Fac, Inc. v. Cooperativa De Seguros De Vida

• Decision Date: 28 June 2000
• Docket Number: No. Civ. 98-1592(JP).,Civ. 98-1592(JP).
• Citation: 106 F.Supp.2d 244
• Parties: FAC, INC. d/b/a Financial Advisors and Consultants, Inc., Plaintiff, v. COOPERATIVA DE SEGUROS DE VIDA, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

106 F.Supp.2d 244

FAC, INC. d/b/a Financial Advisors and Consultants, Inc., Plaintiff, v. COOPERATIVA DE SEGUROS DE VIDA, et al., Defendants.

No. Civ. 98-1592(JP).

United States District Court, D. Puerto Rico.

June 28, 2000.

Etienne Totti Del Valle, Totti & Rodriguez Diaz, San Juan, PR, for plaintiff.

Esther Castro Schmidt, San Juan, PR, for defendants.

OPINION AND ORDER

PIERAS, Senior District Judge.

I. INTRODUCTION

Before the Court is Defendants' Legal Memorandum in Compliance with Court Order and Request for Dismissal (docket No. 60), Plaintiff's Memorandum of Law and Authorities (docket No. 67), Defendants' Reply (docket No. 81), Plaintiff's Sur-Reply (docket No. 91), and Supplemental Briefs (docket Nos. 130, 131). Plaintiff FAC, INC. ("FAC") brings this action against Cooperativa de Seguros de Vida ("COSVI"), Gabriel Dolagaray Balado, José A. Brull Cestero, María Cristina Ortiz, Arcilio Rivas Rodríguez, Andrés Rodríguez Figueroa, and Daniel Santiago under the civil provisions of the Racketeering Influenced Corruption Organizations Act (RICO), 18 U.S.C. §§ 1962(c) and (d), and the Fifth Amendment to the U.S. Constitution. Plaintiff also invokes this Court's pendent jurisdiction under 28 U.S.C. § 1367 for Defendants' alleged tortious conduct under Articles 1802 and 1803 of the Puerto Rico Civil Code, P.R.Laws Ann. tit. 31, § 5141.

FAC, a Puerto Rico corporation, is engaged in the business of providing financial, accounting and health care counseling. FAC entered into a contract with the Puerto Rico Department of Health ("Department of Health") to handle Medicare reimbursement claims for the Health Department and the Puerto Rico Administration of Medical Facilities ("AFASS") through the Health Care Financing Administration ("HCFA") program. By contract with HCFA, COSVI is a fiscal intermediary between Medicare and health care providers in Puerto Rico. The remaining co-defendants are officers or employees of COSVI: Gabriel Dolagaray Balado ("Dolagaray") is the President of COSVI, Andrés Rodríguez Figueroa ("Rodríguez") is the Assistant Vice President of the Audit and Reimbursement Division of Medicare, José A. Brull Cestero ("Brull") is a Vice President of the Medicare Division, María Cristina Ortiz ("Ortiz") was the Executive Vice President, Arcilio Rivas ("Rivas") was the Director of Reimbursement for Medicare, and Daniel Santiago ("Santiago") was the Audit Director for Medicare.

FAC alleges that Defendants conspired to wrongfully disapprove reimbursement claims submitted by FAC and demanded kick-backs in exchange for the approval of pending claims. Defendants advance several grounds for dismissal of the Complaint. First, they maintain that the Court lacks jurisdiction to review COSVI's Medicare claims decisions under 42 U.S.C. § 405(h). Second, Defendants contend that COSVI and its officials are government agents and, as such, they enjoy official immunity under Westfall v. Erwin, 484 U.S. 292, 108 S.Ct. 580, 98 L.Ed.2d 619 (1988). Third, Defendants argue that FAC has failed to properly state a RICO cause of action in its Complaint. Finally, Defendants move to dismiss FAC's pendent claims if the Court dismisses the federal RICO claim.

II. LEGAL STANDARD

Before setting forth the legal standard that the Court will apply in adjudicating the motion before it, the Court must determine whether to convert the motion to dismiss into a motion for summary judgment. Plaintiff attaches to its opposition two sworn statements by William Soria Rivera, excerpts from the deposition of Arcilio Rivas Rodríguez, and a letter dated August 2, 1996 from the Health Care Financing Administration to Antonio Marrero of FAC. Consideration of a Rule 12(b)(6) motion to dismiss is generally limited to the facts stated on the face of the Complaint, documents appended to the Complaint, documents incorporated by reference, and matters of which judicial notice may be taken. See Allen v. West-Point-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir.1991); James W. Moore, 2 Moore's Federal Practice § 12.34[2] (3d ed.1998). When matters outside the pleadings are presented with a motion to dismiss under Rule 12(b)(6), the Court may either exclude those matters or treat the motion as one for summary judgment under Rule 56. See Fed.R.Civ.P. 12(b). Because the appended documents add nothing to Plaintiff's arguments as they bear upon the matters discussed herein, the Court will exclude the documents appended to Plaintiff's opposition from consideration, save the deposition transcript of co-defendant Rivas, which is appended to Plaintiff's Fourth Amended Complaint.

In adjudicating a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must accept as true "all well-pleaded factual averments and indulg[e] all reasonable inferences in the plaintiff's favor." Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996) (citations omitted). "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Miranda v. Ponce Fed. Bank, 948 F.2d 41 (1st Cir.1991). Although there is a low threshold for stating a claim, the pleading requirement is "not entirely a toothless tiger." Doyle v. Hasbro, Inc., 103 F.3d 186, 190 (1st Cir.1996) (quoting The Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir.1989)). A complaint must set forth "factual allegations, either direct or inferential, regarding each material element necessary to sustain recovery under some actionable theory." Romero-Barcelo v. Hernandez-Agosto, 75 F.3d 23, 28 n. 2 (1st Cir.1996) (quoting Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir.1988)). For the purposes of this motion, therefore, all factual allegations in the Complaint will be accepted as true and viewed in the light most favorable to Plaintiff.

III. FACTUAL ALLEGATIONS

Plaintiff FAC states that as a consultant for the Department of Health, it filed a request with COSVI on June 28, 1995 to reopen Cost Reports for the years 1988 to 1992. Once a reopening is requested and a determination of good cause is made, it is common practice for COSVI to give providers an advance payment on the requested amount, as if the cost had been included in the original report. FAC requested an advance payment from COSVI for the alleged reimbursement amounts. Before agreeing to deal with FAC, COSVI requested authorization from the Department of Health showing that FAC had authority to make such a request. FAC claims that this request for authorization was unusual.

Once COSVI began to deal with FAC, FAC received a call in July 1995 from Andrés Rodríguez, COSVI's Vice President of Reimbursement and Audit. In late July 1995, FAC's treasurer, William Soria ("Soria"), and Rodríguez met to discuss the reopening of the Cost Reports. FAC alleges that Rodríguez requested a meeting with two FAC officers, Marrero and González, and further stated that he was in a position to influence the approval of FAC's pending claims. Marrero and González refused to meet with Rodríguez.

On September 19, 1995, COSVI officials, including Rodríguez, met with staff of the Health Care Financing Administration (HCFA) New York Region II Office to discuss FAC's $22.6 million reimbursement claim. Soon after the meeting, Rodríguez called Soria to inform him that the request for reopening was going to be denied.

The week of October 17, 1995, Rodríguez again contacted Soria, telling him that a scheduled "entrance conference" was not going to be held and that things would not be easy for FAC. In late October or early November, Rodríguez called Soria to request a meeting with FAC's Vice President, Antonio Marrero, but Marrero would not agree to such a meeting.

On November 20, 1995, Soria and Rodríguez met at the El Hipopótamo Restaurant in Río Piedras, Puerto Rico. At this meeting, Rodríguez told Soria that FAC would have to make payments or kick-backs to him in order for the reopenings to be approved. According to FAC, Rodríguez specifically stated that highly positioned COSVI officers were involved in the kick-back scheme, and that unless FAC agreed to pay, the Department of Health would not receive any money from their reopening requests. FAC reported these interactions to the Federal Bureau of Investigation ("F.B.I.") in a meeting on November 28, 1995.

On November 30, 1995, Soria met with Rodríguez while wired by the F.B.I. During this meeting, Rodríguez demanded 40% of FAC's commission of $5.5 million. Then on December 2, 1995, Soria and Rodríguez met once again. Rodríguez stated that a small payment would be made to FAC to test FAC's willingness to pay the kick-back. A payment of $62,000.00 was allegedly made, and Rodríguez demanded the kick-back. Soria, acting pursuant to F.B.I. instructions, refused to pay Rodríguez. At that point, there was no further contact with Rodríguez and a reopening of the Cost Reports was not granted, despite ample evidence provided by FAC warranting a reopening.

In addition to the foregoing factual allegations, the parties previously stipulated to the following facts:

a. FAC is a duly organized corporation under the laws of Puerto Rico.

b. FAC was engaged in the business of providing financial, accounting and health care counseling to its clients, including the Puerto Rico Department of Health.

c. COSVI is an entity authorized to do business in Puerto Rico.

d. FAC was authorized by Carmen A. Feliciano de Melecio, Secretary of Health for the Puerto Rico Department of Health, and AFASS, to represent them and file claims on their behalf with COSVI.

e. COSVI is a fiscal intermediary between Medicare and certain medical providers regarding services in Puerto Rico.

f. Gabriel Dolagaray Balado was and is the President of COSVI, Andrés Rodríguez Figueroa was and is the Assistant Vice...