Brown v. Cassens Transport Co.

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 12a0095p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________

X
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PAUL BROWN, WILLIAM FANALY, CHARLES
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THOMAS, GARY RIGGS, ROBERT
ORLIKOWSKI, SCOTT WAY, -
Plaintiffs-Appellants, -
No. 10-2334

,
>
-
-
v.
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CASSENS TRANSPORT COMPANY, CRAWFORD
& COMPANY, SAUL MARGULES, -
Defendants-Appellees. -
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N
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 04-72316—Paul D. Borman, District Judge.
Argued: July 7, 2011
Decided and Filed: April 6, 2012
Before: MOORE, COLE, and GIBBONS, Circuit Judges.

_________________

COUNSEL
ARGUED: Jeffrey T. Stewart, SEIKALY & STEWART, P.C., Farmington Hills,
Michigan, for Appellants. Janet E. Lanyon, DEAN & FULKERSON, P.C., Troy,
Michigan, Timothy R. Winship, THE WILLIAMS FIRM, P.C., Grand Blanc, Michigan,
for Appellees. ON BRIEF: Jeffrey T. Stewart, SEIKALY & STEWART, P.C.,
Farmington Hills, Michigan, Marshall Lasser, MARSHALL LASSER, P.C., Southfield,
Michigan, for Appellants. Janet E. Lanyon, DEAN & FULKERSON, P.C., Troy,
Michigan, Timothy R. Winship, THE WILLIAMS FIRM, P.C., Grand Blanc, Michigan,
Jeffrey C. Gerish, CRAWFORD & COMPANY, Bloomfield Hills, Michigan, for
Appellees. Mark F. Horning, STEPTOE & JOHNSON, Washington, D.C., for Amicus
Curiae.
MOORE, J., delivered the opinion of the court, in which COLE, J., joined.
GIBBONS, J. (pp. 30–38), delivered a separate dissenting opinion.

1
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 2

_________________

OPINION
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KAREN NELSON MOORE, Circuit Judge. The plaintiffs, who were allegedly
injured while working for Cassens Transport Company (“Cassens”), sought worker’s
compensation benefits under Michigan’s Worker’s Disability Compensation Act, Mich.
Comp. Laws § 418.301 (“WDCA”). Crawford & Company, Cassens’s third-party
administrator, denied each plaintiff’s benefits. In response, the plaintiffs filed a
complaint in the United States District Court for the Eastern District of Michigan,
alleging that the denials were fraudulent and 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.

We hold that the Supremacy Clause prevents the Michigan legislature from
preempting a RICO remedy by declaring its worker’s compensation scheme to be
exclusive of federal remedies. An expected entitlement to benefits under the WDCA
qualifies as property, as does the claim for such benefits, and the injury to such property
creates, under certain circumstances, a RICO violation. We therefore REVERSE the
district court’s judgment and REMAND the case for further proceedings consistent with
this opinion.

I. BACKGROUND

Paul Brown, William Fanaly, Charles Thomas, Robert Orlikowski, and Scott
Way were injured allegedly while performing work-related tasks for their employer,
Cassens.1 Cassens is self-insured and contracts with Crawford, a claims adjudicator, to
resolve worker’s compensation claims brought by Cassens’s employees. Dr. Saul
Margules evaluated all of the plaintiffs except Thomas. According to the complaint,

1
Gary Riggs has withdrawn his claims because he signed a release that “clearly and unequivocally
covers and releases the claims he asserts in this action.” Brown v. Cassens Transp. Co. (Brown IV), 743
F. Supp. 2d 651, 653 n.1 (E.D. Mich. 2010). Riggs had originally received benefits that later were
terminated. R. 1 (Compl. ¶ 48).
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 3

Cassens and Crawford solicited fraudulent medical reports from Dr. Margules and other
physicians. Dr. Margules is “not an expert in orthopedic conditions,” which most
injuries on the job involve. R. 1 (Compl. ¶ 37). He was also alleged to be “biased due
to the amount of money defendants paid him over the years to examine Cassens workers
and to testify against them.” Id. The plaintiffs assert that Cassens and Crawford ignored
other medical evidence that supported the plaintiffs’ claims. The plaintiffs allege that
the conspiracy was orchestrated by mail or by wire. The claims of each plaintiff except
Brown were “resolved by settlement” before the Worker’s Compensation Appellate
Commission (“WCAC”) rendered a final determination. Reply Br. at 23. Cassens
denied Brown’s claim, a magistrate granted Brown full benefits, and Cassens appealed.
Brown’s claim was decided on its merits by the WCAC. R. 1 (Compl. ¶ 39). Neither
the briefs nor the complaint state how the WCAC resolved his claim.

On June 22, 2004, the plaintiffs sued Cassens, Crawford, and Dr. Margules
(except that Thomas did not sue Dr. Margules), alleging violations of RICO and
intentional infliction of emotional distress. Each plaintiff seeks monetary “damages
measured by the amount of benefits improperly withheld . . . , plus interest as provided
by law, all tripled in accordance with RICO, together with attorney fees and costs as
provided by law.” R. 1 (Compl. ¶¶ 21, 29, 46, 65, 74). The district court dismissed the
case under Federal Rule of Civil Procedure 12(b)(6) for failure to allege reliance on the
defendants’ fraudulent misrepresentations. Brown v. Cassens Transp. Co. (Brown I),
409 F. Supp. 2d 793 (E.D. Mich. 2005). A divided panel of this court affirmed. Brown
v. Cassens Transp. Co. (Brown II), 492 F.3d 640 (6th Cir. 2007). The Supreme Court
vacated our judgment and remanded the case in light of Bridge v. Phoenix Bond &
Indemnity Co., 553 U.S. 639 (2008), which held that civil RICO plaintiffs do not need
to demonstrate reliance on defendants’ fraudulent representations. Brown v. Cassens
Transp. Co., 554 U.S. 901 (2008). On remand, we held that the plaintiffs had pleaded
a “pattern” of unlawful activity. We also held that the McCarran-Ferguson Act,
15 U.S.C. § 1012, did not reverse preempt RICO claims because the WDCA was not
enacted to regulate the business of insurance and, in any event, RICO would not
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 4

“invalidate, impair, or supersede” the WDCA. Brown v. Cassens Transp. Co. (Brown
III), 546 F.3d 347, 363 (6th Cir. 2008), cert. denied, 130 S. Ct. 795 (2009).

On remand, the district court denied the plaintiffs’ motion to amend their
complaint and dismissed their claims under Rules 12(b)(6) and 12(c). Brown v. Cassens
Transp. Co. (Brown IV), 743 F. Supp. 2d 651 (E.D. Mich. 2010). The district court
determined that the WDCA provided an exclusive state remedy via the WCAC that
foreclosed federal RICO claims; that monetary losses stemming from lost benefits were
personal injuries that were not injury to business or property; and that the damages were
too speculative to support standing. The plaintiffs have appealed.

Meanwhile, three similar cases, all brought by one of the attorneys who
represents the plaintiffs in this case, have been dismissed by various district judges.
Lewis v. Drouillard, 788 F. Supp. 2d 567 (E.D. Mich. 2011), appeal docketed, No. 11-
1325 (6th Cir. Mar. 14, 2011) (held in abeyance by 6th Cir. Apr. 15, 2011, Order
pending the resolution of Jackson and this case); (Jay) Brown v. Ajax Paving Indus.,
Inc., 773 F. Supp. 2d 727 (E.D. Mich. 2011), appeal docketed, No. 11-1391 (6th Cir.
Mar. 28, 2011) (held in abeyance by 6th Cir. June 6, 2011, Order pending resolution of
this case); Jackson v. Sedgwick Claims Mgmt. Servs., Inc., No. 09-11529, 2010 WL
931864 (E.D. Mich. Mar. 11, 2010), appeal docketed, No. 10-1453 (6th Cir. Apr. 4,
2010).

II. ANALYSIS

A. Standards of Review

We review de novo dismissals under Rules 12(b)(6) and 12(c). Poplar Creek
Dev. Co. v. Chesapeake Appalachia, L.L.C., 636 F.3d 235, 240 (6th Cir. 2011). We
construe the complaint in the light most favorable to the plaintiffs, accepting its
allegations as true and drawing all reasonable inferences in the plaintiffs’ favor. Id. To
avoid dismissal, the plaintiffs must “state a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Dismissal “may be granted only
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 5

if the moving party is . . . clearly entitled to judgment,” even after taking as true the
allegations of the nonmoving party. Poplar Creek, 636 F.3d at 240.

We also review de novo when a district court denies a motion for leave to amend
a complaint on the basis that amendment would be futile. Brown v. Owens Corning Inv.
Review Comm., 622 F.3d 564, 569 (6th Cir. 2010).

B. Relationship Between RICO and the WDCA

RICO makes it a crime “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.” 18 U.S.C.
§ 1962(c). RICO defines “racketeering activity” to 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).” Id.
§ 1961(1).

Brown III, 546 F.3d at 352 (alterations and omissions in original).

The WDCA provides that employees who are injured in the course of
employment “shall be paid compensation.” Mich. Comp. Laws § 418.301(1). An
injured employee receives payments beginning fourteen days “after the employer has
notice or knowledge of the disability.” Id. § 418.801(1). The WDCA purports to make
“[t]he right to the recovery of benefits” under the WDCA “the employee’s exclusive
remedy against the employer for a personal injury or occupational disease,” with the sole
exception of “intentional tort[s].” Id. § 418.131(1).

The parties argue at length about (a) whether the plaintiffs’ RICO claims fall
within the ambit of the WDCA, triggering its exclusive-remedy clause, and (b) whether
RICO would impair the WDCA’s regulatory scheme. We find these debates irrelevant.
The plaintiffs brought a federal claim, not a WDCA claim. Although we do not hold that
RICO preempts the WDCA, we do find that “the relative importance to the State of its
own law is not material” when “a valid federal law” provides a cause of action based on
overlapping facts. Ridgway v. Ridgway, 454 U.S. 46, 54 (1981) (internal quotation
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 6

marks and alteration marks omitted). Therefore, the district court erred in finding that
the WDCA forecloses the plaintiffs’ RICO claims.

1. Supremacy Clause

Although RICO’s predicate of mail fraud is similar to the underlying fraud that
affects a state-recognized interest, mail fraud is a distinct offense. Due to the Supremacy
Clause, Michigan does not have the authority to declare a state remedy exclusive of
federal remedies. See U.S. Const. art. VI, cl. 2; Roberts v. Roadway Express, Inc., 149
F.3d 1098, 1105 (10th Cir. 1998) (“If Roadway means to argue that Colorado’s
Workers’ Compensation Act provides the exclusive remedy for all work-related injuries
including emotional distress caused by violations of the civil rights laws, that argument
is readily disposed of by the Supremacy Clause.”); Lopez v. S.B. Thomas, Inc., 831 F.2d
1184, 1190 (2d Cir. 1987) (“New York’s Workers’ Compensation Law might bar
plaintiff’s state common-law claim . . . [, but] we do not read the workers’ compensation
law to deny relief under a federal statute. Were state law to erect such a bar, it would
clearly run afoul of the Supremacy Clause . . . .”). State law can eliminate federal
remedies only when authorized by reverse-preemption clauses, such as the one contained
in the McCarran-Ferguson Act, which played a role in this panel’s prior decision. Brown
III, 546 F.3d at 357. Although the plaintiffs frame their argument in terms of
preemption, the Supremacy Clause is relevant in this case only to decide whether
Michigan can “foreclose[]” federal RICO claims, as the district court held. Brown IV,
743 F. Supp. 2d at 668. Regardless of whether RICO preempts the WDCA, RICO
provides a distinct cause of action.

To contest this result, the defendants rely on Connolly v. Maryland Casualty Co.,
849 F.2d 525, 528 (11th Cir. 1988), cert. denied, 489 U.S. 1083 (1989). The Eleventh
Circuit held in Connolly that a plaintiff could not bring suit for civil rights violations
under 42 U.S.C. § 1985 for injuries that stemmed from delayed payments of worker’s
compensation. The court reasoned that, because “[t]he civil rights claims and
constitutional claims are all based on the right provided by Florida Compensation Law,”
“[t]he remedy for th[e] wrongful conduct cannot rise above the exclusive remedy
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 7

provided by the Florida statutes.” Id. Similarly, the entitlement to worker’s
compensation benefits is created by Michigan statutes. By analogy, specifying and
limiting the remedy for violations of that entitlement arguably is Michigan’s prerogative.
More particularly, the defendants cite Connolly and Prine v. Chailland Inc., 402 F.
App’x 469, 470–71 (11th Cir. 2010) (unpublished opinion), cert. denied, 131 S. Ct. 2100
(2011), for the proposition that this court lacks subject-matter jurisdiction over RICO
claims—that is, the allegations do not state a cognizable RICO claim—if the state court
would decline to exercise jurisdiction over the plaintiffs’ worker’s compensation claims.

The flaw with the defendants’ argument is that the predicate offense for the
RICO action is mail fraud, not the denial of worker’s compensation. “The gravamen of
[a] RICO cause of action is not the violation of state law, but rather certain conduct,
illegal under state law, which, when combined with an impact on commerce, constitutes
a violation of federal law. Therefore, it is not alleged that [the defendants are] subject
to ‘liability under’ the [state law]; their liability . . . stems from RICO.” Williams v.
Stone, 109 F.3d 890, 895 (3d Cir.), cert. denied, 522 U.S. 956 (1997). The district court
here erred when it stated that this case does not “involve[] a separate and independent
tort (theft or conversion or some similar claim)” because the plaintiffs “cannot
disentangle their RICO claim from their underlying claim for benefits.” 743 F. Supp.
2d at 666, 668. Admittedly, the plaintiffs are entitled to damages for the alleged fraud
only if they were actually entitled to worker’s compensation and were not properly
compensated, which is a question of state law. But this fact shows an overlap in
sanctioned conduct, not a dependency relationship between state and federal law. It is
well established that “[t]he fact that a scheme may violate state laws does not exclude
it from the proscriptions of the federal mail fraud statute.” Parr v. United States, 363
U.S. 370, 389 (1960). It follows that mail fraud is still criminal even when the existence
of fraud varies according to whether a state prohibits conduct or whether it affords
entitlements.2 United States v. Blandford, 33 F.3d 685, 702 (6th Cir. 1994) (affirming

2
State law is not the exclusive source for defining fraudulent activity. Langford v. Rite Aid of
Ala., Inc., 231 F.3d 1308, 1313 (11th Cir. 2000) (“[T]he fact that no duty . . . can be located in analogous
[state] cases does not mean that no such duty can be located in federal law.”).
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 8

a mail-fraud conviction by distinguishing a case with identical conduct because one state
proscribed the defendant’s action while the other state did not), cert. denied, 514 U.S.
1095 (1995). Thus, mail fraud is a sanctionable offense even when it resembles a state
tort. For these same reasons, this court has jurisdiction over the federal civil RICO claim
even if the Michigan courts would not hear a claim for worker’s compensation. A
federal civil RICO claim and a state claim for worker’s compensation are legally
distinct, even though they share factual underpinnings.

2. Federal Administrative Schemes and the Filed-Rate Doctrine

Courts have held RICO inapplicable to claims that should have been raised
before federal agencies that had exclusive-remedy clauses in their enabling statutes.
E.g., McCulloch v. PNC Bank Inc., 298 F.3d 1217, 1226–27 (11th Cir. 2002) (Higher
Education Act); Ayres v. Gen. Motors Corp., 234 F.3d 514, 521–22 (11th Cir. 2000)
(National Traffic and Motor Vehicle Safety Act); Bodimetric Health Servs., Inc. v. Aetna
Life & Cas., 903 F.2d 480, 486–87 (7th Cir. 1990) (Social Security Act). The district
court extended this logic to state agencies. However, enabling statutes for federal
agencies shed light on Congress’s intent with regard to RICO because Congress passed
both sets of statutes. In contrast, enabling statutes for state agencies, passed by state
legislatures, say nothing about Congress’s intent with regard to RICO. Michigan cannot
limit the scope of a federal RICO cause of action.

Anticipating this critique, the defendants collect cases in which courts prevented
plaintiffs from bringing RICO claims that would have interfered with state
administrative agencies. The defendants fail to mention that most of these cases apply
the filed-rate doctrine. The filed-rate doctrine insulates from judicial attack utility rates
that have been filed with a state or federal regulatory agency, even when the plaintiffs
allege that the rates are unreasonable due to “fraud upon the regulatory agency.”
Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 20 (2d Cir. 1994); see also Keogh v. Chi.
& Nw. Ry. Co., 260 U.S. 156 (1922); Wah Chang v. Duke Energy Trading & Mktg. LLC,
507 F.3d 1222, 1225–26 n.4 (9th Cir. 2007); Tex. Commercial Energy v. TXU Energy,
Inc., 413 F.3d 503 (5th Cir. 2005), cert. denied, 546 U.S. 1091 (2006); Sun City
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 9

Taxpayers’ Ass’n v. Citizens Utils. Co., 45 F.3d 58 (2d Cir.), cert. denied, 514 U.S. 1064
(1995); H.J. Inc. v. Nw. Bell Tel. Co., 954 F.2d 485 (8th Cir.), cert. denied, 504 U.S. 957
(1992); Taffet v. So. Co., 967 F.2d 1483 (11th Cir.) (en banc), cert. denied, 506 U.S.
1021 (1992). Asking this court to apply the doctrine to the context of worker’s
compensation, the defendants identify a common policy concern: “only by determining
what would be a reasonable rate absent the fraud could a court determine the extent of
the damages.” Wegoland Ltd., 27 F.3d at 21. Similarly, only by knowing whether the
plaintiffs were entitled to worker’s compensation could a court determine the extent of
the damage produced by the defendants’ fraud. Additionally, without the filed-rate
doctrine, “victorious plaintiffs [in utility rate suits] would wind up paying less than non-
suing ratepayers,” id., just as victorious plaintiffs in this case would wind up recovering
more than injured workers who do not bring a RICO suit.

The filed-rate doctrine, however, has not been extended to any other context. To
the contrary, some cases have criticized its continuing validity even within the field of
utility rates. Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 760 F.2d 1347,
1352–55 (2d Cir. 1985) (Friendly, J.), aff’d, 476 U.S. 409 (1986). Crucially, a key
justification for the filed-rate doctrine is the need for knowledgeable regulatory agencies
to police “generally monopolistic and oligopolistic industries” to ensure reasonable rates,
rather than leaving a rate-reasonableness calculation in the hands of the less
knowledgeable courts. Wegoland, 27 F.3d at 21. This concern is less present in the field
of worker’s compensation where courts are regularly tasked with calculating the value
of such injuries. In addition, the filed-rate doctrine protects a legislative-type
determination by a regulatory agency, whereas the Michigan exclusivity provision
insulates an adjudicatory determination. Agency expertise, while often justifying some
measure of deference, never justifies a prohibition on our review—direct, much less
indirect—of agency adjudications. For these reasons, we decline to extend the filed-rate
doctrine.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 10

3. Burford Abstention

Had the complaint survived the motions to dismiss, the district court stated that
it “would [have] stay[ed] Plaintiffs’ RICO claims . . . based upon the Burford abstention
doctrine. Brown IV, 743 F. Supp. 2d at 676 n.17. Burford abstention is a method by
which federal courts may defer to the pending decision of a state agency when “the
State’s interests are paramount and . . . [the] dispute would best be adjudicated in a state
forum.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 728 (1996). When a complaint
seeks only monetary damages, Burford abstention may justify a stay, though not a
dismissal of the claims. Id. at 730. The decision whether to invoke Burford abstention
is committed to the discretion of the court. Id. at 724–25. Here, none of the parties’
current briefs even mention Burford abstention.3 We therefore decline to exercise our
discretion to stay the case.

All told, Michigan cannot preempt a federal RICO claim, and the resemblance
of the federal RICO claim to the claim for a state entitlement does not undermine the
RICO claim.

C. Injury to Property

The district court also rejected the plaintiffs’ claims because it held that they
failed to allege an injury to property, as required by RICO. The district court viewed the
plaintiffs’ alleged injuries as “wholly derivative of their personal injuries,” and as such
they could not be injury to property. Brown IV, 743 F. Supp. 2d at 674. We fail to see
support for the district court’s position in the text of RICO, and we hold that the
plaintiffs have alleged an injury to property because they allege the devaluation of either
their expectancy of or claim for worker’s compensation benefits.

3
Moreover, it appears that the parties are no longer awaiting “a final determination of Plaintiffs’
entitlement to those benefits via Michigan’s workers’ compensation scheme.” Brown I, 409 F. Supp. 2d
at 803. All of the claims settled except Brown’s, Reply Br. at 23, which was decided on its merits.
Appellant Br. at 35 n.11.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 11

1. Background

Title 18 U.S.C. § 1964(c) entitles those who have been “injured in [their]
business or property by reason of” racketeering, among other actions, to treble damages,
costs, and fees. Plaintiffs can recover under § 1964(c) only if they can demonstrate an
injury to “business or property.” Shaping our analysis of this provision is the Supreme
Court’s instruction that “RICO is to be read broadly.” Sedima, S.P.R.L. v. Imrex Co.,
473 U.S. 479, 497 (1985). The Supreme Court justified that rule in two ways. First,
Congress wrote the RICO statute with “self-consciously expansive language and overall
approach.” Id. at 498 (citing United States v. Turkette, 452 U.S. 576, 586–87 (1981)).
Second, Congress “express[ly] admoni[shed] that RICO is to ‘be liberally construed to
effectuate its remedial purposes.’” Id. (quoting Pub. L. No. 91-452, § 904(a), 84 Stat.
947). The remedial purpose of RICO is “nowhere more evident than in the provision of
a private action for those injured by racketeering activity.” Id.

2. Prior Panel Decision and Waiver

At the district court, the plaintiffs’ only argument about the nature of their injury
was that Brown III held that they had alleged loss of property. Brown IV, 743 F. Supp.
2d at 671 n.15 (quoting Plaintiffs’ Response to Cassens Mot. to Dismiss). The plaintiffs
are incorrect. Brown III stated:

Each of the plaintiffs has also sufficiently pleaded that they were injured
by the defendants’ “pattern of racketeering activity” under 18 U.S.C.
§ 1964(c) because the defendants’ fraud deprived the plaintiffs of
worker’s compensation benefits and caused them to incur attorney fees
and medical care expenses.

Brown III, 546 F.3d at 355–56. This sentence does not specifically state that the
plaintiffs alleged an injury to property, an issue that was not before the panel in Brown
III.

Nevertheless, this issue “presents an appropriate circumstance for exercising our
discretion to reach an issue not raised below.” Lockhart v. Napolitano, 573 F.3d 251,
261 (6th Cir. 2009). “Ordinarily, an issue that is not raised in the district court is not
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 12

considered on appeal unless the question is presented with sufficient clarity and
completeness for us to resolve the matter without further development of the record.”
United States v. Lucas, 640 F.3d 168, 173 (6th Cir. 2011). This issue is presented with
clarity and completeness. The district court relegated waiver to a footnote and analyzed
the merits of the issue for four pages. All of the parties have briefed the issue at length,
and it is “purely a question of law.” Lockhart, 573 F.3d at 261. We therefore consider
whether the plaintiffs have alleged an injury to property.

3. State or Federal Law

Whether a person has a “property” interest is traditionally a question of state law.
Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 (1982) (“The hallmark of property
. . . is an individual entitlement grounded in state law.”). For that reason, “‘[i]njury to
property’ for RICO purposes is generally determined by state law.” Isaak v. Trumbull
Sav. & Loan Co., 169 F.3d 390, 397 (6th Cir. 1999) (citing DeMauro v. DeMauro, 115
F.3d 94, 96 (1st Cir. 1997)). The Sixth Circuit has never fleshed out the circumstances
in which state law is not determinative of whether someone has a property interest at
stake, but DeMauro suggests that federal law can constrict state definitions of property,
and we agree with that approach. “[O]ne might expect federal law to decide whether a
given interest, recognized by state law, rises to the level of ‘business or property,’” a
question that “depends on federal statutory purpose.” DeMauro, 115 F.3d at 96; see also
Evans v. City of Chicago, 434 F.3d 916, 930 n.25 (7th Cir. 2006) (“[W]e need not adopt
a state law definition of ‘business or property’ which is so broad that it contravenes
Congress’ intent in enacting the RICO law.”); Price v. Pinnacle Brands, Inc., 138 F.3d
602, 607 (5th Cir. 1998) (“[E]ven though courts may look to state law to determine, for
RICO purposes, whether a property interest exists, it does not follow that any injury for
which a plaintiff might assert a state law claim is necessarily sufficient to establish a
claim under RICO.”); cf. Town of Castle Rock v. Gonzales, 545 U.S. 748, 757 (2005)
(invoking the same rule when deciding whether property is protected under the Due
Process Clause). We therefore must ask both whether Michigan defines the interest at
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 13

stake as property and whether such a definition is consistent with the concept of
“property” that Congress protected in enacting RICO.

4. Devaluation of a Statutory Expectancy as Injury to Property

The complaint identifies the plaintiffs’ injuries as including the deprivation and
devaluation of worker’s compensation benefits. R. 1 (Compl. ¶ 17). The district court
held that the fraudulent deprivation or diminution of worker’s compensation benefits did
not amount to an injury in property because such injury is merely another form of
pecuniary loss stemming from a physical injury. Brown IV, 743 F. Supp. 2d at 674.
Because statutory entitlements are property, the injury to which causes harm, we see no
reason under RICO to distinguish between property entitlements that accrue as a result
of a personal injury from those that do not. Although none of the remaining plaintiffs
in this case had started receiving their statutory benefits at the time of the fraud,
Michigan’s nondiscretionary worker’s compensation scheme creates a property interest
in the expectancy of statutory benefits following notice to the employer of injury.
Finally, even if Michigan law does not create a property interest in such an expectancy,
we hold that the plaintiffs’ claim for benefits is an independent property interest, the
devaluation of which also creates an injury to property within the meaning of RICO.

a. Property Interest in Worker’s Compensation Benefits

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 (1999) (citing Goldberg v. Kelly, 397 U.S. 254, 262 & n.8 (1970)); Perry v.
Sindermann, 408 U.S. 593, 601 (1972); Logan, 455 U.S. at 428; Mathews v. Eldridge,
424 U.S. 319, 332 (1976); see also Williams v. Hofley Mfg. Co., 424 N.W.2d 278, 282,
283 n.16 (Mich. 1988) (relying on federal due process law articulated in Logan, 455 U.S.
at 428). 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
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 14

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
(1979). “Congress must have intended to exclude some class of injuries by the phrase
‘business or property.’” Id. at 339. 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 (“[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 (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 (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

4
We recognize that the present case no longer involves plaintiffs who were awarded benefits that
were later revoked. However, because our analysis requires examining whether RICO differentiates
between benefits arising from personal injuries and those that did not, we start with the simpler question
of whether a plaintiff with vested worker’s compensation benefits has a property interest in those benefits,
because the legal entitlement is more widely accepted.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 15

property. Reiter, 442 U.S. at 339. 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. 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

5
The Circuits are less consistent when the injury claimed as a result of the RICO violation
includes lost wages, but this is in part because some states do recognize a legal entitlement to employment
opportunities. Compare Diaz v. Gates, 420 F.3d 897, 900 (9th Cir. 2005) (en banc) (lost wages from
wrongful death caused by RICO violation may be properly pleaded as a property interest given California
law) with Evans v. City of Chicago, 434 F.3d 916, 930–31 (7th Cir. 2006) (lost wages from wrongful
incarceration caused by RICO violation not property interest given Illinois law).
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 16

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 (rejecting
argument that Clayton Act requires injury to commercial property interests); Sedima,
S.P.R.L., 473 U.S. at 497 (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, 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

6
The main cases cited by the defendants for this proposition do not support their argument. The
Third Circuit in Malley-Duff & Assocs., Inc. v. Crown Life Ins. Co., 792 F.2d 341, 353–54 (3d Cir. 1986),
aff’d on other grounds by 483 U.S. 143 (1987), recognized that causes of action were a species of property
and harm to one could also be an injury to business when the action arose out of the termination of a
business. Subsequent Third Circuit cases have held some causes of action are not property if the state itself
would not treat the cause of action as a property interest. See Magnum v. Archdiocese of Philadelphia, 253
F. App’x 224, 226–27 (3d Cir. 2007) (unpublished opinion). Here, the parties do not dispute that Michigan
treats a cause of action over worker’s compensation benefits as property. Williams v. Hofley Mfg. Co., 424
N.W.2d 278, 282, 283 & n.16 (Mich. 1988).
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 17

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 (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 (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
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 18

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.

b. Property Interest in Expectation of Worker’s Compensation
Benefits
Having determined that the devaluation or loss of a statutory entitlement is an
injury to property, we must next decide whether the plaintiffs in this case had accrued
such a legal entitlement. None of the remaining plaintiffs in this case had started
receiving any worker’s compensation benefits under Michigan law at the time of filing
their RICO action. The issue is, therefore, whether an injured employee obtains a
property interest in his expectancy of worker’s compensation benefits. Again, we look
first to Michigan law.

Michigan has not directly addressed at what point an injured employee has a
property interest in the benefits provided by the WDCA. In construing other statutes,
Michigan courts have held that “a unilateral expectation of [a statutory] benefit” before
the benefit is awarded is not property because the claimant must “have a legitimate claim
of entitlement to the funds.” City of St. Louis v. Mich. Underground Storage Tank Fin.
Assurance Policy Bd., 544 N.W.2d 705, 708–09 (Mich. Ct. App. 1996) (citing Williams,
424 N.W.2d 278). However, that principle originates in federal due process law.8 Town
of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005) (quoting Bd. of Regents of State
Colls. v. Roth, 408 U.S. 564, 577 (1972)). And when interpreting federal due process
law, “[e]very regional circuit to address the question,” including the Sixth Circuit, “has

7
The Evans court also distinguished Diaz v. Gates, 420 F.3d 897 (9th Cir. 2005) (en banc), in part
because under Illinois law, prospective employment was not a cognizable property right, whereas under
California law it was. 434 F.3d at 930 n.26.
8
Michigan often looks to federal due process law in analyzing whether property interests are at
stake. Williams v. Hofley Mfg. Co., 424 N.W.2d 278, 282, 283 n.16 (Mich. 1988) (relying on federal due
process law articulated in Logan, 455 U.S. at 428).
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 19

concluded that applicants for benefits, no less than benefits recipients, may possess a
property interest in the receipt of public welfare entitlements,” Cushman v. Shinseki, 576
F.3d 1290, 1297 (Fed. Cir. 2009), so long as “a statute mandates the payment of benefits
to eligible applicants based on objective, particularized criteria,” Mallette v. Arlington
Cnty. Emps.’ Supplemental Ret. Sys. II, 91 F.3d 630, 639–40 (4th Cir. 1996); see also
Hamby v. Neel, 368 F.3d 549, 559 (6th Cir. 2004); Flatford v. Chater, 93 F.3d 1296,
1305 (6th Cir. 1996).9

Federal due process law therefore recognizes a property interest in benefits that
have not yet been awarded if the party asserting the property entitlement can “point to
some policy, law, or mutually explicit understanding that both confers the benefits and
limits the discretion of the [other party] to rescind the benefit.” R.S.W.W., Inc. v. City
of Keego Harbor, 397 F.3d 427, 435 (6th Cir. 2005) (internal quotation marks omitted);
see also Castle Rock, 545 U.S. at 756 (“[A] benefit is not a protected entitlement if
government officials may grant or deny it in their discretion.”). Michigan law is
consistent with this approach. For example, the Michigan Supreme Court has held that
a bar owner with a liquor license has a property interest in his expectancy of receiving
a renewal license, independent of his interest in his existing license, despite having had
no property interest in his expectancy of an initial license in the first place. Bundo v.
City of Walled Lake, 238 N.W.2d 154, 160 (Mich. 1976). The Michigan Supreme Court
focused entirely on the differences in the statutory procedures for obtaining a renewal
license as compared to an initial license. An initial applicant for a liquor license must
obtain approval from the local legislative body before the license may be granted; the
initial applicant therefore has nothing more than a unilateral expectation or hope that he
may receive the license. An existing licensee need not obtain such approval; unless an

9
“The Supreme Court has repeatedly reserved decision on the question of whether applicants for
benefits (in contradistinction to current recipients of benefits) possess a property interest protected by the
Due Process Clause.” Kapps v. Wing, 404 F.3d 105, 115 (2d Cir. 2005). Nevertheless, “the Supreme
Court’s procedural due process jurisprudence focuses on whether statutory provisions create a right, not
whether benefits have been received in the past.” Mallette v. Arlington Cnty. Emps.’ Supplemental Ret.
Sys. II, 91 F.3d 630, 640 (4th Cir. 1996) (citing Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577
(1972)). “[T]he potential consequences of denying . . . benefits are no less potentially dire than those of
revoking them.” Id.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 20

objection by the local body is filed prior to thirty days before his license expires, renewal
“take[s] place as a matter of course.” Id. at 157, 161.

Applying this principle to the present context, we look to the statutory procedures
for obtaining worker’s compensation in Michigan and conclude that applicants for
worker’s compensation benefits have a property interest in those benefits at the time that
their employer becomes aware of the injury. The WDCA’s mandatory language
deprives the WCAC of discretion about whether to award benefits. The statute says that
employees injured in the course of employment “shall be paid compensation,” which is
calculated according to a rigid schedule. Mich. Comp. Laws § 418.301(1) (emphasis
added). In the context of the WDCA, there is no “well established tradition” of
government officials having “discretion” despite “apparently mandatory . . . statutes.”
Castle Rock, 545 U.S. at 760. In fact, no adjudication is required: an employee receives
worker’s compensation benefits fourteen days “after the employer has notice or
knowledge of the disability.” Mich. Comp. Laws § 418.801(1). Applicants therefore
acquire a property interest in worker’s compensation when employers learn of their
employees’ physical injuries. The property interest has an “ascertainable monetary
value” and the identity of the entitlement is neither indeterminate nor vague. Castle
Rock, 545 U.S. at 763. These features demarcate a property interest guaranteed by the
mandatory language of the WDCA.

The dissent argues that the employer’s statutory ability to dispute the payment
of benefits negates any claim of legal entitlement to benefits prior to a decision to award
them.10 As an initial matter, both the dissent and the district court misread Michigan
Compiled Laws § 418.801(2) as permitting the nonpayment of otherwise mandatory

10
The defendants make a similar argument, pointing to Michigan cases with language suggesting
the employee’s “entitlement” to benefits does not begin until after the employee meets his burden of proof
under the WDCA. See, e.g., Stokes v. Chrysler L.L.C., 750 N.W.2d 129, 143–44 (Mich. 2008) (“There
is no way of knowing whether claimant is entitled to benefits until the correct legal standards have been
applied, and these standards cannot be applied until the claimant has introduced evidence concerning his
wage-earning capacity.”); Rakestraw v. Gen. Dynamics Land Sys., Inc., 666 N.W.2d 199, 205 (Mich.
2003) (“[A]n employee must establish the existence of a work-related injury by a preponderance of the
evidence in order to establish entitlement to benefits.”). These cases are cited out of context on issues
regarding respective burdens when benefits are disputed under the WDCA, Mich. Comp. Laws § 418.851,
and not whether a plaintiff has a property interest in his expectancy of benefits. We therefore do not find
their use of the word “entitlement” persuasive on this distinct issue.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 21

weekly compensation in the event of an ongoing dispute. It does not. Subsection
(2) relieves an employer of an otherwise automatic penalty for the non-payment of the
benefits owed under the statute in the event of an ongoing dispute.11 But even if it did
relieve the employer of its obligation, the existence of a limited mechanism to dispute
the receipt of benefits otherwise awarded as a matter of course does not make the
expectation cease to be a property interest.12 In Bundo, 238 N.W.2d at 160–61, for
example, the Michigan Supreme Court deemed it of no consequence that the local
legislative body retained a statutory right to object to renewal of a liquor license.

The absence of a specific statutory provision authorizing an employer not to pay
compensation during a dispute also distinguishes this case from American
Manufacturers Mutual Insurance Co. v. Sullivan, 526 U.S. 40, 58–61 (1999). In
American Manufacturers, the Supreme Court held that claimants of worker’s
compensation benefits in Pennsylvania did not have a property interest in the payment
of benefits prior to an adjudication that the medical treatments for which they sought
compensation were “reasonable and necessary.” Id. at 61. In 1993, Pennsylvania had
amended its worker’s compensation laws to insert a procedure by which an employer
could require a review of the necessity of an employee’s treatments “before a medical
bill must be paid.” Id. at 45. The Supreme Court held that under the new regime, it was
no longer enough that the plaintiffs demonstrated their “initial eligibility for medical
treatment” because they had not overcome the second statutory hurdle of showing “that
the particular medical treatment they received was reasonable and necessary.” Id. at 61.

11
The cases cited by the district court also address only the nonpayment of the penalty set forth
in subsection (2) in the event of an ongoing dispute. See Warner v. Collavino Bros., 347 N.W.2d 787
(Mich. Ct. App. 1984); Richardson v. Gen. Motors Corp., 363 N.W.2d 22 (Mich. Ct. App. 1984); Couture
v. Gen. Motors Corp., 335 N.W.2d 668 (Mich. Ct. App. 1983). The WDCA does not spell out what impact
a dispute has on subsection (1)’s requirement that the employee “shall” be compensated. However, given
that an employer suffers no penalty from refusing to pay disputed claims, as was the case here, it seems
the practical effect of the statute is that employers who dispute claims do not pay them until ordered to do
so.
12
Otherwise a party could never be denied benefits, even for proper grounds, which is clearly not
the case. The ability of an employer to dispute an otherwise nondiscretionary claim of benefits, and such
employer’s potential success, impacts only the value of the employee’s claim to benefits, not the
determination that such an expectancy of benefits is the employee’s property in the first place.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 22

The injured employees therefore could not yet claim a property interest in their
expectation of benefits. Id.

Here, the underlying Michigan state law does not require injured employees to
make such an initial showing before they receive benefits, as Pennsylvania’s law did.
In contrast, Michigan law resembles the old Pennsylvania regime, stating simply that
“[a]n employee[] who receives a personal injury arising out of and in the course of
employment by an employer . . . shall be paid compensation as provided in this act.”
Mich. Comp. Laws § 418.301(1) (emphasis added); see 77 Pa. Stat. Ann. § 531(5)
(Purdon Supp. 1978) (“The employer shall provide payment for reasonable . . . services
rendered . . . as and when needed.”). Although an employee bears the burden of showing
his personal injury arose during the course of his employment in the event of a dispute,
Mich. Comp. Laws § 418.851, no Michigan statutory provision permits the employer to
withhold compensation until such a showing has been made.

Where, as here, the receipt of the benefit is nondiscretionary and statutorily
occurs as a matter of course, we firmly believe that the Michigan courts would recognize
a property interest in an injured employee’s expectancy of worker’s compensation. And,
as already discussed, because a property interest in the form of entitlement to benefits
is consistent with “property” as defined by RICO, the plaintiffs have properly stated a
claim alleging injury to property when they alleged harm to their expectancy of statutory
benefits under the WDCA.

c. Property Interest in Claim for Worker’s Compensation Benefits

Independently of our analysis thus far, we also hold that the plaintiffs in this case
have a property interest in their claim for benefits. Therefore, even if Michigan courts
would not recognize an expectancy of benefits under the WDCA as property, the
plaintiffs in this case may proceed by alleging injury to property in that their claim to
benefits under the worker’s compensation scheme was damaged by the defendants’
actions. American Manufacturers specifically reserved judgment on whether an
applicant has “a property interest in . . . claims for payment, as distinct from the
payments themselves.” Am. Mfrs., 526 U.S. at 61 n.13 (emphasis added). The holding
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 23

was limited to the expectation of payment of worker’s compensation (i.e., mailing a
particular check), not the claim for payment (i.e., entitlement to present a claim). Had
the defendants in American Manufacturers barred the plaintiffs from following the
statutory procedures for presenting a claim at all, the result would very likely have been
different.

Michigan law describes a cause of action for worker’s compensation as a
“species of property”—for both the plaintiff and the defendant. Williams v. Hofley Mfg.
Co., 424 N.W.2d 278, 282, 283 & n.16 (Mich. 1988) (citing Logan, 455 U.S. at 428).
Although the dissent is correct that the plaintiff in Williams had already been awarded
worker’s compensation, unlike here, the relevant interest at issue was not the employee’s
expectancy in benefits but whether an employer had a property interest in a worker’s
compensation cause of action such that a failure to afford the employer adequate process
in such a proceeding injured his property. The court held that it was property. Here, the
plaintiffs’ claim is not necessarily about particular payments themselves, but also about
the defendants’ deception before the WDCA that deprived the plaintiffs of the ability to
assert their claim for benefits under the statute in a fair forum.13 We hold that Michigan
would recognize a claim for worker’s compensation benefits as a species of property
independently of whether the employee had obtained an interest yet in the underlying
benefits themselves. And as discussed throughout, we see no reason to exclude injuries
to causes of action, which are indisputably injuries to property, from the category
identified by Congress as “property” in RICO.

Finally, the defendants are correct that worker’s compensation is “a substitute for
the tort system.” Brown II, 546 F.3d at 359. That does not mean, however, that claims
for worker’s compensation sound in tort. When a plaintiff’s personal injury is filtered
through the WDCA, it is converted into a property right.

13
The plaintiffs’ complaint is ambiguous as to which property interest they believe was
harmed—their expectancy or their claim. This should be considered on remand as part of the plaintiffs’
motion to amend their complaint.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 24

d. Effect of Settlement and Unfavorable Adjudication

Attacking the plaintiffs from another angle, the defendants claim that the
plaintiffs “were not deprived of their causes of action” because the plaintiffs pursued the
claims to resolution, be it by settlement or by final adjudication. Appellee Cassens Br.
at 28. This argument mischaracterizes the plaintiffs’ property interest. The plaintiffs did
not lose the ability to litigate their claims entirely, but the value of their claims was
allegedly diminished because of the fraud.

Of course, the plaintiffs’ RICO action can succeed only by proving that the
plaintiffs suffered an ascertainable injury from the defendants’ fraud. To do that, they
must show that their claims to benefits had value, i.e., the claims had some likelihood
of success had they been able to present them in a fair proceeding. This is similar to
legal malpractice cases, where the plaintiffs also allege injury to an underlying claim,
and Michigan requires plaintiffs to prove a “suit within a suit”—in other words, that they
could have prevailed or obtained a better outcome in the original lawsuit. Coleman v.
Gurwin, 503 N.W.2d 435, 437 (Mich. 1993) (internal quotation marks omitted). This
requirement “insure[s] that the damages claimed to result from the attorney’s negligence
are more than mere speculation.” Id. Losing or settling the original lawsuit does not,
on its own, render the injury speculative. To the contrary, damages are generally
quantified counterfactually. See, e.g., Chronister Oil Co. v. Unocal Ref. & Mktg. (Union
Oil Co. of Cal.), 34 F.3d 462, 464 (7th Cir. 1994) (Posner, J.) (“The point of an award
of damages, whether it is for a breach of contract or for a tort, is, so far as possible, to
put the victim where he would have been had the breach or tort not taken place.”
(emphasis added)).

The same logic is true here; losing or settling a case due to fraudulent medical
reports does not extinguish the plaintiffs’ property interest in bringing a claim free of
fraud. It would be nonsensical to allow a plaintiff to sue her attorney for malpractice
only if she had won the suit in which the malpractice occurred, even though she must
still put on evidence that she would have won absent her attorney’s malpractice.
Likewise, here, plaintiffs should be allowed to proceed on their RICO claim and put on
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 25

evidence that they would have received a better result in the underlying state agency
proceedings had the defendants not submitted fraudulent medical reports. The fact that
the plaintiffs lost or settled in tainted proceedings is not evidence that the plaintiffs
would have lost or settled if the proceedings had been fair.

Raising an argument that goes to the merits of the adjudication, the defendants
dispute whether the plaintiffs were injured on the job. Cf. Mich. Comp. Laws
§ 418.841(1) (“Any dispute or controversy concerning compensation . . . shall be
submitted to the [WCAC] . . . .”). This argument relates only to damages, however, and
not whether plaintiffs had a property interest in a fraud-free adjudication of their claims.
Even if a person cannot ultimately satisfy the criteria to receive the statutory entitlement,
she still has a property interest in her statutory right to raise the claims and be subject to
a fair proceeding on the merits of her claims.

We hold that the plaintiffs have a property interest in their claims for worker’s
compensation benefits, and the favorable or unfavorable adjudication or settlement of
those claims in a proceeding tainted by fraud does not extinguish their property interest
in those benefits. The plaintiffs, then, have alleged an injury to property.

5. Damages

Under 18 U.S.C. § 1964(c), prevailing plaintiffs are entitled to treble damages
and costs of the RICO suit, including reasonable attorney fees. Because of the trebling
of damages, courts do not permit RICO claims to proceed unless the measure of damages
is “not based upon mere speculation and surmise.” Fleischhauer v. Feltner, 879 F.2d
1290, 1299–1300 (6th Cir. 1989). The district court here held that the damages in this
case would be too speculative to give the plaintiffs standing to pursue a RICO claim.
Although many of the arguments with respect to this issue have already been addressed,
we will discuss briefly why damages here are appropriately quantifiable.

In the context of the Clayton Act, “a consumer . . . is injured in ‘property’ when
the price of those goods or services is artificially inflated by reason of the
anticompetitive conduct complained of.” Reiter, 442 U.S. at 339. By analogy, a person
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 26

is injured in “property” under RICO when the value of the statutory benefits that she
receives is artificially decreased by reason of the fraud complained of. “[T]he
compensable injury necessarily is the harm caused by predicate acts sufficiently related
to constitute a pattern.” Sedima, S.P.R.L., 473 U.S. at 497. Calculating such differences
is rarely an exact science, but the plaintiffs should be able to put on proof of how much
compensation they would have received under the WDCA’s rigid schedule of
compensation but for the defendants’ allegedly fraudulent medical testimony. The
difference between that amount and the amount they received in settlement is neither
speculative nor too difficult to surmise.

The WDCA calculates a compensatory award using detailed instructions and
tables set forth in Michigan Compiled Laws §§ 418.301 et seq., plus, after payments are
30 days late, $50 per day (capped at $1,500) for each subsequent day on which the
employer fails to pay in the absence of an ongoing dispute. Brown III, 546 F.3d at 362
(quoting Mich. Comp. Laws § 418.801(2)). The damages alleged in this case are
(1) either the denied benefits, or the amount by which the settlement reduced the award
to which the plaintiff would have been entitled but for the inducement to settle, R. 117–2
(Amended Compl. ¶ 46) (“damages measured by the amount of benefits improperly
withheld”); (2) costs incurred due to the “time delay in receipt of those benefits,” id.;
(3) attorney fees and litigation costs of litigating the claim in the state system, id.; and
(4) expenses from “mileage to and from medical care,” id. The plaintiffs also request
interest pertaining to each item. Id.

Because the plaintiffs have alleged a specific, ascertainable injury to property
within the meaning of RICO, they are entitled to pursue these damages.

D. Adequacy of the Pleadings

The plaintiffs have plausibly alleged an “enterprise” and Dr. Margules’s role in
its “operation or management.” For purposes of RICO, “an enterprise includes any
union or group of individuals associated in fact,” elsewhere described as “a group of
persons associated together for a common purpose of engaging in a course of conduct.”
Boyle v. United States, 556 U.S. 938, —, 129 S. Ct. 2237, 2243 (2009) (internal
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 27

quotation marks omitted). Such an association must have “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. The requirements are
interpreted flexibly. For example, members do not need to hold fixed roles, and a chain
of command is not required. Id. at 2245.

1. Allegations of “Enterprise”

“[A] corporation cannot be both the ‘enterprise’ and the ‘person’ conducting or
participating in the affairs of that enterprise. . . . [A] corporation may not be liable under
section 1962(c) for participating in the affairs of an enterprise that consists only of its
own subdivisions, agents, or members.”14 Begala v. PNC Bank, Ohio, N.A., 214 F.3d
776, 781 (6th Cir. 2000), cert. denied, 531 U.S. 1145 (2001). This principle is known
as the “non-identity” or “distinctness” requirement. Id. Also, a plaintiff may plead in
the alternative and “the pleading is sufficient if any one of [the theories that the plaintiff
pleads] is sufficient.” Fed. R. Civ. P. 8(d)(2).

The alleged enterprise consists of Cassens and Crawford, or Cassens, Crawford,
and Dr. Margules. R. 1 (Compl. ¶ 20). Crawford and Cassens can comprise an
enterprise on their own because Crawford “act[ed] as an agent for, or in concert with,
Cassens.” R. 1 (Compl. ¶ 18) (emphasis added). Moreover, the plaintiffs’ allegations
suggest that Dr. Margules is a distinct actor with whom the other defendants have “a
long-standing business relationship.” Id. ¶ 11; see also Appellee Margules Br. at 29
(“[The complaint] establishes that Dr. Margules was in practice for himself.”).
Therefore, the allegations satisfy the distinctness requirement.

Moreover, the complaint meets Twombly’s plausibility standard. The complaint
alleges that the “Defendants expressly or implied[ly] communicated to Dr. Margules that
[they] wanted him to write reports stating plaintiff was not disabled due to work-related

14
Contrary to the defendants’ argument, there is no requirement that the plaintiffs explicitly allege
that “Cassens is a person.” The complaint clearly alleges that Cassens violated § 1962(c), implying that
Cassens is a “person” capable of violating that section.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 28

injuries, regardless of the true circumstances.” R. 1 (Compl. ¶ 12). Thus, the plaintiffs
have plausibly pleaded the existence of an “enterprise.”

2. Dr. Margules’s Role

The plaintiffs have adequately alleged Dr. Margules’s involvement in the
operation or management of the enterprise. Reves v. Ernst & Young held that, although
liability is not limited to “upper management,” a person can be liable under RICO only
if he or she is part of the “operation or management” of the enterprise. 507 U.S. 170,
185 (1993). The defendants in Reves were not part of the operation of the enterprise
because they simply prepared standard financial statements “based on information from
management’s accounting system.” Id. at 186. Dr. Margules, on the other hand,
allegedly did more than participate in his “own affairs” of evaluating medical conditions.
Id. at 184–85. According to the complaint, Dr. Margules’s evaluations were not
objective medical reports. Dr. Margules was a “‘cut off’ doctor . . . upon whom
Crawford and Cassens could rely for opinions which they could cite as grounds for
cutting off or denying benefits.” R. 1 (Compl. ¶ 6B). He allegedly fraudulently slanted
his medical evaluations to serve the purposes of the enterprise, with “the express or
implied promise of future payment of money.” Id. Therefore, the complaint adequately
alleges that Dr. Margules was part of the operation or management of the enterprise.

E. Leave to File an Amended Complaint

Courts should “freely give leave [to amend a complaint] when justice so
requires.” Fed. R. Civ. P. 15(a). When a complaint, as amended, could not survive a
motion to dismiss, a district court does not err in denying the motion to amend. Owens
Corning, 622 F.3d at 574. Because we conclude that the amended complaint could
survive the motion to dismiss, denial of the motion to amend for reason of futility was
in error. We leave to the district court the question whether justice requires letting the
plaintiffs amend their complaint.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 29

III. CONCLUSION

We REVERSE the district court’s judgment and REMAND the case for further
proceedings consistent with this opinion.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 30

_______________

DISSENT
_______________

JULIA SMITH GIBBONS, Circuit Judge, dissenting. Because I disagree with
the majority’s analysis and conclusions in section II.C. of the opinion and because this
issue is dispositive, I respectfully dissent. The district court recognized several grounds
on which the plaintiffs’ case could be dismissed, and in order to affirm the decision of
the district court, our panel need only have agreed with one of them. The plaintiffs failed
to state a claim for RICO relief because they neglected to plead an injury to business or
property, and, thus, the district court’s dismissal of plaintiffs’ case should be affirmed.1

Plaintiffs’ alleged RICO damages are that they were deprived of workers’
compensation benefits and incurred attorneys’ fees, medical-care expenses, and
transportation expenses driving to and from medical care. The district court held that
plaintiffs lack standing to sue under RICO because their claims for medical expenses and
related pecuniary loss sustained as a result of their workplace injuries do not constitute
injury to business or property under RICO. Brown v. Cassens Transp. Co. (“Brown IV”),
743 F. Supp. 2d 651, 658 (E.D. Mich. 2010). Because plaintiffs’ damages
“unquestionably were incurred as a direct result of Plaintiffs’ on-the-job injuries,” the
district court concluded that “their medical expenses, workers’ compensation benefits,
medical mileage and attorneys fees are damages which are indisputably wholly
derivative of their personal injuries and as such are not injuries to ‘business or property’
under RICO.” Id. at 674. I agree.

As recognized by the majority, RICO provides recovery for “[a]ny person injured
in his business or property by reason of a violation of section 1962 of this chapter . . . .”
18 U.S.C. § 1964(c) (emphases added). Thus, without an allegation of damages to
business or property by reason of a violation of § 1962, plaintiffs will not have standing
to pursue their RICO claims. Although the Supreme Court has stated “RICO is to be

1
I agree with the majority opinion’s determination that Brown III did not deal with this issue and
that we should decide it here.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 31

read broadly” in determining what injuries were actually caused by conduct that RICO
was designed to deter (i.e., racketeering injuries), Sedima, S.P.R.L. v. Imrex Co.,
473 U.S. 479, 497 (1985), (Maj. Op. at 10), this does not eliminate the requirement to
plead an injury to business or property. “‘The phrase business or property . . . retains
restrictive significance. It would, for example, exclude personal injuries suffered.’”
Drake v. B.F. Goodrich Co., 782 F.2d 638, 644 (6th Cir. 1986) (internal quotation marks
omitted) (quoting Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979)) (affirming district
court’s denial of a motion to amend a complaint). Furthermore, this restrictive
significance has been clarified to exclude both personal injuries and pecuniary losses
flowing from those personal injuries. Evans v. City of Chicago, 434 F.3d 916, 926 (7th
Cir. 2006); see also Doe v. Roe, 958 F.2d 763, 767 (7th Cir. 1992) (“The terms ‘business
or property’ are, of course, words of limitation which preclude recovery for personal
injuries and the pecuniary losses incurred therefrom.”); Grogan v. Platt, 835 F.2d 844,
847 (11th Cir. 1988) (“[T]he pecuniary and non-pecuniary aspects of personal injury
claims are not so separated . . . ; rather, loss of earnings, loss of consortium, loss of
guidance, mental anguish, and pain and suffering are often to be found, intertwined, in
the same claim for relief.”).

At the outset, it is necessary to examine what law determines whether an injury
constitutes a personal injury or an injury to business or property. “While federal law
governs most issues under RICO, whether a particular interest amounts to property is
quintessentially a question of state law.” Doe, 958 F.2d at 768 (citing Logan v.
Zimmerman Brush Co., 455 U.S. 422, 430 (1982)). But our court is “not required to
adopt a state interpretation of ‘business or property’ if it would contravene Congress’
intent in enacting RICO.” Id. (citing Reconstruction Fin. Corp. v. Beaver Cnty.,
328 U.S. 204 (1946)). “Some role does exist for state law. There is no general federal
law of property transfers . . . .” DeMauro v. DeMauro, 115 F.3d 94, 96 (1st Cir. 1997).
Nonetheless, “[w]here to set the ‘business or property’ threshold depends on federal
statutory purpose, and that purpose is likely to support a definition that is uniform
throughout the country.” Id. at 96–97. The task of the court is “to determine whether
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 32

Congress intended the damages that plaintiffs seek in this case to be recoverable under
civil RICO.” Grogan, 835 F.2d at 846.

The majority indeed recognizes this legal framework. It then, however,
concludes that Michigan’s definition of property is consistent with Congress’s intent,
while engaging in little discussion of that Congressional intent, and relies on Michigan
procedural due process jurisprudence to determine whether plaintiffs’ allegations state
a claim under RICO. Overlooking or minimizing the federal cases does not merely
reject the helpful analogies they offer; it also results in an interpretation of RICO’s
standing requirement that departs from both Congressional language and intent.

Plaintiffs alleged that, after they were each injured at work, Cassens and
Crawford formed an enterprise and fraudulently denied plaintiffs’ claims for benefits
under the WDCA through Notices of Dispute (in which Crawford challenged the validity
of the claims as being unsupported by medical evidence or not job-related), opinion
letters sent by Dr. Margules (opining that the alleged injury was not job-related or not
sufficiently disabling), and additional communications in furtherance of the scheme.
Brown IV, 743 F. Supp. 2d at 656. Based on this activity, plaintiffs’ alleged damages
were that they were deprived of workers’ compensation benefits and incurred attorneys’
fees, medical care expenses, and mileage to and from medical care providers. Id. at 658.

The majority discusses extensively whether an expectation of workers’
compensation benefits constitutes a property interest. This approach ignores the
determinative fact that the damages sought in worker’s compensation cases derive from
personal injuries. Under RICO, both personal injuries and pecuniary losses flowing
from those personal injuries are insufficient to confer standing under § 1964(c). See
Evans, 434 F.3d at 926; see also Grogan, 835 F.2d at 846–47. The injury to plaintiffs
is not the loss of an opportunity to assert a claim, in which there might or might not be
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 33

a property interest, but the personal injury for which success on the claim would
compensate.2

The majority opinion also departs from precedents of our sister circuits. These
precedents provide useful examples of damages that compensate for personal injury and
those that compensate for injury to property or business interests under RICO. See
Evans, 434 F.3d at 926–27 (finding that malicious prosecution and false imprisonment
resulting in loss of potential income and attorneys’ fees were personal injuries because,
under Illinois law, these claims are traditional tort claims resulting in personal injuries
and pecuniary consequences of those personal injuries); Doe, 958 F.2d at 770 (finding
that loss of earnings, purchase of a new security system, and employment of a new
attorney were derivative of emotional distress resulting from defendant’s sexual
encounters with plaintiff and therefore reflected personal injuries that were not
compensable under RICO); Grogan, 835 F.2d at 848 (holding that plaintiffs could not
recover under RICO “for those pecuniary losses that are most properly understood as
part of a personal injury claim,” in this instance, personal injuries inflicted by predicate
physical injury or death and the lost employment opportunities that result); Drake,
782 F.2d at 644 (finding that a wrongful death action—based in an employer’s
concealment of hazards associated with working in an environment containing vinyl
chloride—constituted a personal injury action rather than an injury to business or
property). But see Diaz v. Gates, 420 F.3d 897, 898, 900–01 (9th Cir. 2005) (en banc)
(per curiam) (concluding that plaintiff had alleged an injury to business or property
resulting from false imprisonment by alleging “lost employment, employment
opportunities, and the wages and other compensation associated with said business,
employment and opportunities, in that [he] was unable to pursue gainful employment
while defending himself against unjust charges and while unjustly incarcerated”); Evans,
434 F.3d at 928 (“Where an employee is able to establish that he has been unlawfully
deprived of a property right in promised or contracted for wages, the courts have been

2
The majority opinion asserts that focusing on the origin of the injury may yield inconsistent
results. But the statutory language delineates the inquiry, which requires an examination of the origins of
an injury. Thus, I would characterize the inconsistency the majority describes as the natural result of the
Congressional definition of injuries within the statute’s reach.
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 34

amenable to classifying the loss of those wages as injury to ‘business or property.’”).
Thus, the cases from other circuits support the defendants’ arguments that pecuniary
damages flowing from plaintiffs’ work-related injuries constitute personal injuries, not
damages to property or business.

Many of these circuit cases also explain that Congress intended RICO’s standing
requirement—which again allows plaintiffs to sue for injuries only to business or
property losses—to have real teeth. See Evans, 434 F.3d at 928 (“[A]lthough the
economic aspects of Evans’ alleged loss of employment income injury could conceivably
be regarded as affecting ‘business or property,’ Congress specifically foreclosed this
possibility by adopting the civil RICO standing requirement and its ‘restrictive
significance’ from the Clayton Act.”); id. at n.23 (“[I]t would be contrary to the intent
of Congress for this court to construe the statute so broadly that we completely read the
‘restrictive significance,’ of the ‘business or property’ standing requirement out of [the
statute].”) (internal citation omitted); Grogan, 835 F.2d at 845 (“The words ‘business or
property’ are, in part, words of limitation; if Congress had intended for the victims of
predicate acts to recover for all types of injuries suffered, it would have drafted the
statute [differently].”). Congress’s clear desire to limit standing to those who suffer
business- or property-related losses makes sense, given that “Congress enacted civil
RICO primarily to prevent organized crime from obtaining a foothold in legitimate
business.” Doe, 958 F.2d at 768; see also Grogan, 835 F.2d at 845. What does not
make sense, however, is to believe that Congress intended to thwart such criminal
activity by recognizing a civil action to recover medical expenses and related losses due
to a denial of worker’s compensation benefits.

In addition, federal district courts have persuasively determined that the sort of
damages sought here are for personal injury, not for injury to business or property. See
Bradley v. Phillips Petroleum Co., 527 F. Supp. 2d 625, 645–47 (S.D. Tex. 2007),
summarily aff’d, 337 F. App’x 397 (5th Cir. 2009); Brown v. Ajax Paving Indus., 773
F. Supp. 2d 727, 734 (E.D. Mich. 2011); Lewis v. Drouillard, 788 F. Supp. 2d 567,
570–71 (E.D. Mich. 2011). In the Southern District of Texas, the federal district court
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 35

evaluated a “claim that Defendants ‘conspired to defraud [the plaintiffs] of their common
law right to file intentional tort claims against their employer for the injuries they
suffered’ in [an explosion].” Bradley, 527 F. Supp. 2d at 645. “Defendants allegedly
‘paid large monetary settlement awards to certain union officials . . . for intentional tort
claims outside of [plaintiff’s] alleged workers’ compensation plan’ . . . .” Id. The court
found that the plaintiffs’ “RICO claim in no way implicates their ‘business or property’”
because “[t]he claim solely seeks to redress for personal injuries suffered in the
[explosion].” Id. at 647. The “viable personal injury causes of action” failed to
“constitute an injury cognizable under RICO.” Id. The court recognized that “the
economic consequences of personal injuries do not qualify as ‘injury to business or
property’” and “at least one court has expressly held that ‘a lost opportunity to bring
state law personal injury claims . . . is not cognizable as an injury to business or property
in a civil RICO action.’” Id. at 646 (internal quotation marks omitted) (citing Magnum
v. Archdiocese of Phila., 253 F. App’x 224, 226 (3d Cir. 2007)). The court then
emphasized that this “position is entirely consistent with the legislative purpose of the
RICO statute.” Id. (internal quotation marks omitted).

Furthermore, two district courts have recently come to the same conclusion with
respect to workers’ compensation claims under the WDCA in the state of Michigan.
These decisions have been stayed on appeal pending our decision in this case. As one
court concluded,

there is no question that the damages identified in Plaintiff’s
complaint—diminished worker’s compensation benefits, losses resulting
from the delayed payment of benefits, medical expenses, and costs and
attorney fees incurred in an effort to secure the benefits to which Plaintiff
allegedly was entitled—all stem from an underlying personal injury that
led Plaintiff to pursue an award of worker’s compensation benefits.

Ajax, 773 F. Supp. 2d at 734 (internal citation omitted). That underlying injury involved
an injury to plaintiff while on the job; plaintiff was then examined by a board-certified
orthopedic surgeon who opined that plaintiff’s injury was work-related; plaintiff’s
employer denied plaintiff’s claim for workers’ compensation benefits; plaintiff sought
review of this denial; and plaintiff alleged that his employer attempted to bribe witnesses
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 36

to testify falsely that plaintiff’s injury occurred outside of work. Id. at 730. The court
in Ajax agreed with the district court in the case at bar and found that this allegation was
insufficient for a RICO action. Furthermore, the court reasoned that the “‘lost cause of
action’ theory of civil RICO damages” was sufficient only when “the ‘lost’ suit is itself
an injury to ‘business or property.’” Id. at 736. Additionally, in Lewis, the court noted,
“While it is true that employers or their insurance carriers are required by law to pay
workers’ compensation benefits when warranted, the injuries suffered by workers while
on the job have never lost their characteristic as personal injuries.” 788 F. Supp. 2d at
570 (citing Mathis v. Interstate Motor Freight Sys., 289 N.W.2d 708 (Mich 1980);
Specht v. Citizens Ins. Co. of Am., 593 N.W.2d 670 (Mich. Ct. App. 1999)). The court
found that “Plaintiffs’ alleged damages [were] intimately related to their personal
injuries,” and they did “not have standing under RICO.” Id.

Finally, our panel previously referred to the WDCA as a “public regulation of the
employment relationship that is a substitute for the tort system rather than any
contractual relationship between employees and employers.” Brown v. Cassens Transp.
Co. (“Brown III”), 546 F.3d 347, 359 (6th Cir. 2008) (emphasis added). The workers’
compensation scheme “creates a legislative remedy regarding the tort-liability
relationship . . . .” Id. at 360. Our statement is consistent with case law analyzing the
intentions of RICO. Given the strong body of case law supporting the notion that
plaintiffs’ damages allege only personal injuries, I would conclude the plaintiffs have not
pled an injury to business or property, as required under RICO.

The majority chooses to ignore most of the case law supporting the result reached
by the district court. Instead, citing Williams v. Hofley Manufacturing Co., 424 N.W.2d
278 (Mich. 1988), the majority concludes that Michigan law establishes that a claim for
workers’ compensation benefits constitutes a property interest. In Williams, the court
concluded that a money judgment rendered in litigation would deprive the defendant
employer of its property, and “the United States Supreme Court has held that a cause of
action is, in itself, a species of property protected by the Fourteenth Amendment’s Due
Process Clause.” Id. at 282 (citing Logan, 455 U.S. at 428). “Thus, to the extent that the
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 37

procedure involved would affect the ability of the defendant to present a legitimate
defense, the defendant’s property rights are also impaired.” Id. at 282–83. Williams,
however, is inapt because it involves an already-decided, legitimate claim of entitlement.
That is not the case here. Indeed, it appears that, after the initial denial of benefits, all
the plaintiffs but Brown have entered into settlements disposing of their workers’
compensation claims. Resolved claims hardly represent legitimate claims of future
entitlement.

The majority also argues that because the workers’ compensation scheme
provided for under the WDCA deprives the WCAC of discretion over whether to award
benefits, those benefits are essentially guaranteed and constitute legitimate claims of
entitlement. Indeed, the WDCA provides for the automatic payment of weekly
compensation installments to a person with a disability claim after the employer has
notice or knowledge of the disability. Mich. Comp. Laws § 418.801(1). However,
weekly compensation is no longer due and payable when there is an “ongoing dispute.”
See Mich. Comp. Laws § 418.801(2). An employer can place a claim in dispute by filing
a “Notice of Dispute.” Michigan state courts have held that no distinction is to be made
among good faith disputes, bad faith disputes, and unreasonable disputes. See Warner
v. Collavino Bros., 347 N.W.2d 787, 790 (Mich. Ct. App. 1984) (“On its face M.C.L.
§ 418.801(2) . . . merely requires an ‘ongoing dispute’ and does not distinguish good
faith disputes from bad faith or unreasonable disputes.”); Couture v. Gen. Motors Corp.,
335 N.W.2d 668, 670 (Mich. Ct. App. 1983) (“We cannot read the term ‘dispute’ in
either statute to mean only a meritorious or nonfrivolous dispute.”). Thus, although the
payment of benefits remains nondiscretionary, payment is not inevitable under the
WDCA. In the case at hand, plaintiffs attempted to receive workers’ compensation
benefits under the WDCA. Due to allegedly false medical reports and other wrongdoing,
those benefits were denied. In order to regain a legitimate claim of entitlement, the
WDCA provides an appellate process by which to challenge the dispute over benefits.
See Mich. Comp. Laws §§ 418.841(1), 418.847(1), 418.859a(1), 418.861. Although
wrongdoing had been alleged in conjunction with that denial, the denial of benefits still
No. 10-2334 Brown et al. v. Cassens Transport Co. et al. Page 38

exists, and the denial of benefits in no way approximates an “already-decided, legitimate
claim of entitlement.” Thus, Williams provides little help to plaintiffs’ position.

For the foregoing reasons, I respectfully dissent. I would affirm the decision of
the district court.