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Crutcher v. Multiplan, Inc.

United States District Court, W.D. Missouri, Southern Division

November 18, 2016

KRIS CRUTCHER and TRI-LAKES DIAGNOSTIC IMAGING, LLC., Plaintiffs,
v.
MULTIPLAN, INC. and PRIVATE HEALTHCARE SYSTEMS, INC., Defendants.

          ORDER

          DOUGLAS HARPOOL UNITED STATES DISTRICT JUDGE

         Before the Court is Defendants' Motion to Dismiss. (Doc. 40). Defendants move for dismissal of Plaintiff's claims set forth in their Amended Complaint. Upon careful review of the issues raised and arguments provided, the Court hereby DENIES Defendants' motion.

         BACKGROUND

         Plaintiffs Kris Crutcher and Tri-Lakes Diagnostic Imaging, LLC, brought this action against defendants Multi-Plan, Inc. and Private Healthcare Systems, Inc. asserting claims of violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), unjust enrichment, civil conspiracy, common law fraud, and accounting and disgorgement.

         Plaintiff Crutcher is a medical provider in Branson, MO providing medical diagnostic imaging services to patients through the limited liability company Tri-Lakes Diagnostic Imaging.[1] Defendants operate as a Preferred Provider Organization (“PPO”) Administrator. Defendants in essence work as intermediaries between health care providers and health insurance companies to create a PPO network. The insurance payers, the health insurance companies, reimburse health care providers for services rendered to the payers' insureds pursuant to PPO arrangements. The health providers agree to offer a discounted rate to patients who are insured by payers in the network. In return, payers with access to the discounted rate provide incentives to patients in order to “steer” them to the health care providers. As a result, health care providers are compensated for a discounted rate by an increase in patients. The PPO administrator is responsible for determining which patients are in network or out of network and which applicable rate applies. The PPO administrator, in this case the Defendants, then sends a bill to the patient's insurance company that in turn reimburses the provider in the amount determined by the PPO administrator.

         In the Amended Complaint, Plaintiffs allege, among other things, that Defendants were involved in a silent PPO - a payment scheme used to obtain illegal discounts for payers who were not entitled to them and without the provider's knowledge or consent. Plaintiffs allege Defendants either applied PPO discounts where no PPO agreement exists and/or by renting providers' discount rates to payers who are not part of the contracted PPO network. Plaintiffs allege this provided discounts to payers with whom they never intended to give a discount and also allowed third-party payers to access their discount rates without providing the “steerage” necessary to create a valid PPO relationship. Plaintiffs allege they lost significant revenue as a result of Defendants' actions.

         Plaintiffs state an example of this silent PPO scheme was an agreement entered into between Multiplan and Coventry.[2] Plaintiffs allege Coventry entered into the agreement in order to access the provider discounts in Multiplan's PPO network and that Multiplan would profit from the agreement in the form of fees and kickbacks from Coventry marketing the PPO network and services. In essence, Plaintiffs allege Coventry then rented access to the discounted rate that Multiplan held out as available for claims, without the knowledge or consent of Plaintiffs. Plaintiffs allege Defendants intentionally omitted and failed to disclose their silent PPO plan to deduct significant discounts from payments owed to Plaintiffs for their medical services. Further, Plaintiffs allege Defendants made material misrepresentations and omissions designed to induce Plaintiffs to continue providing healthcare services and submitting their claims to insurance payers under this silent PPO plan.

         Specifically, Plaintiffs claim Defendants misidentified, misrepresented and/or omitted certain data from the EOB forms sent to Plaintiffs in connection with discounted claims. Plaintiffs allege Defendants did this in order to conceal that the discounts were being applied utilizing network discounts, and omitted the identity of the network utilized in applying for the discount, with the intention of concealing the rental of the PPO network discounts and preventing Plaintiffs from discovering the “scheme.” Plaintiffs allege the statements on the EOBs were false when made and were done in order to defraud and mislead Plaintiffs. Plaintiffs further claim Defendants intentionally concealed their relationships and rental agreements with network brokers and downstream entities.

         In June 2008, Plaintiffs sent a letter to PHCS stating that the name of the business entity had changed but that it offered the same services as the prior entity (Branson Imaging) and was interested in continuing to participate in the PHCS network. Crutcher requested an application for participation based on the ownership change. Plaintiffs allege Multiplan responded saying they were in receipt of Plaintiffs request and were evaluating it. In 2009 Plaintiffs requested a copy of the written contract from Defendants. Defendants stated they were unable to identify the contract and probably needed an updated contract for the current facility.[3] In 2015, Plaintiffs again raised the issue regarding the contract and the terms of the agreement and Defendants were again unable to produce a copy of the contract. Plaintiffs first contend that no PPO contract was ever entered into between Plaintiffs and Defendants. Defendants disagree and contend that Plaintiffs were substituted for the prior entity (Branson Imaging) upon receipt of Plaintiffs' request to continue in the network. In addition, Plaintiffs argue even if there was a contract, they still have claims against Defendants for RICO violations, fraud, civil conspiracy, common law fraud, and accounting and disgorgement.

         STANDARD OF REVIEW

         “To survive a motion to dismiss [under 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint is facially plausible where its factual content “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The plaintiff must plead facts that show more than a mere speculation or possibility that the defendant acted unlawfully. Id.; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While the Court accepts the complaint's factual allegations as true, it is not required to accept the plaintiff's legal conclusions. Ashcroft, 556 U.S. at 678. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.

         The court's assessment of whether the complaint states a plausible claim for relief is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft, 556 U.S. at 679. The reviewing court must read the complaint as a whole rather than analyzing each allegation in isolation. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009).

         DISCUSSION

         As previously stated, Plaintiffs claims are as follows: Count I - Violation of RICO, 18 U.S.C. § 1962(c); Count II - Violation of RICO, 18 U.S.C. § 1962(d); Count III - Unjust Enrichment; Count IV - Civil Conspiracy; Count V - Common Law Fraud; and Count VI - Accounting and Disgorgement. Defendants' arguments to dismiss Plaintiffs' claims can be summarized as follows: 1) the claims are barred by the statute of limitations; 2) the claims should be dismissed because the central allegations are contradicted by Plaintiffs' exhibits; 3) the RICO claims are ...


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