Home Orthopedics Corp. v. Rodriguez, 781 F.3d 521

Home Orthopedics, a Puerto Rico medical equipment supplier, signed a 2005 "Letter of Agreement" (sent by Clinical Medical's president Raúl Rodríguez) reducing reimbursement rates and agreeing to pay a consultant commission to Raúl and Clinical Medical.
The HMO later disavowed having signed that agreement; Home Orthopedics stopped paying the commission when it learned the contract was not genuine, prompting Raúl and Clinical Medical executives to demand payment and threaten Home Orthopedics' business.
After Home Orthopedics partially paid under duress and then refused further payments, several managed-care organizations and insurers (including Medical Card System, First Medical, and Humana) terminated or cancelled contracts with Home Orthopedics.
Home Orthopedics sued various defendants in federal court asserting numerous claims, principally a RICO claim alleging extortion, mail and wire fraud as predicate acts forming a pattern of racketeering activity.
The district court dismissed the federal claims with prejudice (RICO claim under 18 U.S.C. § 1962(c) among them), finding the complaint failed to plead a RICO ‘‘pattern’’ (continuity), and denied Home Orthopedics leave to amend or limited discovery.
The First Circuit affirms, holding Home Orthopedics alleged at most a single, narrow scheme aimed at extracting a discrete sum from a single victim, insufficient to show closed- or open-ended RICO continuity; denial of amendment/discovery was not an abuse of discretion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether complaint adequately alleged a RICO "pattern" (continuity) under §1962(c)	The alleged extortion, mail and wire fraud, and other acts form multiple predicate acts showing a pattern targeting Home Orthopedics	The acts arise from a single scheme to collect a discrete debt from one victim and thus do not show continuity	Held for defendants: plaintiff failed to plead closed- or open-ended continuity; RICO claim dismissed
Whether the enterprise and association-in-fact allegations were sufficient (focus on Juliá)	Enterprise membership and coordinated conduct were adequately pleaded	Allegations were too conclusory to show Juliá partook in an enterprise	Court agreed the enterprise allegations were insufficient as pleaded
Whether plaintiff should get leave to amend complaint	Amendment could add facts showing wider scheme and continuity; discovery needed from defendants	Amendment would be futile; plaintiff failed to show what discovery would produce	Denial of leave to amend and limited discovery affirmed as not an abuse of discretion
Whether discovery should have been allowed before dismissal	Discovery would flesh out fraud/conspiracy details and support RICO pattern	Complaint fails on its face to allege pattern; Becher inapposite because heightened Rule 9(b) context differs	Court found plaintiff waived/failed to develop argument; denial proper

United States v. Turkette, 452 U.S. 576 (1981) (RICO enacted to combat organized crime and enduring criminal conduct)
H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (1989) (pattern requires related predicates and either closed- or open-ended continuity)
Giuliano v. Fulton, 399 F.3d 381 (1st Cir. 2005) (continuity analysis, relatedness and duration factors)
Efron v. Embassy Suites (P.R.), Inc., 223 F.3d 12 (1st Cir. 2000) (single-scheme/finite goal defeats closed continuity)
González-Morales v. Hernández-Arencibia, 221 F.3d 45 (1st Cir. 2000) (single episode tied to a contract does not establish RICO continuity)
Fleet Credit Corp. v. Sion, 893 F.2d 441 (1st Cir. 1990) (example where many acts over years satisfied closed continuity)
Pruell v. Caritas Christi, 678 F.3d 10 (1st Cir. 2012) (leave to amend where claim appears plausible and factual development likely)
New England Data Servs., Inc. v. Becher, 829 F.2d 286 (1st Cir. 1987) (discovery may be warranted to develop fraud allegations under Rule 9(b))