Case 5:20-cv-02255-EJD Document 88 Filed 07/21/21 Page 1 of 8
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`SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
`MOE KESHAVARZI, SBN 223759
` E-Mail: mkeshavarzi@sheppardmullin.com
`DAVID DWORSKY, SBN 272167
` E-Mail: ddworsky@sheppardmullin.com
`333 South Hope Street, 43rd Floor
`Los Angeles, California 90071
`Telephone: 213.620.1780
`Facsimile: 213.620.1398
`ERROL J. KING, JR. (admitted pro hac vice)
`PHELPS DUNBAR LLP
`II City Plaza
`400 Convention Street, Suite 1100
`Baton Rouge, Louisiana 70802
`Telephone: (225) 376-0207
`Fax: (225) 381-9197
`Errol.King@phelps.com
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`Attorneys for Defendant MultiPlan, Inc.
`
`vs.
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`CIGNA HEALTH AND LIFE INSURANCE
`COMPANY, and MULTIPLAN, INC.,
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`Defendants.
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`RJ, as the representative of her beneficiary son
`Case No. 5:20-cv-02255-EJD
`SJ; LW as the representative of her
`
`MULTIPLAN, INC.’S REPLY
`beneficiary spouse MW; and, DS, an
`MEMORANDUM IN FURTHER
`individual, on behalf of themselves and all
`SUPPORT OF ITS MOTION TO DISMISS
`others similarly situated,
`PLAINTIFFS’ FIRST AMENDED
`
`COMPLAINT
`Plaintiffs,
`Hearing Date: August 12, 2021
`Time:
`9:00 a.m.
`Judge:
`Hon. Edward J. Davila
`Courtroom:
`4 (5th Floor)
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`Complaint Filed:
`FAC Filed:
`Trial date:
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`April 2, 2020
`April 30, 2021
`Not set
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`PD.34444511.1
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` Case No. 5:20-cv-02255-EJD
`MULTIPLAN, INC’S REPLY MEMORANDUM
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`Case 5:20-cv-02255-EJD Document 88 Filed 07/21/21 Page 2 of 8
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`Defendant MultiPlan, Inc. (“MultiPlan”) respectfully submits this Reply Memorandum1 in
`further support of its Motion to Dismiss the First Amended Class Action Complaint (“FAC”) filed
`by Plaintiffs, RJ, as the representative of her beneficiary son, SJ; LW as the representative of her
`beneficiary spouse, MW; and, DS an individual, on behalf of and all others similarly situated
`(“Plaintiffs”), pursuant to Fed. R. Civ. P. 9(b) and 12(b)(6) [Rec. Doc. 75] (the “Motion”), and to
`address the arguments made by Plaintiffs in their Response in Opposition to MultiPlan’s Motion to
`Dismiss [Rec. Doc. 80] (the “Opposition” or “Pl. Opp.”), as follows:
`INTRODUCTION
`This Court dismissed Plaintiffs’ claim against MultiPlan for violation of RICO, 18 U.S.C. §
`1962(c), based on a finding that “Plaintiff[s] fail[] to plead with particularity sufficient facts to
`plausibly show that Cigna and Viant [MultiPlan’s affiliate, since dismissed as a party] knowingly
`formed an enterprise to fraudulently underpay claims at below the UCR rates.” March 23, 2021
`Order Granting in Part and Denying in Part Defendants’ Motions to Dismiss (“Dismissal Order”)
`[Rec. Doc. 60], at pp. 13-14. The Court further held that “Plaintiffs’ RICO claim is subject to
`dismissal for the further independent reason that the Complaint fails to allege predicate RICO acts.”
`Id. at p. 14. The Court also found that Plaintiffs’ mail and wire fraud allegations failed to satisfy
`Fed. R. Civ. P. 9(b). Id. at pp. 16-18.
`Plaintiffs’ protestations to the contrary, the FAC does nothing to remedy these and the other
`pleading inadequacies identified by the Court. Plaintiffs’ Opposition is unavailing in establishing
`why Plaintiffs’ claim against MultiPlan in Count I of the FAC should proceed any further and merely
`serves to reinforce the point MultiPlan has been making—that the FAC, just like Plaintiffs’ Initial
`Complaint, fails to state a plausible claim against MultiPlan for violation of RICO, 18 U.S.C. §
`1962(c). And, because there can be no claim for a RICO conspiracy in the absence of a substantive
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`1 Unless otherwise indicated, all emphasis is added, all internal quotation marks and citations are
`omitted, and this Reply Memorandum uses the same defined terms as set forth in MultiPlan’s
`Memorandum of Points and Authorities in Support of its Motion to Dismiss Plaintiffs’ FAC (the
`“Opening Memorandum”).
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`PD.34444511.1
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` Case No. 5:20-cv-02255-EJD
`MULTIPLAN, INC.'S REPLY MEMORANDUM
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`Case 5:20-cv-02255-EJD Document 88 Filed 07/21/21 Page 3 of 8
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`I.
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`RICO clam, Count II of the FAC, alleging a violation of 18 U.S.C. § 1962(d), also must be
`dismissed. Finally, Plaintiffs’ claim for equitable relief fares no better; it too should be dismissed.
`STATEMENT OF ISSUES TO BE DECIDED (L.R. 7-4)
`The issues that are before the Court for decision in connection with MultiPlan’s Motion to
`Dismiss Plaintiffs’ FAC are set forth in MultiPlan’s Opening Memorandum.
`ARGUMENT
`Plaintiff’s RICO Claims Should Be Dismissed; Plaintiffs’ Opposition Adds Nothing
`To Remedy The Fact That The FAC Is Inadequately Pled.
`Plaintiffs argue strenuously that they have corrected the shortcomings in their pleading and
`have now properly alleged a claim against MultiPlan under 18 U.S.C. §1962(c). They again suggest,
`as they did in attempting in vain to defend the Initial Complaint, that: they have satisfied the
`particularity requirement of Fed. R. Civ. P. 9(b); that they have met the plausibility requirement of
`Fed. R. Civ. P. 8(a), as explained by Twombly/Iqbal; that they have properly alleged a RICO
`enterprise; that they have properly spelled out the necessary predicate acts of racketeering and mail
`and wire fraud; and that they have shown that they have RICO standing, based on proximate
`causation. However, other than pointing to new allegations in the FAC that simply “name names”
`of certain MultiPlan personnel, vaguely describe meetings and communications between Cigna and
`MultiPlan, and then—without any other support—label those claims as evidence of fraud sufficient
`to put MultiPlan on notice, Plaintiffs still have not satisfied the requirements of Rule 9(b) showing
`“the who, what, when, where, and how of the fraud,” Dismissal Order, at p. 4 (quoting Vess v. Ciba-
`Geigy Corp., USA, 317 F.3d 1097, 1106 (9th Cir. 2003), and Edwards v. Marin Park, Inc., 356 F.3d
`1058, 1065–66 (9th Cir. 2004)). They still have not shown that the plausibility of their
`characterization of MultiPlan’s (and Cigna’s) conduct as something other than legitimate cost-
`containment activities pursuant to a routine commercial relationship, which this Court noted has
`been “uniformly held [to be] insufficient to establish RICO liability.” Dismissal Order, at p. 13 &
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`PD.34444511.1
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`Case 5:20-cv-02255-EJD Document 88 Filed 07/21/21 Page 4 of 8
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`n.5 (citing Gardner v. Starkist Co., 418 F. Supp. 3d 443, 461 (N.D. Cal. 2019), and Gomez v.
`Gunthy-Renker, LLC, 2015 WL 4270042, at * 8 (C.D. Cal. July 13, 2015), along with others).2
`Plaintiffs also have not succeeded in pleading an association-in-fact enterprise because they
`still have not shown a “common purpose to commit fraud.” Dismissal Order, at p. 14. Further, they
`have done nothing to shore up their failure to identify predicate acts of racketeering and mail and
`wire fraud, particularly with respect to the requisite showing of “specific intent to deceive or
`defraud.” Dismissal Order, at pp. 14–18 (quoting United States v. Miller, 953 F.3d 1095, 1102 (9th
`Cir. 2020).3
`Finally, although the issue was not addressed by the Court in its Dismissal Order, Plaintiffs
`have not established RICO standing based on proximate causation, certainly insofar as MultiPlan is
`concerned. Although Plaintiffs devote a significant portion of their Opposition to argue the point,
`it remains the case that they cannot demonstrate the requisite causal link – that any conduct on the
`part of MultiPlan “not only was a ‘but for’ cause of [their] injur[ies] but was the proximate cause as
`well.” Holmes v. Sec. Inv. Prot. Corp., 503 U.S. 258, 268 (1993). They cannot plausibly allege that
`any conduct by MultiPlan—including, but not limited to, the OON letters4—“led directly to [their]
`injuries,” Anza v. Ideal Steel Supply Corp., 547 U.S. 461 (2006), because there is no reliance that
`resulted therefrom. Further, any actions undertaken by MultiPlan in this case, insofar as any steps
`taken by Plaintiffs or any alleged injuries borne by them are concerned, are far “too remote” and
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`2 Plaintiffs attempt to shift the burden of plausibility from themselves, suggesting that it is MultiPlan
`that is obligated to establish the “obvious alternative explanation” to Plaintiffs’ allegations of a
`fraudulent scheme on the part of Defendants. Opposition, at pp. 5–6. However, the burden of
`meeting the Rule 8(a) requirement of plausibility rests squarely on Plaintiffs.
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`3 Indeed, the Court noted that Plaintiffs failed in this regard “especially [as to] Viant” in the Initial
`Complaint, see Dismissal Order at p. 18; the FAC is no different as to MultiPlan.
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`4 This is the designation used in the FAC; in Plaintiffs’ Opposition, they refer to this
`correspondence—sent after the healthcare services at issue had been rendered—as PAD letters.
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`Case 5:20-cv-02255-EJD Document 88 Filed 07/21/21 Page 5 of 8
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`“indirect” to meet RICO’s proximate cause and standing requirements. See Hemi Grp., LLC v. City
`of New York, 559 U.S. 1, 9 (2010).
`In the end, Plaintiffs are stuck with the RICO allegations in the FAC, which have done
`nothing to remedy the failings that MultiPlan pointed out in its Opening Memorandum. To mask
`this, Plaintiffs continually cite portions of the decision of Judge Gonzalez-Rogers on defendants’
`motions to dismiss plaintiffs’ Second Amended Complaint in LD v. United Behav. Health, No. 4:20-
`CV-002254 YGR, 2020 WL 7432566 (N.D. Cal. Dec. 18, 2020). Judge Gonzalez-Rogers’ opinion
`speaks for itself; however, its holdings with respect to the allegations in the most recent pleading
`filed in that case, which involves different named plaintiffs, a different insurer/plan administrator,
`different healthcare benefit plans, and different pricing methodology and outcomes, are not
`dispositive in this case.
`The FAC here must stand or fall on its own terms; Judge Gonzalez-Rogers’ analysis of a
`different pleading, regardless of superficial similarities to the one before this Court, does not control
`this Court’s obligation to review the plausibility of Plaintiffs’ allegations in the FAC in the light of
`the Court’s own “judicial experience and common sense.” Ashcroft v. Iqbal, 566 U.S. 663, 679
`(2009), quoted in Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 996 (9th Cir.
`2014).
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`The Ninth Circuit held in In re Century Aluminum Co. Secs. Litig., 729 F.3d 1104, 1108 (9th
`Cir. 2013), that
`when faced with two possible explanations, only one of which can be true and only
`one of which results in liability, plaintiffs cannot offer allegations that are merely
`consistent with their favored explanation but are also consistent with the alternative
`explanation. Something more is needed, such as facts tending to exclude the
`possibility that the alternative explanation is true, in order to render plaintiffs’
`allegations plausible.
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`In that case, the Ninth Circuit found that the complaint established only a “possible” entitlement to
`relief; therefore, the case was properly dismissed. The same result is mandated here. Plaintiffs have
`alleged a fraudulent scheme based on their interpretation of the actual facts—facts which are
`consistent with the “obvious alternative explanation” of MultiPlan’s and Cigna’s participating in a
`legitimate commercial relationship to manage ever-increasing healthcare costs. There is nothing
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`Case 5:20-cv-02255-EJD Document 88 Filed 07/21/21 Page 6 of 8
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`fraudulent about the employment of cost-based pricing methodologies developed by MultiPlan and
`made available to Cigna (and others), admittedly for a fee (something which this Court found to be
`unsupportive of Plaintiffs’ allegations of a common purpose to commit fraud, see Dismissal Order,
`at p. 14), but which ultimately lead to Cigna’s independent determination of what reimbursements
`are appropriate. This being the case, Plaintiffs’ distortion of those facts cannot be accepted by the
`Court – there is no fraudulent scheme; there is no association-in-fact enterprise; there have been no
`predicate acts of racketeering, since there is no specific intent to deceive, and no reliance has been
`shown; and there is no direct causal link between the conduct alleged and any purported injuries
`suffered by the Plaintiffs.5 Dismissal of plaintiffs’ RICO claims as set forth in the FAC is therefore
`warranted.
`II.
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`Plaintiffs Still Have Failed To Properly Plead Their Claims For Equitable Relief;
`Their Opposition Offers Nothing New To Explain The Inadequacies Of The FAC
`In This Regard.
`At the outset, one point regarding Plaintiffs’ characterization in their Opposition (p. 16) of
`MultiPlan’s position concerning Count VI of the FAC must be made abundantly clear—MultiPlan
`has not conceded that it is an ERISA fiduciary, despite the Court’s conclusion to the contrary in
`considering the allegations in the Initial Complaint. See Opening Memorandum, at p. 17 & n.13.
`MultiPlan does not anticipate that, at this stage of the case, the Court will change its view on that
`point; nothing in the FAC changes that. It is, however, something quite different to suggest that—
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`5 Although Plaintiffs point out in their Opposition that Judge Gonzalez-Rogers found proximate
`cause in the LD case, based on her determination that the “prescribing physicians relied on
`Defendants’ [sic] misrepresentations and omissions,” and her further conclusion that MultiPlan can
`be held liable for the alleged misrepresentations of the other defendant in that case, see Opposition,
`at p. 13, MultiPlan submits that such interpretation is inconsistent with the applicable law, imposing
`as it does aider-and-abettor liability in a circumstance where it is not warranted by the facts. See
`Reves v. Ernst & Young, 507 U.S. 510 (1993). Moreover, in the larger context of RICO pleading,
`it is axiomatic that allegations must show unlawful conduct by each defendant. In re Wellpoint, Inc.
`Out-of-Network “UCR” Rates Litig., 903 F. Supp. 2d 880, 914 (C.D. Cal. 2012).
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`Case 5:20-cv-02255-EJD Document 88 Filed 07/21/21 Page 7 of 8
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`assuming, after all the facts are weighed without the benefit of presumptions and inferences running
`in favor of Plaintiffs as they do at this stage of the case, that MultiPlan is held to the standard of an
`ERISA fiduciary—MultiPlan has committed any breaches of fiduciary duties, particularly when
`they are predicated on demonstrably false claims of “[MultiPlan’s] control over plan assets,”
`“monies that [MultiPlan] paid out,” or “claims they [incorrectly including MultiPlan] . . . illegally
`paid.” See Opposition, at pp. 16–17. Plaintiffs’ allegations in the FAC which attempt to make out
`aa claim for equitable relief under ERISA still fail to do so.
`In its Dismissal Order, the Court did not reach other grounds raised by then-defendant Viant,
`which now-defendant MultiPlan continues to assert, that “because the claims [at that time
`encompassed in Counts VII and VIII of the Original Complaint] do not meet the basic pleading
`requirements of Rule 8: to give notice of what the claims are and the grounds upon which they rest.”
`See Dismissal Order., at p. 12. The FAC purports to remedy that failing but, again, there is no
`specificity to Plaintiffs’ allegations. Accordingly, the issues raised in MultiPlan’s dismissal motion,
`as spelled out in its Opening Memorandum at pages 17 to 21, are still very much unresolved. There
`are no alleged details, as required by Ruel 9(b), concerning any purported misrepresentations, their
`materiality, any reliance thereon, or knowing participation on the part of MultiPlan (or its affiliate
`Viant), in any alleged fiduciary breach of Cigna as a plan administrator.
`Further, despite Plaintiffs’ assertions to the contrary, they have still have not shown an
`entitlement to equitable relief. MultiPlan will not restate here the arguments previously made in its
`Opening Memorandum. Suffice it to say, Plaintiffs have not shown that they have standing, let
`alone, the elements which justify their claim for the extraordinary no-legal remedies they seek.
`CONCLUSION
`The FAC is inadequately pled; further amendment as requested by Plaintiffs would be futile.
`Accordingly, for the foregoing reasons, and the reasons set forth in its Opening Memorandum,
`Defendant MultiPlan, Inc., respectfully asks the Court to grant its Motion and dismiss with prejudice
`all of the claims and causes of action asserted by Plaintiffs against MultiPlan in the First Amended
`Class Action Complaint.
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`PD.34444511.1
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`Case 5:20-cv-02255-EJD Document 88 Filed 07/21/21 Page 8 of 8
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`DATED: July 21, 2021
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`By:
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`/s/ David E. Dworsky
`Moe Keshavarzi
`David E. Dworsky
`Sheppard Mullin
`333 South Hope Street, 43rd Floor
`Los Angeles, CA 90071
`Telephone: (213) 620-1780
`Fax: (213) 620-1398
`
`and
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`Errol J. King, Jr. (pro hac vice)
`Phelps Dunbar LLP
`II City Plaza
`400 Convention Street, Suite 1100
`Baton Rouge, Louisiana 70802
`Telephone: (225) 376-0207
`Fax: (225) 381-9197
`
`Attorneys for Defendant, MultiPlan, Inc.
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` Case No. 5:20-cv-02255-EJD
`MULTIPLAN, INC.'S REPLY MEMORANDUM
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