District Court Ignores Supreme Court in Boyle Dismissing a Civil RICO Complaint

Illinois Farmers Ins. Co. v. Guthman et al., 2017 WL 3971867 (D. Minn. 9/7/17)

The court dismissed the Plaintiff’s civil RICO claims finding that the alleged association in fact enterprise was not “separate and apart” or distinct from the pattern of racketeering activity.  Here, plaintiffs allege that Defendants Guthman, Steiner, their clinics, and the runners violated RICO by associating with each other to achieve the purpose of billing and receiving improper no-fault benefit payments.

In relying on, principally, case law prior to the Supreme Court’s 2009 decision in Boyle v. United States, 556 U.S. 939 (2009), the court completely misconstrued the law regarding “separateness.” The court cites to case law which in part is correct that the enterprise is a separate element which must be proved. But, incorrectly, the court relies on pre-Boyle law citing to Stephens, Inc. v. Geldermann, Inc., 962 F.2d 808, 815–16 (8th Cir. 1992) (holding that plaintiff failed to prove the existence of an enterprise under RICO because “[t]he only common factor that linked all these parties together and defined them as a distinct group was their direct or indirect participation in [the] scheme to defraud [plaintiff].”)

Boyle overruled existing Eighth Circuit cases and specifically held that the existence of an enterprise may be inferred from the evidence showing that persons associated with the enterprise engaged in a pattern of racketeering. As a basis for the decision, the Boyle court referenced the Court’s decision in Turkette that the evidence proving racketeering activity and evidence establishing an enterprise, “may in particular cases coalesce.” Id., at 947. The proof to assert an enterprise must merely show the “three structural features,” a purpose; relationships, and longevity. Id., at 945.

For this court to ignore Boyle is mind-blowing. The Plaintiffs correctly argued that the enterprise independently exists without the fraudulent acts because the clinics are otherwise legitimate is also a strong argument of “separate and apart,” and which is evidence of the “three structural features.”  The courts continued reliance on the 1992 decision in Stephens is just wrong, and completely contrary to the liberal construction of RICO espoused by the Supreme Court in Boyle and other cases. Boyle itself was a group of four or five bank robbers who associated together to commit predicate crimes; nothing else. For the Supreme Court to find this an enterprise shows the liberal breadth.  In fact, the Court in Boyle summed up in the conclusion, that

“the point we made in Turkette that proof of a pattern of racketeering may be sufficient in a particular case to permit a jury to infer the existence of an association in fact enterprise.”

Id., at 951.




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