to property. Evans, 434 F.3d at 930 (emphasis added); see also Grogan v. Platt, 835 F.2d 844, 847 (11th Cir.), cert. denied, 488 U.S. 981, 109 S.Ct. 531, 102 L.Ed.2d 562 (1988). Neither of these cases involved an injury to an intervening legal entitlement. Both addressed whether various damages that were the proximate result of a personal injury caused by a RICO violation, albeit some more indirectly than others, could be deemed property interests on their own. Evans, 434 F.3d at 930 (lost wages from wrongful incarceration caused by alleged RICO violation not property); Grogan, 835 F.2d at 846-47 (economic losses from wrongful death caused by alleged RICO violation not property). We take no issue with their holdings that they could not. Evans even left open the possibility that a plaintiff might be able to recover under RICO for loss of an employment opportunity if an employee is able to establish that he has been unlawfully deprived of a property right in promised or contracted[-]for wages. 434 F.3d at 928. The Evans court did not say it would permit recovery for such a property deprivation only if the promise of wages did not arise following a physical injury at work. [7] Such a scenario involving harm to an intervening legal entitlement, separating the physical injury from the downstream pecuniary losses, would be more factually analogous to this case than the actual facts of Evans are. Focusing on whether pecuniary losses flowed in some way from a personal injury does not make sense in cases involving the devaluation of an actual legal entitlement as the result of an independent RICO fraud.