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November 6, 2001


The opinion of the court was delivered by: Henderson, District Judge.


This matter came before the Court on November 5, 2001, on (1) defendants' motion to dismiss plaintiffs second amended complaint, and vacate the June 15, 2001 partial summary judgment order, and (2) Plaintiff's motion for permanent injunction over state-law claims asserted by patient and restitution. Having carefully considered the written and oral arguments of counsel, the governing legal authority, and the record herein, the Court grants defendants' motion to dismiss in part, vacates the June 15, 2001 partial summary judgment ruling, and remands this action to the Superior Court for the County of San Francisco. The Court does not reach plaintiffs motion for injunctive relief and restitution.


As set forth in the complaint, the basic facts underlying this case are as follows: Plaintiff, Marina Grauberger, was injured in an automobile accident on January 14, 1998. She was treated for her injuries by defendant, St. Francis Hospital. Her insurer, Blue Cross, paid the hospital its negotiated rates in full except for the deductible amounts and co-payments, which plaintiff paid itself. Plaintiff later sued the driver who allegedly caused the accident ("tortfeasor"). St. Francis hospital then filed a lien in that action pursuant to the Hospital Lien Act ("HLA"), Calif. Civil Code §§ 3045.1-3045.6, seeking to recover the difference between St. Francis "normal rates" and the lower, negotiated rates that it charged plaintiff pursuant to her Blue Cross plan. The tortfeasor and plaintiff settled for $100,000. Plaintiff, however, disputed the validity of lien. Accordingly, the parties agreed to place the disputed amount at issue ($31,747.74) in trust pending litigation of the matter.

On March 17, 2000, plaintiff filed the instant action in San Francisco Superior Court challenging the validity of the lien on numerous grounds. Defendants removed the action to federal court on the ground that plaintiffs first amended complaint asserted a federal question under the Racketeer Influenced and Corrupt Organizations Acto ("RICO"), 18 U.S.C. § 1961 et seq. Thereafter, defendants moved to dismiss the complaint on the grounds that the RICO claim failed as a matter of law, that the state law claims were preempted by ERISA and barred by privilege, and that the state law claims were otherwise defective as a matter of law. The Honorable Judge Charles Legge, who was presiding over the case at the time,*fn1 decided to defer ruling on the motion to dismiss, and to instead address the legal question of the validity of the lien. He informed the parties that if he ruled in defendants' favor on this legal issue, it would effectively end the case, and that if he ruled for plaintiff on this issue, he would return to the issues raised by defendants' motion to dismiss.

On June 15, 2001, Judge Legge ruled that the HLA did not authorize the lien at issue and ordered that the $31,747.74 held in trust be released to plaintiff. He did not, however, rule on the legal sufficiency of any of the claims asserted in the complaint. Shortly thereafter, defendants renewed their motion to dismiss this action on the same grounds asserted in their original motion. They further argue that, if the court finds that it lacks federal question jurisdiction, and declines supplemental jurisdiction, the June 15, 2001 order should be vacated. Plaintiff simultaneously moves for a permanent injunction and restitution.


A. Defendants' Motion to Dimiss*fn2

1. RICO Claim

Under well settled law, a plaintiff seeking to assert a RICO claim must demonstrate (1) the conduct, (2) of an enterprise, (3) through a pattern; (4) of racketeering activity. Sun Sav. and Loan Ass'n v. Dierdorff, 825 F.2d 187, 191 (9th Cir. 1987). In addition, other requirements apply to the specific subsections of RICO. See 18 U.S.C. § 1962 (a), (b), (c), (d). For the reasons set forth below, the Court finds that plaintiff can not satisfactorily allege any racketeering activity, a necessary element of any RICO claim. In addition, plaintiffs RICO claim suffers from other defects as well.

(a) Racketeering Activity

Racketeering activity "is any act indictable under various provisions of 18 U.S.C. § 1961." Forsyth v. Humana, Inc., 114 F.3d 1467, 1481 (9th Cir. 1997). In other words, the racketeering activity must amount to, or pose a threat of, continued criminal activity. Here, plaintiff contends that defendants' conduct constitutes racketeering because it constitutes mail fraud, 18 U.S.C. § 1341, and extortion under the Hobbs Act, 18 U.S.C. § 1951.

As an initial matter, plaintiffs general and conclusory assertions of "fraudulent liens" and a "double billing scheme," see SAC ¶ 36, are insufficient to show that defendants engaged in "racketeering activity." See e.g. Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988) (conclusory allegations of fraud that do not comply with Fed.R.Civ.P. 9(b) particularity requirements are a "fatal defect" when seeking to sustain a RICO claim); Pillsbury, Madison & Sutro v. Lerner, 31 F.3d 924, 928 (9th Cir. 1994) ("conclusory allegations without more are insufficient to defeat a motion to dismiss for failure to state a claim"); Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1400 (9th Cir. 1986) (RICO claim based on fraud must be plead with particularity sufficient to satisfy Fed. R.Civ. p. 9(b)).

Even if the Court considers the more detailed allegations set forth in plaintiffs RICO case statement and opposition papers, it is plain that plaintiff can not satisfactorily allege either mail fraud or a violation of the Hobbs Act. With respect to mail fraud, plaintiff must prove a scheme to defraud with the specific intent to defraud. Forsyth, 114 F.3d at 1480; 18 U.S.C. ยง 1341. Plaintiff asserts that the lien filed by St. Francis Hospital (through the mail) was a "fraudulent lien" because defendants knew the amount stated on the bill exceeded the amount that it had agreed to accept pursuant to Grauberger's insurance contract, and therefore was excessive and constituted double billing. ...

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