RICO lawsuit against Sedgwick, Coca-Cola dismissed

A federal appeals court dismissed a lawsuit alleging Coca-Cola Enterprises Inc. and Sedgwick Claims Management Services Inc. violated the Racketeer Influenced and Corrupt Organizations Act in settling workers compensation claims.

A split 11-5 en banc panel of the 6th U.S. Circuit Court of Appeals in Cincinnati found Tuesday that Congress did not intend for federal courts, through RICO claims, to become an alternative for settling workers comp disputes in state systems.

It affirmed a trial court's previous dismissal of the 2009 civil lawsuit brought by two workers comp claimants in the U.S. District Court for the Eastern District of Michigan. They claimed to have suffered unrelated workplace injuries.

But Sedgwick disputed both claims and declined to pay benefits, according to the appeals court decision. The plaintiffs alleged in their lawsuit that Coca-Cola and Coca-Cola's third-party administrator engaged in fraud to avoid paying benefits to injured workers.

Last year, a three-member panel of the same appeals court overturned the trial court's dismissal of the case, ruling that the plaintiffs adequately stated a claim for relief under RICO.

But the en banc panel's majority in Clifton Jackson et al. v. Sedgwick Claims Management Services Inc. ruled Tuesday that had Congress intended for RICO to serve as an alternative federal forum for workers comp disputes “it would have provided more explicit guidance” to do so.

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“To summarize, we would expect Congress to give a clear statement of its intent to intervene in Michigan's administrative system for handling workers compensation claims,” the majority opinion states. “While we recognize that RICO is a remedial statute that deserves a liberal construction, it is not a means for federalizing personal injury tort claims arising under state law. RICO lacks a clear statement of Congress's intent to effectuate such a change in the law.”

U.S. Circuit Court Judge Karen Nelson Moore wrote the dissent. She argued that because the plaintiffs allegedly suffered a property-related injury, meaning the loss of workers comp benefits, they have properly stated a claim under RICO and their suit should proceed.

“I would hold that injury to the statutory entitlements alleged by the employees in this case is an injury to property within the meaning of RICO,” she wrote in her dissent.