United States District Court, D. Minnesota
Illinois Farmers Insurance Company, 21st Century Insurance Company, Bristol West Casualty Insurance Company, and Mid-Century Insurance Company, Plaintiffs,
Timothy W. Guthman, D.C., Inver Family Chiropractic, P.A., Team Chiropractic, P.A., a/k/a Team Chiropractic, Inc., Team Chiropractic Service Corporation, Alianza Chiropractic Clinic, Rehabilitations Professionals, Inc., Gregory Peter Steiner, D.C., Chiropractic Wellness Center, Inc., Apple Valley Wellness Center, Centro Hispano de Ayuda, Silvia Ross, a/k/a Silvia Pena, Zulema Calderon, a/k/a Sulema Calderon, Zulema Levya, and Zulema Manjarrez, Laura Pimental, a/k/a Analaura Pimental Duqueiro Cano, a/k/a “El Duque, ” Defendants.
Richard S. Stempel, Bradley L. Doty,  Gregory Maus, Stempel &
Doty, PLC, Hopkins, Minnesota, for Plaintiffs.
M. Magnuson, Kelley, Wolter & Scott, P.A., Minneapolis,
Minnesota, for Defendants Timothy W. Guthman, D.C., Inver
Family Chiropractic, P.A., Team Chiropractic, P.A., Alianza
Chiropractic Clinic, Centro Hispano de Ayuda, Silvia Pena
Ross, Laura Pimentel, and Duqueiro Cano.
W. Asp, Kristen G. Marttila, Lockridge Grindal Nauen
P.L.L.P., Minneapolis, Minnesota, for Defendants Gregory
Peter Steiner, D.C., Chiropractic Wellness Center, Inc., and
Rehabilitation Professionals, Inc.
S. Doty, Judge
matter is before the court upon the motion to dismiss by
defendants Gregory Peter Steiner, D.C. and Chiropractic
Wellness Center, Inc. (Steiner Defendants) and the motion to
dismiss by defendants Timothy W. Guthman, D.C., Inver Family
Chiropractic, P.A., Team Chiropractic, P.A., Alianza
Chiropractic Clinic, Centro Hispano de Ayuda, Silvia Pena
Ross, Laura Pimentel and Duqueiro Cano (Guthman Defendants).
Based on a review of the file, record, and proceedings
herein, and for the following reasons, the court grants the
Steiner Defendants' motion and grants in part the Guthman
fraud action arises out of defendants' alleged scheme to
defraud automobile insurers. Plaintiffs Illinois Farmers
Insurance Company, 21st Century Insurance Company, Bristol
West Casualty Insurance Company, and Mid-Century Insurance
Company issue automobile-insurance policies in Minnesota. Am.
Compl. ¶¶ 6-10. Under the Minnesota No-Fault
Automobile Insurance Act, Minn. Stat. § 65B.41 et seq.,
insurers are required to provide “basic economic loss
benefits” - a minimum of $20, 000 for necessary medical
expenses - in each automobile policy sold in Minnesota. The
Act is designed to expedite payments to those injured in
accidents without regard to fault in order to “relieve
the severe economic distress of uncompensated victims”
and “encourage appropriate medical and rehabilitation
treatment.” Minn. Stat. § 65B.42. Insurers must
make these payments within 30 days of being billed by a
medical provider. Id. § 65B.54.
and Steiner are Minnesota chiropractors. Am. Compl.
¶¶ 12, 16-17. Plaintiffs allege that they took
advantage of the no-fault insurance system by billing for (1)
medically unnecessary treatments at their
clinics or (2) services that were not actually
provided. To accomplish this, they paid people, referred to
as “runners, ” to solicit prospective patients.
Id. ¶ 26. The runners, in turn, would provide
cash to accident victims to entice them to go to the clinics,
which then “billed [plaintiffs] for services not
rendered, ” “provided excessive treatment which
was not necessary, treated [the individuals] at a frequency
that was unreasonable[, ] and generally developed a pattern
and practice of excessive treatment modalities and therapy to
maximize the charges [they] could submit for no-fault medical
benefits.” Id. ¶¶ 25, 40. The
amended complaint alleges that Guthman specifically
instructed runners to target plaintiffs' insureds,
because plaintiffs ostensibly “paid claims faster than
other no-fault insurers.” Id. ¶ 39.
Ultimately, plaintiffs paid more than $750, 000 for services
billed by Guthman, Steiner, and their clinics. Id.
commenced this matter in early 2017, alleging numerous
claims. Defendants moved to dismiss, and plaintiffs then
filed the amended complaint, asserting seven claims:
violation of the Racketeer Influenced and Corrupt
Organizations Act (RICO), 18 U.S.C. § 1962(c) (Count 1)
and § 1962(d) (Count 2); violation of the Minnesota
consumer-fraud statute, Minn. Stat. § 325F.69 (Count 3);
civil conspiracy (Count 4); common-law fraud (Count 5);
no-fault fraud (Count 6); and unjust enrichment (Count 7).
The Guthman Defendants and the Steiner Defendants now move to
dismiss all of these claims.
Standard of Review
survive a motion to dismiss for failure to state a claim,
“‘a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.'” Braden v. Wal-Mart
Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“A claim has facial plausibility when the plaintiff
[has pleaded] factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678
(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544,
556 (2007)). Although a complaint need not contain detailed
factual allegations, it must raise a right to relief above
the speculative level. Twombly, 550 U.S. at 555.
“[L]abels and conclusions or a formulaic recitation of
the elements of a cause of action” are not sufficient
to state a claim. Iqbal, 556 U.S. at 678 (citation
and internal quotation marks omitted).
The RICO Claims
enacted RICO in 1970 as part of the Organized Crime Control
Act, Public Law No. 91-452, in an effort to combat
mob-related activities and organized crime. The statute makes
it unlawful for “any person employed by or associated
with any enterprise ... to conduct or participate, directly
or indirectly, in the conduct of such enterprise's
affairs through a pattern of racketeering activity.” 18
U.S.C. § 1962(c). “Racketeering activity”
includes a host of enumerated crimes such as murder,
kidnapping, robbery, and, relevant here, mail fraud.
Id. § 1961(1). In addition to possible criminal
penalties, RICO provides a civil remedy for persons injured
by a violation of its substantive provisions. See
id. § 1964(c). To show a civil RICO violation, a
plaintiff must demonstrate “(1) conduct (2) of an
enterprise (3) through a pattern (4) of racketeering
activity.” Crest Constr. II, Inc. v. Doe, 660
F.3d 346, 353 (8th Cir. 2011).
plaintiffs allege that Guthman, Steiner, their clinics, and
the runners violated RICO by associating with each other to
achieve the purpose of billing and receiving improper
no-fault benefit payments. Defendants argue that this claim
fails as a matter of law because, among other things,
plaintiffs have not alleged the existence of an
“enterprise” distinct from the alleged
racketeering activity itself. The court agrees.
enterprise “includes any individual, partnership,
corporation, association, or other legal entity, and any
union or group of individuals associated in fact although not
a legal entity.” 18 U.S.C. § 1961(4). An
“association in fact, ” requires a discrete
structure and existence uniting its members as a cognizable
group. Nelson v. Nelson, 833 F.3d 965, 968 (8th Cir.
2016). Although such association need not have regular
meetings or a chain of command, it must comprise something
more than a pattern of racketeering activity. Id.;
see also United States v. Turkette, 452 U.S. 576,
583 (1981) (“The ‘enterprise' is not the
‘pattern of racketeering activity'; it is an entity
separate and apart from the pattern of activity in which it
engages.”). A plaintiff, therefore, must demonstrate
that the alleged enterprise would exist in the absence of the
alleged racketeering activity. Crest Constr., 660
F.3d at 354-55. In other words, “[t]he focus of the
inquiry is whether the enterprise encompasses more than what
is necessary to commit the predicate RICO offense.”
Diamonds Plus, Inc. ...