AMA v. United Healthcare (Full Text)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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THE AMERICAN MEDICAL ASSOCIATION, :
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et al.,

Plaintiffs,

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-against-

UNITED HEALTHCARE CORPORATION,

et al.,

Defendants.

McKENNA, D.J.

00 Civ. 2800 (LMM)
MEMORANDUM AND
ORDER

The plaintiffs here move to amend their Third Amended

Complaint (“TAC”), primarily in order to add claims under

RICO and under both state and federal antitrust laws

against specified defendants in this putative class action.

As set forth in further detail in this Court’s prior

orders, the plaintiffs in this matter include subscribers

to certain health plans (“Subscriber Plaintiffs”),1 out-of-

1 The Proposed Fourth Amended Complaint (“PFAC”) identifies the
Subscriber Plaintiffs as Gail Temple, Mary Gilmartin, New York State
Senator Toby Ann Stavisky, Janet Stravitz, Cynthia Falk, S. Joseph
Domina, David and Colleen Finley, Paul Steinberg, and Cliff Wilson,
individually and as co-executor of the estate of Michelle Wilson.
(PFAC ¶ 18.) The Subscriber Plaintiffs include a subcategory of
plaintiffs also designated as the Union Plaintiffs, which consists of
members of the New York State United Teachers, Civil Service Employees
Association, Organization of New York State Management/Confidential
Employees, and New York State Police Investigators Association. The
Union Plaintiffs entered this lawsuit by means of a Complaint in
Intervention following this Court’s granting their unopposed motion to
intervene on January 30, 2003. See Am. Med. Ass’n v. United Healthcare
Corp., No. 00 Civ. 2800 (LMM), 2003 WL 230897 (S.D.N.Y. Jan. 30, 2003).
For purposes of this motion, they are included within the Subscriber

network medical care providers suing as assignees of their

subscribers’ benefit claims (“Provider Plaintiffs”),2 and

medical associations suing in their associational capacity

on behalf of their members (“Medical Association

Plaintiffs”)3 (all, collectively, “Plaintiffs”).

Plaintiffs seek to assert these RICO and antitrust

causes of action against defendants United Healthcare

Corporation, United Healthcare Service Corporation, United

Health Group Incorporated, United Healthcare Insurance

Company, United Healthcare Insurance Company of New York,

United Healthcare of the Midwest, Inc., United Healthcare

Services of Minnesota, Inc., and Ingenix, Inc.

(collectively, “United Healthcare” or “Defendants”).

Defendants oppose Plaintiffs’ motion for leave to amend on

multiple grounds, including futility, excessive delay, bad

faith, and undue prejudice.

Plaintiffs’ motion for leave to amend the Third

Amended Complaint and, in effect, to file a Fourth Amended

Complaint is GRANTED to the extent that the proposed

additional claims are based on injuries that occurred after

July 15, 2000. However, any the proposed antitrust and

Plaintiffs.
2 Provider Plaintiffs are identified in the PFAC as Michael Attkiss,
M.D., and William B. Ericson, Jr., M.D. (PFAC ¶ 20.)
3 Medical Association Plaintiffs are identified in the PFAC as the
American Medical Association, the Medical Society of the State of New
York, and the Missouri State Medical Association. (PFAC ¶ 20.)

RICO claims that are based on injuries that occurred before

July 15, 2000 are time-barred.

I. Background

This action involves certain health care plans either

directly insured or administered by United Healthcare.

These plans allow subscribers to obtain health care

services from “out-of-network” or “non-participating”

physicians; that is, physicians who “have not entered into

contracts with United Healthcare to serve as part of its

provider network.” (TAC ¶1.) Under these health care

plans, subscribers are reimbursed a certain percentage of

the “usual, customary and reasonable” (“UCR”) fees for such

services based on United Healthcare’s calculation of the

UCR rates. (TAC ¶1.)

Plaintiffs’ TAC alleges that Defendants violated

ERISA, the terms of the health care plans, and, in the case

of certain plaintiffs, New York’s Deceptive Trade Practices

statute and contract law.4 (Pls.’ Mot. for Leave to Amend

1.) The Proposed Fourth Amended Complaint (“PFAC”) asserts

additional claims against United Healthcare for antitrust

and RICO violations based on Defendants’ alleged “massive

4 Plaintiffs’ TAC includes similar allegations against American Airlines
and Metropolitan Life Insurance Company. The proposed amendments to
the TAC — and consequently this motion for leave to amend the TAC —
implicate only United Healthcare and do not involve either of the other
defendants in this action.

scheme to under-reimburse millions of beneficiaries (and

their providers),” which Plaintiffs allege to be

“maintain[ed] . . . through deception, concealment and the

unlawful exercise of market power through [United

Healthcare’s] ownership and control of the data used by

most insurers in setting UCR rates and [United

Healthcare’s] agreements and coordinated efforts with those

insurers.” (Pls.’ Mot. for Leave to Amend 1.)

A. Procedural History

This Court has already considered multiple motions to

dismiss in this action, including, most recently, a motion

to dismiss the Third Amended Complaint. See Am. Med. Ass’n

v. United Healthcare Corp., No. 00 Civ. 2800 (LMM), 2002 WL

31413668 (S.D.N.Y. Oct. 23, 2002) (the “October 2002

Order”). In the October 2002 Order, the defendants’ motion

to dismiss was granted as to certain portions of

Plaintiffs’ claims in the TAC and denied as to others.

The October 2002 Order also instructed the parties to

begin “Stage One” discovery, which was “limited to the

proper parties in this action as opposed to the merits of

the case.” October 2002 Order at *6.5 Stage One discovery

5 Following the October 2002 Order, the Union Plaintiffs moved to
intervene in this action on behalf of their members, New York State
employees and Empire Plan beneficiaries, and this Court granted that
unopposed motion on January 30, 2003. See Am. Med. Ass’n v. United
Healthcare Corp., No. 00 Civ. 2800 (LMM), 2003 WL 230897 (S.D.N.Y. Jan.

was completed on or about May 14, 2004, save for the

resolution of a few outstanding discovery disputes. (Pls.’

Mot. for Leave to Amend 4.)

B. The Motion to Amend

Plaintiffs now seek to amend the TAC -– in effect, to

file a fourth amended complaint — by adding fifteen new

causes of action. Ten of these, Counts XVI through XXV

(the “Proposed Antitrust Claims”), allege violations of

federal and state antitrust laws. Specifically, Counts XVI

through XX allege violations of Section 1 of the Sherman

Act, 15 U.S.C. § 1, on behalf of various plaintiffs, and

Counts XXI through XXV allege violations of New York’s

parallel antitrust statute, the Donnelly Act, NY Gen. Bus.

Law §§ 340 et seq., on behalf of various New York-based

plaintiffs. (PFAC ¶¶ 18-27.) Four of the remaining five

proposed counts — Counts XXV through XXIX — are based on

alleged violations of RICO, 18 U.S.C. § 1962(c), and are

brought on behalf of various plaintiffs, and the fifth —

Count XXX — is based on alleged violations of Florida’s

RICO Act, Fla. Stat. §§ 895.01 et seq., and is brought on

behalf of beneficiary class members residing in Florida

30, 2003). Thereafter, the defendants moved to dismiss Union
Plaintiffs’ Complaint in Intervention and to compel arbitration of the
Union Plaintiffs’ claims. This Court denied both motions on August 22,
2003. See Am. Med. Ass’n v. United Healthcare Corp., No. 00 Civ. 2800
(LMM), 2003 WL 28004877 (S.D.N.Y. Aug. 22, 2003).

(collectively, the “Proposed RICO Claims”) (all,

collectively, the “Proposed Amendments”). (PFAC ¶¶ 28-32.)

1. The Proposed Antitrust Claims

Plaintiffs’ Proposed Antitrust Claims are based on

United Healthcare’s alleged illegal exercise of buying

power and unlawful restraint of trade. (Pls.’ Mot. for

Leave to Amend 8.) Plaintiffs allege that United

Healthcare owns and controls two databases, the Prevailing

Healthcare Charges System (“PHCS”) and the Medicode/MDR

(“MDR”) (collectively, the “UCR Databases”), which are used

to establish UCR reimbursement rates on which United

Healthcare bases its payments to out-of-network medical

care providers. (PFAC ¶ 2.) Plaintiffs allege that United

Healthcare manipulates those two databases “to reduce

reimbursements paid to beneficiaries well below true UCR

rates for out-of-network services that the beneficiaries

are contractually entitled to receive.” (Pls.’ Mot. for

Leave to Amend at 7-8.)

Plaintiffs allege that United Healthcare and the

Health Insurance Association of America (“HIAA”), from

which United Healthcare acquired the PHCS database in

October 1998, “conspired and agreed to promote and use the

UCR Databases to determine UCR in order to restrain trade

and reduce competition.” (Id. at 8.) The alleged purpose

and effect of the alleged UCR antitrust scheme “is (1) to

control and reduce reimbursements for out-of-network

medical services; and (2) to facilitate United Healthcare’s

and co-conspiring insurers’ concentration and exercise of

collective buying power over in-network providers . . .”

(Id. at 9.)

2. The Proposed RICO Claims

In addition to these antitrust claims, Plaintiffs also

seek to assert five RICO claims against Defendants. All

five Proposed RICO Claims are based on the same alleged

enterprise: the “Out-of-Network Reimbursement Enterprise.”

Plaintiffs allege that this is an association-in-fact

enterprise “comprised of [United Healthcare], the users of

its UCR Databases, United Healthcare and the entities whose

insurance healthcare plans [United Healthcare] administers

either as a plan administrator or claims administrator.”

(PFAC ¶¶ 247, 269.) This enterprise has allegedly been

used to execute fraudulent reimbursement schemes relating

to UCR with predicate acts including “false and misleading

mailings containing falsified UCR determinations and/or

data and information relating to such determinations,”

“false and misleading wire communications,” and “repeated

instances of United Healthcare’s conversion of plan assets

resulting from under-reimbursements through the false

payment schemes.” (Pls.’ Mot. for Leave to Amend 11.)

II. Discussion

A. Legal Standard for Motions for Leave to Amend

Under Rule 15(a), leave to amend a pleading “shall be

given freely when justice so requires.” Fed. R. Civ. P.

15(a). The Supreme Court has interpreted Rule 15 to permit

such amendments unless (1) the party seeking to amend has

unduly delayed; (2) the party seeking to amend is acting

with a dilatory motive; (3) the proposed amendment would

cause undue prejudice to the opposing party; or (4) the

proposed amendment would be futile. Foman v. Davis, 371

U.S. 178, 182 (1962). Whether to allow a party to amend

its complaint is within the discretion of the district

court. Id.

Defendants oppose Plaintiffs’ motion for leave to

amend for each of the four reasons articulated by the

Supreme Court in Foman. Defendants argue that the motion

should be denied because, first, Plaintiffs have unduly

delayed; second, allowing the amendment would unduly

prejudice Defendants; and, third, Plaintiffs have acted in

bad faith. Fourth, Defendants assert that Plaintiffs’

motion should be denied because amendment would be futile

in that (1) the proposed claims in the amendment are time-

barred; (2) the Proposed RICO Claims fail to state a claim

upon which relief can be granted; and (3) the Provider and

Medical Association Plaintiffs’ Proposed RICO Claims are

barred by the doctrine of res judicata. (Defs.’ Mem. in

Opp. 1-3; Defs.’ Notice of Suppl. Auth. 2.) The Court will

address these arguments seriatim.

B. Undue Delay

Defendants first argue that Plaintiffs’ motion for

leave to amend the TAC should be denied because Plaintiffs

have unduly delayed in seeking the amendment. In Foman,

the Supreme Court held that, despite the liberal pleading

standards set forth in Fed. R. Civ. P. 15, a party’s motion

for leave to amend a pleading may be denied if that party

has shown “undue delay” in seeking the amendment. Foman,

371 U.S. at 182. As the Court of Appeals has explained, a

district court “plainly has discretion . . . to deny leave

to amend where the motion is made after an inordinate

delay, no satisfactory explanation is offered for the

delay, and the amendment would prejudice the defendant.”

Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 72 (2d Cir.

1990). When a “considerable period of time has passed

between the filing of the complaint and the motion to

amend, courts have placed the burden upon the movant to

show some valid reason for his neglect and delay.” Sanders

v. Thrall Car Mfg. Co., 582 F.Supp. 945, 952 (S.D.N.Y.

1983), aff’d, 730 F.2d 910 (2d Cir. 1984). See also

Cresswell, 922 F.2d at 72 (“The burden is on the party who

wishes to amend to provide a satisfactory explanation for

the delay.”).

In this case, a significant amount of time passed

between the January 9, 2002 filing of the TAC and the July

16, 2004 filing of the motion for leave to amend the TAC.

To explain this two-and-a-half year delay, Plaintiffs

assert that their proposed amendments are based on

information acquired during Stage One discovery in late

2003 and early 2004.6 (Pls.’ Reply 13.) Plaintiffs aver

that they acted promptly after learning the facts that

underlie their proposed antitrust and RICO claims,7 noting

that they submitted a copy of the proposed amendment to

United Healthcare on May 21, 2004 (approximately one month

6 Notably, Plaintiffs explain their delay as resulting from an
insufficient knowledge of the facts required to plead RICO and
antitrust claims rather than from ignorance of applicable RICO or
antitrust laws. The latter reason was found unavailing in several
cases on which Defendants rely. See, e.g., Sanders v. Thrall Car Mfg.
Co., 582 F.Supp. 945 (S.D.N.Y. 1983), aff’d, 730 F.2d 910 (2d Cir.
1984); Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 72 (2d Cir.
1990).
7 The parties dispute which documents provide the basis for Plaintiffs’
proposed amendments. Defendants point to certain documents that were
turned over to Plaintiffs earlier in the Stage One discovery process,
arguing that Plaintiffs were long in possession of the information
necessary to form a basis for their proposed RICO and antitrust claims.
Plaintiffs counter that these three documents “are, on their face,
peripheral to Plaintiffs’ key allegations in the Amendment” and cite
depositions taken in late 2003 as critical to their proposed
amendments. The Court finds Plaintiffs’ multiple citations to the 2003
depositions persuasive and accepts Plaintiffs’ declaration that the
proposed amendments are based, at least in part, on discovery obtained
in late 2003.

after the April 14, 2004 completion of Stage One discovery)

and filed their motion for leave to amend shortly

thereafter, on July 16, 2004. (Pls.’ Reply 13.)8 The Court

is persuaded that the basis for Plaintiffs’ Proposed

Amendments was formed, at least in part, during Stage One

discovery and finds this a satisfactory explanation for the

delay in the filing of the Proposed Amendments.

Moreover, the Court notes that the cases cited by

Defendants as exemplifying undue delay are all easily

distinguishable from the case at hand. In each of these

cases, the courts relied not only on the alleged delay but

also on the procedural status of the case. In several

instances, motions for leave to amend were denied because

discovery had already been completed and post-discovery

motions for summary judgment had been submitted. See,

e.g., Cresswell, 922 F.2d at 72 (affirming denial of motion

for leave to amend where discovery had closed and plaintiff

offered no valid excuse for delay); Krumme v. Westpoint

Stevens, Inc., 143 F.3d 71, 88 (2d Cir. 1998) (affirming

denial of motion for leave to amend when the case was “near

8 The Court notes that seeking such consent is in accordance with Fed.
R. Civ. P. 15(a) and that Plaintiffs’ attempt to obtain Defendants’
consent provides some justification for the three months of delay
between the seeking of consent in April 2004 and the filing of this
motion in July 2004. See generally Journal Publishing Co. v. Am. Home
Ins. Co., 771 F.Supp. 632, 637 (S.D.N.Y. 1991) (permitting plaintiffs
to amend their complaint four years after the filing of the original
complaint where, inter alia, plaintiffs had sought defendants’ consent
to the amendment in order to avoid motion practice).

resolution and discovery had been completed”); C.L.-

Alexanders Laing & Cruickshank v. Goldfield, 739 F.Supp.

158, 166 (S.D.N.Y. 1990) (denying motion for leave to amend

six months after the close of discovery and after the

submission of the defendant’s post-discovery motion for

summary judgment).9

In other cases relied on by Defendants, courts denied

motions for leave to amend because they were made following

the deadline set by the trial court for such amendments.

See, e.g., Nas Electronics, Inc. v. Transtech Electronics

PTE, Ltd., 262 F.Supp.2d 134, 150-51 (S.D.N.Y. 2003);

Champlain Enterprises, Inc. v. United States, 945 F.Supp.

468, 475 (N.D.N.Y. 1996). Finally, in still other cases

cited by Defendants, courts denied motions for leave to

amend that were filed on the eve of trial. See Zahra v.

Town of Southold, 48 F.3d 674, 686 (2d Cir. 1995)

(affirming denial of motion for leave to amend because,

inter alia, it was made three months before trial); Roorda

v. American Oil Co., 446 F. Supp. 939, 947 (W.D.N.Y. 1978)

(denying motion for leave to amend that was filed eleven

days before trial was scheduled to begin).

9 A motion for summary judgment as to certain plaintiffs has been filed
in this case, but it is based not on the merits but on the results of
Stage One discovery, which was limited to preliminary matters such as
the proper parties. It is thus unlike the motions for summary judgment
in the cited cases, which were all filed post-discovery, reflecting the
advanced procedural status of those cases.

Despite the length of time that has passed since the

filing of the original complaint and of the TAC, the case

at hand remains at an earlier procedural stage. Merits

discovery is in the early stages and has, in fact, been

stayed pending Stage One discovery, which was “limited to

the proper parties in this action as opposed to the merits

of the case.” October 2002 Order at *6. No scheduling

order or deadline for filing motions to amend the pleadings

has expired. And, of course, this case is nowhere near to

being on the eve of trial. The Court therefore finds that

Plaintiffs have not unduly delayed and declines to exercise

its discretion to deny Plaintiffs’ motion for leave to

amend because of delay.

C. Dilatory Motive

In addition to undue delay, Defendants assert

that Plaintiffs’ motion for leave to amend should be denied

because Plaintiffs acted with bad faith. Under Rule 15(a)

as construed by the Supreme Court in Foman, a party’s

dilatory motive is a legitimate basis for a court’s denying

that party’s motion to amend a pleading. Foman v. Davis,

371 U.S. 178, 182 (1962). “When it appears that leave to

amend is sought in anticipation of an adverse ruling on the

original claims . . . the court is free to deny leave to

amend.” PI, Inc. v. Quality Products, Inc., 907 F.Supp.

752 (S.D.N.Y. 1995) (citing Ansam Assocs., Inc. v. Cola

Petroleum, Inc., 760 F.2d 442, 446 (2d Cir. 1985)). In PI,

Inc., the plaintiff moved to amend its complaint following

oral argument on the defendant’s motion to dismiss. The

PI, Inc. court found this to be “clearly a dilatory tactic

to avoid the dismissal of this action,” noting that this

was “also the second time that the plaintiff has used the

tactic of waiting for the defendants to file motions to

dismiss before moving to amend the complaint.” PI, Inc.,

760 F.2d at 765.

Defendants point to two indicators of Plaintiffs’

alleged bad faith. First, they note that Plaintiffs filed

this motion “shortly after Defendants filed their summary

judgment motion,” which Defendants assert demonstrates

“anticipation of an adverse ruling on the motion” that

required Plaintiffs to make the present motion “in a

transparent effort to salvage their complaint.” (Defs.’

Mem. in Opp. 50.) Second, Defendants argue that Plaintiffs’

motion for leave to amend is “an apparent retaliatory

strike” based on Defendants’ antitrust counterclaims

because it was filed approximately six weeks after

completion of briefing on Plaintiffs’ motion to dismiss

Defendants’ counterclaims. (Id. at 50-51.)

Unlike in PI, Inc., here the timing of Plaintiffs’

filing of their motion for leave to amend the TAC is not

“clearly a dilatory tactic.” PI, Inc., 760 F.2d at 765.

Defendants’ assertion that Plaintiffs made this motion in

anticipation of an adverse ruling on Defendants’ summary

judgment motion is belied by the fact that Plaintiffs

provided a draft of the PFAC to Defendants on May 21, 2004

— before Defendants had filed their motion for summary

judgment. (Pls.’ Reply 19; Quackenbos Decl. ¶ 20.) The

PFAC therefore could not have been prepared “in

anticipation of an adverse ruling” or “to salvage [the

Plaintiffs’] complaint.” (Defs.’ Mem. in Opp. 50.)

Nor is there any indication — other than Defendants’

bald assertion — that Plaintiffs filed this motion as some

kind of retaliatory strike. The Court declines to base a

finding of bad faith on such grounds in the absence of any

evidence, particularly as Defendants appear to have

misconstrued the underlying facts in presenting their first

example of Plaintiffs’ alleged bad faith. Plaintiffs’

motion for leave to amend the TAC will not be denied on the

basis of Defendants’ unsupported allegations that

Plaintiffs acted with dilatory motive or bad faith.

D. Prejudice

Third, Defendants urge the Court to deny Plaintiffs’

motion for leave to amend on the grounds that permitting

such amendment would result in undue prejudice to

Defendants. In Foman, the Supreme Court held that leave to

amend can be denied when the proposed amendment would cause

undue prejudice to the opposing party. Foman v. Davis, 371

U.S. 178, 182 (1962). The Court of Appeals has advised

that, “[i]n determining what constitutes ‘prejudice,’

[courts] consider whether the assertion of the new claim

would: (i) require the opponent to expend significant

additional resources to conduct discovery and prepare for

trial; (ii) significantly delay the resolution of the

dispute; or (iii) prevent the plaintiff from bringing a

timely action in another jurisdiction.” Block v. First

Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993).10

Defendants argue that two of the three Block factors

apply here because allowing an amendment to add the

Proposed RICO Claims and the Proposed Antitrust Claims

would require the expenditure of additional resources in

discovery and trial preparation and would significantly

10 In assessing the degree of prejudice required, the Block court
observed that the required demonstration of prejudice varies inversely
with the period of unexplained delay in seeking the amendment: “[T]he
longer the period of an unexplained delay, the less will be required of
the nonmoving party in terms of a showing of prejudice.” Block v. First
Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993) (quotations omitted)
(emphasis added). Here, because the Court has found that the
Plaintiffs provided an adequate explanation for their delay, Defendants
are not entitled to a lower threshold level in showing prejudice
despite the length of time that has passed since the filing of the TAC.
However, even if that threshold were lowered, the Court’s conclusion
would remain the same: Defendants have failed to show sufficient
prejudice to justify the Court’s denying Plaintiffs’ motion for leave
to amend.

delay the resolution of this dispute. The Court disagrees.

First, while recognizing that allowing the Proposed RICO

and Antitrust Claims will require additional discovery

relating to those claims, the Court finds that such

discovery does not create undue prejudice at this

relatively early stage in the litigation. Permitting a

party to amend its pleading will inevitably place some

additional burden on the opposing party, but “courts have

consistently held that such burden does not constitute

impermissible prejudice.” Sommer v. PMEC Assocs. & Co.,

No. 88 Civ. 2537, 1993 WL 361660, at *4 (S.D.N.Y. Sept. 14,

1993) (citing Morse/Diesel, Inc. v. Fidelity and Deposit

Co. of Md., 715 F.Supp. 578, 581 (S.D.N.Y. 1989),

International Bank v. Price Waterhouse and Co., 85 F.R.D.

140, 142 (S.D.N.Y. 1980)).

The cases cited by Defendants found undue prejudice

where parties had completed discovery and were “on the eve

of trial.” Portsmouth Baseball Corp. v. Frick, 21 F.R.D.

318, 319 (S.D.N.Y. 1958). Here, the parties have completed

only preliminary discovery as to the “proper parties in

this action” and have not yet engaged in any significant

discovery on the merits. October 2002 Order at *6. Nor

does the fact that a summary judgment motion has been filed

in this case indicate that Defendants would suffer undue

prejudice if the Court granted the motion to amend. The

summary judgment motion pending before this Court is based

on the preliminary issues rather than on the merits.

Second, the Court finds that allowing an amendment

asserting the Proposed RICO and Antitrust Claims would not

significantly delay the resolution of this matter. In the

primary case relied on by Defendants, the court denied a

plaintiff’s motion to amend where the case was “on the eve

of resolution,” H.L. Hayden Co. of N.Y., Inc. v. Siemens

Medical Systems, Inc., 112 F.R.D. 417, 419 (S.D.N.Y. 1986).

Such is not the case here, where the matter is in the

preliminary stages of merits discovery and is nowhere near

to being ready for trial. See generally Dluhos v. Floating

and Abandoned Vessel, known as “New York”, 162 F.3d 63 (2d

Cir. 1998) (“[I]t is unlikely that such an amendment would

cause undue prejudice to any party given that the

litigation did not appear to be anywhere near substantive

resolution” when the motion to for leave to amend was

made.)

Finally, Defendants also argue that granting

Plaintiffs’ motion for leave to amend would result in undue

prejudice because the proposed claims would “dramatically

change the nature of the case” against them. This Court

agrees with Plaintiffs, however, that the proposed

amendments are based on “substantially similar” allegations

of misconduct regarding Defendants’ “determining UCR

reimbursements and [Defendants’] dealings with

beneficiaries regarding such determinations.” (Pls.’ Reply

21.) While the Proposed RICO and Antitrust Claims are

different in nature from Plaintiffs’ earlier claims, they

are substantially related to those claims, which are based

primarily on ERISA, terms of the plans, contract law, and

the New York Deceptive Trade Practices statute, and which

seek declaratory, injunctive, and monetary relief. In the

one case on which Defendants base their dramatic change

argument, the plaintiffs sought to add RICO claims seeking

$900 million in treble and punitive damages in a matter

where the original complaint only sought an accounting and

the imposition of a constructive trust. See Sommer v. PMEC

Assocs. & Co., No. 88 Civ. 2735, 1993 WL 361660 (S.D.N.Y.

Sept. 14, 1993). The original allegations and the proposed

claims, and the forms of relief sought in both, are clearly

more similar in nature here than they were in Sommer, and

allowing the addition of the proposed claims would not

dramatically change the nature of the case against

Defendants.

The Court therefore finds that allowing the proposed

amendments would not result in undue prejudice to the

Defendants.

E. Futility

In addition to undue delay, bad faith, and undue

prejudice, a court may exercise its discretion to deny a

party’s motion to amend a pleading when the proposed

amendment would be futile. Foman v. Davis, 371 U.S. 178,

182 (1962). An amendment is considered futile if it could

not withstand a motion to dismiss pursuant to Fed. R. Civ.

P. 12(b)(6). Riccuiti v. N.Y.C. Transit Auth., 941 F.2d

119, 123 (2d Cir. 1991). As the Second Circuit has

explained, “the court should not dismiss the complaint for

failure to state a claim ‘unless it appears beyond doubt

that the plaintiff can prove no set of facts in support of

his claim which would entitle him to relief,’ and it should

not deny leave to file a proposed amended complaint unless

that same rigorous standard is met.” Id. (internal

citation omitted). In applying this standard, a court must

“read the facts alleged in the complaint in the light most

favorable” to the non-moving party, and it must accept the

allegations as true. H.J. Inc. v. Northwestern Bell Tel.

Co., 492 U.S. 229, 249 (1989).

Defendants assert that the proposed amendments are

futile on multiple grounds. First, they argue that all of

the proposed additional claims are time-barred for all

Plaintiffs. Second, they argue that the proposed federal

RICO claims are futile because they fail to state a claim

on which relief can be granted. Finally, Defendants argue

that all the proposed claims are futile as to the Provider

and Medical Association Plaintiffs because they are barred

by the doctrine of res judicata. The Court finds that, to

the extent that the Proposed Antitrust and RICO Claims are

based on injuries that occurred after July 15, 2000, they

are not futile.

1. Whether the Proposed Amendments are Time-Barred

Defendants first assert that Plaintiffs’ motion to add

the Proposed RICO Claims and the Proposed Antitrust Claims

should be denied as futile because both types of claims are

time-barred. Plaintiffs counter with three arguments: that

their claim is not time-barred because they have suffered

harms under both antitrust and RICO laws within the statute

of limitations; that the applicable statutes of limitations

were tolled by Defendants’ fraudulent concealment of their

activity; and that even if the claims are time-barred, they

are timely because they relate back to the March 15, 2000

initial Complaint.

a. Applicable Statutes of Limitations

Plaintiffs first assert that their antitrust and RICO

claims are timely because they are made within the

applicable statutes of limitations. The motion for leave to

amend and the PFAC were filed on July 15, 2004. Plaintiffs

argue that their antitrust and RICO claims are not time-

barred because they suffered actionable injuries within the

four-year statute of limitations applicable to both

antitrust and RICO claims -– that is, after July 15, 2000.

It is undisputed that the statute of limitations for

both antitrust and civil RICO claims is four years. See 15

U.S.C. § 15(b) (antitrust); Agency Holding Corp. v. Malley-

Duff Assocs., Inc., 483 U.S. 143, 156 (1987) (RICO). The

parties do dispute, however, whether any of the harms

allegedly suffered by the Plaintiffs since July 15, 2000

are sufficient to trigger the commencement of the four-year

limitations period.

Defendants argue that the Proposed Antitrust Claims

“are time-barred because plaintiffs knew or should have

known of the alleged injuries prior to four years from the

filing of the Motion [f]or Leave [t]o Amend, or July 15,

2000.” (Defs.’ Mem. in Opp. 29 (emphasis in original).)

But the Supreme Court has held that, under antitrust law,

in the case of a “continuing violation,” say a price-
fixing conspiracy that brings about a series of
unlawfully high priced sales over a period of years,
“each overt act that is part of the violation and that
injures the plaintiff,” e.g., each sale to the
plaintiff, “starts the statutory period running again,
regardless of the plaintiff’s knowledge of the alleged

illegality at much earlier times.”

Klehr v. A.O. Smith Corp., 521 U.S. 179, 189 (1997)

(emphasis added)(citation omitted). Whether a plaintiff

knew or should have known of an alleged antitrust injury

therefore does not affect the commencement of the statute

of limitations period under antitrust law: the limitations

period begins afresh with “each overt act that is part of

the violation and that injures the plaintiff.” Id.

Here, Plaintiffs allege that they have been harmed by

“hundreds of intentionally false UCR determinations” as a

result of Defendants’ ongoing antitrust scheme. (PFAC ¶

146.) Several, but not all, of the “brief examples” of

such harms cited in the PFAC occurred after July 2000.

(PFAC ¶¶ 147-180.) The alleged harms that occurred after

July 15, 2000 include, inter alia, “false UCR reimbursement

determinations” and explanations of benefits “containing

misrepresentations and omissions regarding [Defendants’]

use of the UCR Databases.” (PFAC ¶¶ 151, 154.) These

suffice to allege overt acts that are part of a continuing

antitrust violation. The Proposed Antitrust Claims based

on overt acts that occurred after July 15, 2000 are

therefore not time-barred, and the proposed amendment to

include them is not futile on the basis of the four-year

statute of limitations.

Defendants’ argument that the Proposed RICO Claims

“are time-barred because plaintiffs knew or should have

known of the alleged injuries prior to four years from the

filing of the Motion For Leave To Amend” potentially is

more persuasive because the limitations period for civil

RICO claims begins to run “when the plaintiff discovers or

should have discovered the RICO injury.” Tho Dinh Tran v.

Alphonse Hotel Corp., 281 F.3d 23, 35 (2d Cir. 2002)

(quoting In re: Merrill Lynch P’ships Litig., 154 F.3d 56,

58 (2d Cir. 1998)). As Defendants point out, Plaintiffs’

original Complaint, which was filed on March 15, 2000 (over

four years prior to the filing of the PFAC with the

Proposed RICO Claims), expressed actual knowledge of

injuries that occurred well before July 15, 2000. The

Proposed RICO Claims are therefore time-barred unless they

fall within this Circuit’s “separate accrual rule” for

civil RICO violations.

Under this rule, a “new claim accrues and the four-

year limitation period begins anew each time a plaintiff

discovers or should have discovered a new and independent

injury.” In re Merrill Lynch Ltd. Partnerships Litig., 154

F.3d 56, 59 (2d Cir. 1998). “[T]he separate accrual rule

of this Circuit is potentially implicated in any RICO case

where multiple injuries occur over an extended period of

time.” National Group for Communications and Computers

Ltd. v. Lucent Technologies, Inc., 420 F.Supp.2d 253, 265

(S.D.N.Y. 2006). The separate accrual rule is triggered

only if the injury is “new and independent,” In re Merrill

Lynch, 154 F.3d at 59, and “the plaintiff cannot use an

independent, new predicate act as a bootstrap to recover

for injuries caused by other earlier predicate acts that

took place outside the limitations period.” Klehr v. A.O.

Smith Corp., 521 U.S. 179, 181 (1997).

In the case announcing the Second Circuit’s separate

accrual rule, the Court of Appeals found that a separate

cause of action had accrued based on the defendants’

fraudulently concealing the assets of a bankruptcy estate

and instituting frivolous lawsuits. Bankers Trust Co. v.

Rhoades, 859 F.2d 1096 (2d Cir. 1988). These actions

constituted “new and independent” injuries separate and

apart from the loss of the debt itself. Id. at 1103.

Similarly, in Bingham v. Zolt, the Court of Appeals held

that the separate accrual rule applied where the defendants

had diverted and concealed assets from Bob Marley’s estate

over a period of many years. Bingham v. Zolt, 66 F.3d 553

(2d Cir. 1995). Although several wrongful acts, including

the fraudulent transfer of assets and contract rights, had

occurred more than four years before the suit, the Bingham

Court found new and independent injuries in subsequent

“frequent misappropriations of discrete amounts of money

from different sources.” Id. at 561. Thus, “each illegal

diversion constituted a new and independent legally

cognizable injury to the estate,” thereby rendering the

plaintiffs’ civil RICO claim “timely with respect to all

diversions occurring within four years of suit.” Id.

Courts have declined to apply the rule of separate

accrual in the absence of “new and independent” injuries.

In In re Merrill Lynch, for instance, the plaintiff

investors alleged that certain partnerships in which they

had invested “were fraudulent at the outset” but that their

claims, though brought more than four years after investing

in the partnerships, were not barred because of the rule of

separate accrual. In re Merrill Lynch, 154 F.3d at 59.

They argued that “the dissemination of allegedly misleading

reports and other communications and the collection of

annual fees” constituted “new and independent” injuries.

Id. The Court of Appeals found, however, that the later

communications were “continuing efforts to conceal the

initial fraud, and not separate and distinct fraudulent

acts resulting in new and independent injuries.” Id. at 59-

60. Similarly, in Long Island Lighting Co. v. Imo

Industries, Inc. (“LILCO”), the Second Circuit found that

the RICO injury had occurred at the time Plaintiffs knew or

should have known of a design defect in the generators they

had purchased, and that the later failure of the generators

and consequent financial losses did not give rise to a new

and independent RICO claim. Long Island Lighting Co. v.

Imo Industries, Inc., 6 F.3d 876 (2d Cir. 1993).

Although “[t]he In re Merrill Lynch decision confirms

that, in at least some cases, injuries are not ‘new and

independent’ when they are attributable to a common

scheme,” National Group, 420 F.Supp.2d at 256, the In re

Merrill Lynch Court explicitly recognized that “in some

instances a continuing series of fraudulent transactions

undertaken within a common scheme can produce multiple

injuries which each have separate limitations periods.” In

re Merrill Lynch, 154 F.3d at 59 (citing Bingham v. Zolt,

66 F.3d 553, 559-61 (2d Cir. 1995)). This is such a case.

The injuries alleged to have occurred since July 15, 2000 –

– including “false UCR reimbursement determinations” and

explanation of benefits “containing misrepresentations and

omissions regarding [Defendants’] use of UCR Databases” –-

are similar to the ongoing illegal diversions in Bingham.

(PFAC ¶¶ 151, 154.) While In re Merrill Lynch, like this

case, involved allegedly fraudulent mailings and

statements, there the actual injury occurred once: it

resulted from the initial investment in the fraudulent

partnerships, not from “the dissemination of allegedly

misleading reports and other communications and the

collection of annual fees.” In re Merrill Lynch, 154 F.3d

at 59. Here, the alleged injuries occurred each time the

Defendants made a “false UCR reimbursement

determination[],” and these multiple injuries cannot be

said to have resulted from one initial event. (PFAC ¶ 151.)

Rather, they are “new and independent” injuries within the

meaning of the Second Circuit’s rule of separate accrual.

This Court finds, therefore, that Plaintiffs’ Proposed

RICO Claims that are based on UCR benefit determinations

rendered after July 15, 2000, are not time-barred. Any

RICO claims based on injuries that occurred before July 15,

2000, however, are time-barred.11 See Bingham, 66 F.3d at

560 (“Pursuant to [the rule of separate accrual], a

plaintiff who is continuously injured by an underlying RICO

violation may only recover for injuries discovered or

discoverable within four years of the time suit is

brought.”). Because each of the Proposed RICO Claims seems

to allege injuries that occurred after July 15, 2000, leave

to amend to add those claims will not be denied as futile

11 They are time-barred unless they were fraudulently concealed or they
relate back to the filing of the original complaint. See discussion
infra Sections II.E.1.b-c.

on statute of limitations grounds.

b. Fraudulent Concealment

Plaintiffs further argue that the Proposed RICO and

Antitrust Claims are not time-barred because they were

fraudulently concealed.12 In both antitrust and civil RICO

actions, a plaintiff must allege three elements in order to

toll the statute of limitations on the basis of fraudulent

concealment: (1) that the defendant concealed the existence

of the plaintiff’s cause of action; (2) that the

concealment prevented the plaintiff from discovering that

cause of action within the statute of limitations period;

and (3) that the plaintiff diligently attempted to discover

the claims during the statute of limitations period. See

State of New York v. Hendrickson Brothers, Inc., 840 F.2d

1065, 1083 (2d Cir. 1988) (for antitrust claims); Corcoran

v. New York Power Auth., 202 F.3d 530, 543 (2d Cir. 1999)

(for RICO claims).

Allegations of fraudulent concealment, like other

allegations of fraud, must be pleaded with particularity in

accordance with Fed. R. Civ. P. 9(b). See Aetna Cas. and

Sur. Co. v. Aniero Concrete Co., Inc., 404 F.3d 566 (2d

12 The Court must address Plaintiffs’ argument that their claims are not
time-barred on the basis of fraudulent concealment in order to
ascertain to what extent injuries alleged to have occurred prior to
July 15, 2000 -– outside the applicable four-year statute of
limitations –- may form a basis for Plaintiffs’ Proposed Antitrust and
RICO claims.

Cir. 2005) (per curiam). In the PFAC, Plaintiffs allege

that “[a]s a result of Defendants’ fraudulent concealment,

the applicable statutes of limitations have been tolled and

have not begun to run.” (PFAC ¶ 209.) The Court agrees

with Defendants that such conclusory statements are

insufficient to satisfy Rule 9(b)’s pleading requirements.

Plaintiffs argue that they have satisfied the first

element, concealment of the cause of action, and rightly

note that the Second Circuit recognizes certain enterprises

as self-concealing. State of N.Y. v. Hendrickson Bros.,

Inc., 840 F.2d 1065, 1083 (2d Cir. 1988). They direct the

Court to sections of the PFAC alleging that United

Healthcare concealed Plaintiffs’ causes of action. But

while the PFAC may sufficiently state the first element of

fraudulent concealment, it does not allege –- much less

allege with particularity -– the second or third elements

of such a claim. Because Plaintiffs have not satisfied

Rule 9(b) with regard to whether Defendants’ concealment

prevented Plaintiffs from discovering their causes of

action and to whether Plaintiffs exercised due diligence in

seeking to uncover those causes of action, Plaintiffs’

argument that the statute of limitations was tolled by

fraudulent concealment fails.

c. Relation Back

Plaintiffs further argue that their claims are not

time-barred because they relate back to the filing of the

original complaint.13 Fed. R. Civ. P. 15(c) governs whether

a plaintiff should be permitted to amend a pleading to

include claims that would be time-barred if brought in a

separate action. Under Rule 15(c), “[a]n amendment of a

pleading relates back to the date of the original pleading

when . . . the claim or defense asserted in the amended

pleading arose out of the conduct, transaction, or

occurrence set forth or attempted to be set forth in the

original pleading.” Fed. R. Civ. P. 15(c). In analyzing a

Rule 15(c) argument, the court must inquire “whether the

facts provable under the amended complaint arose out of the

conduct alleged in the original complaint.” Salyton v.

American Exp. Co., 460 F.3d 215, 227 (2d Cir. 2006).

The Court of Appeals has repeatedly instructed that

the primary consideration is “whether the original

complaint gave the defendant fair notice of the newly

alleged claims.” Wilson v. Fairchild Republic Co., 143

F.3d 733, 738 (2d Cir. 1998). “If the facts in the

13 Again, although Plaintiffs’ Proposed RICO and Antitrust Claims are
not barred by the statute of limitations to the extent that they arise
from injuries incurred after July 15, 2000, the Court must nonetheless
address whether those proposed claims relate back to the original
complaint in order to ascertain whether Plaintiffs may recover under
antitrust and RICO law on the basis of injuries sustained before July
15, 2000. Because Plaintiffs failed to adequately allege fraudulent
concealment, any such claims are time-barred unless they relate back to
the original complaint.

original pleading do not provide defendant with notice of

facts out of which the time-barred claim arises then

relation back is inappropriate.” 106 Mile Transport

Associates v. Koch, 656 F.Supp. 1474 (S.D.N.Y. 1987). In

cases “where a revised pleading contains alternative

theories based on the same core facts as presented in a

prior pleading, the alternative pleadings relate back to

the original.” Wells v. Harris, 185 F.R.D. 128, 131 (D.

Conn. 1999). However, “courts have declined to apply the

relation back doctrine to allow the addition of new claims

for relief based on transactions or events not included in

the original pleading.” Grace v. Rosenstock, 169 F.R.D.

473, 481 (E.D.N.Y. 1996), aff’d, 228 F.3d 40 (2d Cir. 2000)

(citing cases). Therefore “‘[a]n amendment which states an

entirely new claim for relief based on different facts will

not relate back.’” Forzley v. AVCO Corp. Electronics

Division, 826 F.2d 974, 981 (11th Cir. 1987) (quoting 3 J.

Moore, Moore’s Federal Practice ¶ 15.15[3] at 15-147 to 149

(2d ed. 1985)).

The issue here is therefore whether the Proposed

Antitrust and RICO Claims are “based on the same core

facts” as those alleged in the Original Complaint –-

thereby demonstrating that Defendants had adequate notice

within the statutory period — in which case they relate

back, or are “based on transactions or events not included

in the original pleading,” in which case they do not relate

back under Rule 15(c). Wells, 185 F.R.D. at 131; Grace,

169 F.R.D. at 481.

Plaintiffs assert that the original Complaint, which

alleged violations of ERISA, contract law, and the New York

Deceptive Trade Practices statute, provided notice of the

core facts that now form the basis for Plaintiffs’ Proposed

RICO and Antitrust Claims because the original Complaint

“alleged numerous acts of misconduct by United Healthcare

. . . in applying the PHCS database to make reduced UCR

determinations, and the misrepresentations made by United

Healthcare in informing beneficiaries of the reduced UCR

determinations.” (Pls.’ Reply 34.) In essence, Plaintiffs

argue that “once Plaintiffs identified in the original

Complaint the misconduct and the most tangible and obvious

injuries resulting from it, United Healthcare was put on

notice that all of the underlying reasons and actions

leading to such misconduct were at issue.” (Pls.’ Reply

35.)

The Court agrees, however, with Defendants that the

original Complaint does not include facts that form the

core of the Plaintiffs’ Proposed Claims. While the

original Complaint alleges important facts relating to the

harm of Defendants’ alleged misconduct, it does not include

reference to -– and therefore does not provide any

meaningful notice to Defendants of -– most of the facts

that are key to both the Proposed Antitrust and the

Proposed RICO Claims. The original Complaint alleges basic

facts relating to the HIAA and the PHCS database, but it

does not mention the MDR, the other database at issue in

the PFAC. (Compl. ¶¶ 31-38.) Even reading the allegations

generously, the Court finds that the Proposed Antitrust and

RICO Claims are primarily “based on transactions or events

not included in the original pleading.” Grace, 169 F.R.D.

at 481. They therefore do not relate back to the original

Complaint within the meaning of Rule 15(c).

Plaintiffs’ Proposed Antitrust and RICO Claims that

are based on injuries that occurred before July 15, 2000,

are time-barred and therefore futile. However, because the

Proposed Claims all seem to rely at least in part on

injuries sustained by Plaintiffs after July 15, 2000,

Plaintiffs’ motion for leave to amend will not be denied as

futile on the basis of the statute of limitations.

2. Whether the Proposed RICO Claims State a Claim

United Healthcare argues that Plaintiffs’ motion for

leave to file the Proposed RICO Claims should be denied as

futile because “plaintiffs have failed sufficiently to

state a RICO claim upon which relief can be granted.”

(Defs.’ Mem. in Opp. 38.) As discussed above, “a proposed

amendment to a pleading [is] futile if it could not

withstand a motion to dismiss pursuant to 12(b)(6).”

Riccuiti v. N.Y.C. Transit Authority, 941 F.2d 119, 123 (2d

Cir. 1991). “Dismissal of a civil RICO complaint for

failure to state a claim is only appropriate when it is

clear that no relief could be granted under any set of

facts that could be proved consistent with plaintiff’s

allegations.” Commercial Cleaning Services, LLC v. Colin

Service Systems, Inc., 271 F.3d 374, 380 (2d Cir. 2001).

Under the federal RICO statute, it is “unlawful for

any person employed by or associated with any enterprise

engaged in, or the activities of which affect, interstate

or foreign commerce, to conduct or participate, directly or

indirectly, in the conduct of such enterprise’s affairs

through a pattern of racketeering activity.” 18 U.S.C. §

1962(c).14 In order to sufficiently plead a civil RICO

claim, “a plaintiff must show that he was injured by

defendants’ (1) conduct (2) of an enterprise (3) through a

pattern (4) of racketeering activity.” Cofacredit, S.A. v.

14 The Proposed RICO Claims include four counts alleging violations of
federal RICO law and one count alleging, on behalf of plaintiffs who
reside in Florida, violations of the Florida RICO Act, 895.01 et seq.
Defendants’ arguments in opposition to Plaintiffs’ motion for leave to
file an amended complaint address only the federal RICO claims, so the
Court here confines its analysis to whether Plaintiffs’ proposed
federal RICO claims state a claim upon which relief may be granted.

Windsor Plumbing Supply Co., 187 F.3d 229, 242 (2d Cir.

1999) (internal quotation omitted). See also Sedima,

S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985).

Defendants argue that “plaintiffs have failed

sufficiently to plead the ‘enterprise’ and ‘conduct’

elements of a RICO claim.” (Defs.’ Mem. in Opp. 40.)

Although Plaintiffs may face challenges in presenting

sufficient evidence to carry their burden of proof as to

these two elements of their Proposed RICO Claims, at this

stage all Plaintiffs need do is adequately plead those

elements. Plaintiffs have sufficiently alleged both the

conduct and the enterprise elements here, and their motion

to assert the Proposed RICO Claims will not be denied as

futile for failure to state a claim.

a. The “Conduct” Element

In order to state a RICO claim, a plaintiff must

allege that the defendants conducted the affairs of the

enterprise. Cofacredit, 187 F.3d at 242. Defendants argue

that Plaintiffs’ motion to amend should be denied because

Plaintiffs failed to adequately allege that United

Healthcare “conducted” the affairs of the alleged Out-of-

Network enterprise.

The Supreme Court has explained that “[i]n order to

‘participate, directly or indirectly, in the conduct of

such enterprise’s affairs,’ one must have some part in

directing those affairs,” and, although “RICO liability is

not limited to those with a formal position in the

enterprise,” “some part in directing the enterprise’s

affairs is required.” Reves v. Ernst & Young, 507 U.S. 170,

179 (1993). Specifically, the Court held that “‘to conduct

or participate, directly or indirectly, in the conduct of

such enterprise’s affairs,’ § 1962(c), one must participate

in the operation or management of the enterprise itself.”

Id. In the Second Circuit, this “‘operation or management’

test typically has proven to be a relatively low hurdle for

plaintiffs to clear, especially at the pleading stage.”

First Capital Asset Management v. Satinwood, Inc., 385 F.3d

159, 176 (2d Cir. 2004)(internal citations omitted).

Defendants first argue that Plaintiffs have failed to

surmount this hurdle because “Defendants are not alleged to

have played any role in ‘directing’ the conduct of the

alleged Out-of-Network Reimbursement Enterprise’ . . .”

(Defs.’ Mem. in Opp. 47.) But Plaintiffs satisfy the Reves

standard by alleging that Defendants, “in concert with the

HIAA Group, . . . manipulat[ed] the UCR Databases” using a

variety of methods. (PFAC ¶¶ 129-133.) Such actions

constitute “operation or management” of the enterprise’s

affairs and therefore satisfactorily allege the conduct

element of the Proposed RICO claims.

Second, Defendants argue that Plaintiffs have failed

to allege the conduct element of the Proposed RICO Claims

because Plaintiffs’ “claims solely allege that Defendants

perpetrated a fraud on plaintiffs in the course of

conducting their own affairs, and not the affairs of any

alleged ‘enterprise.’” (Defs.’ Mem. in Opp. 47 (emphasis in

original).) Defendants rely principally on Reves, in which

the Supreme Court held that to satisfy the “conduct”

requirement in a RICO claim the defendant must be alleged

to have played a role in directing the affairs “of the

enterprise itself.” Reves, 507 U.S. at 179.

In Reves, the defendant, an accountant, was an

outsider who had not participated in the operation or

management of the enterprise. Similarly, in other cases

cited by Defendants, the defendants were not in a position

to direct the affairs of the enterprise. See Brannon v.

Boatmen’s First National Bank of Okla., 153 F.3d 1144, 1149

(10th Cir. 1998) (declining to hold a subsidiary liable for

the acts of its parent corporation); Dubai Islamic Bank v.

Citibank, 256 F.Supp.2d 158, 164 (S.D.N.Y. 2003) (finding

that the plaintiffs had failed to adequately allege

“conduct” of the enterprise based on the defendant bank’s

employees’ alleged participation in a customer’s money-

laundering scheme); Richmond v. Nationwide Cassel L.P., 52

F.3d 640, 645 (7th Cir. 1995) (holding that the defendants

had not conducted the enterprise where “[n]ot one of the

non-defendant entities, supposedly constituent parts of the

‘enterprise,’ is described as playing a role in the forced

placed insurance that allegedly was foisted on the used car

purchaser-victim.”). None of these circumstances bears any

similarity to the case at hand, where Plaintiffs allege

that Defendants controlled and manipulated the UCR

Databases. The Court finds, therefore, that Plaintiffs

have sufficiently pled the “conduct” element of their

Proposed RICO Claims.

b. The “of an Enterprise” Element

Second, Defendants assert that Plaintiffs have failed

to state a claim under the RICO statute because they have

not sufficiently alleged the “enterprise” element. Under

the RICO statute, an enterprise is defined as “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). The Supreme Court has further explained that an

association-in-fact enterprise is “a group of persons

associated together for a common purpose of engaging in a

course of conduct.” United States v. Turkette, 452 U.S.

576, 583 (1981). The existence of such an enterprise is

proven “by evidence of an ongoing organization, formal or

informal, and by evidence that the various associates

function as a continuing unit.” Id. See also First Capital

Asset Management, Inc. v. Satinwood, 385 F.3d 159 (2d Cir.

2004).

Moreover, as the Turkette Court explained, “[t]he

enterprise is not the ‘pattern of racketeering activity’;

it is an enterprise separate and apart from the pattern of

activity in which it engages.” Turkette, 452 U.S. at 583

(internal citation omitted). In applying the Turkette

standard, the Second Circuit has looked for information

about an alleged association-in-fact enterprise’s

“hierarchy, organization, and activities” that could

support the conclusion that the enterprise’s members

functioned as a unit. First Capital Asset Management,

Inc., 385 F.3d at 174 (citing U.S. v. Coonan, 938 F.2d

1553, 1560-61 (2d Cir. 1991), cert. denied, 503 U.S. 941

(1992)).15

15 The extent to which an alleged enterprise must have a structure and
organization separate and apart from the predicate acts it is alleged
to have engaged in is a somewhat open question in this Circuit. For a
detailed analysis of the Second Circuit precedents on this issue and
the district court cases construing them, see World Wrestling
Entertainment, Inc. v. Jakks Pacific, Inc., 425 F.Supp.2d 484, 493-500
(S.D.N.Y. 2006). The World Wrestling Court found that First Capital
Asset Management, Inc., 385 F.3d 159 (2d Cir. 2004), had not overruled
United States v. Mazzei, 700 F.2d 85, 89 (2d Cir. 1988), an earlier
precedent that held that the “enterprise” and “pattern of racketeering”

Defendants argue that Plaintiffs failed to allege a

RICO enterprise for multiple reasons. First, Defendants

assert that Plaintiffs “failed to allege an enterprise with

any structure separate and apart from the alleged ‘pattern

of racketeering activity.’” (Defs.’ Mem. in Opp. 42.) The

Court disagrees. Unlike the alleged enterprises discussed

in the cases cited by Defendants, here Plaintiffs have

alleged that “[t]he Out-of-Network Enterprise has and

continues to have an ascertainable structure and function

separate and apart from the pattern of racketeering

activity.” (PFAC ¶ 249.) In particular, Plaintiffs direct

the Court to several paragraphs in their Proposed

Amendments that detail the composition of the HIAA Group

and the structure of the relationship between the HIAA

Group and United Healthcare, including the “Cooperation

Agreement” governing the sale of the PHCS database from

HIAA to Ingenix (one of the Defendants) and the ongoing

interactions between these parties over a period of several

years.16 (See PFAC ¶¶ 3-4, 7-8, 110-111.)

elements were not required to be “distinct and independent, as long as
the proof offered is sufficient to satisfy both elements.” World
Wrestling, 385 F.3d at 495. The World Wrestling Court therefore found
that the plaintiffs had adequately pled the “enterprise” element of
their RICO claim even though their complaint “d[id] not allege a RICO
enterprise that has an ascertainable structure beyond the purported
racketeering acts.” Id. at 494. Because the enterprise alleged here
satisfies the more stringent First Capital standard in addition to the
the Mazzei standard, the Court need not address which standard governs.
16 The Court notes that the HIAA Group is not specifically mentioned in

The Court agrees with Plaintiffs’ argument that these

allegations reflect, inter alia, the alleged Out-of-Network

Enterprise’s “interfacing of [its] management and

information systems,” its “affiliations and contacts

through co-membership in associations and industry

organizations and committees,” and its governance by

“specific benefit plan documents.” (Pls.’ Reply 40-41.)

These are separate and apart from the pattern of

racketeering activity in which United Healthcare is alleged

to have engaged.

Second, United Healthcare argues that Plaintiffs have

failed to allege an “ongoing unit,” instead only alleging

that the “alleged participants are all involved in the

insurance industry and all have some connection with the

PHCS and MDR databases.” (Defs.’ Mem. in Opp. 42.) The

PFAC alleges, however, that the Out-of-Network Enterprise

members, including the HIAA Group, interacted over a period

the description of the Out-of-Network Enterprise’s members and that
Plaintiffs’ citations to the Proposed Amendment’s references to the
HIAA Group are drawn from sections of the Proposed Amendment involving
background information and the Proposed Antitrust Claims rather from
the section involving the Proposed RICO Claims. However, as Plaintiffs
note, the “users of [the] UCR databases” who are alleged to be members
of the Out-of-Network Enterprise include “insurance companies who are
members of the HIAA Group.” (Proposed Amendment ¶ 247, Pls.’ Reply 38.)
While this link seems to be somewhat attenuated, under the Fed. R. Civ.
P. 12(b)(6) standard applicable at this stage the Court must “read the
facts alleged in the complaint in the light most favorable” to the
Plaintiff. H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249
(1989). The Court therefore accepts Plaintiffs’ allegations concerning
the HIAA Group as relating to, and alleging facts regarding the
existence of, the Out-of-Network Enterprise.

of years by contributing data, coordinating information,

and maintaining contacts with each other in order to

manipulate data maintained in the UCR databases. This is

sufficient to allege an “ongoing unit” for purposes of

allowing Plaintiffs to plead their Proposed RICO Claims.

Nor are these, as Defendants further argue, mere

“vague allegations of a RICO enterprise made up of a string

of participants, known and unknown, lacking any distinct

existence and structure.” Stachon v. United Consumers

Club, Inc., 229 F.3d 673, 676 (7th Cir. 2000). Rather,

these allegations, taken in concert and read in the light

most favorable to Plaintiffs, describe specific

participants with multiple interactions and an

ascertainable structure. As such, these allegations

adequately plead an association-in-fact enterprise.17

Therefore the Court finds that Plaintiffs adequately

plead a RICO enterprise. Plaintiffs’ Proposed RICO Claims,

which are based on an alleged enterprise involving United

Healthcare, users of its UCR databases (including the HIAA

Group), and entities whose insurance healthcare plans are

17 United Healthcare also argues that Plaintiffs’ alleged association-
in-fact enterprise fails because the members are competitors and
therefore cannot be “associated together for a common purpose.” (Defs.’
Mem. in Opp. 43 (citing Turkette, 452 U.S. at 583).) This contention
is without merit: Plaintiffs clearly allege a common purpose for the
alleged enterprise — using the databases to depress UCR reimbursement
rates -– that is not inconsistent with the fact that members of the
alleged enterprise may “compete against one another for consumers in
the insurance industry.” (Id.)

administered by United Healthcare, sufficiently allege the

existence of “a group of persons associated together for a

common purpose of engaging in a course of conduct” which

may be proven “by evidence of an ongoing organization,

formal or informal, and by evidence that the various

associates function as a continuing unit.” Turkette, 452

U.S. at 583.

While Plaintiffs may face challenges in proving the

conduct and enterprise elements, the Court of Appeals has

instructed that “[d]ismissal of a civil RICO complaint for

failure to state a claim is only appropriate when it is

clear that no relief could be granted under any set of

facts that could be proved consistent with plaintiff’s

allegations.” Commercial Cleaning Services, LLC v. Colin

Service Systems, Inc., 271 F.3d 374, 380 (2d Cir. 2001).

The Court finds, therefore, that Defendants have failed to

demonstrate that Plaintiffs’ motion for leave to amend

should be denied as futile for failure to state the

“conduct” and “enterprise” elements of the Proposed RICO

Claims.

3. Whether the Provider and Medical Association Plaintiffs’

Claims Are Barred by Res Judicata

In a supplementary submission, Defendants argue that

“all of the proposed amended claims of the Provider and

Medical Association Plaintiffs are barred by the doctrine

of res judicata.” Defendants assert that, for those

plaintiffs, the proposed RICO and antitrust claims are

precluded by the recent decision of the United States

District Court for the Southern District of Florida

granting summary judgment to the defendants in In re

Managed Care Litigation, 430 F.Supp.2d 1336 (S.D. Fla.

2006) (“MCL”). (Defs.’ Notice of Supp. Auth. 2.)

a. The MCL Litigation

MCL was a class action by certain physicians and

medical associations against various health maintenance

organizations (HMOs), including United Healthcare,

encompassing several individual lawsuits that were

consolidated by a multi-district litigation panel.18 The

MCL plaintiffs alleged that various HMOs had conspired with

each other and with McKesson Corporation (“McKesson”),

which is “the dominant source for code editing software in

the healthcare industry,” to defraud physicians by

manipulating data using the “current procedural

terminology” (“CPT”) coding system. MCL, 430 F.2d at 1341.

Under the CPT system, physicians who have not entered a

contractual relationship with an HMO claim reimbursement

for treating patients for medically necessary procedures by

18 The multi-district litigation panel declined to include this case in
the consolidated MCL litigation.

submitting standardized forms that incorporate the CPT

coding system. Klay v. Humana, Inc., 382 F.3d 1241, 1247

(11th Cir. 2004).19

Specifically, the MCL plaintiffs asserted that the

defendants and other co-conspirators conspired to

manipulate fee-for-service payments by “denying,

downcoding, and bundling the CPT codes the doctors submit

and by refusing to recognize modifiers.” MCL, 430 F.Supp.2d

at 1341. The heart of the plaintiffs’ theory was that

various HMOs conspired with McKesson to “develop[]

automatic systems for editing and manipulating the CPT

claims information submitted by doctors” in order to “deny

or diminish payments to the doctors.” Id. at 1343. The

plaintiffs brought a RICO conspiracy claim, arguing that

the alleged agreement between the HMOs and McKesson

violated 18 U.S.C. § 1962(d), and a RICO aiding and

abetting claim based on 18 U.S.C. § 2. Id. In addition,

the MCL plaintiffs sought declaratory and injunctive relief

related to these alleged RICO violations. Id.

The MCL court granted summary judgment to the

19 Klay v. Humana, 382 F.3d 1241 (11th Cir. 2004), is an earlier
incarnation of the case that was later designated as MCL. In the
summary judgment decision asserted to create preclusive effect here,
the MCL court referenced Klay as providing “a more detailed factual and
procedural background of this multidistrict litigation.” MCL, 430
F.Supp.2d 1336, 1340 (S.D. Fla. 2006).

defendants,20 holding that the “evidence proffered by the

Plaintiffs is insufficient to allow a jury to find

reasonably that the Defendants conspired to manipulate

their claims processing software to systematically underpay

doctors.” Id. at 1344. Specifically, the court found that

the plaintiffs had failed to present sufficient evidence of

agreement between the defendant HMOs and McKesson,

rejecting the plaintiffs’ arguments that such agreement was

demonstrated by the defendants’ parallel conduct. Id. at

1349. Because the plaintiffs had failed to show an

agreement, and therefore failed to establish an essential

component of their conspiracy claim, the court held that

the defendants were entitled to summary judgment on all

counts. Id. at 1357.

b. Res Judicata Effect of the MCL Decision

A motion to amend a complaint should be denied as

futile if the proposed causes of action would be barred by

res judicata, a doctrine also known as claim preclusion.

See, e.g., Cuban v. Kapoor Bros., Inc., 653 F.Supp. 1025,

1033 (E.D.N.Y. 1986). Under this doctrine, “a final

judgment on the merits of an action precludes the parties

or their privies from relitigating issues that were or

20 Various other defendant HMOs had reached settlements with the
plaintiffs or otherwise been dismissed from the action, so at the time
of the MCL summary judgment decision at issue here only two defendants,
United Healthcare and Coventry Health Care, Inc., remained.

could have been raised in that action.” Allen v. McCurry,

449 U.S. 90, 94 (1980). See also Monahan v. New York City

Dep’t of Corrections, 214 F.3d 275 (2d Cir. 2000), cert.

denied, 531 U.S. 1035 (2000). “Even claims based upon

different legal theories are barred provided they arise

from the same transaction or occurrence.” LTec Elec. Corp.

v. Cougar Elec. Org., Inc., 198 F.3d 85, 88 (2d Cir. 1999)

(per curiam).

To determine whether the doctrine of res judicata

precludes a party from asserting a claim in a subsequent

litigation, courts inquire whether “(1) the previous action

involved an adjudication on the merits; (2) the previous

action involved the plaintiffs or those in privity with

them; [and] (3) the claims asserted in the subsequent

action were, or could have been, raised in the prior

action.” Monahan, 214 F.3d at 285.21

1. Whether There Has Been an Adjudication on the Merits

21 The Plaintiffs articulate a slightly different test for whether res
judicata applies, relying on the four-prong inquiry established by the
Second Circuit in Corbett v. MacDonald Moving Services, Inc., 124 F.3d
82, 88 (2d Cir. 1997) (The court must inquire whether “1) the prior
decision was a final judgment on the merits, 2) the litigants were the
same parties, 3) the prior court was of competent jurisdiction, and 4)
the causes of action were the same.”). While this test is
substantially similar to the three-step analysis set forth in Monahan
v. New York City Dep’t of Corrections, 214 F.3d 275 (2d Cir. 2000), it
should be noted that the Court applies the Monahan articulation of the
res judicata inquiry because the Corbett version is specific to
bankruptcy proceedings. See In re Layo, 460 F.3d 289, 292 (2d Cir.
2006) (“In Corbett, we set forth the test for res judicata in
bankruptcy proceedings involving a plan of reorganization.”).

Plaintiffs argue that the Southern District of

Florida’s decision granting summary judgment is not a final

judgment on the merits because appeal of that judgment is

currently pending before the Eleventh Circuit Court of

Appeals.22 (Pls.’ Resp. to Defs.’ Notice of Suppl. Auth. 3.)

Plaintiffs rely on several cases holding that failure to

appeal a judgment results in that judgment’s having res

judicata effect, apparently on the logic that if a non-

appealed judgment has such effect, an appealed judgment

does not. (Id. at 3 (citing Federated Dep’t Stores, Inc.

v. Moitie, 452 U.S. 394, 398-401 (1981), Brotherhood of

Maintenance of Way Employees v. St. Johnsbury & Lamoille

County Railroad/M.P.S. Associates, Inc., 806 F.2d 14, 15-16

(2d Cir. 1986).)

It is well-settled federal law, however, that an

appealed judgment is a final adjudication on the merits for

res judicata purposes even when that appeal is pending.

See Petrella v. Siegel, 843 F.2d 87, 90 (2d Cir. 1988) (“Of

course, the determination of the state supreme court

. . . is entitled to res judicata effect, even though the

city may be appealing that determination.”). See also

22 The Plaintiffs draw the language “a final judgment on the merits”
from the Corbett Court’s statement of the res judicata standard. See
Corbett, 124 F.3d at 88. The res judicata standard followed here, as
discussed supra n.22, is taken not from Corbett but from Monahan, which
uses the language “an adjudication on the merits” rather than “a final
judgment on the merits.” Monahan, 214 F.3d at 285.

Moore’s Federal Practice ¶18A at 4433 (“[A] final judgment

retains all res judicata consequences pending decision of

the appeal.”); Alamance Industries v. Gold Medal Hosiery

Co., 194 F.Supp. 538, 540 (S.D.N.Y. 1961) (“Pendency of an

appeal does not render the other judgments less final or

binding.”).

It is undisputed that a grant of summary judgment

constitutes a final judgment on the merits, and the

pendency of an appeal from that judgment does not alter its

res judicata effects. The Court finds, therefore, that the

MCL decision is an adjudication on the merits for res

judicata purposes.

2. Whether the Litigants Are the Same Parties or Their
Privies

In addition to being an adjudication on the merits, in

order for res judicata to apply the prior decision must

have involved “the plaintiffs or those in privity with

them.” Monahan, 214 F.3d at 285. Under the law of this

circuit, “literal privity is not a requirement for res

judicata to apply.” Id. (citation omitted). Rather, “a

party will be bound by a previous judgment if his

‘interests were adequately represented by another vested

with the authority of representation.’” Id. (citing

Alpert’s Newspaper Delivery, Inc. v. The New York Times

Co., 876 F.2d 266, 270 (2d Cir. 1989)).

The plaintiffs in the MCL litigation were a class of

physicians “who submitted fee-for-service claims to at

least one of the Defendants or alleged co-conspirator

health maintenance organizations” and medical associations

who sought relief on their own behalf and on behalf of

their members. MCL, 430 F.Supp.2d at 1340. At an earlier

stage in the same litigation, the Eleventh Circuit Court of

Appeals characterized the case as involving “almost all

doctors versus almost all major health maintenance

organizations.” Klay, 382 F.3d at 1246.

Defendants here assert their res judicata defense

against only certain categories of plaintiffs: Provider

Plaintiffs and Medical Association Plaintiffs. Those

Plaintiffs do not contest that they were either the

plaintiffs or in privity with the plaintiffs in the MCL

litigation. For this reason, and because of the broad and

inclusive nature of the MCL plaintiff class and the

likelihood that the interests of Plaintiffs here were

adequately represented in that case, the Court finds the

second prerequisite to a finding of res judicata to be

satisfied here.

3. Whether the Claims Asserted Here Were or Could Have
Been Raised in MCL

While the first two requirements for res judicata have

been satisfied, in order for res judicata to preclude the

Provider and Medical Association Plaintiffs’ claims the

Defendants must also show that these claims “were, or could

have been, raised in the prior action.” Monahan, 214 F.3d

at 285. As the Court of Appeals has instructed,

In determining whether a second suit is barred by this
doctrine, the fact that the first and second suits
involved the same parties, similar legal issues,
similar facts, or essentially the same type of
wrongful conduct is not dispositive. Rather, the
first judgment will preclude a second suit only when
it involves the same “transaction” or connected series
of transactions as the earlier suit; that is to say,
the second cause of action requires the same evidence
to support it and is based on facts that were also
present in the first.

Maharaj v. Bankamerica Corp., 128 F.3d 94, 97 (2d Cir.

1997) (citation omitted). Thus “[w]hether or not the first

judgment will have preclusive effect depends in part on

whether the same transaction of series of transactions is

at issue, whether the same evidence is needed to support

both claims, and whether the facts essential to the second

were present in the first.” NLRB v. United Technologies

Corp., 706 F.2d 1254, 1260 (2d Cir. 1983).

Defendants argue that res judicata applies because the

Proposed RICO and Antitrust Claims asserted here “were

litigated to a final judgment” in MCL. Alternatively,

Defendants argue that res judicata applies because “even if

the plaintiffs in the prior litigation did not make claims

related to the PHCS or HIAA database – which they did – In

re Managed Care Litigation would still be preclusive”

because the MCL plaintiffs “could have raised the database

to support their claims in the first action.” (Defs.’ Reply

to Suppl. Auth. 5.)23

There are substantial similarities between the MCL

litigation and the proposed claims of the Provider and

Medical Association Plaintiffs in this case. The MCL

Court’s broad characterization of its holding — that the

plaintiffs had failed “to demonstrate a triable issue of

fact regarding whether the Defendants conspired to defraud

doctors by manipulating their claims processing systems” –-

23 Res judicata, as Defendants correctly note, “is not limited to only
claims that were actually litigated.” (Defs.’ Reply to Suppl. Auth.
5.) Rather, it bars all legal claims that a party could have raised in
the prior litigation. It does not, however, as Defendants state,
“extend[] to all matters that the plaintiff raised or could have raised
to support its claim in the first action.” (Id. at 5 (emphasis added).)
That is, Defendants do not argue that the Provider and Medical
Association Plaintiffs could have brought the RICO and antitrust claims
proposed here in the earlier litigation because they arose out of the
transactions, evidence, and facts at issue in MCL. Rather, they argue
that the MCL plaintiffs could have relied on transactions, evidence,
and facts relating to HIAA and PHCS (which form the basis of the
proposed claims here) to support the claims they actually did raise in
MCL. While whether “the same evidence is needed to support both
claims” is relevant to the res judicata inquiry, see NLRB v. United
Technologies Corp., 706 F.2d 1254, 1260 (2d Cir. 1983), the mere fact
that a party “could have raised” a particular fact (rather than a
particular claim) in the earlier action does not reflect the proper
standard for assessing the res judicata effect of that prior action.
The Court therefore will not give particular weight to whether the MCL
plaintiffs “could have raised [facts relating to HIAA and PHCS] to
support [their] claim in the first action” except in determining to
what extent evidence needed to support the MCL claims is also needed to
support the Proposed RICO and Antitrust Claims here. (Defs.’ Reply to
Suppl. Auth. 5.)

reflects the similar nature of the two cases. MCL, 430

F.Supp.2d at 1340. However, “the fact that the first and

second suits involved the same parties, similar legal

issues, similar facts, or essentially the same type of

wrongful conduct is not dispositive.” Maharaj, 128 F.3d at

97. Rather, the standard for determining whether the

claims asserted here were or could have been asserted in

the MCL litigation is “whether the same transaction or

series of transactions is at issue, whether the same

evidence is needed to support both claims, and whether the

facts essential to the second were present in the first.”

NLRB, 706 F.2d at 1260.

The MCL plaintiffs alleged a conspiracy between HMOs

and McKesson to develop McKesson’s database software to

manipulate CPT processing in order to underpay physicians.

McKesson was alleged to have “played a central role in the

conspiracy” as “a co-conspirator, an agent of the

Defendants, an intermediary, and the hub of the

conspiracy.” MCL, 430 F.Supp.2d at 1342. That conspiracy

involved the CPT system, which was allegedly used to

defraud physicians by “covertly denying payments to

physicians based on financially expedient cost and

actuarial criteria rather than medical necessity,

processing physicians’ bills using automated programs which

manipulate standard coding practices to artificially reduce

the amount they are paid, and . . . systematically delaying

payments to gain increased use of the physicians’ funds.”

Klay, 382 F.3d at 1247 (quoting Provider Plaintiffs’ Second

Amended, Consolidated Class Action Complaint ¶ 6).

The PFAC here also involves alleged manipulation of

data to underpay physicians, but here the transactions,

evidence, and underlying facts differ considerably from

those at issue in MCL. Unlike in MCL, where McKesson

played a crucial role in the alleged conspiracy and where

“much of [the plaintiffs’] evidence of conspiracy c[ame]

from McKesson,” here there is no alleged participation by

third party software developers in the UCR scheme. MCL,

1340 F.Supp.2d at 1342. The MCL plaintiffs claimed, and

the MCL Court acknowledged in its decision, that “the

McKesson advisory committees were the principal avenue

through which the Defendants and supposed co-conspirators

met and allegedly conspired.” Id. This case, on the other

hand, involves Defendants’ alleged manipulation of its own

databases to reduce UCR reimbursements. Transactions,

evidence, and facts relating to McKesson -– which were

crucial to the MCL Court’s findings –- are entirely

unrelated to this litigation.

Defendants note that one of the alleged examples of

wire fraud in the MCL litigation was the promulgation of

internal guidelines instructing that providers be told that

“reimbursement rates are based on information about the

usual and customary charges of physicians” instead of “on

industry guidelines obtained from the Health Insurance

Association of America.” (Defs.’ Reply to Suppl. Auth. 3

(quoting Am. Civil RICO Case Statement Pursuant to Local

Rule 12.1, dated April 20, 2001, at 132, ¶ 8).) Defendants

also point out that certain depositions taken in the MCL

litigation at times addressed facts, evidence, and

transactions involving the HIAA and that document requests

included broad language such as “all documents describing

the database(s) used in setting premiums.” (Defs.’ Reply

to Suppl. Auth. 4, n.7 (citing Provider Pls.’ First Request

for Prod. Of Documents to all Defs., dated Oct. 1, 2002).)

However, the MCL Court never refers to any of these facts.

Neither the MCL summary judgment decision nor the earlier

Eleventh Circuit decision in the same litigation addresses

facts and evidence that are crucial to the proposed amended

claims here. Neither contains any mention of usual,

customary, or reasonable rates or the setting of such

rates; the HIAA; Ingenix databases; or PHCS.

The Court finds, therefore, on the basis of the

documents submitted and on the MCL Court’s decision, that