Med. Mut. of Ohio v. FrontPath Health Coalition

2023 Ohio 243, 207 N.E.3d 16

• Court: Ohio Court of Appeals
• Decided: January 27, 2023
• Docket: L-21-1226
• Status: Published

Opinion

[Cite as Med. Mut. of Ohio v. FrontPath Health Coalition, 2023-Ohio-243.]

IN THE COURT OF APPEALS OF OHIO SIXTH APPELLATE DISTRICT LUCAS COUNTY

Medical Mutual of Ohio, et al. Court of Appeals No. L-21-1226

Appellants Trial Court No. CI0201703154

v.

FrontPath Health Coalition DECISION AND JUDGMENT

Appellee Decided: January 27, 2023

*****

Richard M. Knoth, Scott C. Holbrook, Breaden M. Douthett, Sean E. McIntyre, and Hallie R. Israel, for appellants.

John J. McHugh, III, for appellee.

PIETRYKOWSKI, J.

{¶ 1} Appellants, Medical Mutual of Ohio and Medical Mutual Services, L.L.C.

(collectively “Medical Mutual”), appeal from the judgments of the Lucas County Court of Common Pleas, dismissing with prejudice two counts from their amended complaint,

and later denying a motion to amend. For the reasons that follow, we reverse.

I. Facts and Procedural Background

{¶ 2} Medical Mutual and appellee, FrontPath Health Coalition (“FrontPath”) are

competitors for public contracts to provide health benefit services to municipal

corporations in northwest Ohio, in this case Wood County and the City of Toledo. At a

very basic level, Medical Mutual alleged that FrontPath recruited to serve on its board,

public officials who were the health benefit decision makers for the municipal

corporations. FrontPath then encouraged and aided those public officials in using their

influence and authority to steer public contracts for the provision of health benefit

services to FrontPath.

{¶ 3} Medical Mutual initiated the present action on June 27, 2017, when it filed a

four-count complaint against appellee, FrontPath Health Coalition. The first count

sought a judgment declaring that the contracts between FrontPath and Wood County and

the city of Toledo were null and void. The second count contained a claim for civil

liability for criminal acts, alleging that FrontPath aided and abetted government

employees in entering into the contracts in violation of Ohio law. The third count

contained a claim for tortious interference with a contractual or business relationship.

Finally, the fourth count contained a claim for violation of the Ohio Valentine Act—

which prohibits conspiracy against trade—alleging that FrontPath engaged in

2. monopolistic behavior with regard to the market for purchase of health insurance

services.

{¶ 4} On November 5, 2018, Medical Mutual amended its complaint. The

amended complaint added a fifth count alleging a violation of the Corrupt Practices Act

under R.C. 2923.31.

{¶ 5} Shortly thereafter, FrontPath moved to dismiss the amended complaint

pursuant to Civ.R. 12(B)(6). On June 24, 2019, the trial court granted FrontPath’s

motion as to Counts I, II, IV, and V, dismissed those claims with prejudice, and denied

Medical Mutual’s alternative motion to further amend its complaint.

{¶ 6} Following continued discovery, Medical Mutual moved for leave to file a

second amended complaint on January 30, 2020. The second amended complaint sought

to add as defendants, FrontPath’s President and Chief Executive Officer, Susan

Szymanski, and City of Toledo Health Care Cost Containment Committee member and

FrontPath Board of Trustee member, Don Czerniak. In addition to the original five

counts in the amended complaint, the proposed second amended complaint also sought to

add three claims: Count VI, a civil Corrupt Practices Act claim premised upon alleged

violations of the Defend Trade Secrets Act, 18 U.S.C. § 1832; Count VII, a claim for

theft of protectable trade secrets under 18 U.S.C. § 1832, et seq.; and Count VIII, a claim

for theft of trade secrets under R.C. 1333.61, et seq.

3. {¶ 7} On June 16, 2020, the trial court denied Medical Mutual’s motion for leave

to file a second amended complaint.

{¶ 8} Eventually, in September 2021, the matter proceeded to a jury trial on Count

III, which was the claim for tortious interference with a contractual or business

relationship. Following a month-long trial, the jury returned with a verdict award for

Medical Mutual in the amount of $1,781,750.00. The jury declined to award punitive

damages.

II. Assignments of Error

{¶ 9} Medical Mutual has timely appealed, and now asserts three assignments of

error for our review:

1. The trial court erred by dismissing with prejudice Count V of

MMO’s First Amended Complaint setting forth an Ohio Corrupt Practices

Act claim (the “CPA claim”).

2. The trial court erred by dismissing with prejudice Count II of

MMO’s First Amended Complaint setting forth a claim for civil liability for

criminal acts (the “civil liability claim”).

3. The trial court erred by denying MMO’s motion for leave to

amend its complaint to assert claims against new defendants Donald

Czerniak and Susan Szymanski.

4. III. Analysis

{¶ 10} Medical Mutual’s first and second assignments of error argue that the trial

court erred when it dismissed with prejudice the Corrupt Practices Act violation claim

and the civil liability for criminal acts claim, respectively. Because those assignments of

error involve similar questions of law, we will address them together, beginning with the

civil liability for criminal acts claim. We will then address Medical Mutual’s third

assignment of error regarding the trial court’s denial of leave to amend the complaint.

A. Civ.R. 12(B)(6) Dismissal of Claims

{¶ 11} “Ohio is a notice-pleading state.” Maternal Grandmother v. Hamilton Cty.

Dept. of Job and Family Servs., 167 Ohio St.3d 390, 2021-Ohio-4096, 193 N.E.3d 536, ¶

10. “This means that outside of a few specific circumstances * * * a party will not be

expected to plead a claim with particularity. Rather, a ‘short and plain statement of the

claim’ will typically do.” Id., quoting Civ.R. 8(A). “The purpose of notice pleading is

clear: to simplify pleadings to a short and plain statement of the claim and to simplify

statements of the relief demanded * * * to the end that the adverse party will receive fair

notice of the claim and an opportunity to prepare his response thereto.” (Internal

quotations omitted.) Wells Fargo Bank, N.A. v. Horn, 142 Ohio St.3d 416, 2015-Ohio-

1484, 31 N.E.3d 637, ¶ 13, quoting Anderson v. BancOhio Natl. Bank, 1st Dist. Hamilton

No. C-840913, 1985 WL 8844, *1 (Nov. 27, 1985).

5. {¶ 12} “A motion to dismiss for failure to state a claim upon which relief can be

granted is procedural and tests the sufficiency of the complaint.” State ex rel. Hanson v.

Guernsey Cty. Bd. of Commrs., 65 Ohio St.3d 545, 548, 605 N.E.2d 378 (1992). “In

order for a trial court to dismiss a complaint under Civ.R. 12(B)(6) for failure to state a

claim upon which relief can be granted, it must appear beyond doubt that the plaintiff can

prove no set of facts in support of the claim that would entitle the plaintiff to the relief

sought.” Ohio Bur. of Workers’ Comp. v. McKinley, 130 Ohio St.3d 156, 2011-Ohio-

4432, 956 N.E.2d 814, ¶ 12, citing O’Brien v. Univ. Community Tenants Union, Inc., 42

Ohio St.2d 242, 327 N.E.2d 753 (1975), syllabus. “The allegations of the complaint must

be taken as true, and those allegations and any reasonable inferences drawn from them

must be construed in the nonmoving party’s favor.” Id., citing O’Brien at syllabus.

However, “while we are to assume the facts alleged in the complaint are true, we do not

assume the legal conclusions alleged to be drawn from those facts are also true and

disregard any unsupported conclusions included among the facts alleged in the

complaint.” STE Invests., LLC v. Macprep, Ltd., 6th Dist. Ottawa No. OT-21-036, 2022-

Ohio-2614, ¶ 14; Morrow v. Reminger & Reminger Co., L.P.A., 183 Ohio App.3d 40,

2009-Ohio-2665, 915 N.E.2d 696, ¶ 7 (10th Dist.) (“The court need not, however, accept

as true unsupported legal conclusions in the complaint.”). “A motion to dismiss for

failure to state a claim is viewed with disfavor and is rarely granted.” Wilson v. Riverside

Hosp., 18 Ohio St.3d 8, 10, 479 N.E.2d 275 (1985).

6. {¶ 13} “Appellate review of a trial court’s decision to dismiss a complaint

pursuant to Civ.R. 12(B)(6) is de novo. STE Invests. at ¶ 14, citing Perrysburg Twp. v.

Rossford, 103 Ohio St.3d 79, 2004-Ohio-4362, 814 N.E.2d 44, ¶ 5.

1. Civil Liability for Criminal Acts Claim

{¶ 14} In its second assignment of error, Medical Mutual argues that the trial court

erred in dismissing its claim for civil liability for criminal acts.

{¶ 15} In Jacobson v. Kaforey, 149 Ohio St.3d 398, 2016-Ohio-8434, 75 N.E.3d

203, ¶ 13, the Ohio Supreme Court held that “R.C. 2307.60 creates a civil cause of action

for damages resulting from any criminal act, unless otherwise prohibited by law.” R.C.

2307.60(A)(1) provides,

Anyone injured in person or property by a criminal act has, and may

recover full damages in, a civil action unless specifically excepted by law,

may recover the costs of maintaining the civil action and attorney’s fees if

authorized by any provision of the Rules of Civil Procedure or another

section of the Revised Code or under the common law of this state, and

may recover punitive or exemplary damages if authorized by section

2315.21 or another section of the Revised Code.

{¶ 16} Relevant here, Medical Mutual alleged:

12. Over the course of several years, FrontPath has enlisted

employees of the Governmental Employers to serve as directors/trustees of

7. FrontPath and function on behalf of FrontPath and pursue its interests

(collectively, “Government-Affiliated Trustees”). These Government-

Affiliated Trustees played significant roles for FrontPath. For example,

Ms. Pam Boyer, while performing duties as human resource/benefits

manager for Wood County, served for years on the FrontPath Board, even

serving the governance role as Board Chairperson. Ms. Boyer acted on

behalf of FrontPath to thwart Plaintiff’s business efforts in Northwest Ohio.

***

14. Plaintiffs regularly submit bids, or would submit bids in an

unconflicted offering environment, to the Governmental Employers and

other public entities in response to solicitations for bids to provide health

benefit services.

15. FrontPath also regularly submits competing bids or is a

participant in the bidding process to the Governmental Employers in

response to the same bid solicitations to which Plaintiffs respond, or would

respond.

16. On multiple occasions, FrontPath has been selected as the

successful bidder or was a successful participant in the bidding process

with regard to bid solicitations as to which Plaintiffs were, or would have

been, a competing bidder.

8. 17. On multiple occasions, some of the Governmental Employers

and other public entities have awarded contract extensions to FrontPath

without soliciting competing bids from unconflicted health benefit service

providers, including Plaintiffs.

23. Government-Affiliated Trustees have used the authority or

influence of their offices to secure authorization of the contracts between

FrontPath, and the Governmental Employers or other public entities in

violation of Ohio law.

35. FrontPath solicited, procured or aided and abetted the

Government-Affiliated Trustees in their violation of Ohio law and, thereby,

FrontPath violated Ohio law.

36. By recruiting the Government-Affiliated Trustees as

FrontPath board members, FrontPath and the Government-Affiliated

Trustees joined in a malicious combination to injure the Plaintiffs in person

or property, in a way not competent for one alone, resulting in actual

9. 37. The entry of FrontPath, and the Governmental Employers or

other public entities into the contracts in violation of Ohio law has injured

Plaintiffs.

38. Pursuant to Ohio law, Plaintiffs are entitled to compensatory

damages, punitive or exemplary damages, and costs and attorney’s fees

from FrontPath for the injury suffered by Plaintiffs due to the violations of

Ohio law.

{¶ 17} In its motion to dismiss, FrontPath argued that count two of the complaint

did not state a claim for relief. In so arguing, FrontPath characterized count two as a

claim for aiding and abetting tortious conduct, which is not a recognized theory of

recovery. Alternatively, FrontPath characterized the count as one for civil conspiracy.

However, FrontPath argued that the intra-corporate conspiracy doctrine precluded the

finding of a conspiracy between FrontPath and the government-affiliated trustees.

{¶ 18} In response, Medical Mutual asserted that count two was a claim for civil

liability for criminal acts under R.C. 2307.60. Medical Mutual stated that, in this case,

the alleged criminal act was complicity to commit a violation of Ohio’s ethics laws,

specifically R.C. 2921.42(A)(1), which prohibits a public official from using his or her

authority or influence “to secure authorization of any public contract in which the public

official, a member of the public official’s family, or any of the public official’s business

associates has an interest.” Violation of R.C. 2921.42(A)(1) is a felony of the fourth

10. degree. R.C. 2921.42(E). Medical Mutual further argued that FrontPath was complicit

because it “[s]olicit[ed] or procure[d] another to commit the offense,” or “[a]id[ed] or

abet[ted] another in committing the offense.” R.C. 2923.03(A)(1) and (2).

{¶ 19} In its reply, FrontPath argued that Medical Mutual’s subsequent

explanation of the legal theory it was pursuing does not cure the deficiency caused by

Medical Mutual’s failure to plead the commission of an underlying criminal act.

Furthermore, FrontPath argued that the complaint does not adequately plead the crime of

complicity in that it did not allege that FrontPath met the required mens rea of knowingly.

{¶ 20} When the trial court granted FrontPath’s motion to dismiss, it offered two

justifications. First, the trial court reasoned, without further explanation, that “R.C.

2307.60 does not extend to all crimes, only those that injure the claimant in person or

property.” Second, the trial court reasoned that a criminal conviction is required before

liability may be imposed pursuant to R.C. 2307.60, and the complaint did not allege any

such conviction.

{¶ 21} On appeal, Medical Mutual argues that a criminal conviction is not

required before liability may be imposed pursuant to R.C. 2307.60. At the time the trial

court entered its judgment, that question was still unresolved. However, subsequent to

the trial court’s June 24, 2019 judgment entry, the Ohio Supreme Court decided

Buddenberg v. Weisdack, 161 Ohio St.3d 160, 2020-Ohio-3832, 161 N.E.3d 603, ¶ 11, in

which it held that R.C. 2307.60 “does not require proof of an underlying criminal

11. conviction.” Therefore, this aspect of the trial court’s reasoning in granting FrontPath’s

motion to dismiss was in error.

{¶ 22} Turning to the ultimate question of whether the motion to dismiss was

properly granted, we hold that it was not. At the outset, we note that under the liberal

requirements of notice pleading, Medical Mutual was not required to plead the specific

legal theories or statutes upon which it relied. “A party is not required to plead the legal

theory of recovery or the consequences which naturally flow by operation of law from the

legal relationships of the parties. ‘The rules make clear that a pleader is not bound by any

particular theory of a claim but that the facts of the claim as developed by the proof

establish the right to relief.’” Illinois Controls, Inc. v. Langham, 70 Ohio St.3d 512, 526,

639 N.E.2d 771 (1994), quoting McCormac, Ohio Civil Rules Practice (2 Ed.1992) 102,

Section 5.01. Furthermore, even if Medical Mutual pleaded the wrong claim, “[a]

complaint should not be dismissed for failure to state a claim merely because the

allegations do not support the legal theory on which the plaintiff relies. Instead, a trial

court must examine the complaint to determine if the allegations provide for relief on any

possible theory.” Fahnbulleh v. Strahan, 73 Ohio St.3d 666, 667, 653 N.E.2d 1186

(1995).

{¶ 23} Here, construing the allegations and reasonable inferences in Medical

Mutual’s favor, we find that Medical Mutual has adequately pleaded a cause of action

under R.C. 2307.60 for civil liability from FrontPath’s alleged criminal act of complicity

12. to violate R.C. 2921.42(A)(1). Medical Mutual alleged that FrontPath intentionally

recruited and enlisted public officials to serve on its board of trustees, that FrontPath

solicited and helped those officials use their authority and influence to secure public

contracts for FrontPath for which Medical Mutual had submitted bids, and that Medical

Mutual was injured by this conduct. Medical Mutual’s allegations, while sparse, satisfy

the elements of complicity to commit a violation of R.C. 2921.42(A)(1). Therefore, we

hold that the trial court erred when it granted FrontPath’s motion to dismiss. See

CitiMortgage, Inc. v. Rudzik, 7th Dist. Mahoning No. 13 MA 20, 2014-Ohio-1472, ¶ 19-

21 (trial court erred in dismissing R.C. 2307.60 and 2307.61 claim for civil liability for

embezzlement crime where complaint alleged that the bank told existing borrowers that

they were eligible for a home loan modification, had the borrowers make reduced

payments during a trial period, placed the payments into escrow causing the borrowers to

default on the mortgage, and then moved to foreclose).

{¶ 24} More so than arguing that the trial court properly dismissed the civil

liability for criminal acts claim, FrontPath argues that the matter is moot. FrontPath

explains that in its civil liability for criminal acts claim, Medical Mutual sought to

recover damages for FrontPath’s alleged criminal behavior in being complicit to a

violation of R.C. 2921.42(A)(1). FrontPath contends, however, that Medical Mutual

successfully recovered on this theory in the jury trial on the remaining claim for tortious

interference with a contractual or business relationship. FrontPath emphasizes that the

13. jury’s decision was directed by the trial court’s instruction that “it is illegal for a public

official to knowingly employ the authority and influence of his or her office to secure a

public contract, including contracts for the provision of health care benefits, for an

organization on which he or she sits as a board member,” which is effectively a

restatement of R.C. 2921.42(A)(1). Thus, FrontPath concludes that Medical Mutual has

already recovered its damages, and should not be permitted a second bite of the apple.

{¶ 25} Medical Mutual responds that the matter is not moot. Medical Mutual

argues that a civil liability for criminal acts claim under R.C. 2307.60 is subject to a

longer statute of limitations than a claim for tortious interference with a business or

contractual relationship. Thus, Medical Mutual argues that through its civil liability for

criminal acts claim, it would be able to recover damages related to alleged specified

contract renewals and requests for proposals that occurred in 2011 and 2012.

{¶ 26} “A case is moot when the issues presented are no longer ‘live’ or the

parties lack a legally cognizable interest in the outcome.” State ex rel. Ames v. Summit

Cty. Court of Common Pleas, 159 Ohio St.3d 47, 2020-Ohio-354, 146 N.E.3d 573, ¶ 8,

quoting State ex rel. Gaylor, Inc. v. Goodenow, 125 Ohio St.3d 407, 2010-Ohio-1844,

928 N.E.2d 728, ¶ 10. “Conversely, if an actual controversy exists because it is possible

for a court to grant the requested relief, the case is not moot, and a consideration of the

merits is warranted.” Goodenow at ¶ 11.

14. {¶ 27} Here, we agree with Medical Mutual that the matter is not moot. “A claim

for tortious interference is subject to the four-year statute of limitations set forth in R.C.

2305.09(D).” Morrow, 183 Ohio App.3d 40, 2009-Ohio-2665, 915 N.E.2d 696, at ¶ 41.

Medical Mutual asserts that a claim for civil liability for criminal acts is subject to a six-

year statute of limitations, citing Harris v. Cunix, 2022-Ohio-839, 187 N.E.3d 582, ¶ 27

(10th Dist.). However, Harris—in a lengthy analysis—recognizes that other courts have

considered claims for civil liability for criminal acts to be subject to a one-year statute of

limitations. Id. at ¶ 24, citing, e.g., Ettayem v. H.E.R., LLC., 5th Dist. Delaware No. 19

CAE 12 0070, 2020-Ohio-4647 (“R.C. 2307.60 allows complainants to bring a civil

claim for harm caused to them by others’ criminal activity, and any such claim is subject

to a one-year statute of limitations under R.C. 2305.11(A), which sets a one-year

limitation period for any ‘action upon a statute for a penalty or forfeiture.’”); see also

State ex rel. Cty. of Cuyahoga v. Jones Lang Lasalle Great Lakes Co., 8th Dist.

Cuyahoga No. 104157, 2017-Ohio-7727, ¶ 131 (“R.C. 2307.60 contemplates a penalty,

therefore it is subject to the one-year statute of limitations in R.C. 2305.11(A).”). At this

stage, we find it imprudent to decide whether a claim under R.C. 2307.60 is subject to a

six-year or one-year statute of limitations, particularly where we would be doing so for

the first time on appeal, and without the benefit of argument by the parties. Instead, it is

sufficient for the moment that an actual controversy exists, and it is possible for the trial

15. court to award the requested relief. Therefore, we reject FrontPath’s argument, and hold

that the claim for civil liability for criminal acts is not moot.

{¶ 28} Accordingly, Medical Mutual’s second assignment of error is well-taken.

2. Corrupt Practices Act Claim

{¶ 29} In its first assignment of error, Medical Mutual argues that the trial court

erred when it dismissed its Corrupt Practices Act claim. The Ohio Corrupt Practices Act

is patterned after the federal RICO statute, and provides that “[n]o person employed by,

or associated with, any enterprise shall conduct or participate in, directly or indirectly, the

affairs of the enterprise through a pattern of corrupt activity or the collection of an

unlawful debt.” R.C. 2923.32(A)(1). R.C. 2923.34(A) grants a civil remedy to “[a]ny

person who is injured or threatened with injury by a violation of section 2923.32 of the

Revised Code.” Notably, a person who is directly or indirectly injured by the corrupt

activity “shall have a cause of action for triple the actual damages the person sustained,”

if the person “prove[s] the violation or conspiracy to violate [R.C. 2923.32] and actual

damages by clear and convincing evidence.” R.C. 2923.34(E). That person shall also be

entitled to recover reasonable attorney fees in the trial and appellate courts. R.C.

2923.34(F).

{¶ 30} “To state a civil claim under the [Corrupt Practices Act], ‘a plaintiff must

establish: (1) that conduct of the defendant involves the commission of two or more

specifically prohibited state or federal criminal offenses; (2) that the prohibited criminal

16. conduct of the defendant constitutes a pattern; and (3) that the defendant has participated

in the affairs of an enterprise or has acquired and maintained an interest in or control of

an enterprise.” Morrow at ¶ 27; Peirce v. Szymanski, 6th Dist. Lucas No. L-11-1298,

2013-Ohio-205, ¶ 23; Hall v. CFIC Home Mtg., 175 Ohio App.3d 587, 2008-Ohio-1016,

888 N.E.2d 469, ¶ 42 (12th Dist.). Unlike the civil liability for criminal acts claim, which

is subject to notice pleading, the Corrupt Practices Act claim is subject to a higher

pleading standard. “The failure to plead any of [the elements of a Corrupt Practices Act

claim] with particularity results in a defective complaint that cannot withstand a Civ.R.

12(B)(6) motion to dismiss.” (Emphasis added.) Id., citing Universal Coach, Inc. v. New

York City Transit Auth., Inc., 90 Ohio App.3d 284, 291, 629 N.E.2d 28 (8th Dist.1993).

{¶ 31} Here, Medical Mutual alleged:

employees of the [City of Toledo and Wood County] to serve as

directors/trustees of FrontPath and function on behalf of FrontPath and

pursue its interests (collectively, “Government-Affiliated Trustees”). These

Government-Affiliated Trustees played significant roles for FrontPath. For

example, Ms. Pam Boyer, while performing duties as human

resource/benefits manager for Wood County, served for years on the

FrontPath Board, even serving the governance role as Board Chairperson.

17. Ms. Boyer acted on behalf of FrontPath to thwart Plaintiffs’ business efforts

in Northwest Ohio. * * *

16. On multiple occasions, FrontPath has been selected as the

successful bidder or was a successful participant in the bidding process

with regard to bid solicitations as to which Plaintiffs were, or would have

17. On multiple occasions, some of the Governmental Employers

and other public entities have awarded contract extensions to FrontPath

without soliciting competing bids from unconflicted health benefit service

56. FrontPath is a person as that term is defined in Revised Code

2923.31(G).

57. FrontPath is and has been associated with an enterprise—an

ongoing association-in-fact whose members functioned as a continuing unit

for a common purpose of achieving the objectives of the enterprise—and

conducts and participates in the affairs of that enterprise through a pattern

of corrupt activity.

18. 58. The enterprise consists of, among others, representatives of

the Governmental Employers, third-party administrators, and other public

officials, and exists to secure and control the market for health benefit

services in Northwest Ohio.

59. Third-party administrators provide administrative services in

conjunction with health benefit providers like FrontPath. FrontPath

coordinates with certain third-party administrators, representatives of the

Governmental Employers, and other public officials to steer business

toward FrontPath and its third-party administrator partners. Among other

things, FrontPath submits joint or coordinating bids with third-party

administrators for government contracts, and representatives of the

Governmental Employers and other public officials influence the selection

of those bids by the Governmental Employers.

60. FrontPath has knowingly, intentionally, and maliciously

engaged in, attempted to engage in, conspired to engage in, solicited others

to engage in, and participated in, both directly and indirectly, the affairs of

the enterprise through a pattern of corrupt activity.

61. That pattern of corrupt activity consists of at least two

predicate acts, including, but not limited to, unlawfully, willfully, and

knowingly, soliciting and conspiring with others to violate R.C. 2921.42,

19. which makes it a crime for any public official to “[a]uthorize, or employ the

authority or influence of the public official’s office to secure authorization

of any public contract in which the public official, a member of the public

official’s family, or any of the public official’s business associates has an

interest.” R.C. 2921.42(A).

62. As further described above, the Government-Affiliated

Trustees and other public officials use their access and influence to further

the goals of the enterprise—specifically, to secure government contracts on

behalf of FrontPath and the third-party administrators.

63. These predicate acts are related, in that they had the same or

similar purposes, results, participants, victims, and methods of commission.

The predicate acts were continuous and occurred over multiple years,

although the acts were not so connected that they constitute a single event.

64. As a direct and proximate result of FrontPath’s conduct of the

affairs of the enterprise through a pattern of corrupt activity, including the

above-listed predicate acts, Plaintiffs have been injured in their business

and property. Plaintiffs’ injuries include, but are not limited to, suffering

competitive injury, loss of business revenue, and other compensatory

damages in excess of $25,000. Plaintiffs were intended targets of

FrontPath’s wrongful conduct.

20. {¶ 32} In its motion to dismiss, FrontPath argued that Medical Mutual did not

plead its claim with specificity, noting that while Medical Mutual made sweeping

generalizations that government-affiliated trustees used their access and influence to

secure government contracts on behalf of FrontPath, it did not specify a single instance

when the alleged “steering” took place regarding any particular bid or government

contract. Furthermore, FrontPath argued that Medical Mutual failed to sufficiently plead

the existence of an enterprise; FrontPath contends that the conclusory language of the

complaint provides no facts to support an allegation that the unidentified third-party

administrators and public officials ever held or maintained any interest or control in an

ongoing enterprise that was separate and apart from the pattern of corrupt activity.

{¶ 33} In opposing the motion to dismiss, Medical Mutual first argued that the

requirement of an enterprise separate and apart from the pattern of corrupt activity was

eliminated by the Ohio Supreme Court in State v. Beverly, 143 Ohio St.3d 258, 2015-

Ohio-219, 37 N.E.3d 116, syllabus (“The existence of an enterprise, sufficient to sustain a

conviction for engaging in a pattern of corrupt activity under R.C. 2923.32(A)(1), can be

established without proving that the enterprise is a structure separate and distinct from a

pattern of corrupt activity.”). Medical Mutual then argued that the allegations in its

complaint were sufficiently specific because it identified the enterprise participants by

their occupations and roles. By alleging that FrontPath associated with third-party

administrators, public officials, and the government-affiliated trustees, to coordinate bids

21. and use the trustees’ influence to secure public contracts, Medical Mutual asserted that

FrontPath had enough information to be able to identify its own third-party administrators

and the public contracts on which they jointly bid.

{¶ 34} In its reply in support of the motion to dismiss, FrontPath argued that

Medical Mutual misconstrued the holding in Beverly, and that nothing in Beverly

eliminated the requirement to allege the existence both of an enterprise and the connected

pattern of racketeering activity. Moreover, FrontPath contended that Medical Mutual

failed to allege what role the un-named third-party administrators or other government

officials played in the enterprise or how those parties participated, if at all, in the alleged

corrupt activities. Thus, FrontPath concluded that Medical Mutual’s allegations were

nothing more than legal conclusions not sufficient for stating a claim.

{¶ 35} Upon consideration of the parties’ arguments, the trial court granted

FrontPath’s motion to dismiss the Corrupt Practices Act claim. The trial court

acknowledged that Medical Mutual sufficiently alleged a corrupt activity, but noted that

the alleged corrupt activity was the use of a public position to obtain a personal benefit.

However, the trial court found that Medical Mutual did not allege that any governmental

actor benefited personally from his or her service on the FrontPath board. Therefore, the

trial court granted FrontPath’s motion to dismiss.

{¶ 36} On appeal, Medical Mutual focuses exclusively on the trial court’s

determination that the complaint must be dismissed because Medical Mutual did not

22. allege that any government actor received a personal benefit. Medical Mutual argues that

it is not required to allege a personal benefit, and that R.C. 2921.42(A)(1) makes it illegal

for a public official to influence or secure authorization of any public contract in which

“any of the public official’s business associates has an interest.” In this case, Medical

Mutual argues that its allegation of a corrupt activity was sufficient because FrontPath is

a business associate of the public officials who are also the “government-affiliated

trustees.”

{¶ 37} In response, FrontPath does not strenuously contest that the trial court erred

when it determined that Medical Mutual’s complaint failed to state a claim because it did

not allege that the public officials received a personal benefit. Instead, FrontPath again

suggests that Medical Mutual’s complaint was not pled with sufficient specificity.

{¶ 38} Medical Mutual’s argument on appeal addresses only the first of the three

elements required to be alleged with particularity in order to survive a Civ.R. 12(B)(6)

motion to dismiss the Corrupt Practices Act claim. Because we are reviewing the trial

court’s decision de novo, we will address each element in turn, relying upon the

arguments made on appeal and in the trial court.

a. Corrupt Activity

{¶ 39} Under the first element, Medical Mutual was required to allege with

particularity that FrontPath was involved in a corrupt activity. “‘Corrupt activity’ means

engaging in, attempting to engage in, conspiring to engage in, or soliciting, coercing, or

23. intimidating another person to engage in any of the following: * * * (2) Conduct

constituting any of the following: (a) A violation of section * * * 2921.42 * * * of the

Revised Code.” R.C. 2923.31(I)(2)(a).

{¶ 40} In this case, Medical Mutual alleged that FrontPath was involved in at least

two instances of unlawfully, willfully, and knowingly, soliciting and conspiring with

others to violate R.C. 2921.42. R.C. 2921.42(A)(1) states that “No public official shall

knowingly do any of the following: (1) Authorize, or employ the authority or influence

of the public official’s office to secure authorization of any public contract in which the

public official, a member of the public official’s family, or any of the public official’s

business associates has an interest.” Specifically, Medical Mutual alleged that public

officials utilized their authority and influence in the municipal entities to steer public

contracts to FrontPath, for which they served on the board of trustees. Contrary to the

decision of the trial court, we agree with Medical Mutual that the plain language of R.C.

2921.42(A)(1) does not require a showing that the public official received a personal

benefit. We also agree that by virtue of serving on the board of trustees, the public

officials are business associates of FrontPath. Furthermore, we find that FrontPath has an

obvious interest in the public contract that it sought to be awarded. Therefore, we hold

that Medical Mutual sufficiently pled with particularity that FrontPath was engaged in a

corrupt activity.

24. b. Pattern of Corrupt Activity

{¶ 41} Under the second element, Medical Mutual was required to plead with

particularity that FrontPath’s conduct constituted a pattern of corrupt activity. “‘Pattern

of corrupt activity’ means two or more incidents of corrupt activity, whether or not there

has been a prior conviction, that are related to the affairs of the same enterprise, are not

isolated, and are not so closely related to each other and connected in time and place that

they constitute a single event.” R.C. 2923.31(E). “[A] pattern of corrupt activity under

the [Corrupt Practices Act] requires that predicate crimes be related and pose a threat of

continued criminal activity.” Morrow, 183 Ohio App.3d 40, 2009-Ohio-2665, 915

N.E.2d 696, at ¶ 30.

{¶ 42} To determine whether a complaint alleges a pattern, courts should consider

various factors, including “the length of time the racketeering activity existed; the

number of different schemes (the more the better); the number of predicate acts within

each scheme (the more the better); the variety of species of predicate acts (the more the

better); the distinct types of injury (the more the better); the number of victims (the more

the better); and the number of perpetrators (the less the better).” Morrow at ¶ 34, quoting

Columbia Natural Resources, Inc. v. Tatum, 58 F.3d 1101, 1110 (6th Cir.1995); Sun

Bldg. Ltd. Partnership v. Value Learning & Teaching Academy, Inc., 2021-Ohio-2008,

175 N.E.3d 10, ¶ 61 (1st Dist.).

25. {¶ 43} Here, Medical Mutual alleged only that the corrupt activity occurred over

the course of “several years,” and occurred on “multiple occasions.” Medical Mutual

also broadly alleged that the “predicate acts are related, in that they had the same or

similar purposes, results, participants, victims, and methods of commission,” and “[t]he

predicate acts were continuous and occurred over multiple years, although the acts were

not so connected that they constitute a single event.”

{¶ 44} Upon review, we find that Medical Mutual’s allegations as to the existence

of a pattern contain no operative facts, and are merely a recitation of the statutory

language. Medical Mutual does not allege when any of the predicate acts occurred, other

than to say that they occurred continuously over several years, but it does not identify

which years. Likewise, Medical Mutual does not identify any particular contract for

which it submitted a bid, but which was ultimately awarded to FrontPath. Therefore, we

hold that Medical Mutual failed to plead the existence of a pattern of corrupt activity with

specificity. See Fed. Land Bank Assn. v. Walton, 3d Dist. Wyandot No. 16-94-9, 1995

WL 359856, *4 (June 16, 1995) (upholding dismissal of RICO claim where the

complaint asserted legal conclusions, “but no facts or time period to which [it] was

referring”).

c. Enterprise

{¶ 45} For the third element, Medical Mutual was required to plead with

specificity the existence of an enterprise. “‘Enterprise’ includes any individual, sole

26. proprietorship, partnership, limited partnership, corporation, trust, union, government

agency, or other legal entity, or any organization, association, or group of persons

associated in fact although not a legal entity. ‘Enterprise’ includes illicit as well as licit

enterprises.” R.C. 2923.31(C). “The definition of ‘enterprise’ is remarkably open-

ended.” State v. Beverly, 143 Ohio St.3d 258, 2015-Ohio-219, 37 N.E.3d 116, ¶ 8. In

this case, Medical Mutual alleged a de facto, or an “association-in-fact enterprise.” “An

association-in-fact enterprise has been defined as ‘a group of persons associated together

for a common purpose of engaging in a course of conduct.’” Id. at ¶ 9, quoting United

States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981).

{¶ 46} Here, we find that Medical Mutual satisfied its pleading requirement.

Medical Mutual alleged that the enterprise consisted of FrontPath, representatives of the

municipal corporations—at least one of whom was named—, third-party benefits

administrators, and other public officials, and existed to “secure and control the market

for health benefit services in Northwest Ohio.” Medical Mutual further alleged that the

enterprise operated by “FrontPath submit[ting] joint or coordinating bids with third-party

administrators for government contracts, and representatives of the Governmental

Employers and other public officials influenc[ing] the selection of those bids by the

Governmental Employers.” Thus, Medical Mutual demonstrated the existence of a group

of persons engaging in a course of conduct for a common purpose.

27. {¶ 47} In the trial court, FrontPath argued that an enterprise must have “a structure

separate and apart, or distinct, from the pattern of corrupt activity,” citing Dixon v.

Huntington Natl. Bank, 8th Dist. Cuyahoga No. 100572, 2014-Ohio-4079, ¶ 17.

However, the Ohio Supreme Court implicitly rejected this reasoning in Beverly. In that

case, the court held, “the existence of an enterprise, sufficient to sustain a conviction for

engaging in a pattern of corrupt activity under R.C. 2923.32(A)(1), can be established

without proving that the enterprise is a structure separate and distinct from a pattern of

corrupt activity.” Beverly at ¶ 13; see also Boyle v. United States, 556 U.S. 938, 951, 129

S.Ct. 2237, 173 L.Ed.2d 1265 (2009) (“The existence of an association-in-fact is

oftentimes more readily proven by what it does, rather than by abstract analysis of its

structure. * * * [P]roof of a pattern of racketeering activity may be sufficient in a

particular case to permit a jury to infer the existence of an association-in-fact

enterprise.”). Thus, we hold that Medical Mutual was not required to plead an enterprise

having a structure separate and apart from the pattern of corrupt activity, and that

Medical Mutual satisfied its burden to plead the existence of an enterprise with

specificity.

d. Dismissal without Prejudice

{¶ 48} Because we find that Medical Mutual did not plead the existence of a

pattern of corrupt activity with particularity, we hold that the Corrupt Practices Act claim

fails to state a claim upon which relief can be granted.

28. {¶ 49} Notwithstanding that, Medical Mutual alternatively argues that the trial

court erred in dismissing its claim with prejudice and not allowing it to amend the

complaint. We agree. “A trial court’s grant of Civ.R. 12(B)(6) dismissal is without

prejudice except in those cases where the claim cannot be plead in any other way.” STE

Invests., LLC v. Macprep, Ltd., 6th Dist. Ottawa No. OT-21-036, 2022-Ohio-2614, ¶ 16,

quoting Krohn v. Ostafi, 6th Dist. Lucas No. L-19-1002, 2020-Ohio-1536, ¶ 12.

Additionally, “[i]f a motion for failure to state a claim is sustained, ‘leave to amend the

pleading should be granted unless the court determines that allegations of other

statements or facts consistent with the challenged pleading could not possibly cure the

defect.’” State ex rel. Hanson v. Guernsey Cty. Bd. of Commrs., 65 Ohio St.3d 545, 549,

605 N.E.2d 378 (1992), quoting McCormac, Ohio Civil Rules of Practice (2 Ed.1992)

150, Section 6.20. “The [Civil Rules] are structured to allow prompt and summary

disposition of cases at early stages in cases where recovery could not under any

circumstances be made. * * * The spirit of the Civil Rules is the resolution of cases upon

their merits, not upon pleading deficiencies. Civ.R. 1(B) requires that the Civil Rules

shall be applied ‘to effect just results.’ Pleadings are simply an end to that objective.”

Peterson v. Teodosio, 34 Ohio St.2d 161, 174-175, 297 N.E.2d 113 (1973).

{¶ 50} Here, the claim was capable of being pled with more particularity regarding

the alleged pattern of corrupt activity, thereby curing the defect. Consequently, we hold

29. that the trial court erred when it dismissed Medical Mutual’s Corrupt Practices Act claim

with prejudice and denied Medical Mutual leave to amend the complaint.

{¶ 51} Accordingly, Medical Mutual’s first assignment of error is well-taken.

B. Denial of Leave to Amend the Complaint

{¶ 52} Finally, in its third assignment of error, Medical Mutual argues that the trial

court abused its discretion when it denied Medical Mutual’s motion for leave to file a

second amended complaint.

{¶ 53} Relevant here, Civ.R. 15(A) provides that a party may amend its pleading

with the court’s leave. “The court shall freely give leave when justice so requires.” Id.

“While the rule allows for liberal amendment, motions to amend pleadings pursuant to

Civ.R. 15(A) should be refused if there is a showing of bad faith, undue delay, or undue

prejudice to the opposing party.” Turner v. Cent. Local Sch. Dist., 85 Ohio St.3d 95, 99,

706 N.E.2d 1261 (1999), citing Hoover v. Sumlin, 12 Ohio St.3d 1, 465 N.E.2d 377

(1984), paragraph two of the syllabus.

{¶ 54} “A trial court’s denial of a motion for leave to amend a pleading will not be

reversed absent an abuse of discretion.” Leo v. Burge Wrecking, LLC, 2017-Ohio-2690,

89 N.E.3d 1268, ¶ 9 (6th Dist.), citing State ex rel. Askew v. Goldhart, 75 Ohio St.3d 608,

610, 665 N.E.2d 200 (1996). An abuse of discretion connotes that the trial court’s

attitude was unreasonable, arbitrary, or unconscionable. Blakemore v. Blakemore, 5 Ohio

St.3d 217, 219, 450 N.E.2d 1140 (1983).

30. 1. Trial Court’s Judgment Denying the Motion for Leave to Amend

{¶ 55} On January 30, 2020, approximately two and one-half years after the

original complaint was filed, Medical Mutual moved for leave to file its second amended

complaint. Medical Mutual asserted that documents produced in discovery showed that

FrontPath, along with proposed new defendants Don Czerniak and Susan Szymanski,

obtained Medical Mutual’s trade secret information in violation of state and federal trade

secret statutes, including at times while the litigation was pending. Medical Mutual

sought to add the two new defendants to all of the existing claims, and also sought to add

three new claims against all defendants under the Ohio Corrupt Practices Act, Ohio’s

Trade Secrets Act, and the federal Defend Trade Secrets Act. In seeking to add the new

defendants to the existing claims, Medical Mutual recognized that the trial court had

already dismissed Counts I, II, IV, and V, but included those counts for purposes of

protecting the record on appeal.

{¶ 56} In support of its motion, Medical Mutual argued that it had not acted in bad

faith, and that the proposed amended complaint would not cause undue delay or

prejudice. Medical Mutual noted that the active case management order did not provide a

deadline to amend pleadings or add additional parties. Further, Medical Mutual

recognized that discovery was stayed by the court for much of the lawsuit pending

FrontPath’s production of documents. Consequently, at the time of the motion for leave

to amend, neither party had deposed a witness, identified potential experts, or submitted

31. motions for summary judgment. Medical Mutual also argued that the defendants’ alleged

wrongful conduct was only discovered—and could only have been discovered—after a

careful review of the documents produced by FrontPath in 2019, including documents

which showed that some of the alleged conduct occurred while the litigation was

pending. Lastly, Medical Mutual argued that the amended complaint would not

substantially alter the scope of discovery, which already included responsive documents

regarding the claim that FrontPath conspired with third-party administrators, public

officials, and others to secure and control the market for health benefit services in

northwest Ohio. Medical Mutual asserted that the newly added defendants participated in

the scheme, and the newly added claims elaborate on how the defendants accomplished

the goals of the enterprise.

{¶ 57} After briefing by the parties, the trial court entered its judgment on June 16,

2020, denying Medical Mutual’s motion for leave to file a second amended complaint. In

reaching its decision, the trial court found that Medical Mutual’s request to amend the

complaint was untimely, and would be prejudicial to FrontPath and to the proposed

additional defendants. The trial court reasoned that the case has been pending for nearly

three years, and discovery has been ongoing since 2017. The court also noted that

discovery oftentimes has been contentious, and the parties have been litigating and

conducting discovery under a closed set of pleadings since June 14, 2019, when the trial

court granted FrontPath’s Civ.R. 12(B)(6) motion to dismiss as to all of the claims except

32. for tortious interference with a business or contractual relationship. Further, the

discovery deadline has been moved more than once, and the parties have continued to

disagree about the appropriate scope of discovery. The court found that Medical

Mutual’s proposed additional claims would significantly expand the scope of discovery,

and would result in additional pleadings and dispositive motions that would impact the

parties’ ability to comply with the case management schedule. The court noted that the

deadline for mediation was only a few months away, and the parties already anticipate a

tight discovery and dispositive motion practice schedule through the trial date set for

March 2021.

{¶ 58} In addition, the trial court found that Medical Mutual certainly knew of the

identities and alleged involvement of the proposed additional defendants prior to filing its

motion for leave to file the second amended complaint. In support of this finding, the

trial court referenced Medical Mutual’s original claim that FrontPath had an

informational advantage because certain governmental employees were allegedly

“wearing two hats.” Finally, the court found that the prejudice to the proposed additional

defendants would be severe as they would be thrust into the late stages of a case with a

lengthy history, and would be given a very short time under the existing case schedule to

prepare to take discovery, to participate in mediation, and to hire experts.

{¶ 59} Alternatively, the trial court found that the motion for leave to file a second

amended complaint should be denied because the amendment would be futile.

33. Addressing the proposed Corrupt Practices Act claim in Count VI, the trial court found

that the proposed second amended complaint failed to state a claim upon which relief

could be granted.1 Specifically, the trial court found that the second amended complaint

did not allege the existence of a corrupt activity, a pattern of corrupt activity, and an

enterprise.

{¶ 60} As to the existence of a corrupt act and a pattern of corrupt activity, the

trial court found that the second amended complaint generally alleged

at least two predicate acts, including but not limited to, unlawfully,

willfully, and knowingly, soliciting and conspiring with others to violate 18

U.S.C. § 1832, which makes it a crime for Defendants to steal, appropriate,

take, carry away, copy, duplicate, sketch, draw, photograph, download,

upload, alter, destroy, photocopy, replicate, transmit, deliver, send, mail,

communicate, or convey Plaintiffs’ trade secrets in such a way that benefits

anyone other than the Plaintiffs or causes harm to Plaintiffs.

However, the court found that the second amended complaint only specifically alleged

two violations of 18 U.S.C. § 1832, one occurring in 2015, and another occurring in

1 In addition to finding that the proposed Corrupt Practices Act claim in Count VI failed to state a claim upon which relief could be granted, the trial court found that the allegations of violations of the Federal Defend Trade Secrets Act and the Ohio Trade Secrets Act in Counts VII and VIII, respectively, likewise failed to state claims upon which relief could be granted. Regarding those claims, the trial court found that they were barred by the statute of limitations. On appeal, Medical Mutual does not raise any arguments pertaining to those claims, thus we will not address their dismissal by the trial court.

34. 2017. Because the 2015 violation occurred outside of the statute of limitations, the trial

court held that it could not be used as a predicate act for a Corrupt Practices Act claim.

Moreover, the trial court found that Medical Mutual’s allegations reveal a single scheme

to exclude Medical Mutual’s competition in northwest Ohio, and the allegations consist

of one type of predicate act, causing one type of injury, to one victim. Thus, the court

found that the second amended complaint does not allege a pattern of corrupt activity.

{¶ 61} As to the existence of an enterprise, the trial court found that Medical

Mutual’s allegations were vague in that they included no particularities about the

identities of those in the alleged enterprise, nor did they describe the alleged enterprise’s

structure. Furthermore, the court found that Medical Mutual did not allege that there was

an enterprise separate and apart from the corrupt activity.

2. Whether the Second Amended Complaint was Untimely or Unduly Prejudicial

{¶ 62} On appeal, Medical Mutual first argues that its request to file a second

amended complaint was neither untimely nor prejudicial. Upon consideration of the

record and litigation history, we agree.

{¶ 63} The trial court’s decision emphasizes the fact that the litigation had been

pending for almost three years, which we agree is an undesirably long time. But, when

considering whether an attempt to amend a pleading is untimely, we find that the

temporal relationship to the proceedings, rather than the absolute length of time, is of

much greater importance. While prejudice and timeliness are related considerations,

35. “prejudice is the most critical factor to be considered in determining whether to grant

leave to amend.” Musil v. Gerken Materials, Inc., 6th Dist. Lucas No. L-19-1262, 2020-

Ohio-3548, ¶ 25, citing CommuniCare, Inc. v. Wood Cty. Bd. of Commrs., 161 Ohio

App.3d 84, 89, 2005-Ohio-2348, 829 N.E.2d 706, ¶ 17 (6th Dist.). Thus, although

“amendment after an unjustified delay could result in prejudice to the opposing party,”

Zak v. Airhart, 6th Dist. Lucas No. L-21-1052, 2021-Ohio-4399, ¶ 37, an amendment

may not be as prejudicial where it was made without delay or with justified delay.

{¶ 64} In this case, the original complaint was filed on June 27, 2017, and after

being granted an extension, FrontPath answered on August 28, 2017. An initial pretrial

hearing was held on October 5, 2017, at which the parties were granted 60 days to submit

a joint report defining the issues and scope of discovery in preparation of another pretrial

hearing on December 12, 2017. The trial court stayed all discovery until the December

12, 2017 pretrial. Following the December 12, 2017 pretrial, discovery commenced

subject to a joint stipulated protective order concerning confidential material. A

subsequent pretrial was held on March 22, 2018, at which FrontPath was granted

additional time until April 2018 to answer pending interrogatories and to produce

responsive records.

{¶ 65} On May 22, 2018, the trial court held a pretrial at which it established a

preliminary case management order. The preliminary order established a written

discovery deadline of December 7, 2018, and a non-expert discovery deadline of June 3,

36. 2019. The court further ordered that dispositive motions were to be filed by November 4,

2019.

{¶ 66} In August 2018, FrontPath moved for judgment on the pleadings.

Ultimately, Medical Mutual moved to amend its complaint in October 2018, which

FrontPath did not oppose. The trial court granted Medical Mutual’s motion to file the

amended complaint, and the amended complaint was filed on November 5, 2018, thereby

rendering moot FrontPath’s motion for judgment on the pleadings.

{¶ 67} Shortly after the amended complaint was filed, FrontPath moved to dismiss

the amended complaint. The parties litigated the issue, resulting in the trial court’s June

24, 2019 judgment entry dismissing all of Medical Mutual’s claims except for tortious

interference with a contractual or business relationship, which is discussed above in

Medical Mutual’s first and second assignments of error.

{¶ 68} Concurrent with the litigation on the motion to dismiss, on November 26,

2018, FrontPath filed an emergency motion for a protective order regarding Medical

Mutual’s November 20, 2018 subpoenas. The trial court held a hearing on the emergency

motion a few days later, on December 7, 2018. At the December 7, 2018 hearing, the

parties agreed to suspend compliance with all third-party subpoenas. The parties also

recognized that FrontPath was still in the process of responding to additional discovery

requests from Medical Mutual, and that upon such production, Medical Mutual would

then either withdraw the third-party subpoenas, or elect to proceed with the third-party

37. subpoenas, at which time the trial court would hear and decide the emergency motion for

a protective order. The court ordered that all discovery was stayed pending the resolution

of the emergency motion for a protective order, except for FrontPath’s agreed-upon

responses to Medical Mutual’s additional request for documents. On January 7, 2019,

FrontPath served its responses to Medical Mutual’s second combined set of

interrogatories and requests for production of documents.

{¶ 69} A further pretrial was held on April 5, 2019. At that pretrial, the case

management order was amended to provide a new discovery deadline of December 20,

2019. Dispositive motions were ordered to be filed by May 11, 2020, and mediation was

ordered to be completed by June 1, 2020. Jury trial was set for September 14, 2020.

{¶ 70} On June 27, 2019, another pretrial hearing was held. Because the trial

court had just three days earlier granted, in part, FrontPath’s motion to dismiss the

amended complaint, the trial court invited the parties to submit post-hearing briefs to

allow FrontPath to argue why the scope of discovery should be limited, to allow Medical

Mutual to argue why the information it is seeking is relevant and discoverable, and to

allow both parties to address the third-party subpoenas. Following the hearing, on

October 1, 2019, the trial court ordered that Medical Mutual could seek information

pertaining to the names of potential entities that it bid and lost to FrontPath within a five-

year time period, and then discovery would be limited to those entities rather than all

governmental employers for whom FrontPath has provided services. The court further

38. ordered that FrontPath’s provider pricing was in the nature of a trade secret, that it was

not relevant at that time, and thus was not discoverable. Lastly, the trial court approved

FrontPath’s proposed disclosure process to lift the stay on certain third-party discovery.

{¶ 71} Approximately four months after the trial court’s October 1, 2019 order

regarding the scope of discovery, Medical Mutual moved for leave to file its second

amended complaint on January 30, 2020. Subsequent to its motion for leave to file its

second amended complaint, on March 26, 2020, the parties filed a stipulated amendment

to the case management schedule, seeking to extend the existing deadlines by six months.

On March 31, 2020, the trial court amended the case management schedule, setting a new

discovery deadline of June 19, 2020, a mediation deadline of September 1, 2020, and a

dispositive motion deadline of January 11, 2021. Trial was set for March 15, 2021.

{¶ 72} On June 2, 2020 the parties filed a joint status report and stipulation to

amend the case management order. In their filing, the parties noted that they continued to

engage in written discovery, and anticipated supplementing their prior responses to

interrogatories. The parties also commented that although certain depositions had been

previously scheduled, those depositions were cancelled in response to Covid-19.

Recognizing that the current discovery deadline was June 19, 2020, the parties stipulated

to a fact deposition discovery deadline of December 1, 2020. The parties also stipulated

that additional third-party discovery may proceed.

39. {¶ 73} Two weeks later, the trial court denied Medical Mutual’s motion for leave

{¶ 74} In its opposition to Medical Mutual’s motion for leave to amend, FrontPath

cited two cases in support of its argument that Medical Mutual’s second amended

complaint was untimely and prejudicial.

{¶ 75} In the first case, Turner v. Cent. Local Sch. Dist., 85 Ohio St.3d 95, 706

N.E.2d 1261 (1999), the Ohio Supreme Court held that the trial court abused its

discretion when it allowed an untimely motion to amend the answer to assert an

affirmative defense of immunity. In that case, Central moved for summary judgment on

Turner’s negligence claim, arguing that the injury to Turner was not foreseeable.

Summary judgment was awarded to Central, but ultimately reversed on appeal on the

grounds that questions of fact remained. Id. at 96. Upon remand, Central moved to

amend its answer to assert the defense of statutory immunity. Id. The Ohio Supreme

Court reasoned that the motion for leave to amend was untimely and unfairly prejudicial,

noting that it was made two years and ten months after the litigation had commenced, and

after a trial date had been set. Id. at 99. The court also recognized that the motion came

after all experts were in place, and discovery was complete. Id. Lastly, the court was

troubled by the fact that Central did not give a rationale for waiting so long to assert an

obvious defense that “most likely would have terminated the litigation in the first

instance, or at the very least, would have narrowed the issues remaining for resolution.”

40. Id. The Ohio Supreme Court therefore reasoned that the amendment unfairly prejudiced

Turner, who had already been forced to expend time, resources, and money to oppose the

first motion for summary judgment and the appeal therefrom. Id.

{¶ 76} In the second case, Columbia Gas of Ohio, Inc. v. Toledo Edison Co., 6th

Dist. Lucas No. L-14-1263, 2015-Ohio-3942, ¶ 27-28, this court held that the trial court

did not abuse its discretion when it denied the plaintiff’s motion for leave to amend its

complaint. In that case, the motion for leave to amend was filed almost two years after

the original complaint had been filed and after extensive discovery had been conducted,

and one day after the trial court denied the plaintiff’s motion to continue the trial date and

set alternative cut off dates. Id. at ¶ 27. The plaintiff filed its leave to amend less than

one week before the deadline for filing summary judgment motions, and after the

deadlines for disclosing expert witnesses. Id. In affirming the trial court’s denial of the

plaintiff’s motion for leave to amend, this court noted that the plaintiff offered no

explanation for the delay other than vaguely stating that it was necessary to “update and

refine the allegations to conform to the information revealed by discovery.” Id. at ¶ 28.

This court also found that the defendant would be prejudiced because the defendant

would have to file additional pleadings, further discovery would be needed, and the

deadline for filing motions for summary judgment would have to be extended. Id.

{¶ 77} In addition to the cases cited by FrontPath, we have also addressed the

issue of whether an amendment is untimely and unfairly prejudicial in two recent cases.

41. {¶ 78} In Musil, 6th Dist. Lucas No. L-19-1262, 2020-Ohio-3548, at ¶ 23-29, this

court affirmed the trial court’s denial of Musil’s motion for leave to amend the complaint.

In that case, the motion was filed more than a year after the original complaint, more than

eight months after discovery was substantially completed, almost seven weeks after the

defendant filed its motion for summary judgment, and just two months before the trial

date. Id. at ¶ 28. This court reasoned that Musil knew of the facts giving rise to his

amended complaint for more than eight months before filing his motion, and that “the

costs of continued litigation, both in terms of time and resources, constitutes prejudice to

[the defendant] where [Musil] waited to file a motion for leave to amend until after [the

defendant] filed a meritorious motion for summary judgment.” Id. at ¶ 29.

{¶ 79} Similarly, in Zak, 6th Dist. Lucas No. L-21-1052, 2021-Ohio-4399, at ¶ 29-

40, this court affirmed the denial of a motion for leave to amend the answer to plead

statute of limitations as an affirmative defense. In Zak, the defendant did not raise the

statute of limitations in his motion for summary judgment, and only raised it for the first

time in his reply in support of his motion for summary judgment. The trial court denied

the defendant’s motion for summary judgment, finding that he waived the statute of

limitations defense. Thereafter, less than a month before the trial date, the defendant

filed a motion for leave to amend his answer to assert the statute of limitations defense.

The trial court denied the motion, finding that it would jeopardize the trial date and would

require a reopening of discovery to address the new defense. On appeal, this court

42. affirmed, holding that the trial court did not abuse its discretion in denying leave to plead

an “eleventh hour affirmative defense.” Id. at ¶ 39. This court reasoned, “To require

amendment in such circumstances would subject an opposing party to piecemeal motions

that delay trial and force duplication of time and resources in responding to the newly

asserted defenses.” Id.

{¶ 80} In contrast, in Christ v. Konski, 181 Ohio App.3d 682, 2009-Ohio-1460,

910 N.E.2d 520 (6th Dist.), this court reversed the trial court’s judgment vacating its own

prior order to grant the appellant’s motion for leave to amend his complaint to add a new

party defendant. In Christ, the original complaint was filed on August 9, 2005, then

voluntarily dismissed, and re-filed on January 7, 2008. Id. at ¶ 5-6. The refiled

complaint was intended “to reflect the intervening death of Christ, as well as to curtail the

volume of defendants named in the refiled action.” Id. at ¶ 6. On June 11, 2008, the

appellant deposed one of the defendant’s medical expert witnesses, and based on that

testimony sought to add an additional defendant. Id. at ¶ 7-8. The trial court initially

granted the motion for leave to amend the complaint, and at the same time vacated the

scheduled August 18, 2008 trial date. The defendant then sought relief from that

judgment, arguing that the motion for leave to amend was untimely and unduly

prejudicial, and asserting that vacating the trial date would adversely affect the

defendant’s patient care, ability to earn a living, and insurance status. Id. ¶ 10. The trial

court adopted the defendant’s arguments without limitation, vacated its previous order,

43. and struck the amended complaint from the record. However, the trial court affirmed its

prior order vacating the trial date. Id. at ¶ 11.

{¶ 81} On appeal, this court reversed the decision of the trial court, finding that it

was unreasonable and arbitrary. This court reasoned that the appellant’s motion was not

untimely, as it was filed within a week of the deposition where it learned of the basis for

adding the new defendant. Furthermore, this court recognized that while adding a new

defendant may involve inconvenience in the form of additional discovery and the

continuation of the trial date, there was nothing in the record to establish undue, actual

prejudice. Id. at ¶ 18. To the contrary, this court stated, “barring appellant from pursuing

action against the pathologist whom appellee’s own expert witness believes breached the

standard of care with adverse consequences to decedent would constitute extreme actual

prejudice.” Id. Thus, this court held that the trial court abused its discretion because

neither unreasonable delay nor actual prejudice were shown, and because the trial court

simply adopted the arguments of the defendant yet those arguments contradicted the

portion of the judgment that vacated the trial date. Id. at ¶ 19.

{¶ 82} Upon review, the facts of this case are much more closely aligned to Christ,

than to Turner, Columbia Gas, Musil, or Zak. Here, the motion for leave to amend was

not filed on the eve of trial, after discovery had been completed, and either after

dispositive motions had been made or were just about to be made. To the contrary,

discovery was ongoing, and would later be extended by stipulation twice for almost

44. another year after the motion for leave to amend was filed. At the time the trial court

denied Medical Mutual’s motion for leave to amend, no depositions had been taken, and

the parties contemplated that discovery would continue for at least another six months,

and dispositive motions were not due for approximately seven months. In addition, third-

party discovery in this complex case had only begun four months earlier, and had not to

that point received much response. This is not a case where Medical Mutual dilatorily sat

upon information, then sought to amend its complaint at a late stage. Instead, the record

shows that Medical Mutual sought to amend its complaint as it received new information

from the protracted and ongoing discovery provided by FrontPath.

{¶ 83} Nor do we find reasonable the trial court’s conclusion that Medical Mutual

knew of the identity and alleged involvement of the proposed additional defendants at the

time of the original complaint. In so concluding, the trial court referenced Medical

Mutual’s general allegation that FrontPath had an informational advantage because some

governmental employees were “wearing two hats.” However, a general allegation of an

informational advantage does not mean that Medical Mutual knew or could have known

that the proposed additional defendants were stealing Medical Mutual’s trade secret

pricing information as alleged in the second amended complaint. Furthermore, the trial

court’s conclusion that the proposed additional defendants would be unduly prejudiced

by being added to the lawsuit is unreasonable. A new defendant is always prejudiced by

having to defend against allegations in court, and such a defense would certainly be

45. burdensome in complex cases. However, that prejudice is not unfair where the facts

underlying the allegation were discovered, and motion for leave to amend was filed, at a

relatively early stage of the litigation. Indeed, it would be monumentally more unfair to

not allow a plaintiff to seek recovery against a defendant for wrongdoing simply because

it would be expensive and burdensome for the defendant to have to defend himself or

herself.

{¶ 84} Finally, while amending the complaint would have expanded the scope of

discovery relative to FrontPath—although it is unclear to us how significantly it would

have expanded the scope given that the proposed additional claims arose out of the same

transactions as the claims in the original and amended complaints for which written

discovery had been ongoing, and given that it would not have required a second round of

depositions because no depositions had yet occurred—that expansion was largely due to

the trial court’s prior erroneous dismissal with prejudice of Medical Mutual’s claims.

{¶ 85} Thus, while we recognize that the addition of new claims and defendants

would result in the inconvenience and cost of additional pleadings and discovery, we hold

that it is not unduly prejudicial to FrontPath, or the proposed additional defendants, where

the information was learned during the course of the litigation, and the motion for leave

to amend the complaint was made while the litigation was still in the discovery phase and

months before any dispositive motions were due to be filed. Therefore, we hold that the

46. trial court abused its discretion when it denied Medical Mutual’s motion for leave to file

its second amended complaint as untimely and unduly prejudicial.

3. Whether the Second Amended Complaint was Futile

{¶ 86} Alternatively, the trial court justified its denial of Medical Mutual’s motion

for leave to amend on the basis that the motion was futile because the second amended

complaint failed to state a claim upon which relief could be granted.

{¶ 87} “Where a plaintiff fails to make a prima facie showing of support for new

matters sought to be pleaded, a trial court acts within its discretion to deny a motion to

amend the pleading.” Wilmington Steel Prods., Inc. v. Cleveland Elec. Illuminating Co.,

60 Ohio St.3d 120, 573 N.E.2d 622 (1991), syllabus. This consideration “is meant to aid

in determining whether the amendment is ‘simply a delaying tactic, [or] one which would

cause prejudice to the defendant.’” Darby v. A-Best Prods. Co., 102 Ohio St.3d 410,

2004-Ohio-3720, 811 N.E.2d 1117, ¶ 20. Because consideration of whether a proposed

claim would survive a motion to dismiss is a legal issue, we review de novo the trial

court’s denial of the motion for leave to amend the complaint on this basis. Hollinghead

v. Bey, 6th Dist. Lucas No. L-99-1351, 2000 WL 1005205, *8 (July 21, 2000), citing

Marx v. Ohio State Univ. College of Dentistry, 10th Dist. Franklin No. 95APE07-872,

1996 WL 87462, *3 (Feb. 27, 1996).

47. {¶ 88} Having already discussed the elements of a Corrupt Practices Act claim in

Medical Mutual’s first assignment of error, we will address the elements in a truncated

fashion.

{¶ 89} In its judgment entry, the trial court found that Medical Mutual only

specifically alleged two corrupt activities, those being violations of the federal Defending

Trade Secrets Act and its Ohio counterpart, but that one of the corrupt activities occurred

before the Defending Trade Secrets Act was enacted. However, the trial court did not

consider the other parts of the second amended complaint, which were incorporated by

reference, and which alleged that the defendants also violated the Ohio ethics laws under

R.C. 2921.42(A)(1). Thus, the second amended complaint sufficiently alleged a corrupt

activity.

b. Pattern of Corrupt Activity

{¶ 90} As to the pattern of corrupt activity, the trial court found that Medical

Mutual alleged a single scheme to exclude its competition in northwest Ohio, and that the

scheme consisted of only one type of predicate act causing only one type of injury to only

one victim. The trial court reasoned that this type of allegation was insufficient to

constitute a pattern of corrupt activity. Again, the trial court did not consider the other

allegations in the complaint.

48. {¶ 91} In this case, Medical Mutual alleged that FrontPath and others engaged in

multiple acts violating R.C. 2921.42(A)(1) and the federal Defend Trade Secrets Act and

its Ohio counterpart, that those acts were in furtherance of the goal to secure public

contracts for FrontPath and its third-party administrative partners, that those activities

occurred on multiple instances with multiple government entities over a course of years,

and that those activities culminated in FrontPath being awarded multiple public contracts.

Unlike the amended complaint, the second amended complaint provided specific

allegations that certain actors took certain actions in 2015, 2017, and 2019.2 Taking these

allegations as true, and construing any reasonable inferences from them, we hold that the

second amended complaint sufficiently alleged a pattern of corrupt activity.

{¶ 92} Finally, the trial court found that the second amended complaint

“include[d] no particularities about the identities of those in the alleged association-in-

fact enterprise, nor do they describe the alleged enterprise’s structure.” As with the other

two elements, the trial court did not consider the entirety of the allegations in the second

amended complaint.

{¶ 93} Medical Mutual alleged that the enterprise consisted of: “among others,

representatives of the Governmental Employers, third-party administrators, other public

2 The second amended complaint was filed under seal. We have reviewed the second amended complaint, but because of the confidentiality of the document, we will not repeat the specific allegations.

49. officials, consultants and others and exists to secure and control the market for health

benefit services in Northwest Ohio.” The factual allegations in the complaint, however,

specifically name FrontPath, the proposed additional defendants, the third-party

administrator HealthScope, and several other named individuals as being involved. Thus,

we hold that the second amended complaint sufficiently alleged the existence of an

{¶ 94} Therefore, because the second amended complaint alleged with

particularity the existence of a corrupt activity, a pattern of corrupt activity, and an

enterprise, we hold that the second amended complaint was not futile.

4. Relief Limited

{¶ 95} In sum, because the second amended complaint was not untimely or unduly

prejudicial, and because it was not futile, we hold that the trial court abused its discretion

when it denied Medical Mutual’s motion for leave to amend.

{¶ 96} However, the scope of Medical Mutual’s third assignment of error only

pertains to the additional new defendants, Donald Czerniak and Susan Szymanski.

App.R. 12(A)(1)(b) mandates that “a court of appeals shall * * * [d]etermine the appeal

on its merits on the assignments of error set forth in the briefs under App.R. 16 * * *.”

For this reason, it is well settled that “[a]ppellate courts determine appeals on the basis of

assignments of error rather than arguments in support of assignments of error.” Bodager

v. Campbell, 4th Dist. Pike No. 12CA828, 2013-Ohio-4650, ¶ 32; see also Jensen v.

50. AdChoice, Inc., 6th Dist. Lucas No. L-14-1014, 2014-Ohio-5590, ¶ 23, fn. 4, quoting

Bonn v. Bonn, 10th Dist. Franklin No. 12AP-1047, 2013-Ohio-2313, ¶ 9 (Refusing to

consider an issue that was “not raise[d] * * * as part of [appellant’s] assignment of error *

* *” because “‘this court rules on assignments of error only, and will not address mere

arguments.’”); Evans v. Ohio Dept. of Rehab. & Corr., 10th Dist. Franklin No. 18AP-

713, 2019-Ohio-3788, ¶ 11, fn. 2 (Refusing to consider an issue that “does not correlate

with [appellant’s] sole assignment of error” because appellate courts must “determine

appeals based on assignments of error, not mere arguments * * *.”).

{¶ 97} Here, the third assignment of error asserts: “The trial court erred by

denying MMO’s motion for leave to amend its complaint to assert claims against new

defendants Donald Czerniak and Susan Szymanski.” (Emphasis added.)

{¶ 98} Our decision is therefore confined to resolution of this assigned error.

{¶ 99} Accordingly, Medical Mutual’s third assignment of error is well-taken.

IV. Conclusion

{¶ 100} For the foregoing reasons, we find that substantial justice has not been

done the party complaining. The trial court erroneously dismissed with prejudice

Medical Mutual’s civil liability for a criminal act and Corrupt Practices Act claims. The

trial court abused its discretion when it denied Medical Mutual’s motion for leave to

amend the complaint to assert claims against new defendants Daniel Czerniak and Susan

Szymanski. Therefore, as described above, the June 24, 2019, and June 16, 2020

51. judgments of the Lucas County Court of Common Pleas are reversed. This matter is

remanded to the trial court for further proceedings consistent with this decision.

FrontPath is ordered to pay the costs of this appeal pursuant to App.R. 24.

Judgments reversed and remanded.

A certified copy of this entry shall constitute the mandate pursuant to App.R. 27. See also 6th Dist.Loc.App.R. 4.

Mark L. Pietrykowski, J. ____________________________ JUDGE Thomas J. Osowik, J. ____________________________ Christine E. Mayle, J. JUDGE CONCUR. ____________________________ JUDGE

This decision is subject to further editing by the Supreme Court of Ohio’s Reporter of Decisions. Parties interested in viewing the final reported version are advised to visit the Ohio Supreme Court’s web site at: http://www.supremecourt.ohio.gov/ROD/docs/.

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