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
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.
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
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,
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
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
¶ 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 ...