Illinois Farmers Insurance Company et al v. Guthman et al

Filing 70

ORDER granting 60 Motion to Dismiss/General; granting in part and denying in part 62 Motion to Dismiss/General(Written Opinion) Signed by Senior Judge David S. Doty on September 7, 2017. (JRC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Illinois Farmers Insurance Company,
21st Century Insurance Company,
Bristol West Casualty Insurance
Company, and Mid-Century
Insurance Company,

Civil No. 17-270(RHK/SER)

Plaintiffs,
v.

ORDER

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,1 Gregory Maus, Stempel
& Doty, PLC, Hopkins, Minnesota, for Plaintiffs.
Kevin
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.

1
Counsel is not related to the undersigned. 

David 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.

by

This matter is before the court upon the motion to dismiss
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,

Team

P.A.,

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 Defendants’ motion.

BACKGROUND
This 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.
¶¶ 6-10.

Am. Compl.

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

2

Minnesota.

The Act is designed to expedite payments to those

injured

accidents

in

without

regard

to

fault

in

order

to

“relieve the severe economic distress of uncompensated victims”
and

“encourage

treatment.”

appropriate

medical

Minn. Stat. § 65B.42.

and

rehabilitation

Insurers must make these

payments within 30 days of being billed by a medical provider.
Id. § 65B.54.
Guthman

and

Steiner

Compl. ¶¶ 12, 16-17.

are

Minnesota

chiropractors.

Am.

Plaintiffs allege that they took advantage

of the no-fault insurance system by billing for (1) medically
unnecessary treatments at their clinics2 or (2) services that
were

not

people,
patients.

actually

provided.

referred

to

Id. ¶ 26.3

as

To

accomplish

“runners,”

to

this,

solicit

they

paid

prospective

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

individuals]
generally

at

a

developed

which

was

frequency
a

not
that

pattern

and

necessary,
was

treated

unreasonable[,]

practice

of

[the
and

excessive

2
The clinics include defendants Inver Family Chiropractic,
Team Chiropractic, and Alianza Chiropractic Clinic, each of
which is owned by Guthman; and Chiropractic Wellness Center,
which is owned by Steiner.
3

The alleged runners are defendants Ross, Pimentel, and
Cano. Defendant Sulema Calderon is also alleged to be a runner
but is not a party to the instant motions.

3

treatment modalities and therapy to maximize the charges [they]
could submit for no-fault medical benefits.”
The

amended

instructed

complaint

runners

alleges

to

target

that

Id. ¶¶ 25, 40.

Guthman

plaintiffs’

specifically

insureds,

because

plaintiffs ostensibly “paid claims faster than other no-fault
insurers.”

Id. ¶ 39.

$750,000

for

services

clinics.

Ultimately, plaintiffs paid more than
billed

by

Guthman,

Steiner,

and

their

Id. ¶ 38.4

Plaintiffs commenced this matter in early 2017, alleging
numerous claims.
then

filed

the

Defendants moved to dismiss, and plaintiffs
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); commonlaw

fraud

(Count

5);

enrichment (Count 7).

no-fault

fraud

(Count

6);

and

unjust

The Guthman Defendants and the Steiner

Defendants now move to dismiss all of these claims.

4
These same allegations form the basis of a criminal case
pending against Guthman, charging him with conspiracy to commit
mail fraud and health-care fraud. See United States v. Guthman,
Crim. No. 17-67 (D. Minn. filed Mar. 22, 2017).

4

DISCUSSION
I.

Standard of Review

To

claim,

survive
“‘a

a

motion

complaint

to

must

dismiss

contain

for

failure

sufficient

to

state

factual

a

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.
550

U.S.

recitation

at

555.

of

“[L]abels

the

elements

sufficient to state a claim.

and
of

a

conclusions
cause

of

or

a

action”

Twombly,
formulaic
are

not

Iqbal, 556 U.S. at 678 (citation

and internal quotation marks omitted). 
II.

The RICO Claims
Congress 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

5

participate,

directly

or

indirectly, in the conduct of such enterprise’s affairs through
a

pattern

of

“Racketeering

racketeering
activity”

activity.”

includes

a

18

host

of

U.S.C.

§

1962(c).

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.
show

a

civil

RICO

violation,

a

See id. § 1964(c).

plaintiff

must

To

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).
Here,

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.

A RICO 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

6

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.
other

words,

“[t]he

Crest Constr., 660 F.3d at 354-55.
focus

of

the

inquiry

is

whether

In
the

enterprise encompasses more than what is necessary to commit the
predicate RICO offense.”

Diamonds Plus, Inc. v. Kolber, 960

F.2d 765, 770 (8th Cir. 1992); see also Sebrite Agency, Inc. v.
Platt, 884 F. Supp. 2d 912, 919 n.4 (D. Minn. 2012) (“[T]he
Eighth Circuit has continued to require that a RICO enterprise
have a structure that is separate and distinct from the pattern
of racketeering activity.”).
The court recently addressed the “enterprise” element of a
civil

RICO

claim

in

a

similar

action.

In

Illinois

Farmers

Insurance Co. v. Mobile Diagnostic Imaging, Inc., No. 13-2820,
2014 WL 4104789 (D. Minn. Aug. 19, 2014) (“MDI”), the plaintiffs
– three of the four insurance companies in this case – alleged
that

an

kickbacks

individual
to

several

(Appleman)

chiropractors

7

and

his
for

company
MRI

(MDI)

referrals.

paid
The

services were then submitted to each patient’s insurer for nofault benefits.

The plaintiffs sued under RICO alleging that

the defendants (Appleman, MDI, and each of the chiropractors
receiving kickbacks) had “devised schemes to defraud Plaintiffs
by

requesting

reimbursement

for

medically

unnecessary

and/or scans incentivized by the payment of kickbacks.”
*14.

The court rejected the claim as a matter of law:

scans
Id. at

“if the

allegations of the complaint are true, the relationship between
MDI

and

Appleman

chiropractors

and

(on
clinics

entirely of fraud.
would

be

no

the

one

(on

the

hand)
other

and

the

hand)

defendant

was

made

up

Without that alleged fraud, then, there

enterprise.”

Id.

In

other

words,

absent

an

enterprise distinct from the alleged racketeering activity, the
RICO claim failed.

See also Stephens, Inc. v. Geldermann, Inc.,

962 F.2d 808, 815-16 (8th Cir. 1992) (holding that plaintiff
failed

to

prove

the

existence

of

an

enterprise

under

RICO

because “[t]he only common factor that linked all these parties
together and defined them as a distinct group was their direct
or

indirect

[plaintiff].”).

participation

in

[the]

scheme

to defraud

The same result must follow here.

The gravamen of the amended complaint is that defendants
associated for the purpose of defrauding plaintiffs out of nofault benefits by funneling accident victims to the clinics in
order to provide unnecessary treatment or to bill for treatment

8

that

was

not

actually

provided.

activity, no enterprise would exist.

Without

this

fraudulent

The RICO claims thus fail.

Plaintiffs respond that the enterprise independently exists
without the fraudulent acts because the clinics are otherwise
legitimate.

This argument, however, ignores the allegations in

the amended complaint.

For example, plaintiffs seem to suggest

the runners served some type of legitimate purpose – finding
patients

without

improper

solicitation

–

but

they

have

only

alleged that the runners were used to solicit accident victims
in exchange for payment.
amended

complaint

defendants,

i.e.,

See Am. Compl. ¶¶ 34-36.

alleges
the

an

clinics,

runners, not just the clinics.

enterprise
the

Further, the

comprising

chiropractors,

Id. ¶ 31.

and

all
the

As a result, the fact

that part of the “enterprise” may have been engaged in lawful
business

is

irrelevant.

See

Stephens,

962

F.2d

at

815-16

(affirming dismissal of RICO claim despite fact that members of
alleged enterprise “carried on other legitimate activities”);
MDI, 2014 WL 4104789, at *15 n.11 (“Components of each alleged
enterprise

have

separate

structures

and

engage

in

legitimate

activities .... But the enterprise itself – that is, the thing
that connects or that is made up of the component parts – does
nothing except engage in fraud, according to the complaint.”)
(emphases omitted).

9

Because the amended complaint does not plausibly allege an
enterprise
§ 1964(c)

limited
fails,

§ 1962(d).

to

as

the

does

clinics,
their

plaintiffs’

claim

under

conspiracy

claim

under

RICO

See Jennings v. Bonus Bldg. Care, Inc., No. 4:13-CV-

663, 2014 WL 1806776, at *10 (W.D. Mo. May 7, 2014) (“If no one
defendant has caused injury through racketeering activity, then
§ 1962(d) conspiracy liability cannot attach to any defendant.”)
(citing Beck v. Prupis, 529 U.S. 494, 505 (2000)).
III. The Remaining Claims
A.

Minnesota Consumer Fraud Act

Minnesota’s Consumer Fraud Act prohibits the use of “fraud,
false

pretense,

false

promise,

misrepresentation,

misleading

statement or deceptive practice ... in connection with the sale
of

any

merchandise.”

Generally

speaking,

authority

to

violations
Minn.

the

Stat.

Minnesota

prosecute

by

Stat.

Minn.

consumer

seeking

injunctive

§ 8.31,

subdiv.

1.

§

325F.69,

Attorney

fraud
relief

General

and

has

1.5
the

similar

and

However,

subdiv.

statutory

civil

penalties.

an

individual

may

assert a claim under the Act as a “private attorney general.”
Id. § 8.31, subdiv. 3a.
“public benefit.”

To do so, the plaintiff must seek a

Buetow v. A.L.S. Enters., Inc., 888 F. Supp.

2d 956, 959 (D. Minn. 2012).

5
“Merchandise” is defined to include services.
Stat. § 325F.68, subdiv. 2.

10

Minn.

Defendants argue that plaintiffs do not seek any public
benefit because plaintiffs do not allege fraudulent or false
statements

to

reimbursement
respond
public

that

the

of

the

their

because

general
sums

public

paid

to

consumer-fraud

they

also

seek

and

primarily

defendants.

claim

Plaintiffs

benefits

injunctive

seek

the

relief

general

enjoining

defendants’ fraudulent conduct and inappropriate treatment of
insureds.
Several courts, including this one, have held that claims
seeking injunctive relief are more likely to serve a public
benefit than claims seeking damages.

See, e.g., Buetow, 888 F.

Supp. 2d at 961; In re Levaquin Prods. Liab. Litig., 752 F.
Supp. 2d 1071, 1076-77 (D. Minn. 2010).
injunctive

relief

does

not

But “a request for

necessarily

establish

a

public

benefit,” In re Levaquin, 752 F. Supp. 2d at 1077, particularly
where the relief “is at best incidental to [a] request for money
damages,” MDI, 2014 WL 4104789, at *20.

That is the case here.

Indeed, the amended complaint makes clear that the injunction
plaintiffs seek is not intended to benefit the public at large,
but only plaintiffs and their insureds.
(“Plaintiffs
Defendants

are
from

entitled
further

to

an

treating

See Am. Compl. ¶ 151
injunction

Plaintiffs’

prohibiting
insureds.”).

Moreover, a review of the amended complaint as a whole reveals
that plaintiffs do not truly seek a public benefit.

11

Over more

than 100 paragraphs and 41 pages, plaintiffs repeatedly cite the
damage defendants’ alleged conduct caused them.
¶¶ 24, 125, 149.

See, e.g., id.

As in MDI, the court concludes that the

request for injunctive relief was merely “incidental” to and
“grafted”

onto

plaintiffs’

request

for

damages

and

does

not

serve the public interest necessary to bring a private cause of
action

under

§ 325F.69.

2014

WL

4104789,

at

*20;

see

also

Select Comfort Corp. v. Tempur Sealy Int’l, Inc., 11 F. Supp. 3d
933,

940

(D.

Minn.

2014)

(dismissing

consumer-fraud

claim

because the relief sought, including injunctive relief, was not
“primarily aimed at altering the defendant’s conduct”) (internal
quotation and citation omitted).
B.

Other Fraud-based Claims

The remaining claims assert a civil conspiracy (Count 4),
common-law fraud (Count 5), no-fault fraud (Count 6), and unjust
enrichment (Count 7).

Each is predicated on the existence of a

fraudulent scheme perpetrated by defendants.
Compl. ¶¶ 156, 159, 166, 173.

See, e.g., Am.

According to plaintiffs, that

scheme resulted in the submission of hundreds of false claims,
for which plaintiffs paid more than $750,000.6

6
Plaintiffs have provided charts listing all of the
allegedly fraudulent claims submitted, including the claim
number, the amount, and the date.
See Am. Compl. Ex. 2.
Plaintiffs believe that every claim submitted by Guthman,
Steiner, and their clinics from the inception of the fraud –
approximately 2010 – was fraudulent.

12

Fraud

claims,

including

meet

Federal

Rule

must

of

those
Civil

simply

sounding

Procedure

9(b)’s

in

fraud,

heightened

pleading requirement.

Drobnak v. Andersen Corp., 561 F.3d 778,

784 (8th Cir. 2009).

This requires a plaintiff to “state with

particularity the circumstances constituting fraud” or, in other
words, “identify the who, what, where, when, and how of the
alleged fraud.”

U.S. ex rel. Thayer v. Planned Parenthood of

Heartland, 765 F.3d 914, 917 (8th Cir. 2014) (internal quotation
marks and citations omitted).
harmony

with

claims

the

require

principles

“a

higher

Courts must read Rule 9(b) “in
of

notice

degree

of

pleading,”
notice,

but

fraud

enabling

the

defendant to respond specifically, at an early stage of the
case,

to

potentially

criminal conduct.”

damaging

allegations

of

immoral

and

Schaller Tel. Co. v. Golden Sky Sys., Inc.,

298 F.3d 736, 746 (8th Cir. 2002) (internal quotation marks and
citation omitted).

“[C]onclusory allegations that a defendant’s

conduct was fraudulent and deceptive are not sufficient.”

Id.

The crux of defendants’ motions with respect to the fraudbased claims is that they are not adequately pleaded under Rule
9(b).

The court agrees, in part.
1.
The

The Guthman Defendants

Guthman

Defendants

argue

that

the

amended

complaint

does not meet the Eighth Circuit’s interpretation of Rule 9(b)
as set forth in U.S. ex rel. Joshi v. St. Luke’s Hospital, Inc.,

13

441 F.3d 552 (8th Cir. 2006).

In Joshi, the court held that a

plaintiff must plead at least a few “representative examples of
the[] alleged fraudulent conduct, specifying the time, place,
and content of the[] acts and the identity of the actors” to
establish

an

“indicia

alleged fraud.

of

reliability”

with

respect

to

the

Id.

In an attempt to comply with Joshi, plaintiffs identified
eighteen

claims

submitted

by

defendants

examples of the purported fraud.

as

representative

See Am. Compl. ¶¶ 68-114.

Generally speaking, those examples specify when the claims were
made, the particular claim numbers, who submitted them, and what
was

fraudulent

about

them.

For

example,

in

one

instance

plaintiffs allege that following a car accident on February 21,
2012, Guthman and Inver Family Chiropractic billed more than
$19,000 for services treating the insured’s neck and back “even
though the policyholder had suffered a torn ACL in his left
knee” and “never had any neck pain.”

Id. ¶¶ 75-76.

Similarly,

the amended complaint alleges that following a car accident on
December 18, 2011, plaintiffs were billed for treatment to a
husband

and

wife

by

Guthman

and

Alianza

Chiropractic

for

(i) “adjustments” to the wife, even though she “did not receive
adjustments due to being in too much pain,” and (ii) mechanical
traction for the husband that was not actually provided.
¶¶ 68-74.

In another instance, plaintiffs allege that a child

14

Id.

injured in a car accident complained only of neck pain, but
Guthman

nevertheless

billed

more

than

$1,100

for

x-rays

and

claimed that the patient reported “severe pain throughout her
neck, upper back, chest and right knee.”

Id. ¶ 103.

Plaintiffs

argue that each of these examples are emblematic of the broader
fraudulent scheme alleged.
The Guthman Defendants attempt to minimize these examples
as

isolated

billing.

incidents
The

representative

of

court

purported
is

examples,

not

coupled

overbilling
persuaded.
with

other

or

mistaken

Plaintiffs’
indicia

of

reliability – most notably the corroboration of a cooperating
witness - are sufficient to plausibly allege fraud.

See, e.g.,

id. ¶ 40 (alleging that Guthman ordered the cooperating witness
to pay accident victims to obtain treatment in the clinic, even
though the patients denied being injured).7
The

Guthman

Defendants,

relying

on

MDI,

argue

that

allegations of improper solicitation are insufficient to give
rise to a fraud claim.

In MDI, the court found the fraud claim

7
The Guthman Defendants argue that the court should
disregard allegations provided by the witness because he or she
is anonymous.
But plaintiffs identified the witness at oral
argument and the allegations are detailed enough to identify the
person in any event.
See Am. Compl. ¶¶ 48, 55.
Further,
reliance on an anonymous witness is not uncommon in cases
involving healthcare fraud.
See, e.g., State Farm Mut. Auto.
Ins. Co. v. Healthcare Chiropractic Clinic, Inc., Civ. No. 152527, 2015 WL 6445324 (D. Minn. Oct. 23, 2015).

15

lacking, because even if patients had been improperly solicited,
that did not mean they were improperly treated:
One of the major weaknesses of plaintiffs’
case is their failure to recognize that the
payment of kickbacks (on the one hand) and
the medical necessity and reasonableness ...
of an MRI scan (on the other hand) are
entirely separate questions.
2014 WL 4104789, at *10.

As already noted, however, the alleged

scheme here involves not only soliciting victims, but also the
submission of patently false and fraudulent claims.

Plaintiffs

therefore have complied with Rule 9(b) with respect to Guthman
and his clinic.
Plaintiffs have failed to do so, however, with respect to
the runners.

Although plaintiffs provide some allegations that

the runners solicited patients for treatment at the clinics, see
Am. Compl. ¶ 92, in most instances the allegations lack any
degree

of

specificity.

See

id.

¶

75

(alleging

that

“the

policyholder was solicited for treatment with Defendants Guthman
and Defendant Inver Family [Chiropractic] by an agent of the
Defendants”); id. ¶ 96 (alleging that “the policyholder received
a

call

from

policyholder’s
Plaintiffs
provide

one

of

involvement

cannot

allegations

the

Defendant

in

a

motor

Runners

after

vehicle

accident”).

simply

lump

together

all

about

only

some

them.

of

defendants
Petersen

the

and
v.

England, No. 09-2850, 2010 WL 3893797, at *10 (D. Minn. Sept.

16

30, 2010); Moua v. Jani-King of Minn., Inc., 613 F. Supp. 2d
1103, 1111 (D. Minn. 2009).
More important, plaintiffs seem to overlook the distinction
between payments to the runners and the allegedly fraudulent
billing.
were

As recognized in MDI, even if kickbacks to the runners

unlawful,

that

does

not

necessarily

provided – and the billing - was improper.
*10.

mean

the

treatment

2014 WL 4104789, at

In other words, the fact that the runners were paid does

not necessarily mean that they were involved in the fraudulent
scheme alleged.

Plaintiffs argue that the runners were aware of

the scheme, but they make no such allegation.

As a result, the

amended complaint does not plausibly allege that the runners
knowingly participated in a scheme to defraud.
2.

The Steiner Defendants

Much like the allegations against the runners, the amended
complaint is significantly less detailed with respect to Steiner
and

Chiropractic

Wellness.

Plaintiffs

only

provide

examples

that Ross, a runner, performed medical services on policyholders
despite not having a license to do so, and for which plaintiffs
were billed.

See Am. Compl. ¶¶ 80-87, 99-102.

But unlike the

allegations with respect to Guthman, plaintiffs do not provide
sufficient
Defendants.

detail

to

plausibly

allege

fraud

by

the

Steiner

In the examples provided in the amended complaint,

plaintiffs do not allege that the patients did not actually need

17

the treatment provided or that the bills submitted for those
services were unreasonable.

See id. ¶¶ 85, 100, 101.

Nor have

plaintiffs provided sufficient other “reliable indicia that lead
to

a

strong

submitted.”

inference
Thayer,

765

that

[false]

F.3d

at

919.

claims

were

Indeed,

actually

the

amended

complaint does not cite to any first-hand knowledge of Steiner’s
billing practices or other “reliable indicia” to suggest that
the

Steiner

Defendants

“actually

submitted”

false

claims.

Though plaintiffs point to the cooperating witness, there is no
indication the witness was involved in billing or knew that
Steiner was providing medically unnecessary treatment.

As a

result, the fraud-based claims against the Steiner Defendants
fail as a matter of law.

CONCLUSION
Based on the foregoing, and all the files, records, and
proceedings herein, IT IS HEREBY ORDERED that:
1.

The Guthman Defendants’ motion to dismiss [ECF No. 62]

is granted in part as follows:
a.

The motion is granted as to the claims against

Ross, Pimentel, Cano, and Centro Hispano de Ayuda, and the
claims

against

these

defendants

prejudice;

18

are

dismissed

with

b.

The

motion

is

granted

as

to

the

RICO

claims

(Counts 1 and 2) and the Minnesota Consumer Fraud Act claim
(Count 3) against Guthman, Inver Family Chiropractic, Team
Chiropractic, and Alianza Chiropractic, and those claims
are dismissed with prejudice;
c.

In all other respects, the Guthman Defendants’

motion is denied; and
2.

The Steiner Defendants’ motion to dismiss [ECF No. 60]

is granted, and all claims asserted against those defendants are
dismissed with prejudice.
Dated: September 7, 2017
s/David S. Doty
David S. Doty, Judge
United States District Court

19