Allstate Insurance Company v. Michael Plamb, 2015 U.S. App. LEXIS 16571

Background

Allstate sued a network of telemarketers, chiropractic clinics, and affiliated law firms alleging a coordinated scheme to recruit not-at-fault accident victims, provide unnecessary chiropractic care, and present inflated third-party insurance claims in violation of RICO and state law.
The scheme involved MPS (telemarketing), CSG (clinics), PMG/LON (law-office support), and principals (Plambeck, Friedman, Toca) who coordinated referrals, training, billing, and settlement processing; patients signed assignments and often received standardized, repetitive care supported by poor or unnecessary x‑rays.
After a multi-year investigation and trial, the jury found RICO liability (federal and Ohio) and fraud/unjust enrichment on 391 of 555 contested claims (originally 721); the district court awarded actual and treble damages under RICO and denied prejudgment interest.
Allstate sought roughly $1.9M in attorney’s fees; the district court found hourly rates and hours reasonable but reduced the award to 54% ($1,027,623.65) because Allstate prevailed on about 54% of the originally contested claims.
Both sides appealed: defendants challenged sufficiency of evidence on enterprise, causation, damages, statute of limitations, and expert testimony; Allstate challenged denial of prejudgment interest and the fee reduction.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Existence of an "association‑in‑fact" enterprise under RICO	The defendants formed an ongoing, hierarchical organization (MPS, CSG, PMG/LON) with a common purpose to generate insurer payments	No separate enterprise apart from the racketeering; shared purpose limited to committing fraud; some defendants had only limited roles	Court upheld enterprise: evidence showed ongoing organization, continuity, shared purpose (illegitimate purpose permissible); no plain error
Participation/operation by mid‑level actors (Toca, Friedman, Plambeck)	These defendants actively supervised/refined scheme (training, scripts, settlement direction) and thus participated in operation/management	Lacked direct involvement with bad x‑rays; insufficient to show operation/management	Court held they participated in operation/management; liability does not require direct handling of x‑rays
Causation (but‑for and proximate) for RICO claims	Allstate: enterprise targeted insurers; payments to insurers were foreseeable and were the object of the scheme	Defendants: payments were not directly caused by defendants; reliance not shown	Court: proximate and but‑for causation satisfied under Bridge; reliance not required for mail/wire‑fraud‑based RICO claims
Damages sufficiency (showing payments were for unnecessary care)	Experts reviewed all files and itemized settlement allocations; jury instructed to award only for unreasonable services tied to deficient x‑rays	Receivable Finance argued Allstate failed to show on a file‑by‑file basis that payments were solely for unnecessary services	Court affirmed: evidence (including expert review and verdict linkage to deficient x‑rays) sufficed; distinguishes Receivable Finance

Key Cases Cited

Allstate Ins. Co. v. Receivable Fin. Co., 501 F.3d 398 (5th Cir.) (discusses damages proof and reliance issues in prior Allstate litigation)
Boyle v. United States, 556 U.S. 938 (2009) (definitions and proof of association‑in‑fact enterprises)
Turkette, 452 U.S. 576 (1981) (enterprise and pattern distinction in RICO)
Reves v. Ernst & Young, 507 U.S. 170 (1993) (who ‘‘operates’’ an enterprise for RICO liability)
Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) (mail/wire fraud RICO claims do not require plaintiff reliance; proximate cause guidance)
Hensley v. Eckerhart, 461 U.S. 424 (1983) (fee awards may be reduced to reflect limited success)
Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (trial court’s gatekeeping role for expert testimony)
Farrar v. Hobby, 506 U.S. 103 (1992) (degree of success affects fee awards)