Sairam v. Mercy Retirement and Care Center

Background

Samir Sairam, a medical doctor, and Samir Sairam M.D. Inc. sued Mercy Retirement and Care Center and its Executive Director, Tamra Marie Tsanos. Sairam had worked at Mercy as its Medical Director and as an attending physician for residents. Mercy notified him that it would terminate him as Medical Director effective in March 2021.

The second amended complaint alleged that Mercy terminated Sairam and later interfered with his patient relationships because he had complained about substandard care, medically unnecessary procedures, and allegedly improper billing practices. The complaint also alleged that Mercy sent communications that could have misled patients into believing Sairam would no longer treat them and made it more difficult for him to provide care at the facility.

The complaint asserted state-law claims for interference with contractual relationships, interference with prospective economic advantage, violations of California Business and Professions Code sections 510 and 2056, wrongful termination in violation of public policy, and unfair competition. It also asserted a federal claim under the Racketeer Influenced and Corrupt Organizations Act, commonly called RICO.

RICO claim

The RICO claim alleged that Mercy and Tsanos conducted or conspired to conduct an enterprise through a pattern of racketeering activity. The alleged predicate acts were mail fraud—communications to Sairam’s patients—and wire fraud based on claims submitted to the federal government that allegedly certified compliance with health-care laws.

The court dismissed the RICO claim under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a claim for relief. First, the court held that the alleged wire fraud was not plausibly pleaded because the complaint did not explain how Mercy’s alleged false certification of compliance with health-care law was material to the government’s payment decisions.

Second, the court held that the alleged wire fraud and mail fraud were not plausibly related as required for a RICO pattern. The alleged wire fraud concerned claims for payment to the government, while the alleged mail fraud involved efforts to remove or displace Sairam as an attending physician. The court found that the complaint did not plausibly explain how removing Sairam furthered a scheme to defraud the government.

Third, the court held that the alleged mail and email communications did not establish a plausible scheme to defraud. Even if the complaint described continuing bad conduct, it did not plausibly allege that the conduct furthered a scheme to defraud.

Disposition

The court dismissed the RICO claim with prejudice because it had previously given the plaintiffs an opportunity to amend and the amended claim remained deficient. The court declined to exercise supplemental jurisdiction—a federal court’s authority to hear related state-law claims—over the remaining state claims, including the claims against Tsanos. It did not address the defendants’ arguments concerning those state-law claims.

Because the case had been removed from state court, the court ordered the Clerk to remand it to the Alameda County Superior Court, close the federal case file, and dispose of the motion to dismiss at Docket No. 30.