Brown v. Cassens Transp. Co.

• Decision Date: 27 September 2010
• Docket Number: Case No. 04–cv–72316.
• Court: U.S. District Court — Eastern District of Michigan
• Parties: Paul BROWN, William Fanaly, Charles Thomas, Gary Riggs, Robert Orlikowski, and Scott Way, Plaintiffs,v.CASSENS TRANSPORT COMPANY, Crawford & Company, foreign corporations, and Dr. Saul Margules, Defendants.

743 F.Supp.2d 651

Paul BROWN, William Fanaly, Charles Thomas, Gary Riggs, Robert Orlikowski, and Scott Way, Plaintiffs,

v.CASSENS TRANSPORT COMPANY, Crawford & Company, foreign corporations, and Dr. Saul Margules, Defendants.

Case No. 04–cv–72316.

United States District Court, E.D. Michigan, Southern Division.

Sept. 27, 2010.

Marshall D. Lasser, Southfield, MI, Jeffrey T. Stewart, Seikaly & Stewart, Farmington Hills, MI, for Plaintiffs.Janet E. Lanyon, Jerry R. Swift, Dean & Fulkerson, Troy, MI, George M. Head, Plunkett & Cooney, Bloomfield Hills, MI, Kendall B. Williams, Timothy R. Winship, Williams Firm, Grand Blanc, MI, for Defendants.

OPINION AND ORDER

(1) GRANTING DEFENDANT CASSENS TRANSPORT COMPANY'S MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(c) AND FOR PARTIAL SUMMARY JUDGMENT (DKT. NO. 83);

(2) GRANTING DEFENDANT CASSENS TRANSPORT COMPANY'S SUPPLEMENTAL MOTION TO DISMISS; (DKT. NO. 95);

(3) GRANTING DEFENDANT DR. SAUL MARGULES' MOTION TO DISMISS (DKT. NO. 106);

(4) DENYING AS MOOT DEFENDANT CASSENS TRANSPORT COMPANY'S RENEWED MOTION FOR SUMMARY JUDGMENT (DKT. NO. 82);

(5) DENYING PLAINTIFFS' MOTION FOR LEAVE TO AMEND (DKT. NO. 117); AND

(6) DISMISSING THIS CASE WITH PREJUDICE

PAUL D. BORMAN, District Judge.

This matter comes before the Court on Defendant Cassens Transport Company's (“Cassens”) Motions to Dismiss and for Partial Summary Judgment ¹ and Supplemental Motion to Dismiss (Dkt. Nos. 83 and 95) and on Defendant Dr. Saul Margules' (“Margules”) Motion to Dismiss (Dkt. No. 106.) ² Also before the Court is Plaintiffs' Motion for Leave to File First Amended Complaint. (Dkt. No. 117.) The Court held a hearing on these matters on September 15, 2010. For the reasons that follow, the Court GRANTS Defendants' motions to dismiss and DENIES Plaintiffs motion for leave to amend.

INTRODUCTION

Plaintiffs allege that they were deprived of benefits due to them under the provisions of the Michigan Workers' Disability Compensation Act (“WDCA”), Mich. Comp. Laws § 418.101 et seq. They allege that through various acts of mail and wire fraud, and in violation of the Racketeer Influenced and Corrupt Organizations Act, (“RICO”), 18 U.S.C. § 1964(c), Defendants perpetrated a scheme to deny them workers' compensation benefits. The essence of the alleged scheme is that Cassens Transport Company (“Cassens”) (Plaintiffs' employer which was self-insured) and Crawford & Company (“Crawford”) (which served under contract as the claims adjuster for Cassens's workers' compensation claims) deliberately selected unqualified doctors, including Defendant Dr. Saul Margules (“Margules”), to give erroneous medical opinions that would support fraudulent denials of workers' compensation benefits. Four of the six Plaintiffs allege claims against all Defendants (Fanaly, Brown, Orlikowski and Way, all of whom were seen by Defendant Margules) and two of the six allege claims only against Defendants Cassens and Crawford (Thomas and Riggs, neither of whom was seen by Defendant Margules). Plaintiffs each claim monetary damages as a result of the wrongful denial of their statutory workers' compensation benefits, “measured by the amount of benefits improperly withheld from him, plus interest as provided by law, all tripled in accordance with RICO, together with attorney fees and costs provided by law.” ³

Defendants respond that Plaintiffs are impermissibly attempting to bypass the exclusive administrative scheme for recovery of benefits embodied in the WDCA and that, even assuming a claim outside that statutory scheme is viable, Plaintiffs cannot establish several essential elements of a RICO claim including (1) an injury which is compensable under RICO, and/or (2) the existence of a RICO enterprise. Additionally, Defendant Cassens argues that the claims against it are preempted by the Labor Relations Management Act (“LMRA”) and Defendant Margules argues that Plaintiffs cannot establish that he “conducted the affairs” of the alleged RICO enterprise.

The Court concludes that Plaintiffs' exclusive remedy for their claim that they were fraudulently denied benefits under the WDCA lies within the exclusive administrative scheme set forth in the WDCA, which forecloses their RICO claim. The Court further concludes that even assuming such a claim could be raised outside of the WDCA's exclusive administrative framework, Plaintiffs have failed to allege an “injury to business or property” as that term is defined under RICO and their claims thus fail for this separate and independent reason. Finally, the Court concludes that, even assuming that Plaintiffs' Complaint stated a cognizable claim under RICO, the Court would abstain from deciding Plaintiffs' claims and would stay proceedings pending a final WDCA administrative determination of Plaintiffs' entitlements to workers compensation benefits.⁴

I. BACKGROUNDA. Procedural History

On July 15, 2005, this Court entered an Opinion and Order Granting Defendants' Motions to Dismiss Plaintiffs' Complaint Under Rule 12(b)(6). (Dkt. No. 39) This Court ruled that Plaintiffs' RICO claims failed to allege the “key requirement” of reliance and therefore, failed to state a claim for which relief could be granted. Brown v. Cassens Transport Co., 409 F.Supp.2d 793, 808 (E.D.Mich.2005) (“ Brown I ”). Plaintiffs appealed this ruling which was affirmed, based upon established Sixth Circuit precedent requiring proof of detrimental reliance, in Brown v. Cassens Transport Co., 492 F.3d 640, 646 (6th Cir.2007) (“ Brown II ”). In Brown I, this Court also dismissed Plaintiffs' RICO claims on the alternate ground that they were reverse preempted by the McCarran–Ferguson Act, 15 U.S.C. § 1012(b). Id. at 811. In Brown II, the Sixth Circuit did not address this alternative ground for dismissal, invoking its authority to “affirm the district court on any ground supported by the record.” Brown II, 492 F.3d at 646 n. 5.

The United States Supreme Court granted Plaintiffs' petition for a writ of certiorari, vacated the judgment of the Sixth Circuit in Brown II, and remanded the case to the Sixth Circuit for reconsideration in light of Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008), which established that a civil-RICO plaintiff need not show detrimental reliance on the defendant's alleged misrepresentations. On remand, the Sixth Circuit reversed this Court's dismissal of Plaintiffs' claims in Brown I, and remanded for further proceedings, holding: (1) that the WDCA does not preempt Plaintiffs' RICO claims and (2) that Plaintiffs had “sufficiently pleaded a pattern of racketeering activity under RICO given that reliance is not an element of a civil RICO fraud claim.” Brown v. Cassens Transport Co., 546 F.3d 347, 351 (6th Cir.2008) (“ Brown III ”).⁵ Defendants now file the instant motions to dismiss and for partial summary judgment. B. Plaintiffs' Claims

Plaintiffs claim that Defendant Cassens, who employed each of the Plaintiffs, and Defendant Crawford, who adjusted workers' compensation claims on behalf of Cassens, formed an enterprise for purposes of RICO and fraudulently denied Plaintiffs' claims for benefits under the WDCA, in part through violations of the mail and wire fraud statutes, 18 U.S.C. §§ 1341, 1343, which allegedly form the predicate acts for Plaintiffs' RICO claim. (Compl. ¶¶ 4–6A.) Four of the six Plaintiffs, Fanaly, Brown, Orlikowski and Way, claim in addition that Defendant Margules, described by Plaintiffs as a “cut-off” doctor, was part of the enterprise in that he provided false and fraudulent medical opinions to Defendant Cassens and/or Crawford, which were then used to deny Plaintiffs' claims for workers' compensation benefits. (Compl. ¶ 6B.) Plaintiffs allege that in these fraudulent communications, “defendant and the IME ‘cut-off’ doctors whose reports defendants relied upon in terminating or denying plaintiffs' benefits ... discussed means of cutting off plaintiffs' benefits or forcing them to take settlements at less than true value, even though defendants possessed medical reports from treating doctors and doctors chosen by defendants stating plaintiffs did have work-related disabilities.” (Compl. ¶ 6D.) Plaintiff Brown appealed his denial of benefits and was awarded benefits by the Workers Disability Compensation Board (“WDCB”). The remaining Plaintiffs do not allege that they appealed their denial of benefits.

The alleged predicate acts which are specifically referenced in the Complaint are either Notices of Dispute sent from Crawford to Plaintiffs, in which Crawford challenged the validity of the claim as being unsupported by medical evidence or not job related, or opinion letters sent from Margules to Plaintiff and/or Cassens and/or Crawford, opining that his examination revealed that the alleged injury was not job related or not sufficiently disabling. Plaintiffs also make several nonspecific allegations regarding additional “communications” in furtherance of the scheme, without expressly identifying the means of communication, the speaker/author or recipient, or the specific date of the alleged communication.

1. Plaintiff Fanaly

Plaintiff Fanaly alleges that on December 14, 2001, he injured his right foot while walking to his Cassens car-hauling truck.⁶ He reported the injury to “defendants” and his claim was denied by Crawford's claim adjuster, Tina Litwiller, on December 19, 2001 as being not job related. (Compl. ¶ 8.) Fanaly alleges that this denial was fraudulent because “the corporate defendants knew that an injury which happens to an employee while he is leaving his motel during the course and scope of his employment is an injury which is compensable under the Act.” (Compl. ¶ 9.)

On February 17, 2002, Fanaly alleges that he dislocated his left shoulder while loading his Cassens car-hauling truck and filed a claim for benefits under the WDCA. Fanaly further alleges that “Defendants” sent him to Dr. Margules for an examination....