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July 13, 2001


The opinion of the court was delivered by: Jeanne E. Scott, United States District Court Judge.


This matter comes before the Court on cross motions for summary judgment. The Plaintiff Robert Corley alleged that he and his mother Vera Corley, deceased, were victims of racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961-68. For the reasons set forth below, the Court grants the Defendants' Second Motion for Summary Judgment. Corley has failed to present evidence that would, if believed by a jury, establish a pattern of racketeering that injured him or his late mother. He, therefore, cannot recover on his RICO claims.


A. Defendants' Business Operations

Since 1987, individual Defendants Larry Vander Maten and Darrell Hoefling have directly or indirectly owned and operated a network of corporations and other entities (some of which constitute the remaining Defendants in this case), that own and operate nursing homes. The first home opened in Swansea, Illinois, in 1987. The combination of entities now operates fourteen homes. Each home uses the name Rosewood Care Center. One holding company owns each home's separate operating corporation. Each home uses the same management company. Each home's ownership and operation are organized through the same system of leases, management contracts and other agreements. Since 1993, patient census and billing for all homes have been centralized. Each home transfers revenues to the same central bank account. Each home also uses the same sales brochure, and the advertising for all homes is purchased centrally by the single management company.

B. Corley's Dealings with Defendants

In October 1989, Robert Corley visited the Rosewood Care Center Inc. of Peoria. The Peoria home had recently opened in June 1989. Robert Corley looked at the home as a possible place to care for his mother Vera Corley. Peoria Rosewood employee Valerie Mushrush showed him around the home. The home had three room choices: a private suite; private room; and semi-private room which had two beds. Robert Corley*fn1 said that Mushrush emphasized the suites. The suite was larger than a regular private room. The suite cost $12 per day more than a semi-private room: the private suite was $70 a day; the semi-private room was $58 per day. Corley said that he w as led to believe that the price of the private suite would stay in line with the other rooms. Mushrush told Corley that his mother could bring her own furniture from home. She told him that residents have a choice of two entrees at every meal. He also was led to believe that the home provided a high-quality of care for residents.

Mushrush stated in her deposition that she was told to market private suites. She also states that she did not think that prices would increase for one year. She communicated that belief to some customers, although she did not remember whether she told this to Corley.

Based on his inspection of the home and Mushrush's representations, Corley decided to place his mother in the home in a private suite.*fn2 Corley signed a contract for a private suite at a base rate of $70 per day.*fn3 The contract said, "We do not guarantee your accommodations will remain private throughout your stay with us." Corley and Mushrush initialed a change in the contract which struck the following sentence from the contract, "For administrative or other reasons, we may convert any private room to a semi private room upon __ days prior written notice, with an appropriate adjustment in your base rate." The contract also said the home could raise the base rate at any time on 30 days notice.

Defendants also advertised a guarantee of continuing care in 1989 in Peoria. The advertising indicated that if a resident's money ran out, the home would continue to provide the resident with the same level of care. The continuing care would be paid by Medicaid. Contrary to the advertising, the form residential contract at the Peoria home stated that the home w as not qualified to accept Medicaid patients, and there was no guarantee that it would be qualified in the future. The contract further said that continuing care could only be provided if the home qualified for Medicaid. Defendants advertised the guarantee of care in advertising that marketed jointly the Peoria home and the home that the Defendants opened at about the same time in East Peoria, Illinois.

Robert Corley was not concerned about the guarantee of continuing care when he decided to place his mother in the Peoria facility. He believed she had ample funds to pay for her own care. Corley stated that the guarantee of continuing care, "was a plus. It might have been 5/10 of one percent of the good things about Rosewood." Corley August 15 and 16, 1994, Deposition at 240. Later in the same deposition, he stated that the guarantee of continuing care, "was not a factor in the decision at all. It was a plus. . . . I didn't give it that much thought or that much consideration." Id. at 254. Corley also stated that he understood that the home was not qualified for Medicaid at the time he signed the contract.

Vera Corley moved into the Peoria home on or about October 25, 1989. She moved her personal furniture into the suite. She paid to install her own carpeting and a single telephone line.

On December 14, 1989, about sixty days after Vera Corley moved into the home, the home administrator wrote Robert Corley to suggest that he move his mother to a regular private room or a semi-private room. The letter said that the base rate on private suites would go up January, 1990, from $70 per day to $84 per day. This was a 20 percent increase. Corley complained by letter dated December 31, 1989. He said that he felt that he was the victim of a classic bait and switch. On January 5, 1990, Vander Maten telephoned Corley in response to the complaint. After the telephone conversation, the rate increase for his mother was delayed until March 1, 1990. Two more price increases followed in 1990. The base rate for all rooms rose $4 per day on March 30, 1990; Vera Corley's room rate then was $88 per day. The rate for the private suite rose to $122 per day on October 24, 1990. This was a 74 percent increase over the original rate of $70 per day. The base rate for a semi-private room rose only 13.7 percent for the same period, from $58 per day to $66 per day.

Corley complained to the Illinois Attorney General. Attorney Stephen Ukman represented the Defendants at that time. He responded to the complaint on behalf of the Peoria home by letter dated December 18, 1990. Vander Maten approved the letter before it was sent.*fn4 Ukman explained that the Peoria Center was licensed by Illinois for 120 beds. The rooms under the license were either single-bed rooms or double-bed rooms. He stated,

When Rosewood Care Center opened in June, 1989, a number of double-bed rooms were equipped with only one bed and designated as "suites". Mr. Corley's mother has resided in a suite since her admission in October, 1989. Essentially, a suite is a semi private room with only one bed but still suitable for two residents.

Ukman claimed that Corley actually received a discount when he placed his mother in the home. According to Ukman, the stated rate for a suite was $84 per day. Thus, Corley received a discount of $14 per day initially. The evidence concerning whether there was a discount is conflicting. Mushrush said she did not give Corley a discount.

Ukman explained that the price increases reflected increasing costs and demands for beds. He stated that the initial price increase, "was brought on by the mushrooming occupancy of the facility and demands for beds." He stated that the last price increase, "was brought about by the continuing growth of the facility. Because of a shortage of semi-private rooms, Rosewood was having to turn away individuals needing care."

He also stated that Corley was advised of the possibility of price increases due to demand for semi-private rooms,

At the time Mrs. Corley was admitted, management of the facility had advised Mr. Corley that the availability and price of private suites was unique to the period while the facility was filling up, and were subject to change. This was reinforced by Mr. Vander Maten in his conversation with Corley in January, 1990.

Corley disputes that any such statements were made to him.

C. The First Summary Judgment Decision

Corley then brought this action against the Defendants. Corley alleged that he and his mother were victims of racketeering in violation of RICO. The complaint also alleged supplemental state claims. In 1995, Judge Mihm of this District granted summary judgment to the Defendants. Order entered September 27, 1995 (d/e 535). He found that Corley did not establish a pattern of racketeering. The Seventh Circuit reversed because Corley was denied the opportunity to discover evidence of a pattern of racketeering. Corley v. Rosewood Care Center, Inc. of Peoria, 142 F.3d 1041,1049-55 (7th Cir. 1998). After the case was remanded, Vera Corley died. Her estate has been substituted as a party to this action. The parties have now completed discovery.

Additional Evidence of a RICO Pattern

1. Bait and Switch

Corley has now submitted to the Court additional evidence of a pattern of racketeering. First, Corley uncovered a few old price lists for other homes. Exhibits 6 and 11 to Plaintiff's Response to Defendants' Motion for Summary Judgment (d/e 1035 and 1036) (hereinafter referred to as Response Exhibits). One price list for the Swansea, Illinois, home is dated February 17, 1989. The price list states that the stated prices would be effective April 1, 1989. The list shows that the price for a private room with shower was $68 per day. The price for a "Display Suite" was $88 per day.

Another price list for the Swansea home states that the rates listed would be effective August 20, 1990. This list put the price for a semi-private room at $68 per day, a private room with shower at $96 per day, and a private display suite at $130 per day.

Two of the remaining price lists submitted do not identify the home(s) to which they apply.

One such price list shows semi-private rooms as of January 1, 1990, to be $63 per day and display suites to be $93 per day. Another such list indicates that prices as of November 1, 1988, were as follows: semi-private room $51 per day, private room with shower $59 per day, and suite display $69 per day. The remaining price lists in the exhibits all relate to the Peoria home and reflect the price increases in 1989 and 1990 discussed above.

Corley states that these price lists show that the Swansea home initially had a $6 differential between private suites and semi-private rooms ($46/$52). Plaintiff's Statement of Undisputed Facts

ΒΆ 5.d. Corley states that the Swansea homes ultimately went to a $56 price differential ($74/$130). Id. Corley states that the Galesburg home had an initial price difference of $6 between semi-private rooms and private suites ($46/$52)). He states that the ultimate price difference in Galesburg was $60 ($63/$123). He cites the price lists discussed above to support these assertions. The calculations, however, do not seem to relate to the figures on the exhibits. For example, none of the price lists in Exhibits 6 or 11 contains either a $46 or $74 rate for a semi-private room. Defendants dispute the reliability of these ...

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