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
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?