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`WILLIAM P. DONOVAN, JR (SBN 155881)
`MCDERMOTT WILL & EMERY LLP
`wdonovan@mwe.com
`2049 Century Park East, Suite 3200
`Los Angeles, CA 90067-3206
`Telephone:
`+1 310 277 4110
`Facsimile:
`+1 310 277 4730
`
`JOSHUA B. SIMON (admitted pro hac vice)
`WARREN HASKEL (admitted pro hac vice)
`DMITRIY TISHYEVICH (SBN 275766)
`CAROLINE INCLEDON (admitted pro hac vice)
`CHELSEA COSILLOS (admitted pro hac vice)
`MCDERMOTT WILL & EMERY LLP
`jsimon@mwe.com
`whaskel@mwe.com
`dtishyevich@mwe.com
`cincledon@mwe.com
`ccosillos@mwe.com
`One Vanderbilt Avenue
`New York, NY 10017
`Telephone:
`+1 212 547 5400
`Facsimile:
`+1 212 547 5444
`
`Attorneys for Defendant
`CIGNA HEALTH AND LIFE INSURANCE
`COMPANY
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`
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`RJ, as the representative of her beneficiary son
`
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`SJ; LW as the representative of her
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`beneficiary spouse MW; and, DS, an
`Case No. 5:20-cv-02255-EJD
`individual, on behalf of themselves and all
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`CIGNA HEALTH AND LIFE INSURANCE
`others similarly situated,
`COMPANY’S REPLY IN SUPPORT OF
`
`PARTIAL MOTION TO DISMISS
`Plaintiffs,
`PLAINTIFFS’ AMENDED COMPLAINT
`UNDER FED. R. CIV. P. 12(B)(6)
`
`
`Date: August 12, 2021
`Time: 9:00 a.m.
`Courtroom: 4 – 5th Floor
`Judge: Hon. Edward J. Davila
`
`vs.
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`CIGNA HEALTH AND LIFE INSURANCE
`COMPANY, and MULTIPLAN, INC.,
`
`
`Defendants.
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`CIGNA HEALTH AND LIFE INSURANCE COMPANY’S REPLY IN SUPPORT OF MOTION TO DISMISS
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`MCDERMOTT WILL & EMERY LLP
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`ATTORNEYS AT LAW
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`NEW YORK
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`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 2 of 20
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`1.
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`TABLE OF CONTENTS
`INTRODUCTION .................................................................................................................................1
`ARGUMENT .........................................................................................................................................2
`I.
`Plaintiffs’ RICO § 1962(c) Claim Fails (Count I). ....................................................................2
`A.
`Plaintiffs Have Not Plausibly Alleged Cigna Engaged in RICO
`Predicate Acts. ...................................................................................................2
`Plaintiffs Do Not Adequately Plead Mail or Wire Fraud. .................................2
`a)
`Plaintiffs Fail to Plead Reliance. ............................................................2
`b)
`Plaintiffs Fail to Allege Cigna Had Specific Intent to
`Defraud. .................................................................................................5
`Plaintiffs Fail to Allege Federal Health Care Offenses or Money
`Laundering as a Predicate Act. ..........................................................................5
`Plaintiffs Have Not Pled A Rico Enterprise or That Cigna
`Conducted Its Affairs. ........................................................................................8
`Plaintiffs LW and DS Have Not Alleged a RICO Injury. ..................................9
`C.
`Plaintiffs’ RICO Conspiracy Claim Fails (Count II) ...............................................................10
`Plaintiff LW’s Claims Should Be Dismissed Because Her Plan Contains a Binding Forum
`Selection Clause .......................................................................................................................11
`CONCLUSION ....................................................................................................................................14
`
`2.
`
`B.
`
`II.
`III.
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`MCDERMOTT WILL & EMERY LLP
`MCDERMOTT WILL & EMERY LLP
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`ATTORNEYS AT LAW
`ATTORNEYS AT LAW
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`NEW YORK
`NEW YORK
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`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 3 of 20
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`
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`Cases
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`ABC Servs. Grp., Inc. v. Health Net of Cal., Inc.,
`2020 WL 2121372 (C.D. Cal. May 4, 2020) .............................................................................3
`
`Agric. Water v. Occidental Oil & Gas Corp.,
`235 F. Supp. 3d 1132 (E.D. Cal. 2017)......................................................................................6
`
`Atlantic Marine Construction Co. v. U.S. District Court for the Western District Of
`Texas,
`571 U.S. 49 (2013) ...................................................................................................................11
`
`In re Becker,
`993 F.3d 731 (9th Cir. 2021) ...................................................................................................12
`
`Brummett v. Cty. of San Diego,
`2013 WL 1285144 (S.D. Cal. Mar. 25, 2013) ...........................................................................9
`
`Cedars Sinai Med. Ctr. v. Mid-W. Nat'l Life Ins. Co.,
`118 F. Supp. 2d 1002 (C.D. Cal. 2000) .....................................................................................3
`
`CIGNA Corp. v. Amara,
`563 U.S. 421 (2011) .................................................................................................................12
`
`Coleman v. Supervalu, Inc. Short Term Disability Program,
`920 F. Supp. 2d 901 (N.D. Ill. 2013) .......................................................................................13
`
`DeSoto v. Condon,
`2008 WL 11338151 (C.D. Cal. Oct. 3, 2008) ............................................................................6
`
`Desoto v. Condon,
`371 F. App’x 822 (9th Cir. 2010) ......................................................................................1, 5, 6
`
`Eclectic Props. E., LLC v. Marcus & Millichap Co.,
`751 F.3d 990 (9th Cir. 2014) .....................................................................................................8
`
`Gomez v. Guthy-Renker, LLC,
`2015 WL 4270042 (C.D. Cal. July 13, 2015) ........................................................................8, 9
`
`Grant v. County of Erie,
`542 F. App’x 21 (2d Cir. 2013) ...............................................................................................10
`
`Holland Am. Line Inc. v. Wartsila N.A., Inc.,
`485 F.3d 450 (9th Cir. 2007) ...................................................................................................14
`
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`MCDERMOTT WILL & EMERY LLP
`MCDERMOTT WILL & EMERY LLP
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`ATTORNEYS AT LAW
`ATTORNEYS AT LAW
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`NEW YORK
`NEW YORK
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`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 4 of 20
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`
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`Howard v. Am. Online Inc.,
`208 F.3d 741 (9th Cir. 2000) ...................................................................................................11
`
`Kyko Global, Inc. v. Prithvi Information Solutions, Ltd.,
`2020 WL 3654951 (W.D. Pa. July 6, 2020) ..............................................................................6
`
`Laurel Vill. Bakery LLC v. Glob. Payments Direct Inc.,
`2006 WL 2792431 (N.D. Cal. Sept. 25, 2006) ........................................................................14
`
`LD v. United Behavioral Health, Inc.,
`508 F. Supp. 3d 583 (N.D. Cal. 2020) ...................................................................................1, 4
`
`Manetti-Farrow, Inc. v. Gucci Am., Inc.,
`858 F.2d 509 (9th Cir. 1988) ...................................................................................................14
`
`Marin v. Xerox Corp.,
`935 F. Supp. 2d 943 (N.D. Cal. 2013) .....................................................................................13
`
`Martinez v. Quality Loan Serv. Corp.,
`2009 WL 586725 (C.D. Cal. Feb. 10, 2009)............................................................................10
`
`Metaxas v. Lee,
`2020 WL 7025095 (N.D. Cal. Nov. 30, 2020) ..........................................................................7
`
`Nicolas v. MCI Health & Welfare Plan No. 501,
`453 F. Supp. 2d 972 (E.D. Tex. 2006) .....................................................................................13
`
`Odom v. Microsoft Corp.,
`486 F.3d 541 (9th Cir. 2007) .....................................................................................................6
`
`Oscar v. Univ. Students Co-operative Ass’n,
`965 F.2d 783 (9th Cir. 1992), abrogated on other grounds by
`Diaz v. Gates, 420 F.3d 897 (9th Cir. 2005) ............................................................................10
`
`Pac. Bay Recovery, Inc. v. Cal. Physicians’ Servs., Inc.,
`12 Cal. App. 5th 200 (2017) ......................................................................................................3
`
`Prichard v. Metro. Life Ins. Co.,
`783 F.3d 1166 (9th Cir. 2015) .................................................................................................12
`
`Rapp v. Henkel of Am., Inc.,
`2018 WL 6307904 (C.D. Cal. Oct. 3, 2018) ............................................................................13
`
`RJ, et al. v. Cigna Behavioral Health, Inc.,
`2021 WL 1110261 (N.D. Cal. Mar. 23, 2021) .......................................................................5, 8
`
`Rodriguez v. McKinney,
`878 F. Supp. 744 (E.D. Pa. 1995) ............................................................................................10
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`iv
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`MCDERMOTT WILL & EMERY LLP
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`ATTORNEYS AT LAW
`ATTORNEYS AT LAW
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`NEW YORK
`NEW YORK
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`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 5 of 20
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`Rodriguez v. PepsiCo Long Term Disability Plan,
`716 F. Supp. 2d 855 (N.D. Cal. 2010) .....................................................................................13
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`Sarmiento v. BMG Ent.,
`326 F. Supp. 2d 1108 (C.D. Cal. 2003) ...................................................................................13
`
`Stewart v. Wachowski,
`2004 WL 2980783 (C.D. Cal. Sept. 28, 2004) ..........................................................................6
`
`Stitt v. Citibank, N.A.,
`2015 WL 75237 (N.D. Cal. Jan. 6, 2015) ..................................................................................9
`
`TML Recovery, LLC v. Humana Inc.,
`2019 WL 3208807 (C.D. Cal. Mar. 4, 2019) .............................................................................3
`
`U.S. Med. Instruments, Inc. v. CFS N.A., Inc.,
`2013 WL 6055387 (S.D. Cal. Nov. 13, 2013) .........................................................................10
`
`United States v. Caldwell,
`560 F.3d 1214 (10th Cir. 2009) .................................................................................................7
`
`United States v. Esterman,
`324 F.3d 565 (7th Cir. 2003) .....................................................................................................7
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`Verifone, Inc. v. A CAB, LLC,
`2016 WL 4480686 (D. Nev. Aug. 24, 2016) ...........................................................................11
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`Vess v. Ciba-Geigy Corp. USA,
`317 F.3d 1097 (9th Cir. 2003) ...................................................................................................6
`
`Wallace v. Int’l Paper Co.,
`2020 WL 4938361 (C.D. Cal. July 2, 2020) ............................................................................13
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`Yamauchi v. Cotterman,
`84 F. Supp. 3d 993 (N.D. Cal. 2015) .........................................................................................7
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`Statutes
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`18 U.S.C. § 1961(1) .........................................................................................................................8
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`28 U.S.C. § 1404(a) .......................................................................................................................11
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`Other Authorities
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`Rule 9(b) ................................................................................................................................ passim
`
`Rule 12(b)(6) ........................................................................................................................7, 11, 12
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`v
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`ATTORNEYS AT LAW
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`Cigna respectfully submits this reply memorandum in further support of its partial motion to
`dismiss the FAC (Dkt. No. 63).1
`
`INTRODUCTION
`Cigna’s Motion described many of the pleading defects that remain in Plaintiffs’ amended
`RICO claims. Instead of engaging with Cigna’s Motion on the merits, Plaintiffs use most of their brief
`to provide dissertations on unrelated points of law and to block quote Judge Gonzalez-Rogers’
`decision in LD v. United Behavioral Health, Inc., 508 F. Supp. 3d 583 (N.D. Cal. 2020) for rationales
`that do not address the problems that Cigna pointed out in Plaintiffs’ FAC.
`For example, Cigna explained in its Motion that Plaintiffs’ mail and wire-based RICO claims
`fail because they have not alleged anyone relied on any false statements. In response, Plaintiffs cite
`to the portions of LD explaining that first-party reliance is not required for mail and wire fraud. Cigna
`never said it was. Instead, the problem that Cigna flagged with Plaintiffs’ mail and wire fraud claims
`is that they have not pled anyone reasonably relied on Cigna’s allegedly false statements. Plaintiffs
`cannot point to any contrary finding in LD because that opinion did not address this defect.
`Plaintiffs’ other tactic is to misstate the law. For example, among its many failings, Plaintiffs’
`federal health care offense theory fails because Plaintiffs do not plead the predicate act of money
`laundering with Rule 9(b) particularity. Because Plaintiffs cannot claim that they satisfied Rule 9(b),
`they instead argue that Cigna “misreads” the Ninth Circuit’s opinion in Desoto v. Condon, 371 F.
`App’x 822 (9th Cir. 2010), representing to the Court that the “only predicate acts alleged [in Desoto]
`involved mail and wire fraud,” not money laundering as Cigna’s brief said. (Opp’n at 7.) Compare
`that to the Ninth Circuit’s opinion on page 824:
`
`Likewise, the district court properly concluded Desoto’s second amended
`complaint (SAC) fails to plead the RICO predicate acts with sufficient
`specificity to satisfy Federal Rule of Civil Procedure 9(b). . . . The money
`
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`1 Unless otherwise noted, all capitalized terms have the meaning provided them in Cigna’s partial
`motion to dismiss the FAC (“Mot.” or “Br.”) (Dkt. 76), all emphasis has been added, and all internal
`citations and quotations have been omitted.
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`CIGNA HEALTH AND LIFE INSURANCE COMPANY’S REPLY IN SUPPORT OF MOTION TO DISMISS
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`ATTORNEYS AT LAW
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`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 7 of 20
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`laundering allegations fail to allege whether Condon had the requisite
`intent to launder funds in furtherance of a RICO scheme.
`Plaintiffs’ misstatements of law on forum selection clauses are just as egregious. As Cigna
`explained, Plaintiff LW’s plan has a forum selection clause that requires her to pursue her claims in
`the Western District of Tennessee. Plaintiffs argue that this forum selection clause is unenforceable
`because it is against public policy and that LW’s claims are not “in connection with” her plan because
`the plan is not a defendant. But the Ninth Circuit says the opposite: the court affirmed just a few
`months ago that forum selection clauses are enforceable in ERISA plans, and it has found for decades
`now that non-parties can invoke these types of clauses.
`These are only examples. As described below, Plaintiffs do not bother to address most points
`Cigna raised in its Motion, and when they do respond, Plaintiffs offer incorrect readings of the law,
`strawman arguments, and unrelated allegations. Plaintiffs’ RICO claims and LW’s claims should be
`dismissed.
`
`I.
`
`ARGUMENT
`PLAINTIFFS’ RICO § 1962(C) CLAIM FAILS (COUNT I).
`Cigna’s opening brief laid out several reasons why Plaintiffs have still failed to state a RICO
`claim. (Br. at 7-17.) Because none of Plaintiffs’ responses address these pleading defects, their RICO
`claims should be dismissed with prejudice.
`PLAINTIFFS HAVE NOT PLAUSIBLY ALLEGED CIGNA ENGAGED IN
`A.
`RICO PREDICATE ACTS.
`Plaintiffs Do Not Adequately Plead Mail or Wire Fraud.
`1.
`Plaintiffs Fail to Plead Reliance.
`a)
`As Cigna explained in its opening brief, Plaintiffs have not pled predicate acts of mail and wire
`fraud because Plaintiffs fail to plead that anyone reasonably relied on Cigna’s alleged misstatements.
`To do so, Plaintiffs would have to allege that Cigna made false statements before Plaintiffs received
`service (Br. at 9 (citing LD, 508 F. Supp. 3d 583, at 604)), and that someone reasonably relied on those
`pre-service statements. (Br. at 10-13.) But the only pre-service communications that Plaintiffs point
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`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 8 of 20
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`to are VOB calls (id. at 9), and the law is clear that neither they (nor their providers) can reasonably
`rely on VOB calls as a promise of any particular rate of payment. (Id. at 10 (collecting cases).)
`Plaintiffs do not contest any of this. Instead, they try to sidestep the issue by arguing that LD
`considered the issue of reliance and found the plaintiffs’ allegations there sufficient. (Opp’n at 5
`(citing LD, 508 F. Supp. 3d 583, at 600-601); see also Opp’n at 6 (citing LD v. United Behavioral
`Health, 2020 930624, at *5 n.7 (N.D. Cal. Mar. 11, 2021)).) But Plaintiffs’ block-quotes from LD
`address only the uncontroversial principle that first-party reliance is not required in order to plead mail
`or wire fraud. Cigna does not dispute this fact. But the LD did not consider the issue raised in Cigna’s
`dismissal motion: that no one in the chain of causation—whether that be Plaintiffs or their provider,
`Summit Estate—could have reasonably relied on VOB calls because it is settled California law that
`VOB calls are not considered sufficiently specific promises to pay. See Cedars Sinai Med. Ctr. v.
`Mid-W. Nat’l Life Ins. Co., 118 F. Supp. 2d 1002, 1008 (C.D. Cal. 2000) (“[W]ithin the medical
`insurance industry, an insurer’s verification is not the same as a promise to pay”), see also, e.g., ABC
`Servs. Grp., Inc. v. Health Net of Cal., Inc., 2020 WL 2121372, at *6 (C.D. Cal. May 4, 2020)
`(allegations regarding VOB calls inadequate to support a promissory estoppel claim); Pac. Bay
`Recovery, Inc. v. Cal. Physicians’ Servs., Inc., 12 Cal. App. 5th 200, 216 (2017) (allegations about
`VOB calls inadequate to support contract and estoppel claims); TML Recovery, LLC v. Humana Inc.,
`2019 WL 3208807, at *4 (C.D. Cal. Mar. 4, 2019) (allegations regarding VOB calls inadequate to
`support implied contract and oral contract claims).
`The same rationale requires dismissal here. Plaintiffs do not dispute that they have not alleged
`that (1) Cigna authorized a certain amount of treatment or agreed to pay a specific rate; (2) the VOB
`calls that occurred specifically addressed IOP treatment; or (3) Cigna indicated that it would use FAIR
`Health—or any specific charge database—to determine reimbursement.2 (Br. at 10-11.) Instead,
`Plaintiffs argue that their allegations are enough because they are the same ones offered by the
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`2 Plaintiffs’ theory about why Cigna should pay FAIR Health has shifted since they first filed this
`action: while Plaintiffs first contended that Cigna was obligated to use FAIR Health to determine MRC
`(see Dkt. 32 ¶ 19), they now admit that their plans require no such thing. (Opp’n at 2.)
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`CIGNA HEALTH AND LIFE INSURANCE COMPANY’S REPLY IN SUPPORT OF MOTION TO DISMISS
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`MCDERMOTT WILL & EMERY LLP
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`ATTORNEYS AT LAW
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`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 9 of 20
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`plaintiffs in LD. That is not true. In LD, the plaintiffs alleged that the insurer, United Behavioral
`Health, represented on the VOB calls that it would “pay 100% of UCR rates” (Br. at 12 (citing Am.
`Compl. (Dkt. 74) at ¶¶ 259, 295, 326, 355, 382, LD, et al. vs. United Behavioral Health, et al., Case
`4:20-cv-02254-YGR).) The FAC does not allege Cigna made any similar statement for either MW or
`DS; the FAC merely alleges that Cigna representatives verified that MW and DS “had active benefits
`for out of network behavioral health treatment and . . . that the plan was an MRC 2 policy which would
`pay [a percentage] of the Medicare schedule rate for all services.” (Br. at 12 (citing FAC ¶¶ 310,
`340).) Again, Plaintiffs do not attempt to explain how such statements would be fraudulent.
`Even for RJ, Plaintiffs do not allege Cigna promised to pay any particular amount or mentioned
`FAIR Health. (See FAC ¶ 278 (alleging that a Cigna representative “represented that the plan would
`pay 80th percentile of a rate based on UCR”).) Even if they had, it would not have been sufficient.
`First, at best Plaintiffs would still have pled only one predicate act, not two to establish a
`pattern. (Br. at 11-13.) While Plaintiffs conclusorily argue that they “have identified the predicate
`acts of racketeering activity,” the allegations they cite to include post-service communications. (Id. at
`6.) But as the LD court found—and Plaintiffs do not dispute—post-service communications cannot
`support reliance. See LD, 508 F. Supp. 3d at 604 (“only the VOB calls . . . took place before plaintiffs
`received the IOP services at issue. Accordingly, only these communications could satisfy the reliance
`requirement for a RICO claim predicated on mail or wire fraud.”) (emphasis in original). Plaintiffs
`also do not point to alleged facts about how anyone relied on these post-service communications or,
`with respect to payments, any Rule 9(b) time and place details (Br. at 12-13), so even if post-service
`communications were relevant—and they are not—these communications still could not serve as
`predicate acts.
`Second, Plaintiffs do not dispute that the FAC alleges that Summit made the VOB calls for
`each named Plaintiff before providing all treatment, including residential treatment. (Br. at 11.)
`Plaintiffs do not contend that Summit specifically raised IOP treatment on VOB calls, and they do
`allege that Cigna paid UCR for Summit’s residential treatment. (FAC ¶¶ 278, 292, 310, 323, 340,
`353.) Thus, Plaintiffs cannot claim there was anything false about this alleged statement.
`
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`CIGNA HEALTH AND LIFE INSURANCE COMPANY’S REPLY IN SUPPORT OF MOTION TO DISMISS
`CASE NO: 5:20-CV-02255
`
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`MCDERMOTT WILL & EMERY LLP
`
`ATTORNEYS AT LAW
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`NEW YORK
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`
`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 10 of 20
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`Plaintiffs Fail to Allege Cigna Had Specific Intent to Defraud.
`b)
`Plaintiffs also offer no response to Cigna’s second basis for dismissing Plaintiffs’ mail and
`wire fraud claims: that Plaintiffs have failed to allege specific intent to defraud. (Br. at 13-14.)
`Specifically, Plaintiffs do not deny that many of the communications referenced in the FAC actually
`disclose that Viant would price the claims, nor do they deny that all VOB calls were made before the
`named Plaintiffs were admitted to their residential treatment. That means that Cigna could not have
`been aware of what actual services would be at issue, so Cigna could not have specifically intended to
`defraud Plaintiffs or Summit about how it would pay for Summit’s later-in-time IOP services.3 Given
`these allegations, it is not possible for Plaintiffs to plead that Cigna “acted with the requisite intent to
`deceive and cheat.” See RJ, et al. v. Cigna Behavioral Health, Inc., 2021 WL 1110261, at *10 (N.D.
`Cal. Mar. 23, 2021) (dismissing initial RICO claims on this basis).
`Plaintiffs Fail to Allege Federal Health Care Offenses or Money
`2.
`Laundering as a Predicate Act.
`In its opening brief, Cigna explained that Plaintiffs’ federal health care offenses theory fails
`because Plaintiffs have not plead – as they must – that Cigna laundered the proceeds of federal health
`care offenses with Rule 9(b) particularity. (See Br. at 14.) Plaintiffs do not dispute that they do not
`meet Rule 9(b)’s standards and instead try to avoid Rule 9(b) all together, contending that Cigna has
`misread the Ninth Circuit’s decision in DeSoto v. Condon, 371 F. App’x 822 (9th Cir. 2010), which
`Plaintiffs represent did not involve any allegations of money laundering. (Opp’n at 7 (stating that in
`DeSoto, the “only predicate acts alleged involved mail and wire fraud”).)
`That is not true. See DeSoto, 371 F. App’x at 824 (affirming that the predicate acts alleged in
`the complaint—mail fraud, wire fraud, and “money laundering”—are subject to Rule 9(b)); see also
`
`3 See, e.g., FAC ¶ 287 (EOB disclosing that “WE REDUCED THE ALLOWED AMOUNT BASED
`ON VIANT’S FACILITY BILL REVIEW PROGRAM. IF YOU HAVE QUESTIONS ABOUT
`THIS DISCOUNT[] CONTACT VIANT AT 866.233.0121”); id. ¶ 359 (alleging that “each patient”
`received an OON letter disclosing that “Cigna has contracted with Viant to negotiate on your behalf”);
`id. ¶¶ 278, 310, 340.
`
`- 5 -
`
`CIGNA HEALTH AND LIFE INSURANCE COMPANY’S REPLY IN SUPPORT OF MOTION TO DISMISS
`CASE NO: 5:20-CV-02255
`
`
`
`
`MCDERMOTT WILL & EMERY LLP
`
`ATTORNEYS AT LAW
`
`NEW YORK
`
`
`
`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 11 of 20
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`DeSoto v. Condon, 2008 WL 11338151, at *10 (C.D. Cal. Oct. 3, 2008) (“allegations of money
`laundering must satisfy Rule 9(b)’s requirements because money laundering involves an element of
`fraud”). Nor is DeSoto an outlier, as “[m]ost courts have held that allegations of money laundering
`must also satisfy Rule 9(b)’s requirements, since money laundering involves an element of fraud.”
`Stewart v. Wachowski, 2004 WL 2980783, at *4 (C.D. Cal. Sept. 28, 2004) (collecting cases).
`Plaintiffs’ citation to a single, out-of-Circuit unpublished case, Kyko Global, Inc. v. Prithvi
`Information Solutions, Ltd., 2020 WL 3654951 (W.D. Pa. July 6, 2020), finding otherwise does not
`stand up against the weight of these cases.
`But even if Rule 9(b) did not apply to money laundering claims in every instance, it would to
`the money laundering allegations here. As Plaintiffs admit, “fraud-based RICO claims… are required
`to be pled with particularity subject to Rule 9(b).” (Opp’n at 8); see also Vess v. Ciba-Geigy Corp.
`USA, 317 F.3d 1097, 1103-1104 (9th Cir. 2003) (claims that “sound in fraud” must satisfy Rule 9(b)).4
`Here, the Plaintiffs’ claims clearly sound in fraud because without Cigna’s alleged “scheme to
`fraudulently underpay” claims, there could have been no allegedly unlawful proceeds to launder or
`use in financial transactions. (FAC ¶ 126.)
`Just as fatal to Plaintiffs’ money laundering claims, Plaintiffs also offer no response to their
`failure to plead the other elements of money laundering, whether subject to Rule 9(b) or not. (Br. at
`14-15.) This includes failing to plead that Cigna attempted to either promote the allegedly illegal
`activity or to disguise the nature or source of any funds. See Metaxas v. Lee, 2020 WL 7025095, at
`*10 (N.D. Cal. Nov. 30, 2020) (“[W]here a defendant takes no steps to disguise or conceal the source
`or destination of [allegedly laundered] funds . . . the transactions conspicuously lack the convoluted
`character associated with money laundering.”).
`
`4 This finding is consistent with the two cases cited by Plaintiffs: Odom v. Microsoft Corp., 486 F.3d
`541, 553 (9th Cir. 2007), and Comm. to Protect our Agric. Water v. Occidental Oil & Gas Corp., 235
`F. Supp. 3d 1132, 1172 (E.D. Cal. 2017). Neither case states that only mail and wire fraud must be
`pled with particularity, nor does either one involve allegations of money laundering or federal health
`care offenses or the pleading standard that should apply to them.
`
`- 6 -
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`CIGNA HEALTH AND LIFE INSURANCE COMPANY’S REPLY IN SUPPORT OF MOTION TO DISMISS
`CASE NO: 5:20-CV-02255
`
`
`
`
`MCDERMOTT WILL & EMERY LLP
`
`ATTORNEYS AT LAW
`
`NEW YORK
`
`
`
`Case 5:20-cv-02255-EJD Document 89 Filed 07/21/21 Page 12 of 20
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`In their opposition, Plaintiffs try to fill this gap by pointing to their allegations that Cigna
`“underpaid” them for the claims at issue and profited from these underpayments. (Opp’n at 8 (citing,
`in part, FAC ¶¶ 13, 93, 286, 319, 349, 381, 395).) But earning—and even depositing—money from
`an alleged fraud does not constitute money laundering. See, e.g., United States v. Esterman, 324 F.3d
`565, 570 (7th Cir. 2003) (“[W]e have stressed that the mere transfer and spending of funds is not
`enough to sweep conduct within the money laundering statute; instead, subsequent transactions must
`be specifically designed to hide the provenance of the funds involved.”); United States v.
`Caldwell, 560 F.3d 1214, 1222 (10th Cir. 2009) (“Money laundering requires more than simply
`writing a check with the proceeds of unlawful activity. We have repeatedly stated that § 1956 is not
`a money spending statute.”).
`Similarly lacking from Plaintiffs’ brief is any explanation about how Cigna could have
`laundered money from self-funded plans, since under their self-funded Plans, Plaintiffs’ employers
`(not Cigna) are responsible for paying Plaintiffs’ claims. As Cigna explained in its opening brief,
`Plaintiffs cannot. (Br. at 15.)
`Finally, Plaintiffs try to avoid the pleading defects in their money laundering allegations by
`arguing that they have pled a federal health care offense. (Opp’n at 9-10.) However, Plaintiffs’
`allegations in support of this contention (namely, that that Cigna has violated 18 U.S.C. § 1035, § 664,
`§ 1347, § 1027, § 1349, § 1341, and § 1343) are found nowhere in the FAC, and Plaintiffs may not
`now amend their FAC through briefing. See Yamauchi v. Cotterman, 84 F. Supp. 3d 993, 1009 (N.D.
`Cal. 2015) (“In determining the propriety of a Rule 12(b)(6) dismissal, a court may not look beyond
`the complaint to a plaintiff’s moving papers, such as a memorandum in opposition to a defendant’s
`motion to dismiss.”) (quoting Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003) (emphasis in
`original)). In any event, Plaintiffs’ attempts to plead a federal health care offense do not help