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This posting was written by CCH Trade Regulation staff.
FTC Chairman Jon Leibowitz welcomed Joshua D. Wright as an FTC Commissioner at a swearing-in ceremony January 11. President Obama named Wright, a Republican, to a term that ends on September 25, 2019. He was unanimously confirmed by the U.S. Senate on January 1, 2013, and will replace J. Thomas Rosch, who served as a Commissioner beginning in January 2006.
Before joining the FTC, Wright was a Professor of Law at George Mason University School of Law. Wright previously served as the inaugural Scholar in Residence at the FTC Bureau of Competition, from January 2007 to July 2008. Prior to GMU, Wright taught at the Pepperdine University School of Public Policy and clerked for Judge James V. Selna of the U.S. District Court for the Central District of California.
He received a B.A. in Economics at the University of California, San Diego and a J.D. and a Ph.D. in Economics from the University of California, Los Angeles (UCLA), where he was Managing Editor of the UCLA Law Review. According to Truth on the Market blog, Wright would be the first J.D./Ph.D. to serve as an FTC Commissioner and only the fourth economist.
25 Şubat 2013 Pazartesi
UPS Drops Planned Acquisition of TNT Express in Light of EC Concerns
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This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.
United Parcel Service, Inc. (UPS) announced on January 14 that it is dropping its plans to acquire competing delivery company TNT Express N.V. in response to European Commission (EC) antitrust concerns over the deal. UPS said that the EC had informed the companies that it was working on a decision to prohibit the transaction. Upon prohibition by the EC, UPS will withdraw its offer and pay the Dutch firm € 200 million.
According to a statement from TNT released today, the EC case team investigating the proposed acquisition informed the companies that on the basis of UPS’s current remedy proposal it was working towards proposing a prohibition decision. TNT went on to say that it was informed that UPS “sees no realistic prospect that EC clearance can be obtained and that UPS will not pursue the transaction on any other basis.”
In March 2012, the parties announced the proposed transaction to “create a global leader in the logistics industry.” The parties had initially hoped to complete the acquisition by the end of 2012.
The EC disclosed in July 2012 that it had opened an in-depth investigation into the combination. At that time, the EC said that its preliminary investigation indicated potential competition concerns in the markets for small parcel delivery services, in particular international express services, in numerous member states, where the parties would have very high combined market shares.
The parties announced in October that they had received a statement of objections from the EC. The parties offered proposed remedies to resolve the EC's concerns regarding the competitive effects of the proposed merger on the international express small package market in Europe. Obviously, the commitments were not enough to resolve the antitrust concerns. The EC has until early February to issue its decision.
United Parcel Service, Inc. (UPS) announced on January 14 that it is dropping its plans to acquire competing delivery company TNT Express N.V. in response to European Commission (EC) antitrust concerns over the deal. UPS said that the EC had informed the companies that it was working on a decision to prohibit the transaction. Upon prohibition by the EC, UPS will withdraw its offer and pay the Dutch firm € 200 million.
According to a statement from TNT released today, the EC case team investigating the proposed acquisition informed the companies that on the basis of UPS’s current remedy proposal it was working towards proposing a prohibition decision. TNT went on to say that it was informed that UPS “sees no realistic prospect that EC clearance can be obtained and that UPS will not pursue the transaction on any other basis.”
In March 2012, the parties announced the proposed transaction to “create a global leader in the logistics industry.” The parties had initially hoped to complete the acquisition by the end of 2012.
The EC disclosed in July 2012 that it had opened an in-depth investigation into the combination. At that time, the EC said that its preliminary investigation indicated potential competition concerns in the markets for small parcel delivery services, in particular international express services, in numerous member states, where the parties would have very high combined market shares.
The parties announced in October that they had received a statement of objections from the EC. The parties offered proposed remedies to resolve the EC's concerns regarding the competitive effects of the proposed merger on the international express small package market in Europe. Obviously, the commitments were not enough to resolve the antitrust concerns. The EC has until early February to issue its decision.
Subway Sued For Misrepresenting Length of “Footlong” Sandwiches
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This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices Law.
A Subway customer filed a nationwide class action lawsuit in the federal district court in Chicago, alleging that Subway violated the consumer protection statutes of all 50 states and the District of Columbia, after measuring a “Footlong” sandwich purchased from Subway and realizing it was less than 11 inches long (Buren v. Doctor’s Associates, Inc., No. 1:13-cv-00498, January 22, 2013).
Subway advertises and sells submarine sandwiches labeled as “Footlong” subs. The complaint alleges that, because the actual length of the sandwiches falls short of 12 inches, customers pay more than they should have in reliance on Subway’s advertising. Advertising on television, in print, on the radio, and on the Internet allegedly misleads consumers into believing that they are receiving a 12-inch sandwich when they actually receive less.
In marketing and advertising materials, Subway references the length of the “Footlong” subs by having actors or artists’ renderings hold their hands approximately one foot apart, and includes a graphic between the actors’ hands indicating that the hands are one foot apart.
The customer, Nguyen Buren, alleged a class action on behalf of “All persons in the United States who purchased SUBWAY® ‘Footlong’ submarine sandwiches that were less than 12 inches long.”
The complaint sought to enjoin Subway from using the allegedly deceptive advertising and requested restitution, actual damages, treble damages, punitive damages, attorney fees, and costs of suit.
Other Lawsuits
Similar lawsuits have been filed in the Court of Common Pleas in Philadelphia County and in New Jersey Superior Court, Burlington County.
The Pennsylvania complaint alleges a state-wide class action brought under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) “over identical, false, affirmative misstatements of material fact and knowing material omissions made by Subway regarding its trademarked ‘Footlong’ sandwich” starting in January 2007 and continuing to the present (Roseman v. Subway Sandwich Shops, Inc., No. 130102647, January 24, 2013).
“The discrepancy in size between the uniform statements in Subway’s signs, menus and advertising regarding the size of this sandwich and the actual size of this sandwich is not an accident nor is it the result of any variation in size among such sandwiches,” the complaint charged. “Rather, Subway has admitted in communications with the press that this sandwich is made according to exacting, uniform procedures and specifications imposed by Subway upon its franchisees and stores, all of whom are required by Subway to use specified ingredients in specified amounts.”
The action “aims at obtaining redress under the Pennsylvania UTPCPL for those persons in Pennsylvania who received less than what they were promised when they purchased a ‘Footlong’ sandwich in Pennsylvania between January 24, 2007 and the present.” It asks the court to certify the class, enter an order for injunctive and declaratory relief, assess damages and trebled damages, and award attorney fees and costs.
A Subway customer filed a nationwide class action lawsuit in the federal district court in Chicago, alleging that Subway violated the consumer protection statutes of all 50 states and the District of Columbia, after measuring a “Footlong” sandwich purchased from Subway and realizing it was less than 11 inches long (Buren v. Doctor’s Associates, Inc., No. 1:13-cv-00498, January 22, 2013).
Subway advertises and sells submarine sandwiches labeled as “Footlong” subs. The complaint alleges that, because the actual length of the sandwiches falls short of 12 inches, customers pay more than they should have in reliance on Subway’s advertising. Advertising on television, in print, on the radio, and on the Internet allegedly misleads consumers into believing that they are receiving a 12-inch sandwich when they actually receive less.
In marketing and advertising materials, Subway references the length of the “Footlong” subs by having actors or artists’ renderings hold their hands approximately one foot apart, and includes a graphic between the actors’ hands indicating that the hands are one foot apart.
The customer, Nguyen Buren, alleged a class action on behalf of “All persons in the United States who purchased SUBWAY® ‘Footlong’ submarine sandwiches that were less than 12 inches long.”
The complaint sought to enjoin Subway from using the allegedly deceptive advertising and requested restitution, actual damages, treble damages, punitive damages, attorney fees, and costs of suit.
Other Lawsuits
Similar lawsuits have been filed in the Court of Common Pleas in Philadelphia County and in New Jersey Superior Court, Burlington County.
The Pennsylvania complaint alleges a state-wide class action brought under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) “over identical, false, affirmative misstatements of material fact and knowing material omissions made by Subway regarding its trademarked ‘Footlong’ sandwich” starting in January 2007 and continuing to the present (Roseman v. Subway Sandwich Shops, Inc., No. 130102647, January 24, 2013).
“The discrepancy in size between the uniform statements in Subway’s signs, menus and advertising regarding the size of this sandwich and the actual size of this sandwich is not an accident nor is it the result of any variation in size among such sandwiches,” the complaint charged. “Rather, Subway has admitted in communications with the press that this sandwich is made according to exacting, uniform procedures and specifications imposed by Subway upon its franchisees and stores, all of whom are required by Subway to use specified ingredients in specified amounts.”
The action “aims at obtaining redress under the Pennsylvania UTPCPL for those persons in Pennsylvania who received less than what they were promised when they purchased a ‘Footlong’ sandwich in Pennsylvania between January 24, 2007 and the present.” It asks the court to certify the class, enter an order for injunctive and declaratory relief, assess damages and trebled damages, and award attorney fees and costs.
Michigan Motor Dealers Act Amendments Do Not Apply Retroactively to Require Prior Notice of Opening New Dealership
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This posting was written by Tobias J. Gillett, J.D., LLM, contributor to Antitrust Law Daily.
Kia Motors may open an automobile dealer within nine miles of an existing Michigan dealership without providing notice to the dealer, despite a 2010 amendment to Michigan’s Motor Dealers Act requiring manufacturers to provide notice and an opportunity to bring a declaratory judgment action to dealers within nine miles of the new dealer, the U.S. Court of Appeals in Cincinnati has ruled (Kia Motors America, Inc. v. Glassman Oldsmobile Saab Hyundai, Inc., February 7, 2013, McKeague, D.).
Kia and the Michigan dealer entered into their dealer agreement in 1998, when the statute specified a six-mile zone requiring notice rather than a nine-mile zone, and the amendment did not apply retroactively.
Glassman Oldsmobile Saab Hyundai, Inc. is a Southfield, Michigan automobile dealer. In 1998, Kia and Glassman entered into a nonexclusive Dealer Sales and Service Agreement appointing Glassman as an authorized Kia dealer. The agreement stated that “[a]s permitted by applicable law, [Kia] may add new dealers to, relocate dealers into or remove dealers from the [Area of Primary Responsibility] assigned to [Glassman].”
In 1998, Michigan’s Motor Dealers Act required manufacturers to provide written notice to existing dealers within six miles of a proposed new dealer before establishing the dealer, and permitted the existing dealer to bring a declaratory judgment action within thirty days of receiving notice “to determine whether good cause exists for the establishing or relocating of” the proposed new dealer. In 2010, the Michigan legislature amended the Act to extend this zone to nine miles from existing dealers.
Shortly after the amendment became effective, Kia informed Glassman that it intended to establish a new dealer in Troy, Michigan, about seven miles from Glassman. Glassman protested the lack of written notice from Kia, and Kia filed an action for a declaratory judgment that the 2010 amendment did not require it to give notice to Glassman.
The district court granted summary judgment to Kia, concluding that the amendment did not operate retroactively to require Kia to give notice. Glassman appealed.
Contract Argument
On appeal, Glassman contended that the parties had intended to incorporate changes to the law, such as the 2010 amendment, by including the “as permitted by applicable law” language. The appeals court initially noted that the language might not apply to this case, since the language limited Kia’s ability to establish new dealers within Glassman’s “Area of Primary Responsibility,” a term distinct from the “relevant market area” term in the Act. Kia had stated that the new dealer would not be established within Glassman’s “Area of Primary Responsibility.”
Even if it did apply, however, the court observed that changes to the law are generally not incorporated into an agreement unless the language of the agreement clearly indicates the intent of the parties to include such changes. Since “as permitted by applicable law” could refer to the provision of the Act in effect when the contract was signed as easily as it could refer to the current provision, the language did not clearly indicate the intent of the parties to incorporate changes in the law.
Glassman also argued that the 2010 amendment should apply, since other provisions in the agreement required Glassman to comply with applicable consumer-protection, safety, and emission-control laws, and since Kia agreed that those provisions required Glassman to comply with current laws as well as those in effect when the agreement was signed. However, the court of appeals observed that those provisions referred to Glassman’s responsibilities to the general public, and did not “significantly change the parties’ bargain.” Since the dealer establishment provision “directly concern[ed] the relationship between Kia and Glassman,” it differed fundamentally from the other provisions, in the court’s view.
Statutory Argument
Having determined that the agreement did not include the 2010 amendment, the court proceeded to address whether the Michigan legislature intended the 2010 amendment to apply retroactively. The court noted that Michigan statutes are generally presumed to operate only prospectively “unless the contrary intent is clearly manifested.” However, procedural statutes that “neither create new rights nor destroy, enlarge, or diminish existing rights are generally held to operate retrospectively unless a contrary legislative intent is manifested.”
Since the legislature had not manifested a clear intent for the amendment to apply retrospectively, the only issue was whether the amendment was substantive or procedural. Glassman had argued that the amendment was procedural “because it constituted a minor change to the definition of relevant market area,” and did not “create new substantive rights.” However, the court concluded that the amendment, by requiring Kia to provide notice if it established a dealer more than six miles from an existing dealer, did impose a new duty on Kia, and “provide[d] a new substantive right that did not previously exist.”
The court also rejected an argument that, since Kia was intending to establish a new dealer after the 2010 amendment, the amendment would not have to be applied retrospectively, finding that the amendment would “affect[] Kia’s rights under a contract that predates the amendment.”
In addition, the court noted that its decision would permit it to avoid the constitutional question whether applying the 2010 amendment retroactively would violate the Contracts Clauses of the United States and Michigan Constitutions. The court therefore concluded that the 2010 amendment should not be applied retroactively to the agreement, and affirmed the district court’s grant of judgment on the pleadings to Kia.
Kia Motors may open an automobile dealer within nine miles of an existing Michigan dealership without providing notice to the dealer, despite a 2010 amendment to Michigan’s Motor Dealers Act requiring manufacturers to provide notice and an opportunity to bring a declaratory judgment action to dealers within nine miles of the new dealer, the U.S. Court of Appeals in Cincinnati has ruled (Kia Motors America, Inc. v. Glassman Oldsmobile Saab Hyundai, Inc., February 7, 2013, McKeague, D.).
Kia and the Michigan dealer entered into their dealer agreement in 1998, when the statute specified a six-mile zone requiring notice rather than a nine-mile zone, and the amendment did not apply retroactively.
Glassman Oldsmobile Saab Hyundai, Inc. is a Southfield, Michigan automobile dealer. In 1998, Kia and Glassman entered into a nonexclusive Dealer Sales and Service Agreement appointing Glassman as an authorized Kia dealer. The agreement stated that “[a]s permitted by applicable law, [Kia] may add new dealers to, relocate dealers into or remove dealers from the [Area of Primary Responsibility] assigned to [Glassman].”
In 1998, Michigan’s Motor Dealers Act required manufacturers to provide written notice to existing dealers within six miles of a proposed new dealer before establishing the dealer, and permitted the existing dealer to bring a declaratory judgment action within thirty days of receiving notice “to determine whether good cause exists for the establishing or relocating of” the proposed new dealer. In 2010, the Michigan legislature amended the Act to extend this zone to nine miles from existing dealers.
Shortly after the amendment became effective, Kia informed Glassman that it intended to establish a new dealer in Troy, Michigan, about seven miles from Glassman. Glassman protested the lack of written notice from Kia, and Kia filed an action for a declaratory judgment that the 2010 amendment did not require it to give notice to Glassman.
The district court granted summary judgment to Kia, concluding that the amendment did not operate retroactively to require Kia to give notice. Glassman appealed.
Contract Argument
On appeal, Glassman contended that the parties had intended to incorporate changes to the law, such as the 2010 amendment, by including the “as permitted by applicable law” language. The appeals court initially noted that the language might not apply to this case, since the language limited Kia’s ability to establish new dealers within Glassman’s “Area of Primary Responsibility,” a term distinct from the “relevant market area” term in the Act. Kia had stated that the new dealer would not be established within Glassman’s “Area of Primary Responsibility.”
Even if it did apply, however, the court observed that changes to the law are generally not incorporated into an agreement unless the language of the agreement clearly indicates the intent of the parties to include such changes. Since “as permitted by applicable law” could refer to the provision of the Act in effect when the contract was signed as easily as it could refer to the current provision, the language did not clearly indicate the intent of the parties to incorporate changes in the law.
Glassman also argued that the 2010 amendment should apply, since other provisions in the agreement required Glassman to comply with applicable consumer-protection, safety, and emission-control laws, and since Kia agreed that those provisions required Glassman to comply with current laws as well as those in effect when the agreement was signed. However, the court of appeals observed that those provisions referred to Glassman’s responsibilities to the general public, and did not “significantly change the parties’ bargain.” Since the dealer establishment provision “directly concern[ed] the relationship between Kia and Glassman,” it differed fundamentally from the other provisions, in the court’s view.
Statutory Argument
Having determined that the agreement did not include the 2010 amendment, the court proceeded to address whether the Michigan legislature intended the 2010 amendment to apply retroactively. The court noted that Michigan statutes are generally presumed to operate only prospectively “unless the contrary intent is clearly manifested.” However, procedural statutes that “neither create new rights nor destroy, enlarge, or diminish existing rights are generally held to operate retrospectively unless a contrary legislative intent is manifested.”
Since the legislature had not manifested a clear intent for the amendment to apply retrospectively, the only issue was whether the amendment was substantive or procedural. Glassman had argued that the amendment was procedural “because it constituted a minor change to the definition of relevant market area,” and did not “create new substantive rights.” However, the court concluded that the amendment, by requiring Kia to provide notice if it established a dealer more than six miles from an existing dealer, did impose a new duty on Kia, and “provide[d] a new substantive right that did not previously exist.”
The court also rejected an argument that, since Kia was intending to establish a new dealer after the 2010 amendment, the amendment would not have to be applied retrospectively, finding that the amendment would “affect[] Kia’s rights under a contract that predates the amendment.”
In addition, the court noted that its decision would permit it to avoid the constitutional question whether applying the 2010 amendment retroactively would violate the Contracts Clauses of the United States and Michigan Constitutions. The court therefore concluded that the 2010 amendment should not be applied retroactively to the agreement, and affirmed the district court’s grant of judgment on the pleadings to Kia.
Insurer States RICO Claim Against Personal Injury Scammers; Counterclaim Too Bare to Survive
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This posting was written by E. Darius Sturmer, contributor to Antitrust Law Daily.
A physician and a pair of physical therapy clinics, along with their principals, could have violated the federal RICO Act by orchestrating an alleged scheme to defraud State Farm Mutual Automobile Insurance Co. through the filing of claims for physical therapy services that were medically unnecessary or not actually performed, the federal district court in Ann Arbor, Michigan has decided (State Farm Mutual Automobile Insurance Co. v. Physiomatrix, Inc., February 12, 2013, O’Meara, J.).
A motion to dismiss filed by the defendants was denied, while motions by State Farm and two of its employees to dismiss the defendants’ RICO counterclaims was granted. Michigan’s Commissioner of Insurance, Kevin Clinton, and Secretary of State Ruth Johnson were also entitled to dismissal of a declaratory judgment action filed by the defendants, seeking to force them to order State Farm to cease its allegedly illegal conduct and suspend, revoke, or limit the insurer’s authority to act in Michigan.
In the suit, State Farm alleged that the defendant physician provided fraudulent diagnoses and prescriptions to patients who had been involved in motor vehicle accidents and were eligible for Personal Injury Protection (PIP) benefits under State Farm policies. These allowed them to obtain unnecessary physical therapy treatment at the defending clinics. The defendants’ counterclaims asserted that State Farm and two of its employees had violated their civil rights and federal RICO by fraudulently issuing blanket denials of legitimate PIP claims.
McCarran-Ferguson Act Preemption
At the outset, the court rejected an argument by the defendants that State Farm’s RICO claims were reverse preempted by the McCarran-Ferguson Act. The Act provides that “[t]he business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business.” There was no need to undertake an analysis of whether the conduct constituted the business of insurance, the court said, because the application of RICO would not impair Michigan’s No-Fault Act.
There was no legal authority suggesting that the insurance code had abrogated a common law action for fraud. State Farm did not have an “exclusive remedy” under the Michigan Insurance Code for fraud that would conflict with the application of RICO, and there was no evidence that the application of RICO would impair the state’s regulatory scheme. To the contrary, RICO augmented Michigan’s regulatory scheme.
Adequacy of plaintiff’s RICO Claim. State Farm adequately pleaded a claim for violation of 18 U.S.C. §1962(c) of the RICO Act, the court ruled. The insurance company sufficiently alleged the existence of a RICO enterprise and the defendants’ participation in it. It described the purpose of the conspiracy, the relationships between those associated with the enterprise, and sufficient longevity (from 2007 to the present) to permit the enterprise’s purpose. Addressing the claims specifically in the context of the defending physician’s motion, the court noted State Farm’s further allegation that the physician’s role was essential to the success of the scheme, given state laws requiring prescriptions for physical therapy services.
In addition, the court rejected the defendants’ contention that State Farm failed to plead mail fraud with particularity. The insurer’s providing of attachments to the complaint listing the claims at issue, examples of the physicians’ allegedly fraudulent disability certificates, and his initial examination findings, together with its specification of the overall fraudulent scheme in the complaint, sufficed to satisfy the pleading requirements of Federal Rule of Civil Procedure 9(b).
Defendants’ RICO Counterclaim
The defendants’ RICO counterclaim against State Farm and its employees—which contended that the insurer, its employees, and purported “independent” medical examiners conspired to wrongfully issue automatic claim denials—could not similarly survive dismissal, in the court’s view. The claim, which was essentially that State Farm did not remit payment as required under its insurance policies sounded in contract, not fraud, the court noted.
The countercomplaint alleged that in 2011, the insurer and its co-conspirators commenced their predetermined pattern of activity to wrongfully deny each and every claim submitted through the two physical therapy clinics. This consisted of issuing, through the United States Mail, form ‘investigation letters’ at various stages of the claim process and then predetermined explanation-of-benefit letters, all of which contained false and misleading information and statements as to the propriety of the charges sought to be paid to the clinics.
The clinics alleged that the information contained in the investigation letters implying a basis to deny claims and the information denying such claims “was false, was false when made, and was known by the author of such letters to be false when made.” They did not specify, however, what “information” in the investigation letters or explanation of benefit letters was false. Nor did they specify the claims that State Farm had allegedly fraudulently denied. Such bare allegations of fraud did not satisfy Rule 9(b)’s particularity requirement and did not sufficiently allege predicate acts of racketeering to state a claim under RICO, the court concluded.
Further details will appear in RICO Business Disputes Guide. Further information regarding the Guide appears here.
A physician and a pair of physical therapy clinics, along with their principals, could have violated the federal RICO Act by orchestrating an alleged scheme to defraud State Farm Mutual Automobile Insurance Co. through the filing of claims for physical therapy services that were medically unnecessary or not actually performed, the federal district court in Ann Arbor, Michigan has decided (State Farm Mutual Automobile Insurance Co. v. Physiomatrix, Inc., February 12, 2013, O’Meara, J.).
A motion to dismiss filed by the defendants was denied, while motions by State Farm and two of its employees to dismiss the defendants’ RICO counterclaims was granted. Michigan’s Commissioner of Insurance, Kevin Clinton, and Secretary of State Ruth Johnson were also entitled to dismissal of a declaratory judgment action filed by the defendants, seeking to force them to order State Farm to cease its allegedly illegal conduct and suspend, revoke, or limit the insurer’s authority to act in Michigan.
In the suit, State Farm alleged that the defendant physician provided fraudulent diagnoses and prescriptions to patients who had been involved in motor vehicle accidents and were eligible for Personal Injury Protection (PIP) benefits under State Farm policies. These allowed them to obtain unnecessary physical therapy treatment at the defending clinics. The defendants’ counterclaims asserted that State Farm and two of its employees had violated their civil rights and federal RICO by fraudulently issuing blanket denials of legitimate PIP claims.
McCarran-Ferguson Act Preemption
At the outset, the court rejected an argument by the defendants that State Farm’s RICO claims were reverse preempted by the McCarran-Ferguson Act. The Act provides that “[t]he business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business.” There was no need to undertake an analysis of whether the conduct constituted the business of insurance, the court said, because the application of RICO would not impair Michigan’s No-Fault Act.
There was no legal authority suggesting that the insurance code had abrogated a common law action for fraud. State Farm did not have an “exclusive remedy” under the Michigan Insurance Code for fraud that would conflict with the application of RICO, and there was no evidence that the application of RICO would impair the state’s regulatory scheme. To the contrary, RICO augmented Michigan’s regulatory scheme.
Adequacy of plaintiff’s RICO Claim. State Farm adequately pleaded a claim for violation of 18 U.S.C. §1962(c) of the RICO Act, the court ruled. The insurance company sufficiently alleged the existence of a RICO enterprise and the defendants’ participation in it. It described the purpose of the conspiracy, the relationships between those associated with the enterprise, and sufficient longevity (from 2007 to the present) to permit the enterprise’s purpose. Addressing the claims specifically in the context of the defending physician’s motion, the court noted State Farm’s further allegation that the physician’s role was essential to the success of the scheme, given state laws requiring prescriptions for physical therapy services.
In addition, the court rejected the defendants’ contention that State Farm failed to plead mail fraud with particularity. The insurer’s providing of attachments to the complaint listing the claims at issue, examples of the physicians’ allegedly fraudulent disability certificates, and his initial examination findings, together with its specification of the overall fraudulent scheme in the complaint, sufficed to satisfy the pleading requirements of Federal Rule of Civil Procedure 9(b).
Defendants’ RICO Counterclaim
The defendants’ RICO counterclaim against State Farm and its employees—which contended that the insurer, its employees, and purported “independent” medical examiners conspired to wrongfully issue automatic claim denials—could not similarly survive dismissal, in the court’s view. The claim, which was essentially that State Farm did not remit payment as required under its insurance policies sounded in contract, not fraud, the court noted.
The countercomplaint alleged that in 2011, the insurer and its co-conspirators commenced their predetermined pattern of activity to wrongfully deny each and every claim submitted through the two physical therapy clinics. This consisted of issuing, through the United States Mail, form ‘investigation letters’ at various stages of the claim process and then predetermined explanation-of-benefit letters, all of which contained false and misleading information and statements as to the propriety of the charges sought to be paid to the clinics.
The clinics alleged that the information contained in the investigation letters implying a basis to deny claims and the information denying such claims “was false, was false when made, and was known by the author of such letters to be false when made.” They did not specify, however, what “information” in the investigation letters or explanation of benefit letters was false. Nor did they specify the claims that State Farm had allegedly fraudulently denied. Such bare allegations of fraud did not satisfy Rule 9(b)’s particularity requirement and did not sufficiently allege predicate acts of racketeering to state a claim under RICO, the court concluded.
Further details will appear in RICO Business Disputes Guide. Further information regarding the Guide appears here.
24 Şubat 2013 Pazar
Small Spaces etc. - Trying On Tiny
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This week's Small Spaces is an introduction to one couples' blog called Trying On Tiny wherein they chronicle their experience of living in a tiny home. They introduce themselves in this way:
From the beginning this past fall, Audrey writes candidly about the stress, struggles and disappointment with the contractor and the mismatch of what they got compared with what they thought they would be getting for a tiny home. Tomas' illustrates this in his own way.
At the beginning of January the couple details the things they love. Tomas begins:
Encinitas would be the perfect community to build an eco-living village that could include tiny homes on wheels, among other alternatives for small space living, as an eco-tourist experience. Special rates for Encinitas residents to try on this kind of lifestyle for size? Above all we have the perfect setting for a lifestyle that encourages living outside as the preferred pattern, a pattern that can't be enjoyed in the colder climates.
This week's Small Spaces is an introduction to one couples' blog called Trying On Tiny wherein they chronicle their experience of living in a tiny home. They introduce themselves in this way:Audrey Addison:
She moved to Portland, OR 7 years ago and has recently decided to ‘try on’ a tiny home and to embrace a simpler way to live in the world. She feels lucky to have the support of family and friends and feels even luckier to have a partner who shares her dream. She’s a lover of nature, learning, and bikes.
Tomas Quinones:
Recently turned freelance illustrator with a focus on children’s literature, Tomas became interested in tiny houses and simplifying his life after leaving an unfulfilling IT job in 2008. Since then he started ditching the unimportant stuff in his life and focusing more on experiences rather than collecting.
From the beginning this past fall, Audrey writes candidly about the stress, struggles and disappointment with the contractor and the mismatch of what they got compared with what they thought they would be getting for a tiny home. Tomas' illustrates this in his own way.
At the beginning of January the couple details the things they love. Tomas begins:What do I love most about living in my Tiny House? Audrey may share many of these sentiments, but I thought I’d share my own opinion.
- Simple & Cozy
- Owning Less Stuff
- We Own It
- We Can Modify It
- It’s Brought Out My Inner Bob Vila
- Using Fewer Resources
- Peace & Quiet
- Frugal Living
- Clean-up is Quick
- It’s Everything I Need, Nothing More
Things I love Part IIThey both delve deeper into what they mean here with the kind of detail they've laid out their entire experience. It is an entertaining read.
Great idea, Tomas! Here are the top things that I LOVE about living in our tiny home.
- In-line With My Beliefs, Values, and Ideals
- Tomas’s Inner Bob Villa
- Community Support
- Mindfulness
- Home Ownership
- Closeness to Nature
- Cozy, Quiet, and Quick to Clean
- Changeable
- Helpful to Others
- A Good Start
Encinitas would be the perfect community to build an eco-living village that could include tiny homes on wheels, among other alternatives for small space living, as an eco-tourist experience. Special rates for Encinitas residents to try on this kind of lifestyle for size? Above all we have the perfect setting for a lifestyle that encourages living outside as the preferred pattern, a pattern that can't be enjoyed in the colder climates.
So God made a banker
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To be read in the voice of Paul Harvey. (source: Market Watch)
And on the eighth day God looked down on his planned paradise and said, “I need someone who can flip this for a quick buck.”
So God made a banker.
God said, “I need someone who doesn’t grow anything or make anything but who will borrow money from the public at 0% interest and then lend it back to the public at 2% or 5% or 10% and pay himself a bonus for doing so.”
So God made a banker.
God said, “I need someone who will take money from the people who work and save, and use that money to create a dotcom bubble and a housing bubble and a stock bubble and an oil bubble and a commodities bubble and a bond bubble and another stock bubble, and then sell it to people in Poughkeepsie and Spokane and Bakersfield, and pay himself another bonus.”
So God made a banker.
God said, “I need someone to build homes in the swamps and deserts using shoddy materials and other people’s money, and then use these homes as collateral for a Ponzi scheme he can sell to pensioners in California and Michigan and Sweden. I need someone who will then foreclose on those homes, kick out the occupants, and switch off the air conditioning and the plumbing, and watch the houses turn back into dirt. And then pay himself another bonus.”
God said, “I need someone to lend money to people with bad credit at 30% interest in order to get his stock price up, and then, just before the loans turn bad, cash out his stock and walk away. And who, when asked later, will, with a tearful eye, say the government made him do it.”
God said, “And I need somebody who will tell everyone else to stand on their own two feet, but who will then run to the government for a bailout as soon as he gets into trouble — and who will then use that bailout money to help elect a Congress that will look the other way. And then pay himself another bonus.”
So God made a banker.
Brett Arends is a MarketWatch columnist. Follow him on Twitter @BrettArends.
To be read in the voice of Paul Harvey. (source: Market Watch)
And on the eighth day God looked down on his planned paradise and said, “I need someone who can flip this for a quick buck.”
So God made a banker.
God said, “I need someone who doesn’t grow anything or make anything but who will borrow money from the public at 0% interest and then lend it back to the public at 2% or 5% or 10% and pay himself a bonus for doing so.”
So God made a banker.
God said, “I need someone who will take money from the people who work and save, and use that money to create a dotcom bubble and a housing bubble and a stock bubble and an oil bubble and a commodities bubble and a bond bubble and another stock bubble, and then sell it to people in Poughkeepsie and Spokane and Bakersfield, and pay himself another bonus.”
So God made a banker.
God said, “I need someone to build homes in the swamps and deserts using shoddy materials and other people’s money, and then use these homes as collateral for a Ponzi scheme he can sell to pensioners in California and Michigan and Sweden. I need someone who will then foreclose on those homes, kick out the occupants, and switch off the air conditioning and the plumbing, and watch the houses turn back into dirt. And then pay himself another bonus.”
God said, “I need someone to lend money to people with bad credit at 30% interest in order to get his stock price up, and then, just before the loans turn bad, cash out his stock and walk away. And who, when asked later, will, with a tearful eye, say the government made him do it.”
God said, “And I need somebody who will tell everyone else to stand on their own two feet, but who will then run to the government for a bailout as soon as he gets into trouble — and who will then use that bailout money to help elect a Congress that will look the other way. And then pay himself another bonus.”
So God made a banker.
Brett Arends is a MarketWatch columnist. Follow him on Twitter @BrettArends.
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