Opposition Brief — Riverview Health Institute LLC v. Medical Mutual of Ohio

No. 09-1575 : GRICE Or THE <1

IN THE

Supreme Court of the Guited States

RIVERVIEW HEALTH INSTITUTE LLC, ET AL.,

etitioners,

V.

MEDICAL MUTUAL OF OHIO, ET AL..,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Sixth

Circuit

RESPONDENTS’ BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

Pierre H. Bergeron James I). ‘Thomas*

SQUIRE, SANDERS & SQUIRE, SANDERS &

DrmMPpsky LLP DEMPSEY LLP

1201 Pennsylvania Ave. NW 200 South Biscayne

Suite 500 Boulevard, Suite 4100

Washington, D.C. 20004 Miami, Florida 8313]

(202) 626 6600 (306) 577-7050

jdthomas@ssd.com

Stephen F. Gladstone

Michael E. Smith Philp M. Oliss

Frantz Ward LLP SQUIRE, SANDERS &

2500 Key Tower DEMPSEY LLP

127 Public Square 4900 Key Tower

Cleveland, Ohio 44114 127 Public Square

(216) 515-1660 Cleveland, Ohio 44114

(216) 479-8500

Counsel for Respondents *Counsel of Record

August 27, 2010

re RE Be

WILSON-EPES PRINTING CO., IN (202) 789 0096 -—- WASHINGTON, D C. 20007

QUESTIONS PRESENTED

The questions presented are:

(1) Whether the Sixth Circuit properly applied the

test set forth in U.S. Dept. of the Treasury v. Fabe, 508

U.S. 491 (1993) and Union Labor Life Ins. Co. v.

Pireno, 458 U.S. 119 (1982) in determining that the

Ohio laws poverning Petitioners’ allegations that

Kespondents wrongly delayed, diminished, and denied

payment of insurance claims were enacted for the

purpose of regulating the “business of insurance.”

and

(2) Whether the Sixth Circuit properly applicd

the test set forth in Jlumana, Inc. v. Forsyth, 525 U.S

299 (1999) 1n determining that Petitioners’ claims

under the Racketeer Influenced and Corrupt

Organizations Act ( RICO’), 18 U.S.C. § 1961 et seq.,

would impair Ohio's comprehensive = regulatory

scheme to regulate the business of insurance

RULE 29.6 CORPORATE

DISCLOSURE STATEMENT

No parent or publicly held company owns 10

percent or more of the stock in Respondent Medical

Mutual of (ohio

TABLE OF CONTENTS

Pape

Questions Presented

Rule 29.6 Corporate Disclosure Statement 1

‘Table of Content 11)

‘Table of Authoriti A

Introduction |

ptutement of the Case }

i sae Lua be kvround

Latutory iM rearme work >

UA B.,tdTd hoy By myiht Lrie |? Lition 1()

| The Sixth Circuit Properly Followed and

Applied this Court Vrecedent

(concerning: the Musine of insurance

iz | }¢)

1 | Phe Test Set Forth in /lumana |]

hollowed [by Iibvery Circuit |

Lire CPnce Oy Vb ence qo] the mtute

ie Mion j

if Statutory Kivht of Private Action

ind Common Law Khemedics 1G

( (Other State Law | ‘/

Dy Damape 1%

hte ly) mnce state In ure! Re

TABLE OF AUTHORITIES

Case: Pape

American Chiro. vo. Tripon tlealthcare

$67 bd 212 (Ath Cir. 2004) 14

Bancoklahoma Mortgage Corp. v. Capital Title Co

194 bod 1089 (Oth Cir, 1999) 14

ftiowen vo. Massachusetts

14 J ; 4/9 (198%) Z

llamana brie I horsyth,

yyy 29d € 159593) pa Liii

Kenty vo. Thank One. Columbus. N.A

9% ik 4d 444 (6th Cir. 1996) 14

Laltarre { (lredul Acceptance (lorp

hod 640 (Kth Gir, 1999) 14

leiwerview Health Institute. LLC vo. Medical Mutual

Of CANO GOI | $1 O05 (6th ¢ IT 2010) 14

(. Paul ure & Marine In Clo. ov. barry

13% US. $1] C199 78) e

(/nion Labor Life In . 1 frareno

16% Ub. T19 (1982) passim

United States v. South-lastern Underwriters Assn,

322 U.S. 533 (1944)

United States Dep't of Treasury ov. Fabe,

508 US. 491 (1993)

Weiss v. first Unum Life Ins. Co

482 F.3d 254 (3d Cir. 2007)

Statutes & Rules

M6 USO. § 196)

Ohio Rev. Code § 6901.48 1

passim

PpPassti

Passtiil

RESPONDENTS’ BRIEF IN OPPOSITION

INTRODUCTION

The Petition does not even begin to present any

question worthy of this Court’s review. Indeed, the

Petition fails to identify any new rule of law that this

Court should impose. Kather, it quibbles with the

Sixth Circuit's application of well-settled rules of law

and urges this Court to more finely “parse” the

allegations in the complaint These types of

questions are quintessentially ill-suited for this

Court’s review. 5. Ct. R. 10

(‘loser inspection of the questions presented by

the Petition reveals further obstacles to review

Petitioners self-limit the scope of the first question to

“nsurance Companies in the State of Ohio” (Pet. at 1)

hardly a question of national significance. Indeed,

they conecede that this Court has repeatedly ¢cxamined

the “business of insurance” requirement set forth in

the McCarran-Ferguson Act, 15 U.S.C. & 1012(b), and

they acknowledge that the Sixth Circuit relied on

Supreme Court precedent when it determined that

the “business of insurance” requirement was satisfied

here. Petitioners simply do not care for the result.

Yet Petitioners’ surprise at the outcome 1s

difficult to square with their concession that the

complaint actually pleads conduct that “comes within

the ‘business of insurance.” (Pet. at 19) ‘This

concession reveals the fact-dependent nature of the

inquiry they invite this Court to undertake. [ven if

the Court were nevertheless inclined to go down that

path, its opinion would be one of limited utility

constrained to insurance companies in Ohio that have

allegedly perpetrated a scheme almost identical to

-

the conduct alleged here. Understandably,

Petitioners never had much confidence in this

argument in the first place; they did not bother to

raise it before the district court except by a passing

reference ip a footnote.

Petitioners’ second question fares no better. ‘The

purported “circuit split” they depict is illusory. This

Court set forth a standard for “impairment” under

McCarran-Ferguson in Humana, Inc. v. Forsyth, 525

US. 299 (1999). The circuits Gneluding the Sixth

Circuit’ here) have apphed the ffumana test to

varying fact patterns under several different state

law ansurance regimes. To the extent the ultimate

outcomes differ, any such discrepancies can be traced

to substantive differences in the laws of the

respective States, the facts, and the application of

those facts to the state laws presented. The Court

need not take this case to compare and contrast

Ohio's insurance regime with that of New Jersey or

other states.

Moreover, this is the only case among those cited

by Petitioners where the State itself submitted an

amicus brief specifically positing that appheation of

Petitioners’ RICO allegations would iumpatr Ohio's

insurance = reyulations. The Sixth Circuit's

interpretation of Ohio law is entitled to deference by

this Court. See, e.g., Bowen v. Massachusetts, 487

U.S. 679, 908 (1988) (“We have a settled and firm

policy of deferring to regional courts of appeals in

matters that involve the construction of state law.”)

The Petition should be demed

3

STATEMENT OF THE CASE

Factual Background

Respondent Medical Mutual of Ohio! (Medical

Mutual”), is a mutual company that underwrites and

provides pvroup and individual health insurance.

Petitioners Riverview Health Institute, LLC,

Middletown Surgical Associates, Inc., d/b/a/ The

Surgical Weight Loss Center, and Oak Leaf Health

Group LLC, d/b/a’ St. Elizabeth’s Laboratories

(collectively “Riverview”), are health-care providers of

hospital, physician and laboratory services that

provide surgical weight loss procedures to patients at

a facility in Dayton, Ohio.

This case does not arisc, however, from any direct

relationship between Medical Mutual and Riverview.

Rather, this case arises from the relationship

between Medical Mutual and certain’ of its

policyholders who allegedly assigned to Riverview

their nights to receive benefits from Medical Mutual

for medical services that Riverview provided.

Riverview had no direct “provider” relationship

with Medical Mutual, meaning that Riverview

operates “exclusively on an out-of-network basis.”

(Pet. App. 67a). Prior to performing any medical

services for Medical Mutual policyholders, Riverview

' Petitioners alao named in their Complaint Respondents

Kent W. Clapp, who is now deceased but at the time the

Complaint was filed was Medical Mutual's Chairman, President

and CKO, David Quiring, Medical Mutual’s Vice President of

Claims Operations, and Kathy Schneeberger, an employee in

Medical Mutual's financial investigation unit. The Reapondents

are referred to collectively as “Medical Mutual” throughout this

bref

4

requires the insured patient to execute an

“Assignment of Medical Benefits,” which purports to

assign to Riverview all of the insured’s riphts to

receive benefit payments from Medical Mutual. (Ud.

at 67a-G8a). The only contact between Riverview and

Medical Mutual alleged in the Complaint is that

Riverview conferred with representatives from

Medical Mutual to ensure the proposed services

would be covered by the paticnt-insured’s out-of

network insurance coverage, and that from time to

time, Medical Mutual and Riverview would negotiate

and settle the amounts that Medical Mutual would

pay for a given procedure. (Ud. at 80a, 83a, 85a).

This dispute began in August 2006 when Medical

Mutual notified Riverview that the’ Financial

Investigations Department at Medical Mutual had

performed a review of claims and clinical data that

revealed systemic and fraudulent billing practices on

the part of Riverview. (Pet. App. Vila). Riverview

eventually responded by requesting more details

regarding the claims that Medical Mutual alleged

Kiverview had improperly submitted. (/d. at’ 72a).

Medical Mutual rephed in January 2007 with a letter

detailing the claims that Riverview had improperly

submitted to Medical Mutual, causing Medical

Mutual a loss of $796,692.41. Ud. at 72-73a)

In response, and in an effort to avoid Medical

Mutuals claims for damages arising from Riverview’s

fraudulent claim submissions, Riverview launched a

preemptive lawsuit purporting to assert’ three

different federal RICO’ claims To satisfy the

predicate act requirement for its RICO claims,

Riverview alleged that Medical Mutual “acted to

delay, diminish and deny payment of the lawful

oO

Claims of patient-insureds as submitted by out-of

network health providers . . . through a scheme or

artifice, utilizing the U.S. mail and demonstrating a

specific intent to defraud the patient-insureds and

out-of-network health providers . .. ” (Pet. App.

&la). Riverview also alleged that “as part of its

regular way of doing business,” Medical Mutual

“violated provisions of Ohio’s ‘Prompt Pay Act’

(O.R.C. § 3901.381, et seq.), utilizing the mails and

demonstrating a specific intent to defraud patient

insureds and out-of-network providers.” (Ud. at 82a).

For each RICO claim, Riverview based its alleged

standing to recover damages solely on its status as an

assignee of the medical insurance benefits resulting

from the “Assignment of Medical Benefits” Riverview

required its patient-insureds to execute. Ud. at Q3a-

Vda).

Medical Mutual moved to dismiss the RICO

Claims on a two-fold) basis: (1) pursuant to the

McCarran-Ferguson Act, the RICO allegations were

reverse preempted by Ohio laws regulating the

business of insurance; and (2) the Complaint failed to

adequately plead the required elements of RICO (an

argument never reached by the district court). As the

Sixth Circuit) succinetly explained: “Reverse

preemption 1s a form of inverse preemption that

prevents a generally applicable federal law from

inadvertently invalidating, impairing, or superseding

state laws enacted to regulate the business of

insurance.” (Pet. App. 6a).

In its opposition brief, Riverview addressed the

“business of insurance” requerement of McCarran

Ferguson (which underlies the first question now

advanced in its Petition) only in a footnote, asserting

©

merely that “payment agreements with the patients,

because they do not deal with the spread of risk, are

not the ‘business of insurance ....” (Dist. Ct. Doc. 11

at 6n.5).% The balance of its argument focused on the

“ampairment” prony of McCarran-lferguson.

The district court dismissed Riverview’s RICO

claims as reverse preempted under the McCarran

Ferguson Act. (Pet. App. 47a). On appeal, the Sixth

Circuit panel unanimously affirmed. (/d. at 33a)

Before the Sixth Circuit, Riverview tried to retreat

from the fact that its RICO claims explicitly rested on

its status “as the assignees of the patient-insureds.”

(Pet. App. 93a-95a) Contrary to its Complaint,

Riverview argued for the first time that it was relyingy

“in substantial part” upon its own relationship with

Medical Mutual and was secking to enforce its own

rights, as opposed to those of the patient-insureds.

(Riverview Sixth Cir. Bro at 19). The Sixth Circuit

was unpersuaded by this recasting, finding that

Riverview'’s Complaint “focuse[d] on the idea that

Medical Mutual ‘acted to delay, diminish and deny

payment of ... lawful claims of patient insureds as

submitted by out-of-network health providers

through a scheme or artifice, utilizing the U.S. Mail

and demonstrating a specific intent to defraud the

palient-insureds and out-of-network health-care

providers.” (Pet. App. 14a). Relying on Pireno and

* Filings in the district court case, Riverview Health Inst. et

al. v. Medical Mutual of Ohvw, etal., Case No. 3-07 CV 354 (S_D

Ohio), are available on PACER at

https-//ect ohsd_uscourts gov/cpi-bin/login pl. With the exception

of the Complaint, references in this Opposition to district court

filings will be by docket entry number

Fabe, the Sixth Circuit accordingly found that

Riverviews allegations “relate to the actual

performance of the insurance contract between

Medical Mutual and its insureds, thus satisfying all

three prongs of the /zreno test.” Ud.).

Having found the business of insurance

requirement satisfied, the Sixth Circuit analyzed

each of the seven factors identified in Jiumana and

found, as the district court did, that’ Riverview’s

RICO claims would impair) Ohio's | insurance

regulatory scheme and were’ therefore reverse

preempted by McCarran-Ferguson. (Pet. App. 18a

24a). After carefully reviewing Ohio’s comprehensive

scheme for regulating the processing of insurance

claims set forth in the Ohio Prompt Pay Act, the

court found that each of the fflumana factors weighed

in favor of preemption:

We conclude that application of federal RICO in

this case would impair Ohio's insurance

reyulatory scheme. The conduct at the heart of

Plaintiffs) complaint implicates Obhnio’s — law

regarding payment of claims and the Ohio

Department of Insurance is) charged = with

administering the applicable state law. In this

case, Plaintiffs have no common law remedy or

private right of action. ‘The state RICO statute is

inapplicable and the damages available pursuant

to federal RICO would far exceed the damages

contemplated by the Oho legislature when

enacting its ansurance’ regulatory scheme.

Moreover, the State of Ohio has filed a brief as

amicus curtae in support of Defendants, arguing

that the imposition of the federal RICO statute

will impair Ohio's ability to detect insurance fraud

a

and reverse preemption will not prevent insurers

from using state or federal RICO to combat fraud.

Accordingly, Plaintiffs’ RICO claims are reverse

preempted by the McCarran-Ferguson Act and we,

therefore, affirm the district court’s dismissal of

Plaintiffs’ RICO claims.

(Pet. App. 23a-24a).

Statutory Framework

The MecCarran-Ferguson Act was enacted “to

restore the supremacy of the States in the realm of

Insurance regulation.” abe, 508 U.S. at 500.

Accordingly, the Act “precludes application of a

federal statute in face of state law ‘enacted ... for the

purpose of regulating the business of insurance,’ if

the federal measure does not ‘specifically relate to the

business of insurance,’ and would ‘invalidate, impair,

or supersede’ the State’s law.” Hlumana, 525 US. at

307 (citing abe, 508 US. 491)

Prior to United States v. South-Eastern

Underwriters Ass’n., 322 US. 533 (1944), the

issuance of policy insurance was not considered a

transaction in interstate Commerce subject to federal

regulation and, therefore, “the States enjoyed a

virtually exclusive domain over the insurance

industry.” Fabe, 508 U.S. at 499 (citing St. Paul Fire

& Marine Ins. Co. vo. Barry, 438 U.S. 531, 539 (1978)).

In South-Eastern Underwriters, however, the Court

held that insurance companies’ that conducted

substantial business across state lines were enpaped

in interstate commerce and were thus subject to

federal antitrust laws. ‘This holding was widely

considered to be a threat to state regulation of the

insurance industry, and within a year of the decision,

v

Congress enacted the McCarran-Ferguson Act. See

kabe, 508 US. at 499-500

To accomphsh its primary purpose to preserve

state regulation of the activities of insurance

companies,? McCarran-Ferguson provides for reverse

preemption by state laws regulating the business of

insurance The tripartite test for determining

Whether a federal statute is reverse preempted by

state law is well established. The threshold question

is Whether the federal statute at issue “specifically

relates to the business of insurance.” flumana, 525

U.S. at 307 (citing frabe, 508 U.S. at 501). If not, two

questions remain that, if answered in the affirmative,

compel the conclusion that the federal law at issue 1:

preempted by state law: (1) whether the state law

was “enacted ... for the purpose of regulating the

business of insurance,” and (2) whether the federal

law would “invalidate, impair, or supersede the

State’s law.” ld Riverview does not dispute that

RICO does not “specifically relate” to the business of

insurance, and thus its Petition focuses upon the two

remaining questions

Congress made clear this purpose in the first section of the

Act

Congress hereby declares that the continued regulation

and taxation by the several States of the business of

insurance 18 in the public interest, and that silence on

the part of the Congress shall not be construed to impose

any barrier to. Chie regulation or taxation of such

business by the several State:

15 U.S.C. § 1011

LO

REASONS FOR DENYING THE PETITION

8B The Sixth Circuit Properly Followed and

Applied this Court’s Precedents

Concerning The “Business of Insurance”

Test.

As acknowledged by Riverview, this Court) has

repeatedly addressed the “business of insurance’

element of McCarran-lerguson. (Pet. at 4 (collecting

cases)). With the test well-established, and having no

rule of law to offer in its stead, Riverview seeks to

distort the Sixth Circuit's opinion so as to imbue its

question presented with greater importance

Riverview's assertions that “[t}he Sixth Cireurt did

not follow Pireno and related cases, posing a conflict”

(Pet. at 17), and that the Sixth Circuit “relhed

exclusively’ on Fabe (id. at 6), are impossible to

reconcile with the Sixth Circuit’s quotation of and

reliance upon the Pireno test. (Pet. App. 12a). The

Sixth Circuit conducted its analysis of the business of

insurance requirement by: (a) quoting Pireno as

“articulatiing| three critermma that determine whether

an activity is part of the ‘business of insurance,” (b)

citing each of those criteria, and (c) concluding its

discussion of the matter by holding that Rivervicew’'s

“allegations relate to the actual performance of the

insurance contract between Medical Mutual and its

insureds, thus satisfying all three prongs of the

Pireno test.” (Pet. App. 12a-14a). Far from ignoring

or rejecting Prreno, the Sixth Circuit determined that,

under the facts alleged, the Pireno test was satisfied

The same test that the Sixth Circuit applied

(Pet. App. 12a) is the test urged by Riverview. (Pet

at 18). Because the Sixth Circuit applied the test

that Riverview requests, any quarrel by Riverview is

1]

lamated lo the appheation of — that lest.

“Misapplieation” questions are rarely of interest to

thas Court. S. Ct. R. 10.

tut even calling this a misapplication question

Jends too much credit to the Petition in’ hyht of

Kaverview's concession that the Complaint alleves

conduct on the part of Medical Mutual that “comes

within the ‘busimess of insurance.” (Pet. at 19). In

the face of this admission, particularly when

juxtaposed with the Sixth Cireuit’s application of the

legal test requested by Riverview, Riverview’s

yrievance is further delimited to a simple point: “the

Sixth Circuit failed to parse” the Complaint

sufficrently. Cd) Jt is axiomatic that it is not the

role of thas Court, the Sixth Circuit, or a district court

to “parse” a RICO complaint for isolated references

that might rehabilitate a facially deficient claim.

Petitioners neglected to undertake this task before

the district court, and their effort to do so at the Sixth

Circuit was too late in the process. In any event, the

Sixth Circuit's review of the complaint revealed that

the “conduct at the heart of Plaintulfs complaint” fell

clearly within the business of insurance. (Pet. App.

2.34).

Any “parstany|’ cxercuse by this Court) would

neither contribute anything meaningful to the body of

law onterpreting McCarran-Ferguson, nor save

Riverview's RICO claims. To illustrate the point, out

of ats entire LO4-parayraph Complaint, Riverview

identifies just six parapraphs supposedly containing

allegations outside the business of insurance. (Pet. at

19) ISurying a handful of allegations amony many

others that point an the opposite dircetion cannot

salvage Kiverview's Complaint

iZ

Rtevardless, the allegations to which Riverview

now clings do not withstand scrutiny. ‘specifically,

faiverview claims that it alleged fraud incident to

direct agreements it had with Medical Mutual, as

well as fraud committed by Medical Mutual in its

capacily a8 an insurance Claims administrator. (d.).

Whether such conduct falls outside the business of

insurance is Immaterial, however, because Riverview

expressly staked its right to recover damages for each

of its three RICO claims on its alleged status “as the

assignees of the patient-insureds who were injured in

their business and property as a result of Medical

Mutual’s alleged conduct. (Pet. App. G4a-95a). It is

beyond serious dispute that payment (or alleged non-

payment) of the patient-insureds’ medical benefits by

Medical Mutual constitutes the “business — of

insurance.” ‘That is why this issue merited only a

conclusory footnote from Riverview before the district

court. (Dist. Ct. Doc. 1) at 6 n.d).

tiverview accuses the Sixth Circuit of “wrongly

relyfing) on an impermissibly expansive reading of

this Court’s majority opinion in... Mabe... so as to

bar any application of RICO to insurance companies

in the State of Ohiol.|? (Pet. ata). That is simply not

true The Sixth Circuit specifically and = properly

applied abe and Mireno to the RICO allegations in

this case and found Riverview’s RICO claims fall

within the business of insurance: “Plaintiffs contend

that their federal RICO claims do not fall within the

ambit of the ‘business of insurance’ requirement for

reverse preemption. We disagree.” (Pet at 12a). The

Sixth Circuit's decision is fact-dependent and does

not purport to “bar any application of RICO’ to

»)

insurance companies in the State of Ohio,” as

'

supgested by Petitioners in the first question. (Pet

at)

The first question presented is Imited— to

Insurance Companies operating in Ohio, does not

present any lepval issue for this Court to resolve, and

turns on the specific facts alleged. It simply docs not

meet the high standard for certiorari

Il. The Test Set Forth In Humana Is Followed

By Every Circuit.

Sulferiny from the same flaw as the first question

presented, Riverview’s second question does not ask

this Court to issue any new rule of law. Instead, it

simply poses another misapplication question.

Moreover, this misapplication question is one steeped

in state law, and ill-suited for this Court’s review.

As Riverview points out, this Court, in /fumana,

established the “proper test” for determining when a

federal law 1s reverse preempted for impairing a state

law enacted to regulate the business of insurance.

(Pet. at &) In analyzing whether the RICO

allegations in Jlumana would impair the Nevada

statutory scheme at issue in that case, the Court

made clear that the impairment test 1s an as applied

halancing test that involves a consideration of seven

factors. See Hlumana, 525 U.S. at 303 (We hold that

RICO can be applied in this case in harmony with the

State's repulation.”); wd. at 303-04 (analyzing the

ypecific factual alleyations in the complaint); ed. at

$11 CApplying the standard just announced to the

facts of this case ....”); id. (analyzing Nevada's specific

statutory and common law remedies); ud. at 314 CIn

sum, we see no frustration of state policy in the RICO

litivation at essue here.”) (emphasis supplied as to all)

14

The Sixth Circuit balanced cach of the Humana

factors and determined that Riverview’s RICO claims

would impair Ohio’s particular statutory scheme for

regulating the business of insurance. (Pet. App. 24a)

Rivervicw's sugpvestion that the Sixth Circuit failed to

apply Humana, (Pet. at 11, 22), is incorrect: the Sixth

Carcuit cited the Humana factors and then analyzed

cach of them over the course of several pages in its

opinion.4 (Pet. App. 18a-24a)

In light of the nature of this balancing test, 1t 1s no

wonder that Riverview’s circuit split proves illusory.

Riverview posits a circuit split with the ‘Third,

fourth, and Tenth Circuits supposedly following

Humana by permitting application of RICO. to

insurance fraud, and the Sixth and Eighth Circuit

that allegedly show less fidelity to /lumana. ach of

these cases, however, examined different state

insurance schemes through the lens of /iumana. See

ltiverview Health Institute, LLC v. Medical Mutual of

Qhio, GOL F.3d 505 (th Cir. 2010) (Ohio); Weiss vu

First Unum Life Ins. Co., 482 F.3d 254 (3d Cir. 2007)

(New Jersey); American Chiro. v. Trigon Healthcare,

$67 I sd 212 (Ath Cir 2004) (Virginia);

Bancoklahoma Mortgage Corp. vo. Capital Title Co.,

194 F.3d 1089 (Oth Cir. 1999) (Missouri); LaBarre v.

175 F.Sd 640 (th Cir, 1999)

(Minnesota). That courts analyzing the laws of

Credit Acceptance Corp

’

* for similar reasons, Riverview's suggestion that the Sixth

Carcuit went astray by relying upon Kenty v. Bank One,

Columbus, N_A. 92 F 3d 484 (6th Cir. 1996) 18 unavailing. Firat,

ivermiew never argued below that /fumana overruled Kenty

(Vet at 11 nbd) Second. in the course of the Sixth Circuits

appheation of the /lumana factors, it never cites Kenty. (Pet

App 1%a-244)

different states might come to different conclusions

as to whether particular RICO allegations would

ipair state law is hardly surprising. Indeed, that

was the result preordained by //umana’s balancing

LESL.

None of the federal circuits has deseribed these

eases as being a split. In fact, Riverview’s featured

Case Weiss, properly attrmbuted the different

outcomes in these cases to variances in the laws of

the different states at issue: “[Wje find nothing in

cases from other Courts of Appeals dealing with

different state schemes pvoverning insurers that

would cause us to alter our view in this case.” 482

Kosd at 26% After surveying those cases and the

respective state laws, Weiss contrasted them with

New Jersey law: “We do not find that true of New

Jersey. Id. at 269

A review of the /lumana factors (made with

reference to Wetss) reveals both the absence of any

circuit split as well as how dependent Kiverview :

question is on the vagaries of state law

A.Presence or Absence of the § State’s

Position

A central distinction between the causes cited by

Riverview and the decision below 1s the position

taken by the State of Ohio in this case. The State of

Qhio, through its Attorney General, submitted an

amicus brief at the Sixth Circuit supporting Medical

Mutuals position. As the State of Oho explained,

the State's Department of Insurance 1s the “regulator

of the insurance industry in the State of Ohio

(Ohio Amicus Br. at 1). The Department of Insurance

has “enacted extensive rules, regulations and orders,

mecluding specific regulations pvoverning prompt

16

payment to providers and prohibiting unfair claims

practices.” Ud. at 6G). Between state statutes and

these regulations, Ohio “has a unique and complete

set of standards that pvovern the business’ of

insurance... .” QUd.). Allowing Riverview to assert

RICO claims for the same conduct covered by Ohio

statutes and remedies “would impair Ohto's

regulation of the business of insurance.” (Ud. at 7).

The State of Ohio concluded that allowing

Riverviews RICO claim would also frustrate the

Department of Insurance’s ability to combat

insurance fraud. (Ud. at 11). Recognizing that this

amicus brnefis both fatal to its Petition and fatal to

the /iumana analysis, Riverview resorts to simply

attacking the integrity of the Attorney General's

office. Repardless, this factor distinguishes the case

below from all of the cases cited by Riverview in

none of those cases did the State appear and

articulate its position on impairment. This is yet

another example of how this case differs factually

from the others highlizyhted by Riverview.

.Statutory Right of Private Action and

Common Law Remedies.

Unlike the Nevada regime at issue in fflumana,

the New Jersey regime at issue in Weiss and the Oho

regime at issue here do not allow for a private right of

action under their respective statutory regimes. See

Weiss, 442 F.3d at 264; (Pet. App. 19a). While it 1s

truce that Nevada, New Jersey, and Ohio all allow

common law claims to work in tandem with their

respective statutory schemes, the Petition ignores an

important feature that distinguishes this case from

Weiss and Humana: the Sixth Circuit expressly found

that based on the facts of this case, under Ohio law,

17

Riverview had “no common law remedies available,

which renders Ohio’s Prompt Pay Act [Riverview’s]

exclusive source of remedies.” (Pet. App. 19a).

Riverview’s disagreement with the Sixth Circuit’s

determination that Riverview had no viable fraud or

bad faith claims under Ohio law does not mean that

the Sixth Circuit transgressed Humana or created a

circuit split. The Sixth Circuit simply interpreted

state law and found that Riverview could not state a

claim.

Moreover, to even challenge the Sixth Circuit's

determination, Riverview 1s forced to take divergent

positions, simullaneously disclaiming and relying on

its alleged status as assignee of Medical Mutual's

insureds. On one side, Riverview argues that the

business of insurance requirement is not satisfied

because it brought claims on its own behalf, apart

from its alleged status as assignee of the patient-

insureds (Pet. at 5). On the other, Riverview argues

the impairment arm of the McCarran-lerguson test

is not satisfied because Riverview “sued Respondents

on the basis of full assignments from the imsureds”

and therefore had the same right as the insureds to

sue for fraud and bad faith. (Pet. at 24). Riverview

yimply cannot have it both ways.

i Other State Laws

Citing both Weiss and tlumana, the Sixth Circuit

examined whether other state statutes might provide

the basis for the suit. (Pet. App. 2la). Specifically, at

Riverview’s invitation, the court analyzed whether

Ohio's RICO statute —even though Riverview did not

assert such a claim—would theoretically apply to this

Case. The Sixth Circuit held that it would not,

noting that Ohio’s Prompt Pay Act, which Riverview

1%

specifically alleged Medical Mutual had violated,

(Pet. App. 82a), was not a corrupt activity under

Ohio’s RICO statute. In contrast, the Weiss court

specifically found that the claims alleged in that case

would likely be covered by New Jersey's Consumer

Fraud Act. Weiss, 482 F.3d at 266. In other words,

the Third Circuit in Weiss, and the Sixth Circuit here,

applied the same test—whether other state laws

provided grounds for suit—to different conduct and

different state laws, and came to different

conclusions. This is not a conflict.

ID. Damapyes

In Nevada, as noted by this Court in /flumana,

punitive damages are expressly available — for

insurance fraud claims and, in fact, “plaintiffs

seeking rebef under Nevada law may be eligible for

damages exceeding the treble damages available

under RICO” flumana, 525 U.S. at 313. In Wetss,

the Third Circuit likewise held that it was at least

possible that a “racketeering scheme by an insurer’

could warrant punitive damages under New Jersey

law. See Wetss, 482 F.3d at 267 In this case,

however, the Sixth Circuit expressly determined that

punitive damayes were unavailable to Riverview

because it lacked a viable fraud or bad faith claim

and, therefore, treble damages under RICO “would

vreatly exceed” the damuapves available to Riverview

under Ohio law. (Pet. App. 22a). ‘The Petition simply

disputes this interpretation of Ohio law when it

argues punitive damages are available in Ohio for

bad faith and fraud claims

K. Reliance by State Insurers

Finally, Riverview once again ignores the actual

Sixth Circuit opimion and argues that’ prohibiting

1)

insurers in’ Ohio from bringing RICO claims. to

combat insurance fraud would contravene Ohto’'s

regime for regulating the business of insurance. (Pet.

at 27). In fact, the Sixth Circuit determined just the

opposite. Unlike Werss, in which the court “assumed”

the preemption of the plaintiffs RICO claims “would

deprive insurers of an important weapon of self

defense,” Wetss, 482 F.3d at 267, the Sixth Circuit

examined Ohio's regulatory scheme and determined

that insurers would “still have a cause of action

under both Ohio and= federal RICO. for fraud

perpetrated against tin no by insureds.” (Pet. App

23a)

Riverview's second question does not present an

issue worthy of this Court’s review because: (1) there

is no proposed rule of law for the Court to recognize;

(2) the Sixth Circuit properly apphed this Court's

existing precedent; (3) there is no circuit split; (4) the

case hinges on factual distinctions that would render

it of limited utility in future cases; and (5) resolving

this question would require this Court to interpret

and construe Ohio, rather than federal, law

CONCLUSION

lor all of the forevoiny reasons, the Petition for a

24 34

writ of certtorart should be denied

Respectfully submitted,

Pierre H. Bergeron James D. ‘Thomas*

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