Fines Enterprises v. Ruark et al

Filing 50

ORDER granting 43 Motion to Dismiss for Failure to State a Claim. On or before, Thursday, April, 20, 2017, Plaintiff may file an amended complaint. Signed by Judge Roy B. Dalton, Jr. on 4/7/2017. (VMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
FINES ENTERPRISES,
Plaintiff,
v.

Case No. 6:16-cv-1244-Orl-37TBS

KEVIN RUARK; BREANNA
SAAGMAN; MATTHEW SAAGMAN;
HAVEN HOME HEALTH CARE II,
LLC; THOMAS TAYLOR; COPIA
HEALTH CARE, LLC; MICHAEL
MOSES; MATTHEW RUARK; and
JAMIN RUARK,
Defendants.
ORDER
In the instant action, Defendants Haven Home Health Care II, LLC, Kevin Ruark,
Breanna Saagman, Matthew Saagman, Michael Moses, Matthew Ruark, and Jamin
Ruark’s move for dismissal of the Amended Complaint. (Doc. 43.) For the reasons set
forth below, the motion is due to be granted and the Amended Complaint is due to be
dismissed.
I.

PROCEDURAL HISTORY

Plaintiff—a home health care agency—initiated this action under the Racketeer
Influence and Corrupt Organizations (“RICO”) Act on July 11, 2014. (Doc. 1.) On
October 24, 2016, the Court dismissed Plaintiff’s initial complaint without prejudice and
permitted repleader. (Doc. 37.) Plaintiff did so on November 4, 2016. (Doc. 40 (“Amended
Complaint”).) Defendants now seek dismissal of the Amended Complaint on the ground

that it fails to state a claim upon which relief can be granted. (Doc. 43 (“MTD”).) Plaintiff
filed an untimely response (Doc. 46 (“Response”)), and the matter is ripe for the Court’s
consideration. 1
II.
A.

PLEADING STANDARDS

General Pleading Requirements
A pleading must contain “a short and plain statement of the claim showing that

the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “[D]etailed factual allegations” are
not required, but “[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic
recitation of the elements of a cause of action will not do.’” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Rather, “a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial
plausibility when the plaintiff pleads factual content that allows [a] court to draw the
reasonable inference that defendant is liable for the misconduct alleged.” Id. at 678; see
also Bailey v. Wheeler, 843 F.3d 473, 480 (11th Cir. 2016).
Under Federal Rule of Civil Procedure 12(b)(6), a party may request dismissal of
a pleading that falls short of these pleadings requirements. In resolving such motions,
courts limit their consideration to the face of the complaint, its attachments, “documents
incorporated into the complaint by reference, and matters of which a court may take

Plaintiff is forewarned that failure to adhere to Court deadlines may result in the
imposition of sanctions without further notice.
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judicial notice.” See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322–23 (2007);
see also Hoefling v. City of Miami, 811 F.3d 1271, 1277 (11th Cir. 2016). Dismissal is
warranted if, assuming the truth of the factual allegations of the complaint in a plaintiff’s
favor, there is a dispositive legal issue which precludes relief. Neitzke v. Williams,
490 U.S. 319, 326 (1989).
B.

The RICO Act
The federal RICO Act provides a private right of action for anyone injured in his

business or property by a violation of 18 U.S.C. § 1962. See 18 U.S.C. § 1964(c). Subsections
1962(a), (b), (c) impose liability on those who engage in a pattern of racketeering if they
also do the following: (1) invest income derived from a pattern of racketeering activity of
an enterprise engaged in interstate commerce (§ 1962(a)); (2) acquire or maintain, through
a pattern of racketeering activity, any interest in or control over such an enterprise
(§ 1962(b)); or (3) conduct or participate in the conduct of the affairs of such an enterprise
through a pattern of racketeering activity (§ 1962(c)). See Simpson v. Sanderson Farms, Inc.,
744 F.3d 702, 705 (11th Cir. 2014). Section 1962(d) makes it a crime to conspire to violate
the preceding sections.
Pleading a “pattern of racketeering activity” is essential to the survival of a claim
under any of the RICO subsections. To that end, a plaintiff must charge that: (1) the
defendant committed two or more predicate acts; (2) the predicate acts were related to
one another; and (3) the predicate acts demonstrate criminal conduct of a continuing
nature. See Jackson v. BellSouth Telecomm., 372 F.3d 1250, 1264–65 (11th Cir. 2004).

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“Racketeering activity” includes, inter alia, such predicate acts as mail and wire fraud. See
18 U.S.C. § 1961(1).
III.

ANALYSIS

The Amended Compliant falls short of alleging plausible RICO claims. At best,
Plaintiff sketches only the outline of a scheme to defraud premised on Defendants
inducing Plaintiff into agreements, whereby Defendants would manage Plaintiff’s
day-to-day operations, including billing the Medicare Program 2 under Plaintiff’s
Medicare Provider Number (“Management Agreements”). (See Doc. 40, ¶¶ 16–19, 22.)
Such access enabled Defendants to allegedly bill Medicare for medically unnecessary
services, for which they received partial payment at the time of service (“Medicare
Payments”). (See id. ¶¶ 22, 33.) Thereafter, Defendants and Plaintiff engaged in telephone
and email communications concerning “payroll, IT matters, marketing, contract
negotiations, and other business related matters” and communicated about the “promise
of a business relationship.” 3 (Id. ¶ 37.) According to Plaintiff, Defendants’ billing practice
resulted in overpayments, for which Plaintiff remains financially responsible. (Id. ¶ 22.)

Medicare is a federally-subsidized health insurance program for the elderly and
persons with disabilities. See 42 U.S.C. § 1395j. The Medicare Program is administered by
the Centers for Medicare and Medicaid Services, a component of the U.S. Department of
Health and Human Services.
3 The facts from the Amended Complaint are taken as true and construed in the
light most favorable to Plaintiff, the non-moving party. See Hill v. While, 321 F.3d 1334,
1335 (11th Cir. 2003).
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But such conclusory allegations do not identify a single misrepresentation made
to Plaintiff that would substantiate mail or wire fraud. 4 See United States v. Ward,
486 F.3d 1212, 1221–22 (11th Cir. 2007) (discussing the elements required to establish mail
and wire fraud). Plaintiff’s allegations of facially benign conversations evidence routine
discussions germane to any business. (See Doc. 40, ¶¶ 37–39.) Confusingly, Plaintiff
points to Defendants’ practice of billing for medically unnecessary services (Id. ¶ 22) but
does not identify if such a practice is part of the scheme to defraud or the result of it. To
the extent that Plaintiff relies on the alleged fraudulent billing practice to substantiate a
pattern of racketeering predicated on wire fraud, the Amended Complaint is equally
devoid of any facts from which the Court could infer a scheme to defraud.
In addition, Plaintiff fails to plead facts with particularity, as required by Federal
Rule of Civil Procedure 9(b). See Fed. R. Civ. P. 9(b); Ambrosia Coal & Constr. Co. v. Pages
Morales, 482 F.3d 1309, 1316 (11th Cir. 2007) (holding that civil RICO claims premised on
mail and wire fraud are “essentially a certain breed of fraud claims” and must satisfy
Rule 9(b)). To satisfy Rule 9(b), a plaintiff must allege: (1) the precise statements,
documents, or misrepresentations made; (2) the time, place, and each person responsible
for the statement; (3) the content and manner in which the statements misled the plaintiff;
and (4) what the defendants gained by the alleged fraud. See Am. Dental Ass’n v. Cigna
Corp., 605 F.3d 1283, 1291 (11th Cir. 2010) (citing Brooks v. Blue Cross & Blue Shield of Fla.,

Indeed, Plaintiff utterly fails to substantiate a pattern of racketeering based on
mail fraud, as nothing in the Amended Complaint suggests that Defendants mailed
anything.
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Inc., 116 F.3d 1364, 1380–81 (11th Cir. 1997)). Where multiple defendants are involved, a
complaint should inform each defendant of the nature of his alleged participation in the
fraud. See Ambrosia Coal & Constr. Co., 482 F.3d at 1317.
Here, Plaintiff fails to describe the parties to, the place of, or the content of such
conversations, any misrepresentations made, or how such communications furthered a
scheme to defraud. Nor does Plaintiff apprise each Defendant of his individual
involvement in the allegedly fraudulent activity; instead, it lumps all Defendants
together. (See Doc. 40, ¶ 37.) 5 These vague, omnibus allegations are precisely the sort of
pleading which Rule 9(b) seeks to prevent.
Recognizing these obvious deficiencies, Plaintiff attempts to bolster its allegations
in the Amended Complaint through affidavits and exhibits attached to its Response (see,
e.g., Doc. 46-7; Doc. 46-8), but a well-supported response does not make a well-pled
complaint. And in resolving the instant MTD, the Court may consider only the factual
allegations contained in the Amended Complaint and documents either attached thereto
or incorporated by reference. See Hoefling, 811 F.3d at 1277. Because these affidavits and

The Amended Complaint inconsistently defines “Management Group”
parenthetically including different groups of Defendants. (Compare Doc. 40, ¶ ¶ 16, 25
(referencing Defendants Kevin Ruark, Breanna Saagman, Matthew Saagman, Have
Home Health Care II, LLC, Thomas N. Taylor, and Copia Health Care) with id. ¶ 49
(referencing Defendants Kevin Ruark, Michael Moses, Matthew Ruark, Jamin Ruark,
Breanna Saagamn, and Matthew Saagman).) Such confusing parenthetical references are
not curative because Plaintiff does not connect any Defendants to an alleged scheme to
defraud.
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exhibits were not relied on, attached to, or incorporated by reference in the Amended
Complaint, the Court gives no consideration to their content.
Finally, in each count, Plaintiff essentially retreads its general allegations under
separate headings. (Compare Doc. 40, ¶¶ 25–42 with id. ¶¶ 44–61.) Such a practice fails to
appreciate the unique elements required to plead a violation of each subsection of § 1962.
Hence the MTD is due to be granted, and the Amended Complaint is due to be dismissed.
IV.

CONCLUSION

Accordingly, it is ORDERED AND ADJUDGED as follows:
1.

Defendants’ Motion to Dismiss Amended Complaint (Doc. 43) is
GRANTED.

2.

The Amended Complaint (Doc. 40) is DISMISSED WITHOUT
PREJUDICE.

3.

On or before, Thursday, April, 20, 2017, Plaintiff may file an amended
complaint that addresses the deficiencies addressed in this Order. If
Plaintiff chooses to replead, it should do so in a manner that is compliant
with Rule 9(b) and the legal authority associated with civil RICO claims.

DONE AND ORDERED in Chambers in Orlando, Florida, on April 7, 2017.

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Copies:
Counsel of Record

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