Jackson v. Segwick Claims Mgmt. Servs., Inc.

• Decision Date: 18 January 2013
• Docket Number: No. 10–1453.,10–1453.
• Citation: 699 F.3d 466
• Parties: Clifton E. JACKSON; Christopher M. Scharnitzke, on behalf of themselves and all other persons similarly situated, Plaintiffs–Appellants, v. SEGWICK CLAIMS MANAGEMENT SERVICES, INC.; Coca–Cola Enterprises, Inc., foreign corporations; Dr. Paul Drouillard, jointly and severally, Defendants–Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

699 F.3d 466

Clifton E. JACKSON; Christopher M. Scharnitzke, on behalf of themselves and all other persons similarly situated, Plaintiffs–Appellants,

v.SEGWICK CLAIMS MANAGEMENT SERVICES, INC.; Coca–Cola Enterprises, Inc., foreign corporations; Dr. Paul Drouillard, jointly and severally, Defendants–Appellees.

No. 10–1453.

United States Court of Appeals, Sixth Circuit.

Argued: July 19, 2011.

Decided and Filed: Nov. 2, 2012.

Rehearing En Banc Granted, Opinion Vacated Jan. 18, 2013.

ARGUED:Marshall Lasser, Marshall Lasser, P.C., Southfield, Michigan, for Appellants. Kathleen H. Klaus, Maddin Hauser Wartell, Roth & Heller, P.C., Southfield, Michigan, Matthew F. Leitman, Miller, Canfield, Paddock and Stone, P.L.C., Troy, Michigan, Daniel B. Tukel, Butzel Long, Detroit, Michigan, for Appellees. ON BRIEF:Marshall Lasser, Marshall Lasser, P.C., Southfield, Michigan, Jeffrey T. Stewart, Seikaly & Stewart, P.C., Southfield, Michigan, for Appellants. Kathleen H. Klaus, Maddin Hauser Wartell, Roth & Heller, P.C., Southfield, Michigan, Matthew F. Leitman, Thomas W. Cranmer, Miller, Canfield, Paddock and Stone, P.L.C., Troy, Michigan, Daniel B. Tukel, Butzel Long, Detroit, Michigan, Michael F. Smith, The Smith Appellate Law Firm, Washington, D.C., for Appellees. Mark F. Horning, Jeffrey M. Theodore, Steptoe & Johnson LLP, Washington, D.C., for Amici Curiae.

Before: BATCHELDER, Chief Judge; GUY and MOORE, Circuit Judges.

MOORE, J., delivered the opinion of the court, in which GUY, J., joined, and BATCHELDER, C.J., joined in the judgment. BATCHELDER, C.J. (pp. 485–87), delivered a separate opinion concurring in the judgment, which GUY, J., joined.

OPINION

KAREN NELSON MOORE, Circuit Judge.

Clifton Jackson and Christopher Scharnitzke are former employees of Coca–Cola Enterprises (“Coca–Cola”) who claim that they were injured while performing their jobs. When they reported their injuries to Coca–Cola's third-party administrator for worker's compensation claims, Sedgwick Claims Management Service (“Sedgwick”),¹ Sedgwick denied them both benefits.The plaintiffs claim that the medical evidence strongly supported their injuries, but that Sedgwick engaged in a fraudulent scheme involving the mail—and in the case of Jackson using Dr. Drouillard as a “cut-off” doctor—to avoid paying benefits to injured employees. The plaintiffs sued in federal court alleging that the actions of Sedgwick, Coca–Cola, and Dr. Drouillard violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961(1)(B), 1962(c), and 1964(c) (“RICO”). The district court dismissed the lawsuit.

Since the district court's dismissal, several issues on this appeal were resolved by our opinion in Brown v. Cassens Transport Co., 675 F.3d 946 (6th Cir.2012) (“Brown II ”). We also disagree with the district court's application of the elements of a RICO cause of action to the plaintiffs' allegations in the complaint. We therefore REVERSE the district court's judgment and REMAND the case for further proceedings consistent with this opinion.

I. BACKGROUND

Clifton Jackson was employed by Coca–Cola when he allegedly injured his lumbosacral spine at work in September 2007. R. 2 (Am.Compl.¶ 31A) (Page ID # 39). Jackson was treated at the Henry Ford Hospital by Dr. Shlomo Mandel, a specialist in the lower back. Dr. Mandel determined that the work-related injury rendered Jackson disabled. In May 2008, Sedgwick requested a second opinion by Dr. Terry Weingarden, an expert paid for by the defendants. Dr. Weingarden also determined that Jackson was disabled from a work-related injury. Id. Sedgwick asked Dr. Weingarden to review Jackson for a second time, and Dr. Weingarden again determined that Jackson was disabled. Id.

After obtaining three reports confirming Jackson's disability, in January 2009, Sedgwick mailed a letter to Jackson requesting yet another examination, this time by Dr. Paul Drouillard. Id. (Page ID # 40). Plaintiffs allege that Dr. Drouillard is not a back surgeon and was hired by Sedgwick as a “cut-off” doctor to provide false medical reports and participate in a scheme dishonestly to deprive Coca–Cola employees of their statutory benefits under the Michigan Worker's Disability Compensation Act (“WDCA”), Mich. Comp. Laws § 418.301. Id. at ¶¶ 12, 13, 15, 31. After Jackson met with Dr. Drouillard, Dr. Drouillard mailed a report to Sedgwick stating that Jackson was not disabled. Dr. Drouillard's report contains three statements by Jackson regarding the scope of his pain that Jackson claims he never made and several conclusions about the nature of Jackson's physical injury that Jackson claims are wholly unsupported by the medical evidence. Id. at ¶ 31A. Sedgwick relied on this report to terminate Jackson's benefits.

Christopher Scharnitzke was employed as a truck driver when he allegedly injured his shoulder because of, he claims, extensive lifting at work. He ceased working from August 2007 to February 2008 due to the injury, but did not seek worker's compensation for that time. Id. at 31B (Page ID # 41–42). From 2004 to 2007, on three separate occasions, he reported to his family doctor that he experienced left shoulder pain while doing heavy lifting at work. In August 2007, Dr. Marc Milia, an orthopedic surgeon, observed similar pain from the work Scharnitzke was performing. The doctor performed an MRI and diagnosed Scharnitzke with “acromioclavicular arthritis.” Dr. Milia treated Scharnitzke and authorized him to return to work in February 2008.

Scharnitzke continued to work until March 4, 2008, when he experienced “instant pain” in his left shoulder while pulling a 300–pound two-wheeler cart of product up a flight of stairs. He was sent to the company's clinic, Concentra Medical Center, that same day. Id. (Page ID # 42). On March 11, 2008, the Concentra doctor observed that Scharnitzke had a “minor work aggravation” and a “chronic shoulder problem.” Id. (Page ID # 43). The Concentra records concluded that Scharnitzke was disabled due to his shoulder condition and referred Scharnitzke back to his orthopedic surgeon. The records were sent to Sedgwick, which then mailed a notice of dispute claiming that his March treatment was not related to a work injury but was instead due to “acromioclavicular arthritis.” Id. Scharnitzke alleges that Sedgwick had no information at that time to suggest his March injury was related to arthritis and not the “minor work aggravation” indicated in the Concentra records, which should have entitled him to worker's compensation. Id.

Sedgwick and Coca–Cola continued to deny Scharnitzke benefits after receiving numerous updates from Dr. Milia about the nature of Scharnitzke's injuries. In April 2009, Sedgwick received a note from Dr. Milia, Scharnitzke's orthopedic surgeon, clarifying that “[h]is current shoulder disability ... 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.” Id. (Page ID # 44). After receiving Dr. Milia's note, Sedgwick continued to deny Scharnitzke benefits.

Scharnitzke and Jackson both filed petitions for benefits with Michigan's Workers' Compensation Agency Board of Magistrates (the “Board”). We were informed at oral argument that Jackson settled his benefits claim shortly after the district court dismissed his RICO suit. On May 13, 2010, the Board awarded Scharnitzke benefits starting from the injury in March 2008 until July 2009, but found no evidence that his prior leave from July 30, 2007 to February 11, 2008, was work related. Scharnitzke v. Coca–Cola Enters., Inc. (May 13, 2010), available online at http:// www. dleg. state. mi. us/ WCA/ PDFS/ Opinions_ 051409/ 2010/ scharnitzke. christopher. 5. 13. 10. pdf. The Workers' Compensation Appellate Commission affirmed in part and reversed in part, agreeing that Scharnitzke was entitled to benefits starting in March 2008 but only through January 2009. Scharnitzke v. Coca–Cola Enters., Inc., No. 10–0061 (May 11, 2011), available online at http:// www. dleg. state. mi. us/ ham/ wcac/ 11 pdfa/ 07400061. pdf. Both parties sought leave to appeal the decision before the Michigan Court of Appeals, which was granted on March 1, 2012. Scharnitzke v. Coca–Cola Enters., No. 304515 (Mich.Ct.App.). As of the time of filing, briefing appears completed but no decision has been issued.

In April 2009, Jackson and Scharnitzke filed suit together in the U.S. District Court for the Eastern District of Michigan seeking equitable and monetary relief under RICO. Jackson brought his claim against Sedgwick, Coca–Cola, and Dr. Drouillard; Scharnitzke sued just Sedgwick and Coca–Cola. The plaintiffs amended their complaint once as of right to include a request for class certification. R. 2 (Am. Compl. at 22) (Page ID # 45). They later sought leave to file a second amended complaint adding another plaintiff, Paul Lulek, who also wanted to sue Sedgwick and Dr. Drouillard, identifying additional predicate acts of mail fraud, and adding a claim of RICO conspiracy. See R. 44–1 (2d Am.Compl.¶¶ 30A, 31, 31C). Meanwhile, the defendants filed a motion to dismiss.

The district court granted the defendants' motions to dismiss and denied leave to amend the complaint on the basis of futility. Jackson v. Sedgwick Claims Mgmt. Servs., Inc., No. 09–11529, 2010 WL 931864 (E.D.Mich. Mar. 11, 2010). The district court held that the plaintiffs' claims could be dismissed on the basis of three alternative grounds: (1) RICO does not provide a remedy that is functionally an “ ‘end run’ around the exclusive procedures and remedies” provided for under the WDCA; (2) the plaintiffs' claims were not ripe; and (3) the plaintiffs failed to state a cognizable RICO claim. Jackson, 2010 WL 931864, at *14. The district court also determined that if the plaintiffs had stated a valid RICO claim, the Burford-abstention and primary-jurisdiction doctrines would require staying the federal...