American Chiropractic Ass'n v. Trigon Healthcare, Inc.

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

AMERICAN CHIROPRACTIC 

ASSOCIATION, INCORPORATED, a non-

profit corporation; VIRGINIA

CHIROPRACTIC ASSOCIATION,

INCORPORATED; GEORGE W.

CHIRIKINIAN, D.C.; DOUGLAS M. COX,

D.C.; WILLIAM R. THEISIER, D.C.;

JOHN C. WILLIS, D.C.; JERRY R.

WILLIS, D.C.; SARAH ELIZABETH

ALLEN; LANA KAY BALL; MARGARET

BYRNE; ROGER DALTON; MARY SUE

DEAN; HARVIE LEE FRENCH, JR.;

PATRICIA HERMAN; CINDY

LINKENHOKER; SANDRA PHILLIPPI;

DARLENE REQUIZO; DAVID RUSSOTTO;

 No. 03-1675

GLORIA JEAN SMITH; LYNN D.

WAGNER; ANDREA WALLACE;

PATRICIA WHITTINGTON; BENIS D.

WOOD; RICHARD D. WORLEY; DALE

DUKE YONTZ; DOUGLAS F. AMBROSE;

GEORGE C. MCCLELLAND; JAMES M.

PORTER; LARRY L. STINE; WENDY

HOLDEN WILLIS; STEVEN W. YATES;

KEVIN J. WESTBY; GREGORY WALTER;

JEFFERSON K. TEASS,

Plaintiffs-Appellants,

v.



2 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

TRIGON HEALTHCARE, INCORPORATED; 

TRIGON INSURANCE COMPANY; TRIGON

ADMINISTRATORS; MID-SOUTH

INSURANCE COMPANY; TRIGON

HEALTH AND LIFE INSURANCE

COMPANY,

Defendants-Appellees, 

and

BLUE CROSS AND BLUE SHIELD

ASSOCIATION,

Defendant.



Appeal from the United States District Court

for the Western District of Virginia, at Abingdon.

James P. Jones, District Judge.

(CA-00-113-1)

Argued: February 24, 2004

Decided: May 6, 2004

Before WILLIAMS and MICHAEL, Circuit Judges, and

William D. QUARLES, Jr., United States District Judge

for the District of Maryland, sitting by designation.

Affirmed by published opinion. Judge Williams wrote the opinion, in

which Judge Michael and Judge Quarles joined.

COUNSEL

ARGUED: George P. McAndrews, MCANDREWS, HELD & MAL-

LOY, LTD., Chicago, Illinois, for Appellants. Howard Feller, Bryan

Alan Fratkin, MCGUIREWOODS, L.L.P., Richmond, Virginia, for

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 3

Appellees. ON BRIEF: Steven J. Hampton, Patrick J. Arnold, Jr.,

Peter J. McAndrews, Ronald A. Dicerbo, MCANDREWS, HELD &

MALLOY, LTD., Chicago, Illinois; William G. Shields, THORSEN

& SCHER, Richmond, Virginia, for Appellants.

OPINION

WILLIAMS, Circuit Judge:

In this appeal, we consider whether Trigon Healthcare, Virginia’s

largest for-profit health insurance company, and its affiliated compa-

nies (collectively, Trigon),1 were engaged in an anticompetitive con-

spiracy with medical doctors and medical associations whose purpose

was to harm chiropractors. American Chiropractic2 filed this eight

count complaint alleging violations of federal antitrust laws, the

Racketeer Influenced and Corrupt Organizations Act (RICO), and

various state laws, claiming that Trigon and the medical doctors and

associations were engaged in a conspiracy that used Trigon’s reim-

bursement policies and treatment guidelines to limit severely the flow

of insurance dollars to chiropractors and steer those monies toward

medical doctors. Trigon argues that no conspiracy exists, and that it

implemented its coverage policies unilaterally based on market supply

and demand. The district court agreed with Trigon, dismissing two

counts of the complaint for failure to state a claim and disposing of

the remaining counts by granting Trigon’s motion for summary judg-

ment. Although we apply different reasoning than the district court in

some areas, we affirm its disposition of the case in favor of Trigon.

1

Trigon Healthcare was recently purchased by Anthem Healthcare, an

Indiana based health insurance company. To be consistent with the dis-

trict court’s usage and the factual record developed below, we refer to

the corporation as "Trigon."

2

We refer to the appellants, the American Chiropractic Association, the

Virginia Chiropractic Association, certain individual chiropractors and

some patients of individual chiropractors, collectively as "American Chi-

ropractic."

4 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

I.

Trigon is a for-profit, publicly-traded health insurance company

located in Virginia. Trigon’s business consists of selling individual

and group healthcare benefit plans to its subscribers. Generally, these

healthcare benefit plans list the benefits and services covered by Tri-

gon under the plan and describe any services that are excluded from

the plan or are the subject of coverage limitations. Trigon makes a

network of healthcare providers, including medical doctors, hospitals,

pharmacies, chiropractors, and therapists, available to plan members

to provide the services covered under the plan. Trigon creates this net-

work of healthcare providers by entering into contracts with providers

who are willing to abide by Trigon’s terms and conditions, as set forth

in Trigon’s provider agreements. Simply put, "Trigon is essentially

purchasing services from the healthcare providers who agree to

become participating providers in Trigon’s [provider] networks."

(J.A. at 1344.) Trigon strives to offer "the best coverage at the lowest

possible cost," and it endeavors to pay "the lowest possible price" to

healthcare providers to ensure low-cost access for plan enrollees.

(J.A. at 1597, 4579.)

Chiropractic medicine is "a non-pharmaceutical, nonsurgical sys-

tem of health care based on the self-healing capacity of the body"

with the aim of "removing irritants to the nervous system and restor-

ing proper function" to the nervous system. Dorland’s Medical Illus-

trated Dictionary 347 (30th ed. 2003). Chiropractic treatment most

commonly involves spinal manipulations3 to relieve musculoskeletal

complaints. Id. Trigon has provided coverage for chiropractic services

since the 1980’s, and Trigon "acknowledge[s] that chiropractic care

has a health effect, a positive health effect when rendered appropri-

ately."4 (J.A. at 4186.)

3

Spinal manipulation is defined by the Agency for Health Care Policy

and Research, a division of the U.S. Department of Health and Human

Services, as "manual therapy in which loads are applied to the spine

using short or long lever methods." (J.A. at 5507.)

4

The use of chiropractors by Trigon’s plan enrollees has increased sub-

stantially since Trigon began covering chiropractic care. For instance, in

1996 only 26,275 plan enrollees received spinal manipulation treatment

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 5

Despite Trigon’s coverage of chiropractic services, and the fact that

chiropractic medicine is, as the district court noted, a "recognized

branch of the healing arts," see American Chiropractic Association v.

Trigon Healthcare, Inc., 258 F. Supp. 2d 461, 463 (W.D. Va. 2003),

there is a history of animus from medical doctors and insurers aimed

at chiropractors. Beginning in 1962, the American Medical Associa-

tion (AMA), aided by the National Association of Blue Shield Plans,5

began a "lengthy, systematic, successful, and unlawful" national

group boycott aimed at destroying chiropractic medicine. Wilk v. Am.

Medical Ass’n., 895 F.2d 352, 371 (7th Cir. 1990). As the Seventh

Circuit explained:

In 1963 the AMA formed its Committee on Quackery

("Committee"). The Committee worked diligently to elimi-

nate chiropractic. A primary method to achieve this goal

was to make it unethical for medical physicians to profes-

sionally associate with chiropractors. Under former Princi-

ple 3, it was unethical for medical physicians to associate

with "unscientific practitioners." In 1966, the AMA’s House

of Delegates passed a resolution labelling chiropractic an

unscientific cult.

Id. at 356.

Beginning in 1977, the AMA slowly began to phase out its boycott

of chiropractors, and the Seventh Circuit adopted the Wilk district

court’s finding that the boycott became dormant in 1980 when Princi-

ple 3 was revised.6 Id. at 356, 374. Although Trigon is a licensee of

from chiropractors, but that number jumped to 74,477 by 2001. The

number of chiropractic providers in Trigon’s network rose from 513 to

961 during the same time span, and now almost 90% of chiropractors in

the Commonwealth of Virginia are in Trigon’s provider network. In

addition, the total amount of payments from Trigon to chiropractors rose

from $12,380,737 in 1996 to $21,510,503 in 2001.

5

This organization is now called Blue Cross & Blue Shield Association

of America.

6

Although the Seventh Circuit recognized that the boycott ended in

1980, it affirmed a grant of injunctive relief against the American Medi-

cal Association because some of its actions in 1983 "indicated the

AMA’s likelihood of returning to its old (anti-chiropractic) ways." Wilk

v. Am. Medical Ass’n., 895 F.2d 352, 367 (7th Cir. 1990).

6 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

Blue Cross & Blue Shield Association of America, there is no record

evidence connecting Trigon to this boycott.

American Chiropractic, however, asserts that medical doctors con-

tinue to harbor animosity toward chiropractors and have entered into

an anticompetitive conspiracy with Trigon to harm chiropractors.

American Chiropractic contends that medical doctors and their medi-

cal associations have conspired with Trigon to limit the usage of chi-

ropractors by Trigon’s plan enrollees and to restrain severely the

reimbursement paid to chiropractors for services rendered to plan

enrollees. The ultimate goal of this conspiracy, American Chiroprac-

tic argues, is to shift insurance dollars away from chiropractors

toward medical doctors and harm the business of chiropractors.

In response to this perceived anticompetitive conspiracy, American

Chiropractic brought this action in the United States District Court for

the Western District of Virginia on August 18, 2000. American Chiro-

practic’s eight-count complaint alleged that Trigon7 conspired with

medical doctors and medical associations to restrain interstate trade

in violation of § 1 of the Sherman Antitrust Act, 15 U.S.C.A. § 1

(West 1997) (count one); attempted to monopolize the market for

treatment of neuromusculoskeletal conditions in violation of § 2 of

the Sherman Act, 15 U.S.C.A. § 2 (West 1997) (count two); engaged

in a pattern of racketeering activity in violation of the Racketeer

Influenced and Corrupt Organizations Act, 18 U.S.C.A. § 1962 (West

2000) (count three); tortiously interfered with the business enterprise

of chiropractors in violations of state common law (count four); con-

spired to injure chiropractors in their trade or practice in violation of

Va. Code Ann. § 18.2-499 (Michie 1996) (count five); committed

state common law breach of contract (count six) and conspiracy

(count seven); and violated Va. Code Ann. §§ 38.2-2203, 38.2-3408,

38.2-4221, and 38.2-4312(E) (Michie 2002), referred to as the Vir-

ginia insurance equality laws (count eight). The district court exer-

cised supplemental jurisdiction over the state law claims pursuant to

28 U.S.C.A. § 1367 (West 1993).

7

The complaint initially named Blue Cross & Blue Shield of America

in addition to Trigon Healthcare, Inc. and its affiliated companies. Blue

Cross & Blue Shield of America was voluntarily dismissed as a defen-

dant by American Chiropractic.

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 7

Trigon moved to dismiss the complaint in its entirety on October

13, 2000. The district court, on July 19, 2001, granted that motion in

part and dismissed American Chiropractic’s RICO (count three) and

Virginia insurance equality (count eight) claims for failure to state

claims. The district court held that the RICO claim was preempted by

the McCarran-Ferguson Act and that the Virginia insurance equality

laws relied upon by American Chiropractic did not create private

causes of action.

Following discovery, on August 13, 2002, Trigon filed a motion

for summary judgment on the remaining counts in the complaint.

American Chiropractic did not file a Rule 56(f) motion requesting fur-

ther discovery, but it did contest Trigon’s motion for summary judg-

ment. After the benefit of oral argument, the district court, on April

25, 2003, granted Trigon’s motion for summary judgment on the

remaining counts. As to counts one, five, and seven, the district court

found that the intracorporate immunity doctrine precluded any con-

spiracy between Trigon and the medical doctors that served on one of

its committees, the Managed Care Advisory Panel, and that American

Chiropractic had produced no other evidence of a conspiracy between

Trigon and the medical doctors or medical associations. As to Ameri-

can Chiropractic’s claim for monopolization (count two), the district

court granted summary judgment because Trigon did not possess

monopoly power in the relevant market. It also granted Trigon’s

motion for summary judgment as to American Chiropractic’s state

law claims for tortious interference (count four) and breach of con-

tract (count six). American Chiropractic noted a timely appeal of the

district court’s rulings, and we have jurisdiction under 28 U.S.C.A.

§ 1291.

On appeal, American Chiropractic argues: (1) that the district court

erred in holding the intracorporate immunity doctrine applies to this

case; (2) that the district court erred in holding that there was insuffi-

cient evidence of a conspiracy between Trigon and the medical asso-

ciations to withstand summary judgment; (3) that the district court

erred in granting summary judgment on the tortious interference

claim; (4) that the district court erred in dismissing the Virginia insur-

ance equality claim; (5) that the district court erred in dismissing the

RICO claim as preempted by the McCarran-Ferguson Act; and (6)

8 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

that the district court abused its discretion in conducting discovery.8

We address each contention in turn.

II.

Counts One, Five, and Seven

(The Conspiracy Counts)

American Chiropractic first contends that the district court erred in

finding that the intracorporate immunity doctrine barred the possibil-

ity of a conspiracy between Trigon and its Managed Care Advisory

Panel (MCAP) and in granting summary judgment on American Chi-

ropractic’s claim under §1 of the Sherman Act and its state law con-

spiracy claims.9 We review the grant of summary judgment de novo,

viewing the facts in the light most favorable to the non-moving party.

See Figgie Int’l, Inc. v. Destileria Serralles, Inc., 190 F.3d 252, 255

(4th Cir. 1999). Summary judgment is appropriate "if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no genuine issue

as to any material fact and that the moving party is entitled to a judg-

ment as a matter of law." Fed. R. Civ. P. 56(c).

Under its Section 1 claim, American Chiropractic alleged that Tri-

gon and its MCAP, a committee established by Trigon, created false

referral guidelines meant to limit the usage of chiropractors for the

treatment of lower back pain and, accordingly, to keep insurance

reimbursement monies away from chiropractors. Trigon established

the MCAP, composed of six Trigon employees and nine independent

8

We note that American Chiropractic does not appeal the district

court’s grant of summary judgment on its § 2 Sherman Act claim (count

two) or the state law breach of contract claim (count six).

9

Because the state law conspiracy claims follow the same analysis as

the § 1 claim, we do not address them separately. See Va. Vermiculite,

Ltd. v. Historic Green Springs, Inc., 307 F.3d 277, 284 (4th Cir. 2002)

(noting that the Virginia Civil Conspiracy Act does not create liability

absent a violation of the federal antitrust laws); Fox v. Deese, 362 S.E.2d

699, 708 (Va. 1987) (adopting intracorporate immunity doctrine for Vir-

ginia conspiracy laws).

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 9

10

medical doctors appointed by professional organizations, to "obtain

input and advice from medical doctors on clinical issues such as qual-

ity control initiatives." (J.A. at 1348.) The MCAP "was formed and

appointed by officers and employees of Trigon." (J.A. at 1352.) Dr.

Lawrence Colley, Trigon’s Vice President for Corporate Medical Pol-

icy during the relevant time period, also served as a member of the

MCAP. It is undisputed that the MCAP was never given information

regarding specific payment policies and that it lacked any decision-

making authority.

American Chiropractic points to the MCAP’s approval, in October

1995, of Trigon’s practice guideline, titled "Managing Low Back

Problems in Adults" (the Low Back Guideline), as evidence of an

anticompetitive conspiracy between the members of the MCAP and

Trigon. (J.A. at 6119.) This Low Back Guideline was drafted as an

informative practice guideline for physicians. The Guideline also did

not bear any relation to Trigon’s coverage and reimbursement poli-

cies. (J.A. at 1539-40.) The Low Back Guideline was written by Tri-

gon’s employees, not the MCAP, and was issued in response to a

lengthy study by the Agency for Health Care Policy and Research

(AHCPR), a division of the U.S. Department of Health and Human

Services.

The AHCPR study was titled "Acute Low Back Problems in

Adults" and was accompanied by a reference guide for treating low

back pain. The study recommended spinal manipulation "in place of

medication or a shorter trial [of manipulation] if combined with

NSAIDS"11 for the treatment of low back pain. (J.A. at 5653.) The

AHCPR study defined "manipulation" as "manual therapy in which

loads are applied to the spine using short or long lever methods." (J.A.

at 5507.) This definition of manipulation referred to the procedure

rendered primarily by chiropractors, as opposed to medical doctors.

One medical journal, the Annals of Internal Medicine, stated in July

10

These organizations include the Virginia Society of Internal Medi-

cine, the Medical Society of Virginia, the American College of Physi-

cians, the University of Virginia School of Medicine, the Eastern

Virginia Medical School and other medical organizations.

11

NSAIDs is an abbreviation for non-steroidal anti-inflammatory drugs

such as aspirin and ibuprofen.

10 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

1998 that "the [AHCPR] recently made history when it concluded that

spinal manipulative treatment is the most effective and cost-effective

treatment for acute low back pain." (J.A. at 4984.) American Chiro-

practic argues that this AHCPR study "was a boon to chiropractors

and a setback for medical doctors." (Appellant’s Br. at 22.)

Trigon intended its under ten page Low Back Guideline to be "a

shortened and user-friendly format" of the over one-hundred and fifty

page AHCPR study for health care providers. (J.A. at 1538.) The Low

Back Guideline stated that it was "adapted from the [AHCPR] and . . .

approved and endorsed by Trigon’s Managed Care Advisory Panel."

(J.A. at 6123.) The MCAP considered the Low Back Guideline,

alongside two other practice guidelines, on October 25, 1995. During

that meeting, one of the medical doctors on the MCAP asked if the

guidelines the MCAP was considering were meant to be referral

guidelines. Dr. Colley told them that the guidelines were referral guide-

lines.12 The MCAP then adopted and approved the Low Back Guide-

line without making or suggesting any changes to it.

American Chiropractic argues that the Low Back Guidelines are

false and misleading in two principal ways. First, the Low Back

Guideline provided that "[a] short trial of manipulation may be as

effective as NSAIDs." (J.A. at 6120.) American Chiropractic con-

tends that the AHCPR guideline stands for the proposition that manip-

ulation is more effective than NSAIDs. Second, the Low Back

Guideline did not define the term "manipulation." According to

American Chiropractic, the absence of this definition meant that the

Low Back Guideline deterred primary care physicians from referring

patients to chiropractors because it failed to identify manipulation

practiced by chiropractors as the specific type of manipulation recom-

mended. Dr. Scott Haldeman, one of American Chiropractic’s experts

and a member of the AHCPR panel, opined that "[b]y omitting the

AHCPR’s definition of manipulation, Trigon and its Managed Care

12

It is unclear whether Dr. Colley was stating that the Low Back

Guideline was a referral guideline, or if he was referencing one of the

other guidelines before the Managed Care Advisory Panel. Because this

fact does not affect our analysis on American Chiropractic’s Section 1

claim, we will assume that Dr. Colley was referencing the Low Back

Guideline.

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 11

Advisory Panel materially altered the recommendations of the

AHCPR." (J.A. at 5672.) Because of this omission, according to Dr.

Haldeman, Trigon’s guidelines would "deprive patients of the benefit

from spinal manipulation as practiced by doctors of chiropractic, and

. . . deprive doctors of chiropractic of the opportunity to treat those

patients." (J.A. at 5672.)

The district court was not persuaded by American Chiropractic’s

argument, and held that, under the intracorporate immunity doctrine,

Trigon was legally incapable of conspiring with the MCAP. Addition-

ally, the district court then found that American Chiropractic had

failed to adduce sufficient evidence of a conspiracy between Trigon

and the medical associations who appointed individuals to the MCAP

to survive summary judgment. On appeal, American Chiropractic

argues that the intracorporate immunity doctrine does not apply,

either because the medical doctors on the MCAP lacked a unity of

interest with Trigon or because the independent personal stake excep-

tion to the doctrine should apply. American Chiropractic also con-

tends that it has produced direct evidence of a conspiracy among

Trigon and the medical doctors on the MCAP and the medical associ-

ations that appointed those doctors.

A.

We consider first American Chiropractic’s argument that Trigon

conspired with the medical doctors who served on the MCAP.13 Sec-

tion 1 of the Sherman Act provides, in relevant part, that "[e]very

contract, combination in the form of trust or otherwise, or conspiracy,

in restraint of trade or commerce among the several States, or with

foreign nations, is declared to be illegal." 15 U.S.C.A. § 1. Thus, to

establish a § 1 violation, a plaintiff must show: "(1) a contract, combi-

nation or conspiracy; (2) that imposed an unreasonable restraint of

trade." Dickson v. Microsoft Corp., 309 F.3d 193, 202 (4th Cir. 2002).

"It is incontestable that ‘concerted action’ in restraint of trade lies at

the heart of a Sherman Act section 1 violation." Va. Vermiculite, Ltd.

v. Historic Green Springs, Inc., 307 F.3d 277, 280 (4th Cir. 2002). In

other words, § 1 "does not reach conduct that is wholly unilateral."

13

American Chiropractic did not argue that Trigon conspired with its

own employees serving on the MCAP.

12 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 768

(1984) (internal quotation marks omitted).

"Proof of concerted action requires evidence of a relationship

between at least two legally distinct persons or entities." Oksanen v.

Page Memorial Hosp., 945 F.2d 696, 702 (4th Cir. 1991) (en banc).

Thus,

it is perfectly plain that an internal ‘agreement’ to imple-

ment a single, unitary firm’s policies does not raise the anti-

trust dangers that § 1 was designed to police. The officers

of a single firm are not separate economic actors pursuing

separate economic interests, so agreements among them do

not suddenly bring together economic power that was previ-

ously pursuing divergent goals.

Copperweld, 467 U.S. at 769. Moreover, "§ 1 is not violated by the

internally coordinated conduct of a corporation and one of its unincor-

porated divisions." Id. at 770. "For similar reasons, the coordinated

activity of a parent and its wholly owned subsidiary must be viewed

as that of a single enterprise for purposes of § 1 of the Sherman Act."

Id. at 771. Accordingly, the Supreme Court has held that a parent and

its wholly owned subsidiary are legally "incapable of conspiring with

each other for purposes of § 1 of the Sherman Act." Id. at 777. The

Court in Copperweld noted further that "a parent and a wholly owned

subsidiary always have a ‘unity of purpose or a common design’" so

the law’s concern with a sudden joining of independent interests is

not present in such a case. Id. at 771 (emphasis added).

We have applied this "intracorporate immunity" doctrine articu-

lated in Copperweld to hold that a hospital lacked the capacity to con-

spire with its peer review committee for purposes of § 1. See

Oksanen, 945 F.2d at 706.14 The plaintiff in Oksanen, a doctor, con-

tended that the hospital conspired with its peer review committee,

14

A lawsuit alleging a conspiracy between a hospital and its peer

review committee currently would be barred under the Health Care Qual-

ity Improvement Act of 1986. 42 U.S.C.A. §§ 11101-11152 (West 1995

& Supp. 2003). That Act was passed after the filing of Oksanen’s lawsuit

and was not made retroactive to pending cases.

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 13

composed of staff physicians at the hospital, to limit and then revoke

his staff privileges. Although the hospital and its medical staff were

"legally separate entities," we held that the intracorporate immunity

doctrine applied, explaining that "we must examine the substance,

rather than the form, of the relationship between the hospital and the

medical staff during the peer review process." Id. at 703. We con-

cluded that the hospital and the doctors on the peer review committee

possessed a unity of interest: improving the quality of patient care.

"Like a corporation delegating authority to its officers, the [hospital]

delegated peer review decisionmaking in the first instance to the med-

ical staff." Id. at 703. Thus, "[i]n effect, the medical staff was working

as the [hospital’s] agent." Id.; see also Detrick v. Panalpina, Inc.,108

F.3d 529, 544 (4th Cir. 1997) ("The intracorporate immunity doctrine

provides that a conspiracy can not exist between the agents of a cor-

poration and the corporation itself."); ePlus Technology v. Aboud, 313

F.3d 166, 179 (4th Cir. 2002) ("[A]cts of corporate agents are acts of

the corporation itself, and corporate employees cannot conspire with

each other or with the corporation."). Moreover, the hospital "retained

ultimate responsibility for all of the hospital’s credentialing deci-

sions." Oksanen, 945 F.2d at 704. The hospital’s "ultimate control

over peer review decisions enable[d] it to employ peer review to pur-

sue its interests." Id. Finally, we questioned whether hospitals pos-

sessed any economic motive for conspiring with some medical

doctors to exclude others from the staff: "[i]f a physician is qualified

and does not disrupt the hospital’s operations, it is in the hospital’s

interest to include, not exclude, that physician." Id.; see also P.

Areeda and H. Hovenkamp, Antitrust Law ¶ 1471b (1999 Supp.).

We have continued to recognize the existence of one narrow excep-

tion to the intracorporate immunity doctrine — the independent per-

sonal stake exception. In Greenville Pub. Co. v. Daily Reflector, Inc.,

496 F.2d 391 (4th Cir. 1974), we held that an exception to the intra-

corporate immunity doctrine "may be justified when the officer has

an independent personal stake in achieving the corporation’s illegal

objective." Id. at 399. We declined an invitation to apply the excep-

tion in Oksanen because the peer review committee lacked the ability

to bind the hospital. "If the officer cannot cause a restraint to be

imposed and his firm would have taken the action anyway, then any

independent interest is largely irrelevant to antitrust analysis."

Oksanen, 945 F.2d at 705. Put differently, "[t]o give advice when

14 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

asked by the decisionmaker is not equivalent to being the decision-

maker itself." Pennsylvania Dental Ass’n. v. Medical Serv. Ass’n.,

745 F.2d 248, 259 (3d Cir. 1984).

Applying this reasoning here, we agree with the district court that,

under the intracorporate immunity doctrine, Trigon lacked the legal

capacity to conspire with the medical doctors on the MCAP. Ameri-

can Chiropractic argues that because the medical doctors on the

MCAP do not share a unity of interest with Trigon, the MCAP cannot

be considered a corporate agent of Trigon. A similar argument was

raised and rejected in Oksanen. There, the plaintiff had alleged that

the medical doctors on the peer review committee did not have a unity

of interest with the hospital because the medical doctors would act in

their own best interest, not the best interest of the hospital. As men-

tioned above, we found that the medical doctors, in their role as mem-

bers of the peer review committee, had a unity of interest with the

hospital: ensuring patient care. We believe that Oksanen’s reasoning

is not only instructive but persuasive here.

American Chiropractic is undoubtedly correct that medical doctors

and insurance companies do not, generally speaking, share a unity of

interest. That, however, is not the correct inquiry in cases applying the

intracorporate immunity doctrine. Instead, we look to whether the

medical doctors, in their role as members of the MCAP, share a unity

of interest with Trigon that makes them corporate agents of Trigon.

We believe that they do.

Because Trigon established the MCAP to offer input on clinical

issues faced by Trigon, the individual medical doctors, in their role

as members of the MCAP, shared the same interest as Trigon:

addressing clinical issues in a manner that would best serve its con-

sumers, the plan enrollees. The MCAP is without question a corporate

agent of Trigon, chaired by a Trigon employee, and we believe that

the intracorporate immunity doctrine applies to its actions. The deci-

sion to consult with doctors on the MCAP does not "represent the

sudden joining of economic forces that section one is designed to

deter and penalize." Oksanen, 945 F.2d at 703. By creating the

MCAP, Trigon did not bring together independent economic forces.

Instead, Trigon had "ultimate control" over the MCAP’s actions and

was able to employ the MCAP to pursue its interests. In fact, we are

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 15

presented with even stronger reasons for applying the doctrine here

than we were in Oksanen because, in Oksanen, the peer review com-

mittee and the hospital were legally distinct entities. The MCAP is not

legally distinct from Trigon.

American Chiropractic’s argument paints with too broad a brush,

and would, in effect, undercut much of the rationale of the intracor-

porate immunity doctrine by focusing on form over substance. Penal-

izing "coordinated conduct simply because a corporation delegated

certain responsibilities to autonomous units might well discourage

corporations from creating divisions with their presumed benefits."

Copperweld, 467 U.S. at 771. "Far from being a competitor with [Tri-

gon], the [MCAP] was in fact a natural component of [Trigon’s] man-

agement structure. " Oksanen, 945 F.2d at 703.

Moreover, the independent personal stake exception does not apply

because the MCAP did not have the power to bind Trigon; it only

made non-binding recommendations and endorsed materials already

composed by Trigon employees. In fact, the MCAP did not even rec-

ommend changes to the Low Back Guideline. While the MCAP’s seal

of approval was important to Trigon from a business perspective

because it allowed Trigon to market various publications as approved

by a panel of medical doctors, American Chiropractic has made no

showing that the MCAP itself could rewrite any part of such a publi-

cation and make Trigon issue those rewritten publications. The ulti-

mate decision as to the contents of any document before the MCAP

always rested with Trigon, and, accordingly, the independent personal

stake exception cannot apply. See id. at 705.

Thus, we agree with the district court that Trigon lacked the capac-

ity to conspire, within the meaning of § 1, with its corporate agent,

the MCAP or its members.

B.

American Chiropractic next argues, assuming that the MCAP did

not conspire with Trigon, that the medical associations who placed

their members on the MCAP conspired with Trigon to publish the

allegedly misleading guidelines and to implement several coverage

policies aimed at limiting the usage and reimbursement of chiroprac-

16 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

tic services. As discussed above, to establish a § 1 violation, a plain-

tiff must show: "(1) a contract, combination, or conspiracy, (2) that

imposed an unreasonable restraint of trade." Dickson, 309 F.3d at

202. A plaintiff can offer direct or circumstantial evidence to prove

concerted action. Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S.

752, 774 (1984). American Chiropractic argues on appeal that it pro-

vided direct evidence of this conspiracy, in the form of the minutes

from the MCAP meeting where the MCAP approved the Low Back

Guideline, and the Low Back Guideline itself. These minutes and the

Low Back Guideline, American Chiropractic alleges, represent direct

evidence of a conspiracy orchestrated between the medical associa-

tions and Trigon. Additionally, American Chiropractic argues that it

presented direct evidence that Trigon and the medical associations

conspired to implement two other coverage policies with the intent to

harm chiropractors — a $500 cap on spinal manipulations and a

reduced reimbursement rate for chiropractors and other limited

license providers.

In 1988, Trigon instituted a $500 yearly reimbursement cap on spi-

nal manipulations, regardless of "what type of provider renders the

services." (J.A. at 5345.) Although this $500 reimbursement cap is

facially neutral, in that it does not target a specific provider, neither

side disputes that chiropractors are the main providers of spinal

manipulations. One chiropractor testified that no other insurance com-

pany had a cap as harsh as Trigon’s, and that a "majority" of insur-

ance companies did not use a hard coverage cap on spinal

manipulations. (J.A. at 7900, 7903-04.) This $500 annual coverage

limit on spinal manipulations has remained in place since 1988.

In 1996, Trigon lowered the reimbursement rate for limited-license

practitioners,15 including chiropractors, to 60% (from 70%) of that

received by fully-licensed practitioners performing the same proce-

dure. As explained by Trigon, "the marketplace for third party health-

care coverage is extremely competitive and our customers are

extremely price sensitive," making the lower reimbursement rate "ap-

propriate and reasonable." (J.A. at 4636, 6337.)

15

Limited-license providers are defined by Trigon to include chiroprac-

tors, speech therapists, occupational therapists and physical therapists.

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 17

American Chiropractic argues that both of these policies resulted

from a conspiracy between Trigon and the medical associations. The

$500 annual cap, American Chiropractic asserts, was implemented

with the purpose of limiting the utilization of chiropractic services,

while the lower reimbursement rate was intended to shift insurance

dollars from chiropractors to medical doctors. American Chiropractic

argues that, because Trigon recognizes that chiropractic care is effec-

tive and inexpensive, policies like these that have an adverse effect

on chiropractic care are direct evidence that Trigon is not making an

independent economic judgment but rather conspiring to harm chiro-

practors.

"[A]ntitrust law limits the range of permissible inferences from

ambiguous evidence in a § 1 case." Matsushita Elec. Indus. Co., Ltd.

v. Zenith Radio Corp., 475 U.S. 574, 588 (1986). Direct evidence is

extremely rare in antitrust cases and is usually referred to as the

"smoking gun." InterVest, Inc. v. Bloomberg, L.P., 340 F.3d 144, 159

(3d Cir. 2003). We agree with the Third Circuit that direct evidence

in this context is "explicit and requires no inferences to establish the

proposition or conclusion being asserted." Id. (quotation marks omit-

ted); see United Mine Workers of Am. v. Pennington, 381 U.S. 676,

720 (1965) (Goldberg, J., dissenting) ("Only rarely will there be direct

evidence of an express agreement" in conspiracy cases). American

Chiropractic’s offering falls far short of this standard. At most, the

MCAP meeting shows contact between two independent economic

actors, but "mere contacts and communications, or the mere opportu-

nity to conspire, among antitrust defendants is insufficient evidence

[of] an anticompetitive conspiracy." Cooper v. Forsyth County Hosp.

Auth., 789 F.2d 278, 281 (4th Cir. 1986). The two coverage policies

are also not direct evidence of a conspiracy because both require the

rather large inferential leap that Trigon drafted and implemented the

policies only after reaching an agreement with medical doctors and

associations.

Furthermore, as the district court explained,16 American Chiroprac-

16

American Chiropractic also limited its arguments to direct evidence

of a conspiracy before the district court, but that court found that Ameri-

can Chiropractic offered no direct evidence of a conspiracy and instead

analyzed whether there was circumstantial evidence of a conspiracy.

18 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

tic has not entered sufficient indirect evidence of a conspiracy to harm

chiropractors. It is undisputed that use of chiropractic treatment by

Trigon subscribers has substantially increased since the Low Back

Guideline was issued in 1996. See supra note 4. Since 1996, the

amount of money paid to chiropractors by Trigon has also risen sub-

stantially, from approximately $12 million dollars to over $21 million

in 2001. The reimbursement policies about which American Chiro-

practic complains are facially neutral policies that admittedly have an

effect on chiropractors. There is, however, no evidence of an effort

by Trigon to harm chiropractors apart from these facially neutral

reimbursement policies and the Low Back Guideline, and, more

importantly, American Chiropractic has failed to show that either the

reimbursement policies or the Low Back Guideline was the result of

an antitrust conspiracy. They have pointed to no evidence that Trigon

conspired with any entity in forming its policies. In fact, the only evi-

dence in the record is that all of the actions in dispute were taken uni-

laterally by Trigon employees. In the face of Trigon’s affidavits that

it acted unilaterally, American Chiropractic needed more to create a

genuine issue of material fact.

Moreover, American Chiropractic has not explained why Trigon

would, as an economic matter, attempt to exclude chiropractors from

its provider network or dissuade patients from the use of chiropractic

services if chiropractic care is more cost-effective than other medical

care. As the district court ably explained, see Trigon Healthcare, 258

F. Supp. 2d at 466-67, this alleged conspiracy does not make eco-

nomic sense from Trigon’s perspective. We agree with the district

court that, "as a profit-seeking corporation, [Trigon] had no economic

motive to prevent referrals to chiropractors." Id. at 466.

Accordingly, we affirm the district court’s grant of summary judg-

ment on American Chiropractic’s claim under § 1 of the Sherman Act

(count one) and its state law conspiracy claims (counts five and seven).17

17

Because we find that American Chiropractic failed to prove the exis-

tence of an anticompetitive conspiracy, we do not consider whether

American Chiropractic entered sufficient evidence that Trigon and the

medical associations and medical doctors implemented unreasonable

restraints on trade.

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 19

III.

Count Four

(Tortious Interference)

American Chiropractic next challenges the grant of summary judg-

ment in favor of Trigon on its state law claim for tortious interference.

We review the grant of summary judgment de novo. Figgie Int’l, 190

F.3d at 255. Virginia law permits recovery for such claims where a

party can show "(1) the existence of a business relationship or expec-

tancy, with a probability of future economic benefit to plaintiff; (2)

the defendant’s knowledge of the relationship or expectancy; (3) a

reasonable certainty that absent defendant’s intentional misconduct,

plaintiff would have continued in the relationship or realized the

expectancy; and (4) damages to plaintiff." Commercial Bus. Sys., Inc.

v. Halifax Corp., 484 S.E.2d 892, 896 (Va. 1997) (quotation marks

omitted). "[P]roof of the existence of the first and third elements of

the tort must meet an objective test," and "mere proof of a plaintiff’s

belief and hope that a business relationship will continue is inade-

quate to sustain the cause of action." Id. at 897. Instead, a plaintiff

must "establish a probability of future economic benefit, not a mere

possibility." Id. (emphasis added). When a plaintiff is alleging that a

third party has interfered with a business expectancy rather than with

an actual contract, the plaintiff must "show that the defendant inter-

fered by employing improper methods." Peterson v. Cooley, 142 F.3d

181, 186 (4th Cir. 1998). Improper methods are "those means that are

illegal or independently tortious, such as violations of statutes, regula-

tions, or recognized common-law rules." Duggin v. Adams, 360

S.E.2d 832, 836 (Va. 1987).

Under this count, American Chiropractic argues that the $500

annual coverage cap on spinal manipulations tortiously interfered

with the chiropractors’ business expectancy that their patients would

continue to seek treatment from them. This argument fails because

American Chiropractic has not shown a business expectancy with a

probability of future economic benefit. Virginia law requires objec-

tive proof of a probability of future economic benefit, not just a hope

or a belief that a business relationship will continue. American Chiro-

practic admitted that patients have the ability and the right to termi-

20 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

nate their relationship at any time, and it has not introduced any

evidence showing more than a hope or belief that, generally speaking,

patients would continue seeking treatment from chiropractors. The

chiropractors never had written contracts with their patients, and some

patients unilaterally terminated their treatment relationships with the

chiropractors. Because American Chiropractic failed to show that it

has an objective, valid business expectancy with a probability of

future economic benefit, the district court was correct to grant sum-

mary judgment to Trigon on this count.18

IV.

Count Eight

(Virginia Insurance Equality Statutes)

American Chiropractic also argues that the district court erred in

dismissing its claim under the Virginia insurance equality laws for

failure to state a claim. We review the dismissal of a complaint under

Federal Rule of Civil Procedure 12(b)(6) de novo. Ostrzenski v. Sei-

gel, 177 F.3d 245, 251 (4th Cir. 1999). On appeal from an order

granting a Rule 12(b)(6) motion to dismiss, this court accepts as true

the facts as alleged in the complaint, views them in the light most

favorable to the plaintiff, and recognizes that dismissal is inappropri-

ate "unless it appears to a certainty that the plaintiff would be entitled

to no relief under any state of facts which could be proved in support

of his claim." Mylan Lab., Inc. v. Matkari, 7 F.3d 1130, 1134 n.4 (4th

Cir. 1993); see Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)

(explaining that dismissal for failure to state a claim is proper "only

if it is clear that no relief could be granted under any set of facts that

could be proved consistent with the allegations").

In its complaint, American Chiropractic alleged that Trigon vio-

lated Virginia’s insurance equality laws, found in Va. Code Ann.

§§ 38.2-2203, 38.2-3408, 38.2-4221, and 38.2-4312(E), because Tri-

18

Because we conclude that American Chiropractic lacked a valid busi-

ness expectancy, we do not address the district court’s alternative ground

for granting summary on this claim — that Trigon did not use improper

means in interfering with the chiropractors’ alleged business expectancy.

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 21

gon implemented reimbursement and utilization restrictions targeted

only at chiropractors, not medical doctors. The district court found

that none of these statutory provisions created private rights of action

on their face and declined to read a private right of action into the sec-

tions.

As a preliminary note, §§ 38.2-2203, 38.2-4221 and 38.2-4312 do

not apply to Trigon’s business, so American Chiropractic cannot state

a claim under those code sections. Section 38.2-2203 deals with "bod-

ily injury liability insurance"; § 38.2-4221 applies to non-stock corpo-

rations; and § 38.2-4312(E) applies to health maintenance

organizations. Trigon is a for-profit stock corporation that operates in

the field of accident and sickness insurance. Thus, by their clear

terms, these statutory provisions do not apply to Trigon’s business

decisions.

The issue is thus, whether § 38.2-3408, which applies to accident

and sickness insurance companies, creates a private cause of action.

For the following reasons, we hold that Virginia would not recognize

a private cause of action under this code section. The section reads,

in relevant part, "[i]f an accident and sickness insurance policy pro-

vides reimbursement for any service that may be legally performed by

a person licensed in this Commonwealth as a chiropractor . . . reim-

bursement under the policy shall not be denied because the service is

rendered by the licensed practitioner." Va. Code Ann. § 38.2-3408.

The code section itself does not include an enforcement mechanism,

but § 38.2-200 explains that the "[State Corporation] Commission is

charged with the execution of all laws relating to insurance and insur-

ers." Va. Code Ann. § 38.2-200. Section 38.2-221 grants the Commis-

sion the power to levy and enforce penalties against insurers for

violations of the insurance code. Va. Code Ann. § 38.2-221. That sec-

tion, however, also states that the "power and authority conferred

upon the Commission by this section shall be in addition to and not

in substitution for the power and authority conferred upon the courts

by general law to impose civil penalties for violations of the laws of

this Commonwealth." Va. Code Ann. § 38.2-221.

We have previously stated that "federal courts should be reluctant

to read private rights of action into state laws where state courts and

state legislatures have not done so. Without clear and specific evi-

22 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

dence of legislative intent, the creation of a private right of action by

a federal court abrogates both the prerogatives of the political

branches and the obvious authority of states to sculpt the content of

state law." A & E Supply Co. v. Nationwide Mut. Fire Ins. Co., 798

F.2d 669, 674 (4th Cir. 1986). Applying this test, we held that the Vir-

ginia Unfair Trade Practices Act (UTPA) did not create a private

cause of action because it lacked explicit language creating such an

action. The Virginia UTPA contained a statutory provision similar to

§ 38.2-221,19 and we explained that it "[did] not create any new rights

of action but instead preserve[d] any existing right of action that an

injured person may have against a wrongdoer." Id. at 674 n.5. We

have found no Virginia cases since A & E Supply that call this under-

standing into question.

Like the Virginia UTPA, § 38.2-3408 does not create a private

right of action because it does not contain any specific statutory lan-

guage creating such an action. The existence of § 38.2-221 does not

evince a legislative intent to create private rights of action under the

insurance code. Rather, as we explained in A & E Supply, that statu-

tory provision only leaves in place pre-existing statutory and

common-law rights of action.

Accordingly, the district court was correct in dismissing American

Chiropractic’s claim under the Virginia insurance equality laws.

V.

Count Three

(RICO)

American Chiropractic’s final contention of error relating to the

substantive holdings of the district court is that the district court erred

19

The provision at issue in A & E Supply read that "no order of the

Commission under this article shall in any way relieve or absolve any

person affected by such order from any liability under any other laws of

this Commonwealth." A & E Supply Co. v. Nationwide Mut. Fire Ins.

Co., 798 F.2d 669, 674 n.5 (4th Cir. 1986) (quoting Va. Code Ann.

§ 38.1-57.1)).

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 23

in finding that its RICO claim was preempted by the McCarran-

Ferguson Act and dismissing that claim pursuant to Rule 12(b)(6).20

As stated above, we review de novo a complaint for failure to state

a claim and "take all allegations as admitted and examine whether the

plaintiff can prove any set of facts that would entitle him to relief."

Anderson v. Found. for Advancement, Educ. and Employment of Am.

Indians, 155 F.3d 500, 505 (4th Cir. 1998). "Federal ‘notice’ pleading

standards require that the complaint be read liberally in favor of the

plaintiff." Id. For the reasons that follow, we agree that American

Chiropractic’s claim is not preempted by the McCarran-Ferguson Act,

but nonetheless affirm the district court’s dismissal of this count

because American Chiropractic failed to allege a claim for mail fraud

or wire fraud and, accordingly, failed to state a claim for a RICO vio-

lation.

A.

The McCarran-Ferguson Act provides that "[n]o Act of Congress

shall be construed to invalidate, impair, or supersede any law enacted

by any State for the purpose of regulating the business of insurance."

15 U.S.C.A. § 1012(b) (West 1997). The McCarran-Ferguson Act

does not apply to federal laws that are specifically targeted at the

business of insurance. Id. Trigon argues that applying RICO to Amer-

ican Chiropractic’s claims would invalidate, impair or supersede Vir-

ginia’s insurance code, found at Title 38.2 of the Code of Virginia.

For a federal law to be preempted by McCarran-Ferguson: (1) the

state law in question must be enacted for the purpose of regulating the

business of insurance; (2) the federal law must not be specifically

related to the business of insurance; and (3) the federal law must

invalidate, impair or supersede the state law in question. Humana,

Inc. v. Forsyth, 525 U.S. 299, 307 (1999). The second factor is easily

satisfied because the Supreme Court has held that "RICO is not a law

that specifically relates to the business of insurance." Humana, 525

U.S. at 307 (quotation marks omitted). Thus, we are left to decide

whether Title 38.2 is a law enacted for the purpose of regulating the

20

As discussed infra, in its RICO claim, American Chiropractic alleged

that Trigon engaged in a pattern of racketeering activity including mail

fraud, wire fraud, and extortion.

24 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

business of insurance and, if so, whether RICO impairs, invalidates

or supersedes its operation.

We have little difficulty concluding that Title 38.2 is a set of laws

enacted for the purpose of regulating the business of insurance. The

Supreme Court has stated that "[s]tatutes aimed at protecting or regu-

lating this relationship [between insurer and insured], directly or indi-

rectly are laws regulating the ‘business of insurance.’" SEC v. Nat’l

Securities, Inc., 393 U.S. 453, 460 (1969). "[T]he focus of McCarran-

Ferguson is upon the relationship between the insurance company and

its policyholders . . . ." United States Dep’t of Treasury v. Fabe, 508

U.S. 491, 501 (1993). Accordingly, the McCarran-Ferguson Act

encompasses "laws that possess the ‘end, intention, or aim’ of adjust-

ing, managing, or controlling the business of insurance." Id. at 505.

Applying these standards, Title 38.2 of the Code of Virginia, specifi-

cally §§ 38.2-200, 38.2-221 and 38.2-3408 at issue here, is a set of

laws enacted for the purpose of regulating the business of insurance.

Title 38.2 is limited to insurance companies and creates a comprehen-

sive network of statutory provisions aimed at controlling and manag-

ing the business of insurance. For instance, § 38.2-3408, by requiring

insurers to provide reimbursement for all providers of covered ser-

vices, helps to manage the relationship between the policyholder and

the insurance company by ensuring that if a particular service is cov-

ered by an insurance company, the policyholder can seek treatment

from any provider able to perform that service.

Accordingly, we next must decide whether allowing a RICO claim

to proceed against an insurance company would "invalidate, impair,

or supersede" Virginia’s insurance code. The Supreme Court recently

considered a similar question: whether RICO invalidated, impaired or

superseded Nevada’s laws regulating insurance. Humana, 525 U.S. at

307. In Humana, the Court defined "invalidate" as "to render ineffec-

tive, generally without providing a replacement rule or law," and "su-

persede" as "to displace (and thus render ineffective) while providing

a substitute rule." Id. Using these definitions, it is clear that, as in

Humana, RICO’s application would neither "invalidate" nor "super-

sede" Virginia law.21

21

The district court relied heavily on Ambrose v. Blue Cross & Blue

Shield of Va., Inc., 891 F. Supp. 1153 (E.D. Va. 1995), aff’d 95 F.3d 41

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 25

Thus, the key question, as in Humana, is whether RICO’s applica-

tion to Trigon’s alleged conduct would "impair" Virginia’s law. In

holding that RICO did not impair Nevada’s law, the Supreme Court

stated that

When federal law does not directly conflict with state regu-

lation, and when application of the federal law would not

frustrate any declared state policy or interfere with a State’s

administrative regime, the McCarran-Ferguson Act does not

preclude its application.

Id. at 310. The only difference between the Nevada laws considered

in Humana and the Virginia laws at issue in this case is that the

Nevada laws explicitly provided for a private right of action, whereas

the Virginia laws, as discussed supra, Part IV, do not. The district

court found this difference dispositive, holding that application of

RICO would convert Virginia’s system of public redress into a federal

system of private redress and thus that RICO would impair, invali-

date, and supersede Virginia law. Am. Chiropractic Ass’n, 258 F.

Supp. 2d at 735. We disagree.

Instead, we agree with the Tenth Circuit’s resolution of this issue

in Bancoklahoma Mortgage Corp. v. Capital Title Co., 194 F.3d 1089

(10th Cir. 1999). The Missouri insurance laws at issue in that case,

like the Virginia insurance laws at issue here, did not provide for a

private right of action. The court nonetheless concluded that Humana

compelled a holding that the RICO claims were not barred by the

McCarran-Ferguson Act. Id. at 1099. The court held

RICO "advances" Missouri’s "interest in combating insur-

ance fraud" and "does not frustrate any articulated [Mis-

souri] policy." Although Missouri does not provide a private

cause of action under its [insurance laws], it does allow

causes of action under other state law. See Mo. Rev. Stat.

(4th Cir. 1996) (unpublished per curiam opinion). Because Ambrose was

decided before the Supreme Court’s decision in Humana, Inc. v. Forsyth,

525 U.S. 299 (1999), and because the district court in Ambrose applied

different definitions for the statutory terms than did the Humana Court,

that decision is not helpful to our decision today.

26 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

§ 375.944(4) (1991). Therefore, the McCarran-Ferguson Act

does not bar [the] RICO claims.

Id. (quoting Humana, 525 U.S. at 314); see also Humana, 525 U.S.

at 312 ("Moreover, the [Nevada] Act is not hermetically sealed; it

does not exclude application of other state laws, statutory or deci-

sional."); Sabo v. Metropolitan Life Ins. Co., 137 F.3d 185 (3d Cir.

1998) (holding that RICO does not impair a state insurance law that

permits private rights of action under other state laws). But see

LaBarre v. Credit Acceptance Corp., 175 F.3d 640 (8th Cir. 1999)

(holding that the lack of a private right of action in the state insurance

laws was dispositive without considering whether the statute at issue

permitted the application of other state laws to the conduct of insur-

ers).

RICO furthers Virginia’s interest in policing insurance fraud and

misconduct and does not frustrate any declared state policy. Although

RICO’s damage provisions are admittedly more severe than many

state laws, RICO does not interfere with Virginia’s administrative

scheme. Moreover, as discussed in Part IV, although Virginia’s insur-

ance laws do not create private rights of action, § 38.2-221 allows for

other state laws to apply to the conduct of insurers.22 Va. Code Ann.

§ 38.2-221 (The "power and authority conferred upon the Commis-

sion by this section shall be in addition to and not in substitution for

the power and authority conferred upon the courts by general law to

impose civil penalties for violations of the laws of this Common-

wealth."). We agree with the Tenth Circuit that in such a situation,

Humana compels a conclusion that American Chiropractic’s RICO

claim was not barred by the McCarran-Ferguson Act.

B.

Although we disagree with the reasoning of the district court, we

can affirm the dismissal of the complaint "on any basis fairly sup-

ported by the record." Eisenberg v. Wachovia Bank, N.H., 301 F.3d

220, 222 (4th Cir. 2002). Perhaps anticipating our conclusion in Part

22

For example, in this case American Chiropractic asserted state law

claims for tortious interference with a business relationship, common law

and statutory conspiracy, and breach of contract.

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 27

V.A., Trigon has argued in the alternative that we should affirm the

12(b)(6) dismissal of the RICO claim because American Chiropractic

has failed to state a claim under RICO. RICO provides, in pertinent

part, that "[i]t shall be unlawful for any person who has received any

income derived, directly or indirectly, from a pattern of racketeering

activity . . . to use or invest, directly or indirectly, any part of such

income, or the proceeds of such income . . . [in] the establishment or

operation of, any enterprise which is engaged in, or the activities of

which affect, interstate or foreign commerce." 18 U.S.C.A. § 1962(a).

"Any person injured in his business or property by reason of a viola-

tion of section 1962 of this chapter may sue . . . and shall recover

threefold the damages he sustains and the cost of the suit, including

a reasonable attorney’s fee." 18 U.S.C.A. § 1964(c).

A plaintiff bringing a civil RICO action under § 1964(c) must ade-

quately plead at least two predicate acts of racketeering that form a

"pattern of racketeering." 18 U.S.C.A. § 1961(5). Private civil RICO

suits may be brought regardless of whether the government chooses

to prosecute the criminal RICO violation. Sedima, S.P.R.L. v. Imrex

Co., Inc., 473 U.S. 479, 493 (1985). Here, American Chiropractic’s

complaint stated that Trigon committed mail fraud, wire fraud, and

extortion.23 All three qualify as "racketeering activity," see 18

U.S.C.A. § 1961(1), but Trigon contends that American Chiropractic

cannot state a claim for any of those predicate acts.

We consider first the alleged mail and wire fraud. The federal mail

and wire fraud statutes prohibit the use of the mails or interstate wires

in furtherance of schemes to defraud. 18 U.S.C.A. §§ 1341, 1343

(West 2000). For the government to obtain a conviction for mail or

wire fraud it must prove (1) a scheme disclosing an intent to defraud;

and (2) the use, respectively, of the mails or interstate wires in fur-

therance of the scheme. See Chisolm v. Transouth Fin. Corp., 95 F.3d

331, 336 (4th Cir. 1996). In a prosecution for mail or wire fraud, the

government is not required to show reliance on any misrepresentation.

23

American Chiropractic also alleged the predicate act of securities

fraud in its complaint, but it did not pursue that claim because Trigon

previously had not been convicted of securities fraud, as required by 18

U.S.C.A. § 1964(c) (West 2000).

28 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

To recover civil RICO damages, however, an individual must also

allege that he was injured "by reason of" the pattern of racketeering

activity. Id.; see also 18 U.S.C.A. § 1964(c). To meet this burden with

respect to mail fraud and wire fraud, a plaintiff must "plausibly allege

both that [he] detrimentally relied in some way on the fraudulent

mailing [or wire] . . . and that the mailing [or wire] was a proximate

cause of the alleged injury to [his] business or property." Chisolm, 95

F.3d at 337 (emphasis added). The alleged fraud "must be a ‘classic’

one[,] . . . the plaintiff must have justifiably relied, to his detriment,

on the defendant’s material misrepresentation." Id. American Chiro-

practic’s complaint states that Trigon committed mail and wire fraud

by representing, in its "Ancillary Professional Provider Agreement,"

that it reimburses healthcare providers pursuant to the Federal

Resource Based Relative Value Scale (RBRVS).24 The complaint

stated that chiropractors justifiably relied upon this alleged misrepre-

sentation in deciding to enter into provider agreements with Trigon

and that the chiropractors were injured because Trigon does not, in

fact, reimburse chiropractic services pursuant to the RBRVS.25 Trigon

entered the Ancillary Professional Provider Agreement in full to sup-

port its motion to dismiss.

Although as a general rule extrinsic evidence should not be consid-

ered at the 12(b)(6) stage, we have held that when a defendant

attaches a document to its motion to dismiss, "a court may consider

it in determining whether to dismiss the complaint [if] it was integral

to and explicitly relied on in the complaint and [if] the plaintiffs do

not challenge its authenticity." Phillips v. LCI Int’l Inc., 190 F.3d 609,

618 (4th Cir. 1999); see also Parrino v. FHP, Inc., 146 F.3d 699, 705-

06 (9th Cir.1998). As the Third Circuit has explained

24

The RBRVS is the relative value scale used by Medicare in setting

its reimbursement rates for providers under that program.

25

At oral argument before this court, counsel for American Chiroprac-

tic also alleged that Trigon committed mail fraud by telling its plan

enrollees that healthcare providers were reimbursed in accordance with

Medicare rates. The district court previously had held that American Chi-

ropractic lacked standing to advance the claims of individual patients,

and American Chiropractic did not appeal that ruling. Thus, the argument

that Trigon committed mail fraud against its enrollees is not properly

before this court.

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 29

The rationale underlying this exception is that the primary

problem raised by looking to documents outside the

complaint—lack of notice to the plaintiff—is dissipated

"[w]here plaintiff has actual notice . . . and has relied upon

these documents in framing the complaint." What the rule

seeks to prevent is the situation in which a plaintiff is able

to maintain a claim of fraud by extracting an isolated state-

ment from a document and placing it in the complaint, even

though if the statement were examined in the full context of

the document, it would be clear that the statement was not

fraudulent.

In re Burlington Coat Factory Securities Litigation, 114 F.3d 1410,

1426 (3d Cir. 1997) (quotation marks omitted).

As stated above, American Chiropractic explicitly referred to the

Ancillary Professional Provider Agreement, and its mail and wire

fraud claims are based on the alleged misrepresentation made in that

document. In addition, American Chiropractic does not contest the

authenticity of the documents. Accordingly, we can consider those

documents at the 12(b)(6) stage of the litigation.

The Ancillary Professional Provider Agreement states, in part, that

"[m]ost Trigon fees are based upon external benchmarks of relative

value, for example, the [RBRVS]." (J.A. at 156.) Thus, American

Chiropractic alleges, Trigon has misled chiropractors into believing

that their reimbursement would be based upon Medicare’s reimburse-

ment system. In full, however, the Ancillary Professional Provider

Agreement states that

Trigon’s fee schedules represent the maximum Allowable

Charge for each covered service that corresponds to a sin-

gle service code. The preponderance of valid service codes

[are] from Current Procedural Terminology (CPT), HCFA

Common Procedural Coding System (HCPCS), American

Dental Association (ADA), or National Drug Codes (NDC).

For covered services represented by a single code, the maxi-

mum Allowable Charge is the fee schedule amount deter-

mined by Trigon in its sole discretion or your usual charge

for the service, whichever is less. Most Trigon fees are

30 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

based upon external benchmarks or relative value, for

example, the Federal Resource Based Relative Value Scale

(RBRVS), Average Wholesale Price (AWP), American

Society of Anesthesiologists (ASA), relative value and Med-

icare’s laboratory and Durable Medical Equipment (DME)

fees.

(J.A. at 156 (footnote omitted) (emphases added).)

The Agreement comes with Trigon’s fee schedule attached. Rele-

vant here, Trigon’s fee schedule includes the maximum allowable

charge for the four service codes associated with spinal manipula-

tions. The fee schedule discloses that Trigon reimburses providers

who perform spinal manipulations the same amount regardless of how

many "regions" of the spine are manipulated. The RBRVS, however,

provides a higher reimbursement when more spinal regions are

manipulated. It is undisputed that Trigon began this reimbursement

practice in 1997.

We conclude that American Chiropractic, as a matter of law, could

not justifiably rely on the statement that "most" Trigon fees are based

on the RBRVS for two reasons. First, the statement only provides that

"most" fees are based on the external benchmark of the RBRVS. The

term "most" indicates that some of Trigon’s reimbursement payments

were not based upon the RBRVS. Second, the remainder of the docu-

ment clearly explains that Trigon’s fee schedule represents the maxi-

mum allowable charge for a service. Moreover, the fee schedule

discloses that Trigon does not follow the RBRVS when reimbursing

for spinal manipulations. Because the fee schedule discloses that Tri-

gon does not reimburse for spinal manipulation services according to

the RBRVS, American Chiropractic could not have justifiably relied

on Trigon’s alleged misrepresentation that most of Trigon’s fees were

based on the RBRVS. Accordingly, American Chiropractic has failed

to plausibly allege that it justifiably relied on a misrepresentation by

Trigon.

To withstand a motion to dismiss for failure to state a RICO claim,

a plaintiff must plausibly allege at least two predicate acts of racke-

teering. As noted above, American Chiropractic’s complaint alleged

three predicate acts — mail fraud, wire fraud, and extortion. Because

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 31

we have held that American Chiropractic failed to state a claim for

mail or wire fraud, it has failed to allege at least two predicate acts

of racketeering, and we need not address whether it properly alleged

a claim of extortion.

Although, in light of Humana, Inc v. Forsyth, American Chiroprac-

tic’s claim is not preempted by the McCarran-Ferguson Act, we

affirm the dismissal of this count because American Chiropractic

failed to state a claim for a RICO violation.

VI.

Finally, American Chiropractic argues that the district court abused

its discretion in handling discovery in this case by refusing to extend

the temporal scope of discovery to include events prior to 1996 and

by failing to lengthen discovery after Trigon turned over documents

relating to the MCAP in a tardy manner.26 "We afford substantial dis-

cretion to a district court in managing discovery and review discovery

rulings only for abuse of that discretion." United States ex rel. Becker

v. Westinghouse Savannah River Co., 305 F.3d 284, 290 (4th Cir.

2002), cert. denied, 123 S. Ct. 1929 (2003).

Discovery commenced in September 2001, soon after the district

court addressed Trigon’s motion to dismiss, and the parties agreed in

writing to limit discovery requests to events occurring after January

1, 1996.27 Discovery lasted ten months, concluding on June 28, 2002.

26

American Chiropractic raises four other arguments relating to the

conduct of discovery. Those arguments are that the district court abused

its discretion by: (1) failing to require Trigon to produce the identity of

all medical doctors employed by Trigon; (2) refusing to compel Trigon

to turn over information regarding any service code that paid a lower

reimbursement amount to limited-license practitioners than to medical

doctors; (3) by refusing to compel Trigon to turn over more of Dr. Col-

ley’s file; and (4) by refusing to allow American Chiropractic to conduct

another Rule 30(b)(6) deposition. We have examined these issues care-

fully and conclude that they are without merit; thus, we affirm those rul-

ings as well.

27

The parties agreed that this time limit could be revised by negotia-

tions in good faith if American Chiropractic could show a valid basis for

requesting additional information.

32 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

On June 14, 2002, just prior to the close of discovery, Trigon turned

over documents relating to Dr. Colley and his involvement with the

MCAP. Trigon admitted that despite its efforts to locate the docu-

ments, they had been "overlooked" and offered to cure the late pro-

duction by allowing American Chiropractic to depose Dr. Colley after

the stated discovery deadline passed. Trigon also permitted American

Chiropractic to depose two representatives of medical societies with

members on the MCAP after the close of discovery.

American Chiropractic’s first assertion is that the district court

abused its discretion by limiting the scope of discoverable materials

to those created after January 1, 1996. By doing so, American Chiro-

practic contends, the district court rendered American Chiropractic

unable to pursue key avenues of investigation in the case, including

the $500 coverage cap instituted in 1988 and the MCAP meeting from

October of 1995 where the Low Back Guideline was approved.

Unfortunately for American Chiropractic, this limitation was imposed

not by judicial fiat, but by the mutual agreement of the parties. The

record shows that American Chiropractic and Trigon agreed, in writ-

ing, to limit discovery to events arising after January 1, 1996 unless,

in good faith, a more expansive time period was necessary. American

Chiropractic failed to contact Trigon to discuss expanding the time

period and did not mention the limiting nature of the agreement to the

district court until June 18, 2002, a mere ten days before the close of

discovery. The district court found that expanding the time period to

events before January 1, 1996, would be "overly burdensome" to Tri-

gon and refused American Chiropractic’s invitation to do so. (J.A. at

1137.) We cannot say the district court abused its discretion by refus-

ing, at such a late date, to expand the scope of discovery beyond that

mutually agreed to by the parties.

Next, American Chiropractic contends that the district court abused

its discretion by refusing to extend the end-date of discovery when

Trigon turned over documents relating to the Low Back Guideline

and the MCAP’s October 25, 1995 meeting just before the close of

discovery. Trigon does not dispute that it was dilatory in turning over

those particular documents; in a letter to American Chiropractic, it

admitted that "despite Trigon’s good faith efforts to produce all of the

relevant documents, these documents were not found and were over-

looked during the previous document productions. This was admit-

AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE 33

tedly a mistake by Trigon." (J.A. at 5296.) Despite this admitted

mistake, the district court denied American Chiropractic’s request for

more discovery and found that "any mistakes on Trigon’s part have

not caused prejudice." (J.A. at 1131.)

While we are not sure that Trigon’s late production of these docu-

ments did not have the potential to cause prejudice, two factors lead

us to conclude that the district court did not abuse its discretion in

refusing to extend discovery. First, Trigon offered to cure the late pro-

duction by allowing American Chiropractic to conduct an additional

deposition of Dr. Colley after the close of discovery. Second, Trigon

allowed American Chiropractic to take depositions of two of the med-

ical societies with members on the MCAP after the close of discovery

as well.

Additionally, if American Chiropractic felt that it had insufficient

time to conduct discovery given the late production of documents,

and/or that Trigon was not negotiating in good faith an agreement for

further discovery, it could have filed a Rule 56(f) motion in response

to Trigon’s motion for summary judgment.28 We have held that "[i]f

a party believes that more discovery is necessary for it to demonstrate

a genuine issue of material fact, the proper course is to file a Rule

56(f) affidavit." Harrods Ltd. v. Sixty Internet Domain Names, 302

F.3d 214, 244 (4th Cir. 2002). This American Chiropractic did not do.

In sum, we find that the district court did not abuse its discretion in

its discovery rulings.

VII.

In conclusion, we affirm the district court’s grant of summary judg-

ment on American Chiropractic’s § 1 Sherman Act claim, Virginia

civil and common law conspiracy claims, and tortious interference

claim. We also affirm the district court’s dismissal of American Chi-

ropractic’s claim under the Virginia insurance equality laws for fail-

28

Federal Rule of Civil Procedure 56(f) provides that "[s]hould it

appear from the affidavits of a party opposing [a summary judgment]

motion that the party cannot for reasons stated present by affidavits facts

essential to justify the party’s opposition, the court may . . . order a con-

tinuance to permit . . . discovery to be had."

34 AMERICAN CHIROPRACTIC v. TRIGON HEALTHCARE

ure to state a claim. Although we disagree with the district court’s

holding that American Chiropractic’s RICO claim is preempted by

the McCarran-Ferguson Act, we affirm the district court’s dismissal

of that claim because American Chiropractic has failed to state a

claim for a RICO violation. We also find that the district court’s dis-

covery rulings were not an abuse of discretion.

AFFIRMED