Allstate Ins. Co. v. Linea Latina De Accidentes Inc.

• Decision Date: 16 February 2011
• Docket Number: Civil No. 09–3681 (JNE/JJK).
• Citation: 781 F.Supp.2d 837
• Parties: ALLSTATE INSURANCE COMPANY, d/b/a Allstate Property and Casualty Insurance Company, d/b/a Allstate Indemnity Company, d/b/a Northbrook Indemnity Company, Farmers Insurance Exchange, d/b/a Illinois Farmers Insurance Company, d/b/a Mid Century Insurance Company, d/b/a Bristol West Insurance Company, Plaintiffs,v.LINEA LATINA DE ACCIDENTES, INC., Cristina Suarez, Mobile Care Chiropractic, PLLC, Kristi Lea Zimmerman, D.C., Advanced Injury Specialists, LLC, Renewal Bodyworks, LLC, Scott A. Allan, D.C., Alex Prigoda, and Morningstar Home Care, Defendants.
• Court: U.S. District Court — District of Minnesota

781 F.Supp.2d 837

ALLSTATE INSURANCE COMPANY, d/b/a Allstate Property and Casualty Insurance Company, d/b/a Allstate Indemnity Company, d/b/a Northbrook Indemnity Company, Farmers Insurance Exchange, d/b/a Illinois Farmers Insurance Company, d/b/a Mid Century Insurance Company, d/b/a Bristol West Insurance Company, Plaintiffs,

v.LINEA LATINA DE ACCIDENTES, INC., Cristina Suarez, Mobile Care Chiropractic, PLLC, Kristi Lea Zimmerman, D.C., Advanced Injury Specialists, LLC, Renewal Bodyworks, LLC, Scott A. Allan, D.C., Alex Prigoda, and Morningstar Home Care, Defendants.

Civil No. 09–3681 (JNE/JJK).

United States District Court, D. Minnesota.

Feb. 16, 2011.

Richard Stempel, Esq., and John Syverson, Esq., Stempel & Doty PLC, appeared for Plaintiffs.Eric Tostrud, Esq., and Matthew Salzwedel, Esq., Lockridge Grindal Nauen PLLP, appeared for Defendants.

ORDER

JOAN N. ERICKSEN, District Judge.

Insurance companies assert claims under federal and state law against chiropractic clinics, a massage therapy clinic, an entity that provides services to the clinics, and individuals associated with the entities. In broad terms, the claims arise out of allegations that Defendants illegally solicited persons insured for no-fault automobile insurance, submitted claims for services that were either not rendered or unnecessary, gave kickbacks to each other, and failed to disclose financial interests. The case is before the Court on Defendants' motion to dismiss the Amended Complaint. For the reasons set forth below, the Court grants in part and denies in part the motion.

I. BACKGROUND

The identification of the plaintiffs is muddled. The Amended Complaint's caption identifies two insurers as the plaintiffs. Paragraphs 12 to 24 of the Amended Complaint characterize the two insurers and the six “d/b/a” companies, if Northbrook Indemnity Company and Northbrook Insurance Company are assumed to be the same,¹ as the plaintiffs. In their response to Defendants' motion, Plaintiffs stated:

To avoid any additional confusion, the Plaintiffs in this matter are Allstate Property and Casualty Insurance Company, Allstate Indemnity Company, Northbrook Indemnity Company, Illinois Farmers Insurance Company, Mid Century Insurance Company, and Bristol West Insurance Company. Plaintiffs have simply set forth their parent companies in the caption, but will amend the caption should that be necessary.The Court assumes solely for present purposes that Plaintiffs are Allstate Property and Casualty Insurance Company, Allstate Indemnity Company, Northbrook Indemnity Company, Illinois Farmers Insurance Company, Mid Century Insurance Company, and Bristol West Insurance Company. Plaintiffs provide no-fault automobile insurance in Minnesota.

Defendants are Linea Latina De Accidentes, Inc.; Cristina Suarez; Mobile Care Chiropractic, PLLC; Kristi Lea Zimmerman, D.C.; Advanced Injury Specialists, LLC; Renewal Bodyworks, LLC; Scott A. Allan, D.C.; Alex Prigoda; and Morningstar Home Care. Mobile Care Chiropractic, Advanced Injury Specialists, and Morningstar Home Care are chiropractic clinics that are allegedly owned by Zimmerman, Allan, and Dhruvesh Patel, respectively. Renewal Bodyworks is a mobile massage therapy service that is allegedly owned by Zimmerman. Notwithstanding their purported ownership, Plaintiffs contend that the chiropractic clinics are subject to the supervision and management of Zimmerman. In turn, Zimmerman reports to, and is subject to the control of, Prigoda. Linea Latina De Accidentes is allegedly owned by Suarez and portrays itself as a “help line” marketing company. Suarez reports to, and is subject to the control of, Prigoda. Prigoda is not a licensed chiropractor.

According to Plaintiffs, Linea Latina De Accidentes solicits their insureds who have experienced automobile accidents. Linea Latina De Accidentes refers the insureds to Mobile Care Chiropractic, Advanced Injury Specialists, or Morningstar Home Care. Renewal Bodyworks provides massage therapy services for patients of the chiropractic clinics. The clinics submitted claims to Plaintiffs for services that were either not rendered or unnecessary.

Plaintiffs' Amended Complaint contains eleven counts: (1) violation of the Racketeer Influenced and Corrupt Organizations Act (RICO); (2) RICO conspiracy; (3) consumer fraud; (4) no-fault fraud; (5) common law fraud; (6) insurance fraud; (7) solicitation violations; (8) unjust enrichment; (9) violation of federal and state anti-kickback statutes; (10) failure to disclose financial interest; and (11) corporate practice of medicine. Counts 1 to 8 are asserted against all defendants. Count 9 is asserted against Linea Latina De Accidentes, Mobile Care Chiropractic, Advanced Injury Specialists, and Morningstar Home Care. Count 10 is asserted against Linea Latina De Accidentes, Mobile Care Chiropractic, and Advanced Injury Specialists. Count 11 is asserted against Mobile Care Chiropractic, Kristi Zimmerman, Advanced Injury Specialists, Scott Allan, Alex Prigoda, and Morningstar Home Care.

II. DISCUSSION

When ruling on a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim, a court must accept the facts alleged in the complaint as true and grant all reasonable inferences in favor of the plaintiff. Crooks v. Lynch, 557 F.3d 846, 848 (8th Cir.2009). Although a complaint is not required to contain detailed factual allegations, “[a] pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Id. (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

A. Counts 1 and 2: RICO

Plaintiffs claim that Defendants violated RICO. Under RICO, it is “unlawful 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)(2006). “A violation of § 1962(c) requires [a plaintiff] to show ‘(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.’ ” Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 428 (8th Cir.2009) (quoting Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)), cert. denied, ––– U.S. ––––, 130 S.Ct. 1074, 175 L.Ed.2d 887 (2010). Under RICO, it is also “unlawful for any person to conspire to violate” § 1962(c). 18 U.S.C. § 1962(d). RICO provides a private right of action to “[a]ny person injured in his business or property by reason of a violation of section 1962.” Id. § 1964(c). Defendants assert that Plaintiffs' claims under RICO should be dismissed because Plaintiffs failed to adequately allege the existence of an enterprise, injury to their business or property as the result a RICO violation, an agreement to violate RICO, and fraud with particularity.

1. Enterprise

Defendants maintain that a plaintiff, to plead a RICO enterprise, must allege: (1) a common or shared purpose; (2) certain continuity of personnel and structure; and (3) an ascertainable structure that is distinct from that inherent in a pattern of racketeering activity. See United States v. Lee, 374 F.3d 637, 647 (8th Cir.2004); Handeen v. Lemaire, 112 F.3d 1339, 1351 (8th Cir.1997). Defendants read the Amended Complaint to assert that their alleged association had no purpose other than to engage in predicate acts of racketeering. In the absence of an allegation that the alleged enterprise would endure were the predicate acts removed, Defendants maintain that Plaintiffs failed to allege an enterprise. See Handeen, 112 F.3d at 1352; Stephens, Inc. v. Geldermann, Inc., 962 F.2d 808, 816 (8th Cir.1992). Plaintiffs maintain they adequately alleged that the enterprise has an ascertainable structure that is distinct from that inherent in a pattern of racketeering activity.

The Supreme Court recently addressed whether an association-in-fact enterprise under RICO “must have ‘an ascertainable structure beyond that inherent in the pattern of racketeering activity in which it engages.’ ” Boyle v. United States, 556 U.S. 938, 129 S.Ct. 2237, 2241, 173 L.Ed.2d 1265 (2009) (quoting petition for certiorari).² The Supreme Court held “that such an enterprise must have a ‘structure’ but that an instruction framed in this precise language is not necessary.” ³ Id. To resolve the issue, the Supreme Court considered three questions: “First, must an association-in-fact enterprise have a ‘structure’? Second, must the structure be ‘ascertainable’? Third, must the ‘structure’ go ‘beyond that inherent in the pattern of racketeering activity’ in which its members engage?” Id. at 2244.

The first question was answered affirmatively: “an association-in-fact enterprise must have a structure.” Id. “From the terms of RICO, it is apparent that an association-in-fact enterprise must have at least three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise's purpose.” Id.

The Supreme Court regarded “ascertainable” as “redundant and potentially misleading”:

Whenever a jury is told that it must find the existence of an element beyond a reasonable doubt, that element must be “ascertainable” or else the jury could not find that it...