A federal appeals court has scotched a multibillion-dollar RICO class action launched by the American Dental Association and its members against major insurance companies for their alleged failure to pay providers.
A three-judge panel of the U.S. Court of Appeals for the 11th Circuit threw out that the purported class action, finding that the complaint did not meet the controversial heightened pleading standards required under two recent U.S. Supreme Court decisions.
The court upheld the suit’s dismissal in favor of Cigna Corp. and MetLife Inc. and their subsidiaries.
The May 14 decision, written by Circuit Chief Judge Joel Dubina, found that the Racketeer Influenced and Corrupt Organizations Act case could not survive the pleading standards under the U.S. Supreme Court’s Twombly and Iqbal decisions. In Bell Atlantic Corp. v. Twombly, the court in 2007 required plaintiffs to show the plausibility, not just possibility, of relief based on claims made in a complaint. Last year, in Ashcroft v. Iqbal, the high court required plaintiffs to present more than conclusory facts in their pleadings and instead to present claims that reasonably supported an inference of liability.
The defense bar has lauded both Twombly and Iqbal as a way to filter out meritless claims, while plaintiffs’ attorneys have asserted that the higher standards preclude clients with limited resources or access to information from having their day in court.
The lawsuit was filed in 2003 by three dentists and the American Dental Association in the U.S. District Court for the Southern District of Florida on behalf of potentially hundreds of other dentist in the insurers’ networks. Related to so-called “deny, reduce and delay” multidistrict litigation there involving physicians with similar claims against insurers, the lawsuit alleged that the insurers violated the RICO Act by “bundling” dental services rendered. Such bundling, the dentists alleged, resulted in reimbursement for a smaller number of services at a lower price. After the U.S. Supreme Court issued the Twombly decision, the plaintiffs amended their complaint under the new standard. In 2008, the district court dismissed the case without prejudice, finding that it did not meet that new standard.
In affirming the lower court, Dubina wrote that the “present case reflects the concerns that motivated the Supreme Court to adopt a new pleading standard in Twombly and Iqbal.” It found that not only did the dentists fail to meet the Twombly and Iqbal standard, but they also did not establish their claims under procedural rules pertaining to RICO allegations. “[W]e cannot infer a scheme-driven deception from a complaint that provides no details of fraud or conspiracy,” Dubina wrote.
Representing the individual plaintiffs was G. Robert Blakey, a professor at the University of Notre Dame Law School. He said that he sensed defeat during oral arguments.
“It was clear from the minute I opened my mouth,” he said. “The Court of Appeals was a buzzsaw.” Blakey estimated damages at between $5 billion and $6 billion.
James Griffith Jr., a partner in the Philadelphia office of Akin Gump Strauss Hauer & Feld, represented MetLife. Jamie Zysk Isani, an associate in the Miami office of Hunton & Williams, represented Cigna. Neither attorney was immediately available for comment. MetLife provided a written statement. “MetLife has long believed that the allegations made by the ADA were without merit, and we were confident that the court would rule in our favor.”
The other judges on the appeals panel were Peter Fay and Harold Albritton, who was sitting by designation from the U.S. District Court for the Middle District of Alabama.
Leigh Jones can be contacted at email@example.com.