Class Action

Class Action Defense Cases–Love v. Blue Cross: Florida Federal Court Grants Defense Motion To Dismiss RICO Class Action Holding Class Action Complaint Failed To Satisfy Rule 9(b)’s Pleading Requirements

By Michael J. Hassen

Class Action Complaint Alleging Violations of RICO Failed to Satisfy Heightened Pleading Requirements of Rule 9(b) Thus Warranting Dismissal Florida Federal Court Holds

Plaintiffs, a group of doctors, filed a putative class action against certain health insurance companies alleging that defendants violated RICO in that they “conspired to inflate profits by systematically denying, delaying, and diminishing payments due to them as physicians.” Love v. Blue Cross & Blue Shield Ass’n, ___ F.Supp.2d ___ (S.D.Fla. March 26, 2009) [Slip Opn., at 1]. According to the allegations underlying the class action, the alleged scheme “involved the manipulation of computerized billing programs.” Id. Many of the defendants entered into a settlement agreement; the remaining class action defendants moved to dismiss the seventh version of the class action complaint. Id. The magistrate recommended granting the motion to dismiss because the allegations in the class action complaint failed to plead conspiracy and the predicate RICO claims with specificity. Id. In part, the defense motion to dismiss argued that the class action allegations failed to meet the heightened pleading requirements of Rule 9(b); plaintiffs argued that Rule 9(b) does not apply to mail and wire fraud claims. Id., at 1-2. The district court followed the magistrate’s recommendation because “Rule 9(b) most assuredly applies to claims for mail and wire fraud,” id., at 2.

The federal court explained that the class action complaint “‘must contain factual allegations which are ‘enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true.’” Love, at 2 (quoting Bell Atlantic v. Twombly, 127 S.Ct. 1955 (2007)). The court concluded, however, that the sixth amended class action complaint “fails to aver sufficient facts to indicate the existence of a conspiracy under prevailing precedent, because it only describes parallel conduct that can easily be explained by a theory of rational independent action.” Id. Accordingly, the district court adopted the recommendation of the magistrate and dismissed the class action complaint. Id., at 3.

Full post as published by Class Action Defense Blog on April 02, 2009 (boomark / email).