Allstate Insurance Company v. Michael Plamb

802 F.3d 665, 2015 U.S. App. LEXIS 16571, 2015 WL 5472433
CourtCourt of Appeals for the Fifth Circuit
DecidedSeptember 17, 2015
Docket14-10574
StatusPublished
Cited by29 cases

This text of 802 F.3d 665 (Allstate Insurance Company v. Michael Plamb) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allstate Insurance Company v. Michael Plamb, 802 F.3d 665, 2015 U.S. App. LEXIS 16571, 2015 WL 5472433 (5th Cir. 2015).

Opinion

JERRY E. SMITH, Circuit Judge:

Allstate Insurance Company (“Allstate”) sued a consortium of telemarketing companies, chiropractic clinics, and affiliated law offices spanning several states, contending that they had violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”). A jury returned a verdict in Allstate’s favor, leading to a sizable award and attorney’s fees. The defendants contend that the evidence was insufficient under RICO, that some claims were barred by the statute of limitations, and that the district court erred in admitting Allstate’s expert witnesses. Allstate challenges the district court’s decision not to award prejudgment interest and to reduce the fee award. We affirm.

I.

The scheme to defraud insurance, companies such as Allstate aimed to identify persons who had been in vehicle accidents but were not at fault. The defendants would convince them to receive unnecessary chiropractic services, then would file third-party claims against the at-fault party’s insurer.

First, the participants had to identify potential claimants. Michael Plambeck owned Media Placement Services (“MPS”), a telemarketing firm, which Douglas Friedman managed. Defendant Jennifer Giessner was Plambeck’s Controller. MPS employees purchased police accident reports and scoured them for not-at-fault victims who met certain criteria, usually low-income individuals without health insurance.

Once a potential patient was identified, an MPS employee would call to warn that the person may have suffered trauma whose ill effects might not be apparent for weeks. The telemarketer would offer the victim a free spinal exam to determine whether he was injured. The caller would assure the prospective patient that the appointment would be at no cost to him or his insurer, but the charges would be billed to the at-fault party. The caller would schedule an appointment at a clinic that was part of Chiropractic Strategies Group (“CSG”), which Plambeck owned; defendants Michael Capobianco and Paul Grindstaff were Clinic Partners. At a clinic, the patient would sign several forms, including an Assignment of Benefits that allowed the clinic to collect directly from the insurer.

A Plambeck-trained chiropractor would administer the free examination, at the end of which the chiropractor often ordered x-rays. The x-rays often were marked up with lines and circles purporting to show that the patient needed treat *672 ment, although the markings had little or no diagnostic value. Many of the x-rays were of poor quality, with some rendered unreadable by underexposure or overexposure and others made difficult to parse by the presence of buttons, clips, zippers, and belt buckles. Even though the chiropractor deemed x-rays necessary, the useless ones were not retaken, but the insurer was still billed for them.

The chiropractors almost always prescribed the same treatment: hot and cold packs, electrical stimulation, massages, and other passive modalities. Patients received the treatment for the same, length of time — daily for two weeks, then three times a week. After sixteen or twenty visits, the chiropractor often deemed the patient cured without a reexamination or follow-up testing.

When a patient came to a clinic, he was usually referred, at Plambeck’s direction, to a law firm with substantial ties to Plam-beck. Many of those firms were funded and run by two companies, Professional Management Group LLC (“PMG”) and Law Office Network LLC (“LON”), which were owned by Randall Toca and funded by Plambeck. PMG was in the same Plambeck-owned building with MPS and CSG, and Plambeck exercised significant oversight over PMG employees. The patient would meet with a lawyer, but non-lawyer employees drafted demand letters on firm letterhead, mailed them to insurers, and negotiated settlements.

Settlement checks were sent to local offices, then forwarded to headquarters. The case managers prepared deposits to the representative firms’ trust accounts, from which Toca disbursed the funds to various entities. Often the accident victim received less than one-third of the funds.

II.

After beginning a two-year investigation in 2005, Allstate sued Plambeck and more than sixty other individuals and entities, alleging violations of federal and state RICO statutes, fraud, conspiracy to commit fraud, and unjust enrichment. Allstate sought to recover the amount it customarily allowed for services Plambeck’s clinics had provided to 721 patients. During trial, Allstate dropped a number of cases, and the district court dismissed others, ultimately reducing the contested insurance claims to 555.

After a five-week trial and four days of deliberations, the jury found that the defendants had violated the federal RICO statute and Ohio’s RICO statute, had committed fraud, and were unjustly enriched in 391 of the 555 cases. Almost all of the 391 eases involved missing or deficient x-rays.

Although the jury found liability on multiple theories, it awarded damages only for the federal and Ohio RICO violations and not for fraud or unjust enrichment. Actual damages assessed on the appealing defendants were $945,593, and the court assessed treble damages of $2,836,779. 1 The court denied Allstate’s request for prejudgment interest on the actual-damages amount and denied defendants’ motion for a new trial.

Allstate moved for attorney’s fees of $1,903,006.75. The court held that the hourly rate and total hours were appropriate, but it reduced the award because Allstate had prevailed on only 391 of the original 721 disputed claims. Because Allstate proved only about 54% of its underlying claims, the court awarded only 54% of the requested fees, or $1,027,623.65.

*673 III.

Both sides appeal. The defendants challenge the sufficiency of the evidence supporting the existence of a RICO enterprise, causation, and damages; additionally, they assert that some claims are barred by limitations and that the court erred in admitting certain of Allstate’s experts. Both the Ohio RICO claims and the attorney’s-fee award are contested, but those challenges rise and fall on the success of the federal RICO claims.

Allstate’s cross-appeal asserts that the district court abused its discretion in not awarding prejudgment interest and in reducing the total attorney’s-fee request. Allstate presses a contingent cross-appeal: If we grant relief to the defendants, Allstate disputes the district court’s dismissing its misrepresentation claims and excluding certain evidence and questions from the jury charge and verdict form.

IV.

We review de novo a denial of a motion for judgment as a matter of law. Allstate Ins. Co. v. Receivable Fin. Co., 501 F.3d 398, 405 (5th Cir.2007). We reverse a denial only if there is “no legally sufficient evidentiary basis for a reasonable jury to find for a party.” Id. “[W]e view all evidence and draw all reasonable inferences in the light most favorable to the verdict” and reverse only when the evidence and inferences “point so strongly in favor of the movant that a rational jury could not reach a contrary verdict.” Id.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
802 F.3d 665, 2015 U.S. App. LEXIS 16571, 2015 WL 5472433, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allstate-insurance-company-v-michael-plamb-ca5-2015.