Stiegel v. USAA CASUALTY INSURANCE COMPANY

Filing 49

ORDER denying 30 Motion to Dismiss; denying 34 Motion to Dismiss Complaint Ordered by US DISTRICT JUDGE CLAY D LAND on 10/03/2017 (glg)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
HOLLY STIEGEL and RAIDEN
STIEGEL,

*
*

Plaintiffs,
*
vs.

CASE NO. 4:16-CV-346 (CDL)

*
USAA CASUALTY INSURANCE COMPANY
and AUTO INJURY SOLUTIONS,
*
INC.,
*
Defendants.
*
O R D E R

Plaintiff Holly Stiegel claims she was injured in a car
wreck and that she incurred medical expenses as a result.

She

further claims that her automobile insurer at the time of the
wreck,

Defendant

USAA

Casualty

Insurance

Company

(“USAA”),

refused to reimburse her after she submitted a claim under her
insurance policy for the payment of those medical expenses.

She

subsequently filed this action against USAA, claiming that it
refused in bad faith to pay her claim for medical expenses that
were covered by the medical payments coverage portion of her
policy.

She

asserted

claims

for

breach

of

the

insurance

contract, and she also sought bad-faith penalties pursuant to
O.C.G.A. § 33-4-6.
During
they

discovery,

thought

would

her

enlarge

attorneys
an

unearthed

otherwise

evidence

mundane

breach

that
of

contract claim into a sinister (and potentially more lucrative)
fraud

claim

that

includes

the

Georgia

Organizations

Act

(“RICO”),

alleged

USAA

pursuant

to

that

and

allegations
Racketeer

of

criminal

Influenced

O.C.G.A. § 16-14-1

Defendant

Auto

Injury

misconduct

and
et

Corrupt

seq.

Solutions,

She
Inc.

(“AIS”) colluded to devise a scheme whereby USAA would accept
money from insureds in the form of insurance premiums, knowing
that it was not going to pay legitimate claims asserted under
its insureds’ medical payments coverage, and refer those claims
to

AIS

with

the

understanding

that

AIS

would

find

ways

to

justify the denial of legitimate claims or reduce the amount
that was legitimately owed.

Finding that these claims should

best be tested at the motion to dismiss and summary judgment
stage,

the

Court

granted

Plaintiff’s

motion

to

amend

her

Complaint to add claims for fraud, RICO violations, and unjust
enrichment.

The Court also allowed her to add as a plaintiff

her husband, who was the named insured on the USAA policy, and
to join as a party defendant AIS, which she alleges conspired
with USAA to commit this tortious and illegal conduct.
Defendants now move to dismiss Plaintiffs’ fraud, RICO, and
unjust

enrichment

claims.

Defendants

maintain

that

the

exclusive cause of action for remedying the Plaintiffs’ alleged
injuries
Georgia’s

is

one

refusal

for
to

breach
pay

of

contract

insurance

2

and

claims

bad-faith

statute,

under

O.C.G.A.

§ 33-4-6.
decision

Neither
by

any

party

Georgia

has

pointed

appellate

the

court

Court

to

deciding

a

single

this

issue

directly, nor has the Court found such precedent on its own.
thus

appears

Plaintiffs’

that
RICO

the
and

impression in Georgia.

issue

of

fraud

whether

claims

is

It

§

33-4-6

precludes

an

issue

of

first

As explained in the remainder of this

Order, the Court concludes that Georgia courts would likely hold
that § 33-4-6 does not preclude the assertion of fraud and RICO
claims

simply

because

an

insured

breach of contract claim.

also

have

a

bad-faith

Furthermore, the Court finds that

Plaintiffs

have

sufficiently

Defendants

have

a

stronger

may

alleged
argument

fraud
that

and

RICO

Plaintiffs

claims.
have

no

unjust enrichment claim under Georgia law based on the facts
alleged in their Complaint.

Although skeptical of their ability

to prevail on that claim, the Court declines to dismiss it at
this stage of the proceedings.

Accordingly, USAA’s motion to

dismiss (ECF No. 30) and AIS’s motion to dismiss (ECF No. 34)
are denied.
FACTUAL BACKGROUND
Plaintiffs allege the following facts in support of their
claims.

The Court must accept these allegations as true for

purposes of the pending motions.
Holly Stiegel was injured in a car wreck in January of 2014
and again in another car wreck in February of that same year.

3

Both wrecks were caused by the other drivers’ negligence.

As a

result of the collisions, Stiegel suffered severe injuries and
eventually underwent a three-level cervical fusion surgery.

At

the time, her husband, Raiden Stiegel, was the named insured on
an automobile insurance policy issued by USAA.
was a covered driver under the policy.
policy

had

payments

both

coverage.”

represented
medical

underinsured

by

USAA

expenses

and

The
to

cover

funeral

Plaintiffs’ insurance

motorist
medical
“the

Holly Stiegel

coverage
payments

reasonable

expenses

because

injury) or death caused by an auto accident.”

and

“medical

coverage
and
of

was

necessary
BI

(bodily

Am. Compl. ¶¶ 10–

12, ECF No. 31 (quoting Stiegel Insurance Policy, ECF No. 3115).

After USAA paid the Stiegels a sum from the underinsured

motorist coverage, Holly Stiegel’s counsel sent a demand to USAA
for the policy limits of the medical payments coverage.

Her

counsel submitted all of her medical bills and medical records
related to her treatment after the two car wrecks.

Plaintiffs

allege that USAA denied Stiegel’s claim for medical payments
coverage

in

bad

faith,

leaving

them

with

unpaid

medical

expenses.
Plaintiffs learned during discovery on the bad faith claim
that USAA contracts with a third party, AIS, to review claims
submitted

by

“audited”

the

USAA’s

insureds.

Stiegels’

AIS

claim.

4

and

Plaintiffs

its

subcontractors

allege

that

this

auditing

process

computerized

and

systematically

consists

of

automated

review

deny

insureds’

subjecting
that

claims.

the
uses

The

claim

to

algorithms

claims

are

a
to

then

submitted to doctors chosen by a subcontractor of AIS for an
additional peer review.

Plaintiffs claim that USAA and AIS use

these particular doctors because they know that the doctors will
provide

USAA

Plaintiffs

with

allege

ammunition

that

the

to

automated

deny

legitimate

review

process

claims.
and

the

“independent” peer review is a sham designed to deny legitimate
claims and conceal USAA’s intention to not pay such claims in
the first place.

Thus, according to Plaintiffs, USAA defrauded

them and stole their money when it charged them premiums for
insurance coverage that it never intended to provide, and AIS
helped USAA cover its tracks.
DISCUSSION
Plaintiffs assert claims against USAA for fraud, breach of
contract, bad-faith penalties under O.C.G.A. § 33-4-6, Georgia
RICO violations, and unjust enrichment.

Plaintiffs similarly

assert a Georgia RICO claim against AIS for conspiring with USAA
in its efforts to deceive Plaintiffs and steal their premiums.
USAA

moves

to

dismiss

Plaintiffs’

fraud,

RICO,

and

unjust

enrichment claims, and AIS moves to dismiss Plaintiffs’ RICO
claim against it.

The focus of Defendants’ argument is that

5

Plaintiffs’ only remedy is a claim for breach of contract and
bad-faith penalties pursuant to O.C.G.A. § 33-4-6.
Under Georgia law, an insured who alleges that his insurer
failed to pay a claim that is covered under his insurance policy
is

limited

to

a

claim

for

breach

of

contract

penalties pursuant to O.C.G.A. § 33-4-6.
Ins.

Co.,

310

S.E.2d

513,

516

(Ga.

and

bad-faith

See McCall v. Allstate

1984)

(holding

that

the

plaintiff could not recover damages except those provided by
O.C.G.A.

§ 33-4-7

for

the

insurer’s

bad-faith

denial

of

her

claim and holding that the analysis applied equally to § 33-46).

But Plaintiffs’ fraud and RICO claims are not claims based

on USAA’s breach of the insurance contract.

Those claims rely

on elements that are separate and distinct from a breach of
contract

claim.

They

are

not

simply

attempts

to

obtain

additional damages for a cause of action that is the same as a
breach of contract claim in all but name.
allege

that

they

suffered

damages

Moreover, Plaintiffs

flowing

from

Defendants’

tortious conduct that are different than the amount of money
that

USAA

should

have

paid

them

according

to

the

insurance

policy.
I.

The RICO Claims (Counts V, VI, & IX)
Plaintiffs’

RICO

claim

is

based

theft by taking and theft by deception.

on

Defendants’

alleged

Plaintiffs allege that

Defendants stole their money when they devised a scheme for USAA

6

to avoid paying benefits legitimately owed under their insurance
policy while collecting premiums for insurance that they knew
was not being provided.

Thus, Plaintiffs appear to seek as

their damages the return of the money they paid in the form of
premiums to USAA.

The Court finds that this claim is not a

claim by a holder of an insurance policy to recover benefits
under the policy and bad-faith penalties based on an insurance
company’s refusal to pay a loss covered under the policy.

Thus,

§ 33-4-6 does not preclude Plaintiffs from asserting their RICO
claim against USAA.

And since AIS is not an insurer, § 33-4-6

does not apply to it at all.
McCall v. Allstate Ins. Co.,
different result.

does not require a

In McCall, the Georgia Supreme Court simply

reiterated

the

when

legislature

the

supra,

well

accepted

and

codifies

unremarkable

the

principle

exclusive

remedy

that

for

particular type of claim, courts must follow the statute.
id.

at

516

(“[W]here

the

General

Assembly

has

provided

a
See
a

specific procedure and a limited penalty for noncompliance with
a specific enactment, . . . the specific procedure and limited
penalty were intended . . . to be the exclusive procedure and
penalty.”).

Specifically, the court in

McCall

held that

an

insured could not recover punitive damages or damages for injury
to

its peace,

happiness,

or feelings

based on its insurer’s

refusal to pay a covered insurance claim because the applicable

7

statute

limited

the

available

damages

to

the

amount

of

the

claim, an additional percentage of that amount for a bad-faith
penalty, and attorney’s fees.

It further held that the insured

could not recover attorney’s fees in the particular case because
the insured failed to comply with the procedure outlined in the
statute.

Id. at 515.

As previously explained, Plaintiffs’ RICO

claim does not rest on a determination that USAA failed to pay
certain benefits that were covered under their policy with USAA.
Instead, it depends on whether Defendants devised an illegal
scheme

to

insurance

steal

Plaintiffs’

coverage.

sufficiently

state

The
a

money

Court

claim

for

by

finds

selling

that

injury

that

them

these
is

phony

allegations

separate

and

distinct from that caused by the mere denial of a claim covered
by the policy and, thus, that § 33-4-6 does not bar Plaintiffs’
RICO claims against USAA or AIS.1
AIS, while advancing many of the same arguments as USAA,
also

argues

that

Plaintiffs’

RICO

claim

against

it

must

be

dismissed because Plaintiffs failed to allege that AIS committed
two predicate acts of racketeering.

A plaintiff may state a

civil RICO claim by alleging that the defendant “knowingly and
willfully join[ed] a conspiracy which itself contains a common
1

In McGowan v. Progressive Preferred Ins. Co., 637 S.E.2d 27 (Ga.
2006), the Georgia Supreme Court implicitly acknowledged that the
insured there could maintain claims for fraud and civil RICO if it
could establish damages flowing from the fraudulent scheme in addition
to the amount owed under the policy.

8

plan or purpose to commit two or more predicate acts.”

Wylie v.

Denton, 746 S.E.2d 689, 693 (Ga. Ct. App. 2013) (quoting Rosen
v. Protective Life Ins. Co., 817 F. Supp. 2d 1357, 1382 (N.D.
Ga. 2011) (applying Georgia law)).

Plaintiffs have alleged that

AIS conspired with USAA to assist USAA in theft by taking and
theft by deception against Plaintiffs by putting their claim
through

the

sham

review

process

underlying

USAA’s

deliberate

scheme to keep the money the Plaintiffs sent to USAA under the
guise

of

premium

payments.

Am.

Compl.

¶¶

110–12,

115.

Plaintiffs’ allegations are sufficient to proceed on their claim
for RICO conspiracy against AIS.

Thus, Defendants’ motions to

dismiss Plaintiffs’ RICO claims are denied.
II.

The Fraud Claims (Counts I–III)
Plaintiffs’ fraud claims against USAA are not precluded for

the same reasons that § 33-4-6 does not preclude their RICO
claims.

Similar to their RICO claims, Plaintiffs allege that

Defendants’ fraudulent scheme caused them damages separate and
distinct from the mere failure to pay them what was owed under
their policy.
liens

and

were

Plaintiffs allege that they were subjected to
hindered

in

their

ability

to

obtain

needed

medical services under their health insurance due to Defendants’
fraudulent scheme.

Am. Compl. 5, 12, 17, & ¶ 53.

Plaintiffs’

Complaint could also be construed as seeking rescission of the
insurance contract based on USAA’s fraud, as well as the return

9

of the premiums they paid.

Thus, the fraud claims against USAA,

being different and distinct from the alternative claim against
USAA pursuant to § 33-4-6, are not precluded.
The Court also rejects USAA’s argument that Plaintiffs have
not stated a claim for fraud in this action.

USAA’s reliance on

Globe Life & Accident Insurance Co. v. Ogden, 357 S.E.2d 276
(Ga. Ct. App. 1987) is misplaced.
of

Appeals

reversed

a

jury’s

In Globe, the Georgia Court

verdict

awarding

the

plaintiff

punitive damages for fraud because her case was “plainly and
simply

one

arising

on

a

breach

of

contract.”

Id.

at

277

(quoting Leonard v. Firemen’s Ins. Co., 111 S.E.2d 773, 775 (Ga.
Ct. App. 1959)).

As previously explained, Plaintiffs’ Complaint

does not merely allege a breach of contract.

In addition to a

claim for breach of contract, Plaintiffs alleged a fraudulent
scheme that caused them compensatory damages separate from the
amount they claim they were owed under the contract.

And it

cannot

allege

be

seriously

argued

that

they

have

failed

to

sufficient facts to state the essential elements for a fraud
claim under Georgia law.
For

the

foregoing

reasons,

USAA’s

motion

to

dismiss

Plaintiffs’ fraud claims is denied.
III. The Unjust Enrichment Claim (Count IV)
The
claim.

Court

is

skeptical

of

Plaintiffs’

unjust

enrichment

A jury could not find in Plaintiffs’ favor on their

10

breach of contract claim or on a fraud claim that affirms the
insurance

contract

enrichment.

and

also

provide

compensation

for

unjust

A claim for unjust enrichment will only lie “when

there is no legal contract.”
342 (Ga. Ct. App. 2002).

Ades v. Werther, 567 S.E.2d 340,

But Plaintiffs also allege that the

contract is voidable and that they should be allowed to rescind
it.

The Court questions whether their unjust enrichment claim

based upon rescission is any different than their tort claim for
fraudulent

inducement

to

enter

the

contract.

Nevertheless,

based on the allegations in the Complaint, the Court declines to
dismiss the Plaintiffs’ unjust enrichment claim at this stage of
the

proceedings

judgment

stage.

and

will

revisit

Accordingly,

the
USAA’s

issue

at

motion

the

summary

to

dismiss

Plaintiffs’ unjust enrichment claims is denied.
CONCLUSION
For the reasons explained in this Order, USAA’s and AIS’s
motions to dismiss (ECF Nos. 30 & 34) are denied.

The parties

shall submit a proposed amended scheduling order within 28 days
of this ruling.
IT IS SO ORDERED, this 3rd day of October, 2017.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA

11