This post discusses an Infuse case and therefore, is from the non-Reed Smith side of the blog only.
“Mother of mercy, is this the end of Rico?” Those are the last words uttered by the gangster in Little Caesar. That villain was played by Edward G. Robinson, who became well-known for playing tough-talking hoodlums, even though he was by all accounts a very sweet man. He showed up as a hero in a couple of films, such as Double Indemnity and The Stranger, but he will always be most remembered for his dastardly snarl. [Ah – who are we kidding? Today Edward G. Robinson’s voice is usually associated with the parody version mouthed by Chief Wiggum on The Simpsons.]
Those same Rico-valedictory words often dance through the heads of wishful-thinking corporate defense attorneys as they pray for the demise of the much-abused RICO statute. A law ostensibly aimed at criminal enterprises has been tortured past any state of recognition, and is applied in all sorts of non-gangsterish contexts. Too many courts let this abuse go, but more and more do not. Recently, in Aaron v. Abubakar Atiq Durrani, M.D., et al., 2014 U.S. Dist. LEXIS 32693 (S.D. Ohio March 12, 2014), the court shot down an attempt to transform a garden variety med-mal and product liability case into a RICO case.
The court was sorely irked by the plaintiffs' attorney, calling him out by name. What provoked this ire? To begin with, there is the matter of the form of the complaint. Or, rather, complaints. At least seven complaints were filed in these consolidated cases. A second amended complaint was erroneously labeled a first amended complaint. The court did not like any of this, not even a little:
Despite having filed no fewer than seven complaints in these consolidated cases, Plaintiffs have never alleged facts supporting the existence of a plausible claim under RICO or Ohio RICO. Plaintiffs’ latest clumsy attempt to repackage medical malpractice and product liability claims is without any plausible basis, notwithstanding its prolixity.
Id. at *1.
The complaint is “anything but a short and plain statement.” Id. at *9. That is one of the nicer things the court says about the plaintiff’s pleadings. The 159 page second amended complaint was “virtually incomprehensible,” containing “976 paragraphs of largely irrelevant factual summaries.” Id. at *10. The complaint also lumps the defendants together, thereby failing “to give the individual Defendants proper notice of what they have allegedly done wrong.” Id. at *11. Further, the plaintiffs’ attempt to incorporate its Exhibits A and B, one a criminal indictment and the other a Medtronic package insert, violates the Federal Rules of Civil procedure, “as to the former because it is a pleading in another case, and as to the latter because it is not an ‘instrument’ that can be attached pursuant to Civil Rule 10(b).” Id. at *14.
The substantive deficiencies in the complaint were even more fundamental. The plaintiffs were seeking recovery in federal court under anti-racketeering laws for their own state law personal injury claims, a practice which the Sixth Circuit has expressly rejected because, “[s]imply stated, RICO is not a means for federalizing personal injury tort claims arising under state law.” Id. at *1. The court concluded that if it accepted the plaintiffs’ theory, “any hospital will have engaged in a pattern of racketeering activity when a credentialed physician of the hospital is accused of committing medical malpractice. This is nonsense.” Id.
In any event, the plaintiffs failed to plead the most basic elements of a RICO claim, such as injury to one’s “business or property,” the existence of an “enterprise,” and specific frauds in furtherance of the enterprise. The plaintiffs alleged only personal injuries – which are not fair game under RICO– and “lost economic opportunities,” which are “mere expectancy interests” that cannot form the basis for damages under RICO. Plaintiffs never alleged the “time, place and content” of any claimed fraudulent communications by any defendant. Rather, the plaintiffs conclusorily alleged that “all named Defendants in this complaint knew” that wires and mails would be used “to further the scheme” and that the defendants used the mails and wires for their billing. Too vague. As for alleging an “enterprise,” the plaintiffs alleged nothing more than legal conclusions that the defendants constituted an enterprise, without any factual allegations of organization or coordinated behavior among the defendants, or that the organization was separate from the patterns of racketeering activity that the plaintiffs allege. And – no surprise here – the plaintiffs did not actually allege any “racketeering activity.” Instead, all that the plaintiffs alleged was that the defendant “hospitals, as a whole, conducted normal hospital activities such as allowing physicians to perform surgeries, ordering materials required by physicians for surgeries, and paying physician salaries.” Id. at *22. Remember how the court called the complaint “nonsense”? This is even more nonsense. Or, to draw inspiration from those double-talking Little Caesar pizza commercials, “Nonsense nonsense.”
Most noteworthy for DDL practitioners, the court held that any failure-to-warn claims alleged against the device company defendants were preempted under 21 U.S.C. §360(k)/Riegel. “Plaintiffs cannot avoid this preemption by recasting the failure to warn as a RICO claim.” Id. at *24. The FDA provides no private right of action, and what the FDCA did not create directly, even the crazily distorted RICO cannot create indirectly. (Plaintiff lawyers who try to invoke RICO in inappropriate fact scenarios remind us of another Edward G. Robinson bad guy, Johnny Rocco, who terrorizes people in a hotel in the great Key Largo. What does Rocco want out of life? “More.”)
The court did not want any more from this particular group of plaintiffs and their attorney. All of the plaintiffs’ claims against all named defendants were dismissed with prejudice, “as Plaintiffs have thoroughly demonstrated that any further leave to amend would be futile.” Id. at *26. Mother of mercy, that’s the end of this RICO case.
We offer a tip of the cyber cap to Frank Woodside of Dinsmore & Shohl, who brought this case to our attention.