Opinion ID: 811166
Heading Depth: 4
Heading Rank: 1

Heading: Relationship Between RICO and WDCA

Text: The district court’s holding that RICO cannot provide a remedy for mail fraud in the context of obtaining worker’s compensation is untenable in light of our recent opinion in Brown II, 675 F.3d 946. In Brown II, we held that the Supremacy Clause preempts the Michigan legislature from eliminating a RICO remedy simply by declaring its worker’s compensation scheme to be exclusive of federal remedies.5 “[T]he predicate offense for the RICO action is mail fraud, not the denial of worker’s compensation.” Id. at 954. It is therefore irrelevant whether the WDCA provides a state administrative remedy for addressing the fraudulent denial of worker’s compensation benefits. Nor 4 The plaintiffs also argue that, by invoking Rule 11(b)(3), they should be entitled to discovery before their complaint is dismissed for lack of particularly under Rule 9(b). See Brown v. Cassens Transp. Co., 546 F.3d 347, 356 n.4 (6th Cir. 2008) (“Brown I”) (citing cases but declining to decide the issue), cert. denied, 130 S. Ct. 795 (2009). Because we hold that the plaintiffs have adequately pleaded a RICO claim, we again decline to resolve this issue. 5 The concurrence makes the unsubstantiated assertion that in a worker’s compensation program, employees relinquish the right to litigate all claims in exchange for no-fault insurance coverage. However, Howard Delivery Service v. Zurich American Insurance Co., 547 U.S. 651 (2006), the case upon which the concurrence relies, merely stands for the proposition that worker’s compensation programs protect the employer from common-law tort claims related to the alleged workplace injury. Id. at 662–63. Here, the plaintiffs do not seek to litigate, or relitigate, tort-based workplace-injury claims. Rather, the plaintiffs are challenging what they allege to be a fraudulent administrative process by which one seeks to make a worker’s compensation claim to Sedgwick. A civil RICO claim not only includes elements distinct from those in a common-law tort claim, but also must withstand heightened scrutiny under Rule 9(b) pleading standards. In sum, the worker’s compensation program does not offer complete immunity to an employer, and this action is not a second bite at the apple, as the concurrence intimates. No. 10-1453 Jackson et al. v. Segwick et al. Page 8 does the existence of a state administrative scheme that does not provide for such a right of action trump the availability of remedies under RICO as it might in the context of a parallel federal administrative scheme. “[T]he fact that a scheme may violate state laws does not exclude it from the proscriptions of the federal mail fraud statute.” Id. at 95455 (quoting Parr v. United States, 363 U.S. 370, 389 (1960)). This is because “enabling statutes for state agencies, passed by state legislatures, say nothing about Congress’s intent with regard to RICO.” Id. at 955. Simply put, “Michigan cannot limit the scope of a federal RICO cause of action.” Id. Some of the defendants’ arguments are slightly different than the ones we addressed in Brown II. Coca-Cola and Dr. Drouillard point us to 28 U.S.C. § 1445(c), which prohibits removing to federal court civil suits “arising under the workmen’s compensation laws” of any state. However, even if § 1445(c) changes the analysis, this case was not removed under § 1445(c); therefore, the statute simply does not apply. In the ripeness portion of its brief, Coca-Cola imports the clear-statement rule from criminal RICO cases. Coca-Cola contends that “Congress must speak with special clarity before a federal statute may be construed in a manner that displaces a policy choice made by a State.” Appellee Coca-Cola Br. at 25 (internal quotation marks and alteration marks omitted). The cases that Coca-Cola cites, however, are concerned with the “sweeping expansion of federal criminal jurisdiction,” not civil. Cleveland v. United States, 531 U.S. 12, 24 (2000) (emphasis added). Furthermore, Cleveland held that state licenses are not “property” of the state within the meaning of the mail-fraud statute because the state’s interest is regulatory in nature. Id. at 22. As we discuss below, the state has created an entitlement to the property in question in the individual recipient.6 Any lack of clarity about the mail-fraud statute as applied in Cleveland is simply not present in this case. 6 The concurrence contends that Brown II incorrectly enables an employee’s workplace injury to satisfy the RICO requirement that the injury be to business or property. This assertion misconstrues the holding in Brown II in order to manufacture a disagreement on an issue not before this court. There is no dispute that an allegation of workplace injuries is insufficient by itself to support a civil RICO claim. Here, as in Brown II, the plaintiffs allege a property interest in bringing a worker’s compensation claim free of fraud—i.e., they allege a devaluation of a statutory expectancy of worker’s compensation benefits. This theory of liability as pleaded by the plaintiffs is entirely distinct from a run-of-the-mill tort claim in which a plaintiff seeks damages apart from worker’s compensation based on a personal injury at work. No. 10-1453 Jackson et al. v. Segwick et al. Page 9