October 6, 2010
PENNSYLVANIA CHIROPRACTIC ASSOCIATION, NEW YORK CHIROPRACTIC COUNCIL, ASSOCIATION OF NEW JERSEY CHIROPRACTORS, FLORIDA CHIROPRACTIC ASSOCIATION AND CALIFORNIA CHIROPRACTIC ASSOCIATION, ON THEIR OWN BEHALF AND IN A REPRESENTATIONAL CAPACITY ON BEHALF OF THEIR MEMBERS, AND GREGORY T. KUHLMAN, D.C., JAY KORSEN, D.C., IAN BARLOW, KENDALL GEARHART, D.C., JEFFREY P. LERI, D.C., MICHELLE M. ASKAR, D.C., MARK BARNARD, D.C., BARRY A. WAHNER, D.C., ANTHONY FAVA, D.C., DAVID R. BARBER, D.C., RYAN S. FORD, D.C., LARRY MIGGINS, D.C., CASEY PAULSEN, D.C., DEAN RENNEKE, D.C., ANDREW RENO, D.C., PERI L. DWYER, D.C., RONALD L. YOUNG, D.C., AND ERIC THOMPSON, D.C., ON THEIR OWN BEHALF AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
BLUE CROSS BLUE SHIELD ASSOCIATION, BLUE CROSS AND BLUE SHIELD OF RHODE ISLAND, BLUE CROSS AND BLUE SHIELD OF ALABAMA, ARKANSAS BLUE CROSS AND BLUE SHIELD, BLUE SHIELD OF CALIFORNIA, BLUE CROSS AND BLUE SHIELD OF FLORIDA, BLUE CROSS AND BLUE SHIELD OF GEORGIA, HEALTH CARE SERVICES CORPORATION, INDEPENDENCE BLUE CROSS, BLUE CROSS AND BLUE SHIELD OF KANSAS, CAREFIRST, INC., BLUE CROSS AND BLUE SHIELD OF MASSACHUSETTS, BLUE CROSS AND BLUE SHIELD OF MICHIGAN, BLUE CROSS AND BLUE SHIELD OF MINNESOTA, BLUE CROSS AND BLUE SHIELD OF KANSAS CITY, HORIZON BLUE CROSS AND BLUE SHIELD OF NEW JERSEY, EXCELLUS BLUE CROSS AND BLUE SHIELD, BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA, HIGHMARK, INC., BLUE CROSS AND BLUE SHIELD OF SOUTH CAROLINA, BLUE CROSS AND BLUE SHIELD OF TENNESSEE, PREMERA BLUE CROSS, THE REGENCE GROUP, WELLMARK, INC., AND WELLPOINT, INC., DEFENDANTS.
The opinion of the court was delivered by: Matthew F. Kennelly, District Judge
MEMORANDUM OPINION AND ORDER
The plaintiffs in this case are chiropractic physicians who have provided services to members of health care plans insured or administered by the defendants, professional associations whose members are chiropractic physicians, and one subscriber to a health care plan.*fn1 The defendants are Blue Cross and Blue Shield of America (BCBSA) and individual Blue Cross and Blue Shield entities (BCBS entities). BCBSA is a national umbrella organization that facilitates the activities of individual BCBS entities. Individual BCBS entities insure and administer health care plans to Blue Cross and Blue Shield customers (BCBS insureds) in various regions.
Plaintiffs allege that defendants improperly took money belonging to plaintiffs. They allege that defendants would initially reimburse plaintiffs for services they provided to BCBS insureds and then sometime afterward would make a false or fraudulent determination that the payments had been in error and would demand repayment from plaintiffs. If the plaintiffs refused to return the payment as demanded, defendants would force recoupment by withholding payment on other, unrelated claims for services plaintiffs provided to other BCBS insureds. The subscriber plaintiff, who recently intervened in the case, alleges that she was held liable for portions of a bill for services she received at a hospital after her insurer demanded recoupment from the chiropractic provider who treated her.
Plaintiffs filed their first amended complaint on November 16, 2009. In it, plaintiffs alleged that defendants' actions violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Employee Retirement Income Security Act (ERISA), as well as Florida state law. On May 17, 2010, the Court granted a motion by defendants to dismiss the RICO claims for failure to state a claim. On March 12, 2010, Katherine Hopkins moved to intervene as a class representative on behalf of a putative class of health care subscribers, a motion the Court granted on August 5, 2010.
Plaintiffs filed a second amended complaint (SAC) on June 29, 2010. The second amended complaint includes several of the same claims that were included in the first amended complaint, specifically, the RICO and ERISA claims. Plaintiffs have added a claim of RICO conspiracy and an ERISA claim on behalf of Hopkins and the putative class of subscribers she represents.
Defendants have filed an "omnibus motion to dismiss" the second amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). This opinion addresses two of the grounds argued by defendants: their argument that the second amended complaint does not state a claim under RICO and their argument that Hopkins' ERISA claim against WellPoint is deficient. For the reasons stated below, the Court grants defendants' motion.
When considering a motion to dismiss a complaint, the Court accepts the facts stated in the complaint as true and draws reasonable inferences in favor of the plaintiff. Newell Operating Co. v. Int'l Union of United Auto., Aerospace, and Agr. Implement Workers of Am., 538 F.3d 583, 587 (7th Cir. 2008). Though Federal Rule of Civil Procedure 8(a)(2) does not require a complaint to include "detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted).
A. RICO Allegations (counts 3, 4, 5 and 6)
Plaintiffs' second amended complaint includes RICO claims under 18 U.S.C. § 1962(c) and (d). They contend that defendants' repayment demands and forced recoupments are part of a nationwide fraudulent scheme by BCBSA and numerous BCBS entities to improperly obtain funds from health care providers, including the individual plaintiffs and members of the association plaintiffs' organizations. They contend that plaintiffs engaged in a pattern of racketeering activity that involved stealing money from employee benefit plans and using the mail to deliver false recoupment demands and benefit denials. Plaintiffs allege that via these acts, defendants participated in the conduct of an association-in-fact enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(c) (counts 3 and 4). Plaintiffs also allege that defendants conspired to violate the RICO statute, in violation of 18 U.S.C. § 1962(d) (count 5). They seek declaratory and injunctive relief under 18 U.S.C. § 1964(a), which allows a court to enjoin violations of section 1962 (count 6).
1. Section 1962(c) Claims
In a decision issued on May 17, 2010, the Court granted defendants' motion to dismiss plaintiffs' claims under RICO section 1962(c). The Court determined that plaintiffs had not alleged any acts of racketeering activity on the part of several defendants with which no individual plaintiff had a provider agreement and therefore could not maintain a 1962(c) claim against those defendants. The Court also ruled that although plaintiffs had sufficiently alleged that each remaining defendant engaged in at least two predicate acts of racketeering activity, the first amended complaint still presented a "substantial proximate cause problem." Penn. Chiropractic Ass'n, 2010 WL 1979569, at *10. As the Court noted, a defendant is liable under RICO only for those actions that proximately cause a plaintiff's injury. Plaintiffs' first amended complaint contained no allegations that any plaintiff was injured by any defendant other than that plaintiff's local BCBS entity. Though plaintiffs argued that the various defendants were "intertwined," the Court ruled that these allegations were insufficient to sustain a single section 1962(c) claim brought by all plaintiffs against all defendants. The Court concluded that plaintiffs could not "lump together all defendants in a single section 1962(c) claim" and therefore dismissed the plaintiffs' RICO claims. Id., at *11.
In their second amended complaint, plaintiffs assert two RICO claims under section 1962(c) that are nearly identical to those they asserted in the first amended complaint: one based on allegations of mail and wire fraud (count 3); and one based on alleged theft from employee benefit plans (count 4).
The factual allegations in support of the mail and wire fraud claim in the second amended complaint are largely unchanged from the first amended complaint, as is the claim itself. Plaintiffs have made two changes, however: they have removed those defendants who did not provide services to any named plaintiffs; and have added a sentence to the claim stating that "[e]ach Individual Plaintiff brings the § 1962(c) claim solely against the § 1962(c) Defendant that issued a repayment demand and forcibly ...
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