Stiegel v. USAA Casualty Insurance Company

MOTION to Dismiss Complaint re Restricted Document - Pursuant to Protective Order,,,, 31 Amended Complaint,,, :

M.D. Ga.June 29, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION RAIDEN STIEGEL AND HOLLY STIEGEL, Plaintiff, v. USAA CASUALTY INSURANCE COMPANY AND AUTO INJURY SOLUTIONS, INC., Defendant. CASE NO.: 4:16-CV-00346-CDL AUTO INJURY SOLUTIONS, INC.’S MOTION FOR DISMISSAL OF PLAINTIFFS’ AMENDED COMPLAINT FOR DAMAGES Auto Injury Solutions, Inc. (“AIS”) hereby moves to dismiss Plaintiffs’ Amended Complaint for Damages under Fed. R. Civ. Proc. 12(b)(6) for all claims against AIS for failure to state a claim for which relief can be granted. The grounds for the relief sought and supporting authority are more fully set forth in the Memorandum of Law in Support of this Motion, which is being filed concurrently herewith. WHEREFORE, AIS respectfully requests that the Court dismiss all claims against AIS and grant such other relief that the Court deems appropriate. Respectfully submitted this June 29, 2017. [signatures on following page] Case 4:16-cv-00346-CDL Document 34 Filed 06/29/17 Page 1 of 2 COOPER, RICE AND OLSON, LLC /s/ Amy Cook Olson 633 17th Street, Suite 2200 AMY COOK OLSON Denver, CO 80202 Colorado State Bar No. 27237 T: 303-607-0077 acookolson@cron-law.com F: 888-975-0239 Counsel for Defendant Auto Injury Solutions, Inc. THE FINLEY FIRM, P.C. /s/ Travis C. Hargrove 200 13th Street TRAVIS C. HARGROVE Columbus, GA 30901 Georgia State Bar No. 141374 T: 706-322-6226 thargrove@thefinleyfirm.com F: 706-322-6221 Counsel for Defendant Auto Injury Solutions, Inc. CERTIFICATE OF SERVICE I hereby certify that on June 29, 2017, I electronically filed the foregoing MOTION FOR DISMISSAL OF PLAINTIFFS’ AMENDED COMPLAINT FOR DAMAGES with the Clerk of Court using the CM/ECF system, which will automatically send email notification of such filing to the following counsel of record: Gary O. Bruce, Esq. Mitchell B. Ladson, Esq. Gary O. Bruce, P.C. 912 Second Avenue Columbus, GA 31901 Jefferson C. Callier, Esq. The Callier Firm 1430 Wynnton Road P.O. Box 2604 Columbus, GA 31902 W. Shawn Bingham, Esq. Mark A. Barber, Esq. Baker Donelson Bearman Caldwell & Berkowitz, P.C. Monarch Plaza, Suite 1600 Atlanta, Georgia 30326 THE FINLEY FIRM, P.C . /s/ Travis C. Hargrove TRAVIS C. HARGROVE Georgia State Bar No. 141374 Counsel for Defendant Auto Injury Solutions, Inc. Case 4:16-cv-00346-CDL Document 34 Filed 06/29/17 Page 2 of 2 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION RAIDEN STIEGEL AND HOLLY STIEGEL, Plaintiff, v. USAA CASUALTY INSURANCE COMPANY AND AUTO INJURY SOLUTIONS, INC., Defendant. CASE NO.: 4:16-CV-00346-CDL MEMORANDUM OF LAW IN SUPPORT OF AUTO INJURY SOLUTIONS, INC.’S MOTION TO DISMISS This case arises from a contractual dispute between Ms. Stiegel and her auto insurer, USAA Casualty Insurance Company (hereinafter, “USAA CIC”). Ms. Stiegel asserts that USAA CIC engaged in bad faith breach of contract when it failed to pay all medical expenses she submitted with her auto accident claims. USAA CIC asserted that the disputed medical expenses were not causally related to the accidents. In addition to suing her insurer, Ms. Stiegel asserts claims against AIS, a company that provides certain medical bill processing services to USAA, but with whom she has no contractual or special relationship. Ms. Stiegel’s Amended Complaint acknowledges that all claims, including the newly alleged tort claims, arise solely from her insurance contract with USAA CIC and pleads no injury beyond failure to realize benefits under the insurance policy. Since Ms. Stiegel’s claims arise from her contractual dispute with USAA CIC, Ms. Stiegel is legally prohibited from seeking recovery in tort because Georgia courts have consistently held that contractual disputes do not give rise to tort recovery. Furthermore, this insurance dispute is governed by the exclusive remedy provided by the Georgia legislature, which set forth the framework for recovery in all claims alleging breach of an insurance contract. Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 1 of 15 2 Georgia courts have consistently upheld the exclusive remedy statute and have refused to impose liability on insurers or their contractors, even when Plaintiffs allege fraud, conversion, theft, or RICO liability stemming from an alleged non-payment of insurance benefits. Finally, Ms. Stiegel’s lawyers’ efforts to circumvent the exclusive remedy statute by filing RICO tort claims against USAA and AIS were previously unsuccessful. The Honorable Ben Richardson of the State Court of Muscogee County, Georgia just recently dismissed substantially similar claims in state court, holding in part “where the General Assembly has provided a specific procedure and a limited penalty for noncompliance with a specific enactment…the specific procedure and limited penalty are intended by the General Assembly to be the exclusive procedure and penalty, and recovery under general penalty provisions…will not be allowed.”1 Accordingly, AIS respectfully requests this Court dismiss all of the claims against AIS. STANDARD OF REVIEW This Court may dismiss a pleading for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A pleading fails to state a claim if it does not contain allegations that support recovery under any recognizable legal theory. 5 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1216 (3d ed. 2002); see also Ashcroft v. Iqbal, 556 U.S. 662, 677-78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). In considering a Rule 12(b)(6) motion, the Court construes the pleading in the non-movant’s favor and accepts the allegations of facts therein as true. See Duke v. Cleland, 5 F.3d 1399, 1402 (11th Cir. 1993). Plaintiff need not provide “detailed factual allegations” to survive dismissal, but the “obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. 1 See June 15, 2017 Order Granting Dismissal, page 2, The Honorable Ben Richardson, Ex. 1 hereto. Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 2 of 15 3 Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In essence, the pleading “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). ARGUMENT A. Plaintiff’s breach of contract claims do not give rise to tort liability against USAA or AIS as a matter of law. In her Amended Complaint, Ms. Stiegel confirms that her entire case arises from her contractual relationship with her auto insurer USAA CIC and that her tort claims are derived solely from duties owed under the insurance contract.2 Since Ms. Stiegel admittedly has no contractual relationship with AIS, she asserts conspiracy as the basis to try to extend her contract-based claims to AIS, a non-party to the contract. Even if a plaintiff attempts to allege fraud, a contractual dispute does not give rise to tort liability, especially where a plaintiff fails to allege a special relationship with the defendant giving rise to a duty that is independent of the insurance contract. ServiceMaster Co., LP v. Martin, 252 Ga.App. 751 (2001); Globe Life & Acc. Ins. Co. v. Ogden, 182 Ga. App. 803 (1987). In ServiceMaster Co., LP, a former employee brought action against his former employer raising claims in contract and tort for the employer’s alleged failure to pay amounts due under the contract. ServiceMaster Co., LP, 252 Ga.App. at 745-55. It was not disputed that the employer essentially stole its employee commissions and knew and concealed the same prior to selling the company. Id. The employee filed suit, seeking recovery for breach of contract, but also pursued punitive damages for the admitted intentional acts, through tort claims. However, 2 Ms. Stiegel’s husband’s claims are not articulated in the Amended Complaint with any specificity, but for purposes of this Motion, are presumed to be either derivative claims or arising from the contractual relationship with USAA CIC. Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 3 of 15 4 the Court of Appeals held that the employee could not recover in tort where all duties that the former employer allegedly breached arose directly from, not independent of, the written contract and therefore could not form the basis for independent torts. Id. at 754. The Court noted that Georgia courts have consistently held that punitive damages recoverable in tort are not available for breach of contract claims, even when the plaintiff alleges fraud. Id. See also A.I. Williams & Assoc. v. Faircloth, 259 Ga. 767, 769 (1989) (“Any breach of contract must arise from the contract, and does not give rise to an action for tort, whether or not such breach was negligent or willful.”). The Court’s holding in Globe Life is also on point. Globe Life & Acc. Ins. Co., 182 Ga. App. at 803-04. In Globe Life, the Plaintiff alleged that her insurance company acted in bad faith and engaged in fraudulent conduct when it refused to pay her insurance claim due to a policy lapse caused by the insurance agent’s alleged theft of the policy premiums. Id. Count I of Plaintiff’s Complaint alleged breach of contract and sought recoverable damages pursuant to O.C.G.A. § 33-4-6. Id. Count II of the Complaint asserted a recovery for punitive damages based upon fraudulent conduct by the insurance agent, who cashed Plaintiff’s premium checks and used the money for his own personal benefit. Id. At trial, the court directed verdict as to Count I in favor of the Plaintiff, awarding recoverable damages set forth in O.C.G.A. § 33-4-6 which included an award for the amount owed under the contract, along with interest, and attorney fees. The trial court then submitted Count II to the jury—resulting in an award of $25,000 in punitive damages. Id. at 804. On appeal, the insurance company argued that it could not be held liable for damages arising in tort where the claims were based on breach of the insurance contract, for which the damages were fixed by Georgia law. Id. The Court of Appeals agreed, holding that the Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 4 of 15 5 plaintiff’s case “was plainly and simply one arising on a breach of contract”, the recovery of which was subjected to the exclusive remedy provided in O.C.G.A. § 33-4-6. Id. The Court noted that “the mere breach of an ordinary contract does not constitute a tort; and if there is no liability except that arising out of a breach of a purely contractual duty, the action must be in contract, and an action in tort cannot be maintained.” Id. at 804, citing Leonard v. Firemen’s Ins. Co., 100 Ga. App. 434, 435 (1959). Since the Plaintiff failed to allege that she had any “special relationship” with Globe Life giving rise to a duty independent of her insurance policy, she had no actionable tort claim. The court held that the Plaintiff’s remedy was fixed by O.C.G.A. § 33- 4-6, and that the “appellee was only entitled to the recovery obtained in Count I for the amount due under the contract policy, for 25% of the insurer’s liability for the loss, and for reasonable attorney’s fees…the remedy is exclusive in the absence of some special relationship of the parties.” Id. at 804. The same situation exists here where Ms. Stiegel’s relationship with USAA CIC is solely contractual and the Amended Complaint does not allege the requisite “special relationship” giving rise to a duty owed by AIS to the Plaintiff. Plaintiff’s claim in this case is entirely based upon USAA’s alleged refusal to pay insurance benefits, rendering dismissal of the tort claims appropriate and limiting her recovery to Georgia’s exclusive remedy, discussed further below. Furthermore, nearly every jurisdiction regards entering into a contract with no then present intention to perform as actionable only in breach of contract, and not tort. See, e.g., Troutman v. Facetglas, Inc., 316 S.E.2d 424, 426 (Ct. App. 1984) (“It is settled law that if a tort arises out of a contract there must also exist a relationship, irrespective of the contract, that gives rise to a duty... A mere breach of contract is not actionable as a tort in South Carolina, no matter what the intent of the breaching party was.”); Cone v. Fagadau Energy Corp., 68 S.W.3d 147, Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 5 of 15 6 160-61 (Tex. App. 2001) (“As a general rule, the failure to perform the terms of a contract is a breach of contract, not a tort…By disputing the charges assessed to his account, Cone is attempting to obtain the benefit of his bargain as provided by the operating agreement. When the injury is only the economic loss to the subject of a contract itself, the action sounds in contract alone.”); Valfer v. Evanston Northwestern Healthcare, 52 N.E.3d 319, 327 (2016) (“A breach of contract is not considered a tort because intent or the willfulness of the breach is not relevant.”); D’Ambrosio v. Engel, 741 N.Y.S.2d 42, 44 (2002) (“It is well established that a simple breach of contract does not give rise to an action in tort”); Electronic Sec. Systems Corp. v. Southern Bell Tel. & Tel. Co., 482 So. 2d 518, 519 (Fla. Dist. Ct. App. 1986) (“A breach of contract cannot be converted into a tort merely by allegations of malice.”). Thus, even taking all of Ms. Stiegel’s allegations as true, Plaintiff’s only recovery is in breach of contract. Those claims do not constitute torts against USAA or against AIS, by extension, as a co-conspirator. B. Plaintiff’s claims are subject to and governed by Georgia’s exclusive remedy. Georgia’s insurance bad faith statute supplies the exclusive remedy in this case and prohibits recovery in tort in cases arising from an insurance policy, including RICO. Georgia’s insurer bad faith statute exists to, “penalize insurers that delay payments without good cause.” Howell v. Southern Heritage Ins. Co., 448 S.E.2d 275, 275 (Ga.Ct.App. 1994). The statute provides the “exclusive remedy for an insurer’s bad faith refusal to pay insurance proceeds.” McCall v. Allstate Ins. Co., 310 S.E.2d 513, 515-16 (Ga. 1984) (superseded by statute on other grounds). The statute states: In the event of a loss which is covered by a policy of insurance and the refusal of the insurer to pay the same within 60 days after a demand has been made by the holder of the policy and a finding has been made that such refusal was in bad faith, the insurer shall be liable to pay such holder, in addition to the loss, not Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 6 of 15 7 more than 50 percent of the liability of the insurer for the loss or $5,000.00, whichever is greater, and all reasonable attorney’s fees for the prosecution of the action against the insurer. See O.C.G.A. § 33-4-6. Thus, not only can Ms. Stiegel recover damages of the insurance benefits she seeks, the statute provides for the recovery of additional damages which are penalizing and punitive in nature including up to 50% of the insurer’s liability and attorney’s fees. However, Ms. Stiegel similarly cannot recover those prohibited damages against AIS under a conspiracy theory. Howell v. S. Heritage Ins. Co., 448 S.E.2d 275, 276 (Ga.Ct.App. 1994) (“[t]he penalties contained in O.C.G.A. § 33-4-6 are the exclusive remedies for an insurer’s bad faith refusal to pay insurance proceeds.”). The District Court holding in Williams v. Unum Life Ins., No. 1:07-CV-0240-JOF, 2007 WL 2479561, at *2-3 (N.D. Ga. Aug. 27, 2007) (unpublished) is on point.3 In Williams, the Plaintiff beneficiary filed a claim for life insurance benefits with Unum Life Insurance following the death of her husband. When Unum denied the claim, Plaintiff filed suit, asserting breach of contract for failure to pay the benefits, bad faith pursuant to O.C.G.A. § 33-4-6, and sought recovery under Georgia’s RICO statute, asserting: Defendants knowingly and intentionally violated Georgia RICO statute for the purpose of pecuniary gain. The Defendants deprived the Plaintiff [by] failing to pay a valid claim when properly presented thus, in turn making a pecuniary gain. Id. The Court dismissed Plaintiff’s RICO claim applying the following analysis: First, the Court held that Plaintiff’s RICO claim did not adequately plead the predicate acts. While the Court surmised that Plaintiff’s predicate act was the defendants’ alleged bad faith refusal to pay the insurance benefit, the Court held that “an insurer’s denial of a claim does not fall within the statutory definition of insurance fraud. O.C.G.A. § 33-1-9 (2007).” Id. 3 See Williams v. Unum Life Ins., No. 1:07-CV-0240-JOF, 2007 WL 2479561, at *2-3 (N.D. Ga. Aug. 27, 2007) (unpublished), Ex. 2 hereto. Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 7 of 15 8 Second, the Court held that Plaintiff could not recover under RICO where O.C.G.A. § 33- 4-6 served as Plaintiff’s exclusive remedy for all recovery against the Unum for its alleged failure to pay the insurance benefits. Since O.C.G.A. § 33-4-6 set forth Plaintiff’s exclusive remedy, the Court held that she was legally barred from recovering under RICO. Id. The Court went on to explain that Plaintiffs’ punitive damages claims were prohibited by O.C.G.A. § 33-4- 6, and by the Georgia Supreme Court decision in McCall v. Allstate Ins. Co., 251 Ga. 869, 871 (1984.) Id. The Georgia Supreme Court in McCall held, “where the General Assembly has provided a specific procedure and a limited penalty for noncompliance with a specific enactment…the specific procedure and limited penalty were intended by the General Assembly to be the exclusive procedure and penalty…[t]his conclusion is equally applicable to O.C.G.A. § 33-4-6.” McCall, 251 Ga. at 871 (emphasis supplied). The Williams Court concluded: Plaintiffs’ claims for punitive damages is thus barred by O.C.G.A. § 33-4-6 for two reasons. First, the statute explicitly limits damages available to plaintiffs. Second, the Supreme Court of Georgia has held that specific penalties outlined in a statute are the exclusive penalties for violations of that statute. Williams, 2007 WL 2479561, at *2. This is precisely the basis for Judge Richardson’s rulings dismissing a substantially similar RICO claim asserted against USAA and AIS by the same set of lawyers in state court.4 The same analysis applied in Williams applies here. As in Williams, Ms. Stiegel’s claims arise out of her contractual dispute with USAA over insurance benefits and alleges tort liability for USAA’s and AIS’s alleged intentional acts of withholding insurance benefits for “pecuniary gain.” Just as the Plaintiff could not pursue a RICO claim against her insurer in Williams, Plaintiff in this case cannot recover under RICO, as Plaintiff’s exclusive remedy is provided by O.C.G.A. § 33-4-6. Since the claims against AIS are derivative of those alleged against USAA, 4 June 15, 2017 Order Granting Dismissal of all claims against AIS (page 2) and Order Granting Partial Dismissal of Claims against USAA. The Honorable Ben Richardson, Ex. 1 hereto. Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 8 of 15 9 and considering all of the claims against AIS arise out of conspiracy, Plaintiff cannot recover against AIS on a RICO theory of liability, rendering dismissal appropriate. C. Additional discovery does not save Plaintiff’s claims. After holding that the Plaintiff’s RICO claims in Williams were impermissible, the Court went on address Plaintiff’s request to conduct discovery to “find” new tort claims to be asserted through an Amended Complaint to be filed in the future. The Court noted, “perhaps realizing the precarious nature of their position, Plaintiffs seek leave of the court to amend their complaint. To support this request, Plaintiffs state only…that the claim should go forward to allow the Plaintiff to prove his case through discovery…” Id. The Court responded, “as best as the court can understand it, Plaintiffs wish to engage in discovery so as to find a claim beyond their O.C.G.A. § 33-4-6 claims. Obviously, this is not the proper method.” Id. AIS has already engaged in costly litigation in State Court on the very same claims and theories asserted by the very same lawyers – resulting in dismissal with prejudice. Just as the Williams court concluded, it would be improper here to allow the conspiracy claims to persist against AIS in order for Ms. Stiegel to engage in a fishing expedition through discovery. D. There is no viable breach of contract claim against AIS, including under RICO. Ms. Stiegel’s breach of insurance contract claims cannot form the basis for recovery under any legal theory against AIS, including RICO, because AIS is not party to the contract. Georgia law clearly limits breach of contract claims to the contracting parties. See O.C.G.A. § 9-2-20. The holding in Crawford v. Hausner, 273 Ga. App. 329 (2005), is on point. In Crawford, the owner of a house that was damaged while being moved brought an action against the moving company, its insurer, and the appraiser hired by the insurer. Crawford, 273 Ga. App. at 329. The homeowner claimed that damages to the home were covered under the moving Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 9 of 15 10 company’s insurance policy, which provided coverage for certain items listed in the policy. Id. However, the house itself was not listed as a covered item, causing the trial court to grant summary judgment in favor of the insurer. The trial court also dismissed the appraiser hired by the insurer. Id. at 329-30. In affirming the dismissal of the appraiser, the appellate court cited to the Georgia’s statute holding that only the parties to the contract may properly bring a breach of contract claim. Crawford, 273 Ga. App. at 330. Third parties, like the appraiser, were not proper parties to an insurance breach of contract claim. Id. Citing O.C.G.A. § 9-2-20, the Court held that the appraiser was not affiliated with the Plaintiff “as an insurer”, and was instead, “merely an independent appraiser that had been hired by Bituminous [the insurer] to do such work.” Id. As such, the Court held that the third party appraiser was not a proper party to Crawford’s lawsuit against the insurer, upholding the dismissal. Id. Ms. Stiegel’s claims against AIS are similar to those rejected by the Georgia Court of Civil Appeals in Crawford. Ms. Stiegel alleges that AIS’s billing recommendations caused USAA to deny certain aspects of her claim. Third parties like AIS providing services to insurance companies cannot be held liable to the insured for their recommendations. Instead, as Crawford holds, the insurance company bears the sole liability for its insured’s claims. Because AIS is not an insurer, did not insure Ms. Stiegel pursuant to her USAA policy, and has no contractual relationship with her, the claims are unsustainable as a matter of law. E. Plaintiff’s RICO claim must be dismissed as it fails to assert an actionable predicate criminal act or pattern of criminal acts. Ms. Stiegel’s RICO claim also fails because Plaintiff cannot assert the requisite criminal acts or pattern of racketeering activity necessary to support the claim. Rather, this is a straightforward contractual dispute over unpaid medical bills. AIS’s processing of medical Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 10 of 15 11 information does not give rise to any claim, let alone a RICO claim, where the activity does not in any way form the requisite criminal acts. Ms. Stiegel’s RICO claims are legally deficient and should be dismissed. Georgia’s RICO statute states that it is “unlawful for any person, through a pattern of racketeering activity or proceeds derived therefrom, to acquire or maintain, directly or indirectly, any interest in or control of any enterprise, real property, or personal property of any nature, including money.” See O.C.G.A. § 16-14-4(a). A “pattern of racketeering activity” is defined as “[e]ngaging in at least two acts of racketeering activity in furtherance of one or more incidents, schemes, or transactions that have the same or similar intents, results, accomplices, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics and are not isolated incidents…” Id., § 16-14-3(4). Under the statute, “racketeering activity” is defined as the commission of a crime in any of the specified categories of offenses (known as predicate offenses). See O.C.G.A. § 16-14-3(5)(A). If a plaintiff fails to allege the requisite unlawful predicate act or pattern of illegal acts, his RICO claim must fail as a matter of law. See Ali v. Fleet Finance, Inc., 232 Ga. App. 13, 15 (1998). Ms. Stiegel alleges two predicate acts in her Complaint: theft by taking and theft by deception.5 However, since AIS’s alleged conduct is not unlawful, illegal, nor does it constitute criminal activity of any form, Plaintiff’s claims must be dismissed. 1) Plaintiff’s RICO claims must be dismissed as it fails to assert an actionable predicate criminal act or pattern of criminal acts. Theft by deception is committed when a person “obtains property by any deceitful means or artful practice with the intention of depriving the owner of the property.” O.C.G.A. § 16-8- 5 Ms. Stiegel’s RICO claims are similar to those rejected by Judge Richardson. See Richardson Order, Ex. 1 hereto (dismissing RICO claims against AIS and USAA for “theft by taking” and “theft by deception” related to the adjustment of a med pay claim). Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 11 of 15 12 3(a). Plaintiff alleges that AIS engaged in theft by deception by conspiracy. O.C.G.A. § 16-14- 4(c). Plaintiff also alleges that AIS engaged in “theft by taking.” “A person commits the offense of theft by taking when he unlawfully takes or, being in lawful possession thereof, unlawfully appropriates any property of another with the intention of depriving him of the property, regardless of the manner in which the property is taken or appropriated.” O.C.G.A. § 16-8-2. Ms. Stiegel alleges that AIS engaged in “theft by deception” and “theft by taking” by conspiring with USAA to deny payment of medical benefits she claims was due under the USAA CIC insurance policy. Plaintiff’s allegations all arise in breach of contract, and are not actionable in tort or RICO, as discussed above. Also, it is not alleged that AIS “took”, appropriated, or obtained any property from the Plaintiff. Rather, Ms. Stiegel simply disputes the manner in which her insurance claim was processed. Further, the claims are not actionable because AIS’s alleged conduct do not constitute criminal acts. The “conduct” Ms. Stiegel argues gives rise to her RICO claim against AIS includes: (1) the utilization of “off shore” processors who split and index bills; (2) the retention of nurses and physicians to review medical information; (3) utilizing technology to evaluate bills; and (4) providing non-binding bill audit recommendations to USAA.6 Even taken as true, not one of these allegations regarding AIS functions gives rise to actionable conduct, let alone criminal conduct required by RICO. Since the allegations do not constitute criminal activity, the RICO claims must be dismissed. See Ali v. Fleet Finance, Inc., 232 Ga. App. 13, 15 (1998) (holding that if a plaintiff fails to allege the requisite unlawful predicate act or pattern of illegal acts, his RICO claim must fail as a matter of law). 2) Plaintiff cannot establish “theft by deception” where Plaintiff fails to allege that she was deceived by AIS’s alleged conduct. 6 See Amended Complaint, page 8 “the conduct at issue [that] gives rise to Georgia RICO claims.” The allegations span pages 8 through 11 of the Amended Complaint. Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 12 of 15 13 Plaintiff’s RICO claim predicated on “theft by deception” is also defective, as she failed to assert that she was “deceived” by AIS’s conduct in processing her provider’s medical bills. In Vernon v. Assurance Forensic Accounting, LLC, 333 Ga.App. 377, 392 (2015), the Plaintiff sued his former employer over the amount of severance he received after being released from employment. The Plaintiff asserted both breach of contract claims and RICO (theft by deception) arguing that the employer’s withholding commissions he claimed were due under the contract. The Employer moved for summary judgment, asserting that the Plaintiff failed to properly assert a RICO claim because he did not claim that he was “deceived” by the employer. The trial court agreed and dismissed the claim. On appeal, the Court upheld the trial court’s decision, holding: A person commits the offense of theft by deception when he obtains property by any deceitful means or artful practice with the intention of depriving the owner of the property…Without reasonable reliance on a false representation, there can be no deception…and without deception, of course, there can be neither theft by deception nor a valid RICO claim based upon theft by deception. Vernon, 333 Ga.App. at 392, citing First Data POS v. Willis, 273 Ga. 792, 795(2), 546 S.E.2d 781 (2001). Since the Plaintiff did not assert that he was deceived by the severance checks he received (he actually challenged the amount of the owed severance), his RICO claims based in theft by deception were not actionable. Just as in Vernon, Ms. Stiegel does not allege that she was “deceived” by AIS’s medical bill processing. Rather, Ms. Stiegel’s simply disputes the basis for USAA CIC’s decision that certain aspects of her medical care were not causally linked to the accident. Since Ms. Peterson has not alleged the requisite “deception” her “theft by deception” claim is legally deficient and should fail. Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 13 of 15 14 3) Plaintiff’s claim lacks the requisite “direct connection” between AIS’s medical bill review services and her alleged damages in USAA denying payment for her medical provider’s invoices. As a mandatory condition to asserting both RICO claims, Ms. Stiegel must show a direct nexus between at least one of the predicate acts listed under the RICO Act and the injury she purportedly sustained. Maddox v. Southern Eng’g Co., 231 Ga. App. 802, 805 (1998.) Specifically, a private plaintiff under the RICO Act must show that the injury suffered flowed directly from the predicate offense. Id. at 806. In other words, Ms. Peterson must show that her injury was caused “by reason of” a violation of one of the specific crimes outlined in the RICO act. However, by Ms. Stiegel’s own allegations, it was USAA who owed her the duty under the policy to reimburse her for medical care, and not AIS.7 Thus, while AIS was allegedly involved in auditing medical bills, it was ultimately USAA who necessarily rendered decisions on compensability. Since USAA, as the insurer, rendered decisions regarding compensability under the policy, Ms. Stiegel cannot establish direct injury flowing from AIS. Accordingly, all of Ms. Stiegel’s RICO claims against AIS must fail as a matter of law. CONCLUSION For the foregoing reasons, Plaintiffs’ Amended Complaint for Damages should be dismissed pursuant to Rule 12(b)(6). AIS is attaching as Exhibit “1”, Judge Richardson’s Orders dismissing these exact claims against Auto Injury Solutions, Inc. and USAA CIC, in the case of Joanna Peterson v. USAA, pending in the State Court of Muscogee County. Respectfully submitted this June 29, 2017. 7 Amended Complaint, page 11, para. 1. Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 14 of 15 15 COOPER, RICE AND OLSON, LLC /s/ Amy Cook Olson 633 17th Street, Suite 2200 AMY COOK OLSON Denver, CO 80202 Colorado State Bar No. 27237 T: 303-607-0077 acookolson@cron-law.com F: 888-975-0239 Counsel for Defendant Auto Injury Solutions, Inc. THE FINLEY FIRM, P.C. /s/ Travis C. Hargrove 200 13th Street TRAVIS C. HARGROVE Columbus, GA 30901 Georgia State Bar No. 141374 T: 706-322-6226 thargrove@thefinleyfirm.com F: 706-322-6221 Counsel for Defendant Auto Injury Solutions, Inc. CERTIFICATE OF SERVICE I hereby certify that on June 29, 2017, I electronically filed the foregoing MEMORANDUM OF LAW IN SUPPORT OF AUTO INJURY SOLUTIONS, INC.’S MOTION TO DISMISS with the Clerk of Court using the CM/ECF system, which will automatically send email notification of such filing to the following counsel of record: Gary O. Bruce, Esq. Mitchell B. Ladson, Esq. Gary O. Bruce, P.C. 912 Second Avenue Columbus, GA 31901 Jefferson C. Callier, Esq. The Callier Firm 1430 Wynnton Road P.O. Box 2604 Columbus, GA 31902 W. Shawn Bingham, Esq. Mark A. Barber, Esq. Baker Donelson Bearman Caldwell & Berkowitz, P.C. Monarch Plaza, Suite 1600 Atlanta, Georgia 30326 THE FINLEY FIRM, P.C . /s/ Travis C. Hargrove TRAVIS C. HARGROVE Georgia State Bar No. 141374 Counsel for Defendant Auto Injury Solutions, Inc. Case 4:16-cv-00346-CDL Document 34-1 Filed 06/29/17 Page 15 of 15 Case 4:16-cv-00346-CDL Document 34-2 Filed 06/29/17 Page 1 of 6 Case 4:16-cv-00346-CDL Document 34-2 Filed 06/29/17 Page 2 of 6 Case 4:16-cv-00346-CDL Document 34-2 Filed 06/29/17 Page 3 of 6 Case 4:16-cv-00346-CDL Document 34-2 Filed 06/29/17 Page 4 of 6 Case 4:16-cv-00346-CDL Document 34-2 Filed 06/29/17 Page 5 of 6 Case 4:16-cv-00346-CDL Document 34-2 Filed 06/29/17 Page 6 of 6 Williams v. Unum Life Ins. Co. of America, Not Reported in F.Supp.2d (2007) 2007 WL 2479561 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 1 2007 WL 2479561 Only the Westlaw citation is currently available. United States District Court, N.D. Georgia, Atlanta Division. Sharon WILLIAMS, as Executrix of the Estate of Fred Williams, deceased, et al., Plaintiffs, v. UNUM LIFE INSURANCE COMPANY OF AMERICA, Defendant. Civil Action No. 1:07-CV-0240-JOF. | Aug. 27, 2007. Attorneys and Law Firms Donald Ellis, Office of Donald Ellis, Decatur, GA, for Plaintiffs. Michael Joseph Hannan, III, Thompson, Slagle & Hannan, LLC, Duluth, GA, for Defendant. OPINION AND ORDER J. OWEN FORRESTER, Senior United States District Judge. *1 This matter is before the court on Defendant's motion to dismiss the complaint in part [2] and Plaintiffs' motion for extension of time to file a more definite statement or motion to amend complaint [5]. I. Background A. Procedural History Plaintiffs, Sharon Williams as executrix of the estate of Fred Williams, Rashun Williams, and Courtney Williams, filed suit against Defendant, Unum Life Insurance Company of America (hereinafter “Unum”), in the Superior Court of Fulton County on December 21, 2006. Plaintiffs make state law claims of breach of contract and bad faith pursuant to O.C.G.A. § 33-4-6 (2007). Plaintiffs further allege that Defendant violated the Georgia Racketeer Influenced and Corrupt Organizations Act (hereinafter “RICO”), O.C.G.A. § 16-14-4 (2007). Defendant removed the suit to this court on January 26, 2007, claiming federal jurisdiction due to diversity among the parties and filed the instant motion to dismiss the complaint in part on February 1, 2007. On February 22, 2007, Plaintiffs filed the instant motion for extension of time to file a more definite statement or to amend the complaint. B. Plaintiffs' Complaint On Defendant's motion to dismiss, the facts in this case are taken from Plaintiffs' complaint. Fred Williams, the decedent, was an employee of the Metropolitan Atlanta Rapid Transit Authority (hereinafter “MARTA”) from 1984 until his death on March 21, 2004. (Cmpl., ¶¶ 10-12.) On December 21, 2002, Williams enrolled in the voluntary Unum life insurance plan offered by the MARTA Employees Club. (Cmpl., ¶ 12.) The plan carried a value of $100,000. (Id.) Williams paid his life insurance premiums to Defendant up until his death, as required by the insurance contract. (Id., ¶ 14.) Williams was never informed that there was a question whether he was insurable under the policy, and the contract with Defendant did not require evidence of insurability. (Id., ¶¶ 15, 17.) After Williams' death, Plaintiffs submitted a claim for payment of the policy. (Cmpl., ¶¶ 13, 19.) Defendant denied this claim and Plaintiffs appealed to Defendant before commencing this action. (Cmpl., ¶ 14.) Plaintiffs raise two counts in their complaint. The first is a claim for breach of contract for failure to pay benefits. The second is a claim of bad faith pursuant to O.C.G.A. § 33-4-6. Plaintiffs seem to assert a Georgia RICO claim in the midst of Count Two. Paragraph 30 of the complaint states, “The Defendants [sic] knowingly and intentionally violated the Georgia RICO Statue [sic] for the purpose of pecuniary gain. The Defendants [sic] deprived the Plaintiff's [sic] failing to pay a valid claim when properly presented thus, in turn making a pecuniary gain.” (Cmpl., ¶ 30.) In their prayer for relief, Plaintiffs seek the benefits under the Unum insurance policy. They also request that the court (2) Find and hold Defendant has acted in bad faith and that Plaintiffs are entitled to the maximum additur allowable by law on all past and future benefits to which they are entitled plus punitive damages; (3) Find that Defendants [sic] knowingly and intentionally Case 4:16-cv-00346-CDL Document 34-3 Filed 06/29/17 Page 1 of 3 Williams v. Unum Life Ins. Co. of America, Not Reported in F.Supp.2d (2007) 2007 WL 2479561 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 2 violated the Georgia RICO Statue [sic] for the purpose of pecuniary gain and award the Plaintiff's [sic] punitive damages. *2 Cmpl., § V(2)-(3) (emphasis added). With respect to the instant motion to dismiss in part, Defendant contends that Plaintiffs have not alleged any facts that support a claim under Georgia RICO. Defendant further contends that Plaintiffs' exclusive remedy for bad faith denial of benefits under an insurance contract arises under O.C.G.A. § 33-4-6 (2007). II. Discussion The Georgia Supreme Court has concluded that corporations are subject to and may be sued under the state's RICO statute. Williams Gen. Corp. v. Stone, 280 Ga. 631, 631 (2006). This statute makes it unlawful for anyone to “acquire an interest in or control of money or property through a pattern of racketeering activity.” Cobb County v. Jones Group P.L.C., 218 Ga.App. 149, 154 (1995) (citation omitted). To prove a state RICO claim, plaintiffs need only establish racketeering activity, not prove that an enterprise exists. Williams v. Mohawk Indust., Inc., 465 F.3d 1277, 1293 (11th Cir.2006). To establish racketeering activity, plaintiffs “must show that the defendant committed predicate offenses (set forth in OCGA § 16-14-3(9)) at least twice.” Jones Group, 218 Ga.App. at 154. In both their complaint and their response to Defendant's motion to dismiss, Plaintiffs fail to allege any facts that may be construed as predicate offenses that represent a pattern of racketeering under Georgia RICO. The complaint simply makes the conclusory assertion that “The Defendants [sic] knowingly and intentionally violated the Georgia RICO Statue [sic] for the purpose of pecuniary gain.” (Cmpl., ¶ 30.) In their response to Defendant's motion to dismiss, Plaintiffs offer no elaboration and assert that their complaint alleges a systematic and ongoing pattern of racketeering activity on the part of the Defendant. (Mem. in Supp. of Pls.' Resp. to Df.'s Mot. to Dismiss, 9.) A mere allegation of “racketeering activity,” however, does not allude to any predicate act. It could be that Plaintiffs contend Defendant's alleged bad faith refusal to pay is a predicate act. While it is true that committing or attempting to commit insurance fraud is a predicate offense under the statute, O.C.G.A. § 16-14-3(9)(A) (xxxvii), an insurer's denial of a claim does not fall within the statutory definition of insurance fraud. O.C.G.A. § 33-1-9 (2007). Furthermore, that allegation is only one predicate act and the statute requires two. 1 Further, the parties agree that Georgia law holds that O.C.G.A. § 33-4-6 is the exclusive remedy for plaintiffs against insurance companies that deny benefits. As the Supreme Court of Georgia held in McCall v. Allstate Ins. Co., 251 Ga. 869, 871 (1984), “where the General Assembly has provided a specific procedure and a limited penalty for noncompliance with a specific enactment ... the specific procedure and limited penalty were intended by the General Assembly to be the exclusive procedure and penalty.... This conclusion is equally applicable to OCGA § 33-4-6.” O.C.G.A. § 33-4-6 states that an insurer who refuses, in bad faith, to pay claims to policy holders “shall be liable to pay such holder, in addition to the loss, not more than 50 percent of the liability of the insurer for the loss or $5,000.00, whichever is greater, and all reasonable attorney's fees for the prosecution of the action against the insurer.” Plaintiffs' claim for punitive damages is thus barred by O.C.G.A. § 33-4-6 for two reasons. First, the statute explicitly limits damages available to plaintiffs. Second, the Supreme Court of Georgia has held that specific penalties outlined in a statute are the exclusive penalties for violations of that statute. *3 Perhaps realizing the precarious nature of their position, Plaintiffs seek leave of the court to amend their complaint. To support this request, Plaintiffs state only: As outlined in Rule 12(b)(6) the Plaintiff shows that the claim should go forward and allow the Plaintiff to prove his case through discovery thus, the motion to dismiss is not timely. There is no issue of the ability of the Defendant to be able to file a responsive pleading to the allegation for which the Defendant denies. The alternative would be for the Plaintiff to file a more definite statement or to amend the Complaint. The Plaintiff clearly shows that the allegations are clear and that the case can be substantiated through discovery Case 4:16-cv-00346-CDL Document 34-3 Filed 06/29/17 Page 2 of 3 Williams v. Unum Life Ins. Co. of America, Not Reported in F.Supp.2d (2007) 2007 WL 2479561 © 2017 Thomson Reuters. No claim to original U.S. Government Works. 3 as requested and should not be dismissed. (Mem. in Supp. Of Pls.' Resp. to Df.'s Mot. to Dismiss, 11.) The court has difficulty parsing the meaning of the above statement. As best the court can understand it, Plaintiffs wish to engage in discovery so as to find a claim beyond their O.C.G.A. § 33-4-6 claims. Obviously, this is not the proper method. The court recognizes that the Federal Rules of Civil Procedure require that leave to amend complaints “shall be freely given [by the court] when justice so requires.” Fed.R.Civ.P. 15(a). However, the court notes that Plaintiffs in this case have not mentioned any facts or allegations that they would raise in an amended complaint. In light of the vague nature of Plaintiffs' request, the court finds there is, at this time, no reason to grant Plaintiffs' request for leave to file an amended complaint. Additionally, Defendant's motion to dismiss Plaintiffs' RICO claims is granted because Plaintiffs have alleged no facts that indicate RICO violations and because O.C.G.A. § 33-4-6 limits plaintiffs' remedies for breach of contract and bad faith denial of claims by insurance companies. III. Conclusion The court DENIES Plaintiffs' motion to amend complaint. The court GRANTS Defendant's motion to dismiss the complaint in part. IT IS SO ORDERED. All Citations Not Reported in F.Supp.2d, 2007 WL 2479561 Footnotes 1 It is unclear, here, as to whether Plaintiffs must plead predicate acts under RICO with particularity pursuant to Fed.R.Civ.P. 9(b). See, e.g., Williams v. Mohawk Indust., Inc., 314 F.Supp.2d 1333 (N.D.Ga.2004) (“When pleading a RICO action, it is well-settled that where the predicate act sounds in fraud (e.g., mail fraud, wire fraud, or securities fraud), the plaintiff must plead that predicate act with particularity ... [but] the Eleventh Circuit has not yet addressed whether the heightened pleading requirement of Rule 9(b) applies to RICO causes of action premised on non-fraud predicate acts[;] some ambiguity exists as to whether the particularized pleading requirements of Rule 9(b) apply to all RICO actions.”), aff'd in part, rev'd in part on other grounds, and remanded, 465 F.3d 1277 (11th Cir.2006). However, since Plaintiff has failed to sufficiently plead two predicate acts under the lesser notice pleading standard of Rule 8, the court does not need to address this issue. End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works. Case 4:16-cv-00346-CDL Document 34-3 Filed 06/29/17 Page 3 of 3