United States District Court, Western District of Michigan; Docket No. 5:96-CV-177;
Honorable Robert Holmes Bell; Unpublished
Official Federal Reporter Citation: Not Applicable; Link to Opinion
Use of Fee Schedules to Determine Reasonable Charges [§3157]
Federal Jurisdiction and Removal of PIP Claims
In this Opinion by Judge Robert Holmes Bell, the court ruled that plaintiff health care providers had failed to state a cause of action under the federal RICO statute [18 USC § 1962(b)], where plaintiffs challenged the actions of the insurance company defendants in (1) using fee schedules to limit payment of medical expense claims, (2) threatening plaintiffs with lawsuits if they attempted to balance-bill patients, (3) attempting to defend patients, without patients' consent, in balance-billing disputes, and (4) otherwise interfering with plaintiffs' contractual rights to pursue collection of professional fees from their patients. In ruling that these claims under the Michigan no-fault law did not create a RICO cause of action, Judge Bell stated: "After reviewing the complaint in a light most favorable to the Plaintiffs, this court finds that at best the Plaintiffs have set forth a valid issue as to the interpretation of the Michigan no-fault statute, not a pattern of racketeering activity. This appears to be a good faith dispute as to the rights, duties and obligations of the key players involved with the Michigan no-fault statute. Even if a court adopts the Plaintiffs' interpretation of the insurance companies' duties under the no-fault act, there is nothing in the complaint, except numerous legal conclusion by the Plaintiffs, alleging that the Defendants had the intent necessary to sustain a claim of fraud or extortion.. .. In addition, this Court finds that Plaintiffs have also failed to allege a RICO enterprise.... The enterprise alleged by the Plaintiffs is the association of individual insurance companies and review companies which assisted them.... This Court finds that the Plaintiffs have failed to allege an ascertainable structure separate from the alleged pattern of racketeering. The Plaintiffs merely claim that the alleged enterprise is synonymous with the alleged racketeering acts. This is not a sufficient claim of an ascertainable structure separate from the alleged enterprise."
The court also ruled that the actions of the defendant insurance companies did not create a viable federal claim for deprivation of due process. The court stated, "This Court finds that a dispute between insurance companies and health care providers over what is a reasonable charge and over whether a health care provider is permitted to balance-bill under the no-fault act does not convert the insurance companies' actions into state action for due process purposes.... Shavers v Attorney General [Item No. 85] should not be read to cause every action by a no-fault insurer to be state action for due process purposes. This case does not implicate issues which are similar to an individual's ability to get no-fault insurance, and consequently to drive. The defendants' review of the reasonableness of bills and challenge to the health care providers' attempts to balance-bill do not have a sufficiently close nexus to the state so that the defendants' actions may be fairly treated as that of the state itself."
Because of the dismissal of the RICO claim and the due process claim, Judge Bell remanded the case to the Eaton County Circuit Court, where it originated, for a determination of these issues under state law.