Sairam v. Mercy Retirement and Care Center

Background

The plaintiffs were Samir Sairam, a medical doctor, and Samir Sairam M.D. Inc., a corporation for which he was the sole shareholder. Sairam previously worked at Mercy Retirement & Care Center, a nursing facility, as its Medical Director and as an attending physician for some residents. Mercy terminated him from the Medical Director position in January 2021, effective in March 2021.

The complaint alleged that Mercy terminated Sairam because he had complained about substandard care and fraudulent billing practices. The allegations included a dispute over a do-not-resuscitate order, complaints about medically unnecessary procedures, and complaints that a physician used medical scribes to create records as though the physician had personally examined patients. The plaintiffs also alleged that, after the termination, Mercy interfered with Sairam’s relationships with patients by sending letters suggesting he would no longer treat them, encouraging transfers to another physician, restricting communications, and refusing to provide his phone number to patient representatives.

The plaintiffs asserted state-law claims for intentional interference with contractual relationships, violations of California Business and Professions Code sections 510 and 2056, wrongful termination in violation of public policy, and violation of California Business and Professions Code section 17200. They also asserted a federal claim under the Racketeer Influenced and Corrupt Organizations Act, commonly called RICO, against Mercy and its Executive Director, Tamra Marie Tsanos.

Motion to Dismiss

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not adequately state a claim. The court noted that the motion appeared to have been filed late, but exercised its discretion to consider it.

RICO Claim

The plaintiffs identified two types of alleged racketeering activity: misleading letters mailed to Sairam’s patients, characterized as mail fraud, and false payment claims submitted to the federal government, characterized as wire fraud. The court observed that the federal government appeared to be the direct victim of the alleged wire fraud, and the plaintiffs did not claim that they were harmed by it.

The court held that the alleged wire fraud and mail fraud were not plausibly related acts for purposes of RICO. The plaintiffs’ proposed common purpose—that Mercy sought to make money—was too general. The court also found that the alleged conduct involved different victims and different types of conduct, and that the mailings did not appear to further the alleged billing fraud.

The court further held that the alleged mail fraud did not satisfy RICO’s continuity requirement. The complaint identified two letters sent within about two months. The court found no evident threat that the conduct would continue and concluded that two letters over that period were insufficient to show a continuing pattern of criminal activity.

Because the plaintiffs had not adequately alleged a RICO claim, the court concluded that the federal claim failed under Rule 12(b)(6). The court stated that amendment might not be futile and therefore allowed the plaintiffs an opportunity to amend.

State-Law Claims and Disposition

The court expressly made no ruling at that stage on the remaining state-law claims. It explained that, if the federal claim were absent, it could decline to exercise supplemental jurisdiction over those claims.

The court granted the defendants’ motion to dismiss and specifically dismissed the RICO claim with leave to amend. The plaintiffs had 30 days from the date of the order to file an amended complaint. If they did not intend to amend, they were required to notify the court within that period, after which the court would decide whether to retain supplemental jurisdiction and, if so, address the defendants’ arguments concerning the state-law claims. The order disposed of Docket No. 8.