LD v. United Behavioral Health

Background

LD, DB, BW, RH, and CJ brought a proposed class action against United Behavioral Health and MultiPlan. They alleged that United underpaid claims for intensive outpatient program services provided by Summit Estate, an out-of-network provider. According to the allegations, the plaintiffs’ insurance plans required payment based on usual, customary, and reasonable rates, but United used a pricing process associated with Viant, MultiPlan’s subsidiary, that produced lower reimbursement amounts. The plaintiffs alleged that they had to pay amounts that United did not reimburse.

The plaintiffs asserted claims under the Employee Retirement Income Security Act and the Racketeer Influenced and Corrupt Organizations Act. The pending motion concerned only the claim against MultiPlan under Section 1962(c) of the Racketeer Influenced and Corrupt Organizations Act. That provision requires allegations of conduct involving an enterprise through a pattern of racketeering activity. The plaintiffs relied on alleged mail fraud and wire fraud, including statements made during benefit-verification calls and later communications about reimbursement.

Legal standard

The court applied the standard for a motion to dismiss for failure to state a claim. At that stage, the court accepts the complaint’s factual allegations as true, views them in the plaintiffs’ favor, and asks whether they plausibly support liability. The court does not decide whether the allegations are ultimately true.

The court also considered its earlier ruling on the prior version of the complaint. In that ruling, it had found that the plaintiffs sufficiently alleged several elements of the RICO claim and standing, but had dismissed the claim against MultiPlan because the allegations did not adequately show a pattern of mail or wire fraud. The plaintiffs amended their complaint to address that deficiency.

Court’s analysis

The court held that the Second Amended Complaint sufficiently alleged the missing pattern-of-racketeering element. It applied a “co-schemer” theory under which a defendant may be liable for mail or wire fraud committed by another participant if the defendant knowingly joined and intended to advance the fraudulent scheme, and the communications fell within that scheme. The court explained that the defendant need not personally make the alleged misrepresentations.

The court concluded that the plaintiffs’ allegations allowed an inference that MultiPlan knowingly participated in and directed the alleged scheme with an intent to under-reimburse the plaintiffs. The allegations also connected United’s benefit-verification calls and later mailed or electronic communications to the alleged scheme. The court rejected MultiPlan’s arguments that the allegations were conclusory, that MultiPlan had to make its own misrepresentations, and that MultiPlan could not be liable because its alleged involvement began after some of the benefit-verification calls.

Disposition

The court DENIED MultiPlan’s motion to dismiss the RICO Section 1962(c) claim. The court ordered MultiPlan to file an answer to the Second Amended Complaint within fourteen days and stated that the order terminated Docket Number 75.