United States District Court, D. Idaho
NORTHWEST OSTEOSCREENING, INC., an Idaho corporation, directly and derivatively in its capacity as a member of IDAHO HEALTH SCREENINGS AND VACCINATIONS, LLC, an Idaho limited liability company, PREVENTATIVE HEALTH, LLC, an Idaho limited liability company, and DANIELLE BENNION, Plaintiffs,
MOUNTAIN VIEW HOSPTIAL, LLC, a Delaware limited liability company, BENJAMIN WOOD, JAMES ADAMSON, JOSH TOLMAN, SIASCONSET, LLC, an Oregon limited liability company, PREVENTATIVE HEALTH, LLC, a Delaware limited liability company, WELLNESS SCREENINGS, LLC, an Idaho limited liability company, and DOE ENTITIES I-X, Defendants.
MEMORANDUM DECISION AND ORDER
B. LYNN WINMILL, District Judge.
Plaintiffs brought suit against Defendants under the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968, and various Idaho laws. Underlying the RICO claims are Plaintiffs' allegations that Defendants committed extortion and wire fraud in order to assume Plaintiffs' interests in a preventative health screening company, Idaho Health Screenings and Vaccinations, LLC ("IHSV").
Defendants move to dismiss Plaintiffs RICO claims for failure to state a claim, and to dismiss the pendant state law claims without prejudice. See 28 U.S.C. § 1367(c)(3); Fed. R. Civ. P. 12(b)(6). Because Plaintiffs have failed to plead facts establishing an essential element of their substantive RICO claim-a "pattern of racketeering activity"- the Court will grant Defendants' motion to dismiss.
Since about 2001, Plaintiff Danielle Bennion has owned and operated Plaintiff Northwest Osteoscreenings, Inc. ("Northwest Osteo") to offer health screening services, such as blood pressure checks and body mass index calculations, and vaccinations to businesses and government entities in Idaho. Because it was not a "credentialed provider" within the meaning of Idaho insurance regulations and most insurance policies, Northwest Osteo could not bill its patients' insurance providers for the services it performed. Instead, Northwest Osteo billed patients or their employers directly.
In January 2011, Bennion joined Defendant Mountain View Hospital, LLC ("MVH") as its director of government affairs. In this capacity, Bennion developed a professional relationship with Defendant James Adamson, the CEO of MVH. Around the same time, a provision of the Affordable Care Act eliminated deductibles, co-insurance, and co-payments from new and existing health insurance plans for many preventative health care services. See 42 U.S.C. § 300gg-13(a).
Bennion viewed this change as a business opportunity. She approached Adamson and proposed a collaboration between Northwest Osteo and MVH. Under her plan, Northwest Osteo would perform on-site preventative health services, and MVH, as a "credentialed provider, " would bill the patients' insurance providers for the services. The two corporations would split the insurance revenue. Adamson was intrigued by Bennion's proposal.
Together with Defendant Benjamin Wood, an attorney with whom Adamson had a relationship, and Defendant Josh Tolman, MVH's then vice president, Adamson and Bennion moved forward with the proposal. Defendants represented to Bennion that MVH had the staff and expertise necessary to correctly and expediently bill for health screening services and vaccinations. However, to ensure a timely distribution of revenue, Adamson insisted that a new corporation be formed. Adamson assured Bennion that Wood would handle the task because he was licensed in Idaho. On March 28, 2011, Wood formed IHSV for that purpose.
Ownership of IHSV was split. Bennion, through Northwest Osteo, owned a fifty-percent interest in IHSV. Wood, Tolman, and-unbeknownst to Bennion-Adamson owned the remaining fifty-percent interest through a series of corporate members, the last of which was Defendant Siasconset. IHSV's operating agreement named Bennion and Wood as managers. Dkt. 16, ex. 2. For her work as manager, Bennion was to be paid $150.00 an hour.
On May 1, 2011, IHSV and MVH entered into an exclusive contract in accordance with Bennion's proposal. Under the contract, IHSV would receive seventy percent of the insurance revenue, and MVH would retain the remaining thirty percent. In the months that followed, IHSV prospered. It grew a large client base and generated a significant stream of revenue.
When they learned exactly how much revenue IHSV had been generating, Adamson, Wood, and Tolman decided to oust Bennion from IHSV. On August 10, 2011, Wood flew to Boise to meet with Bennion. Because MVH had not paid IHSV the revenue it was owed under the contract, IHSV needed a cash infusion from its members. Wood informed Bennion that Adamson had offered to cover Northwest Osteo's half of the contribution ($15, 000) in exchange for an ownership interest in IHSV. Bennion declined the offer.
The following month, Wood sent a "management agreement" to Bennion. Under the agreement, Bennion would be removed as manager of IHSV and replaced by personnel from a management corporation controlled by Adamson, Wood, and Tolman. Initially, Bennion refused to sign the agreement. Bennion's refusal prompted from Adamson a profanity-laced tirade, during which Adamson threatened to fire Bennion from her position as director of government affairs for MVH, terminate the contract between IHSV and MVH, and destroy Bennion's professional reputation unless she signed the management agreement. Additionally, Adamson accused Bennion of misusing MVH funds for personal purposes, which Bennion later disproved. Feeling scared and trapped, Bennion submitted to Adamson's demands and resigned her position as co-manager of IHSV on September 26, 2011.
Following Bennion's resignation, Woods offered to purchase eighty-five percent of Northwest Osteo's ownership ...