Case Information
*2 Before: BECKER and MANSMANN, Circuit Judges, and BROTMAN, District Judge.* (Filed September 12, 1996) ___________
Jeffrey C. Dohrmann, Esquire (ARGUED)
Rieders, Travis, Mussina,
Humphrey & Harris
161 West Third Street
P.O. Box 215
Williamsport, PA 17703
COUNSEL FOR APPELLANT
Deborah Martin-Norcross, Esquire
Stephen R. Wirth, Esquire
Roger S. Kaplan, Esquire (ARGUED)
Jackson Lewis, Schnitzler & Krupman
101 Park Avenue
37th Floor
New York, NY 10178-3898
* Honorable Stanley S. Brotman of the United States District Court for the District of New Jersey, sitting by designation.
Kevin C. Quinn, Esquire
Elliott, Reihner, Siedzikowski,
North & Egan
400 Spruce Street
300 Mellon Bank Building
Scranton, PA 18503
COUNSEL FOR APPELLEES BERWICK HEALTHCARE, BERWICK HOSPITAL CENTER, ALEX KERIS, HENRY MANDEL, DAVID MATISSE, THOMAS SPATT, THE BOARD OF DIRECTORS OF THE BERWICK HEALTHCARE CORPORATION Sidney R. Steinberg, Esquire
Jonathan P. Sprague, Esquire (ARGUED)
Post & Schell
1800 JFK Boulevard
19th Floor
Philadelphia, PA 19103
COUNSEL FOR APPELLEE WYOMING VALLEY
HEALTH CARE SYSTEM, INC.
Robert J. Gillespie, Jr., Esquire
Joseph C. Zola, Esquire (ARGUED)
Mylotte, David & Fitzpatrick
Bicentennial Building
15 Public Square
Suite 200
Wilkes-Barre, PA 18701-1797
COUNSEL FOR DAVID KASPUTIS
___________
OPINION OF THE COURT __________
MANSMANN, Circuit Judge.
In this civil RICO complaint, Robert A. Rehkop alleged
that he was discharged from his position as a Certified
Registered Nurse Anesthetist in retaliation for refusing to
complete what he contends were fraudulent Medicare, Medicaid, and
Medical Assistance forms and for reporting this activity to the
FBI. The district court dismissed the complaint, holding that
Rehkop did not suffer an injury "substantially caused" by the
RICO enterprise pursuant to 18 U.S.C. § 1962(c). The court
further dismissed the section 1962(d) conspiracy count, after
finding Rehkop's claim under section 1962(c) deficient.
We hold that the district court correctly dismissed the
section 1962(c) count. Nonetheless, in light of our opinion in
Shearin v. E.F. Hutton Group, Inc.,
I.
In January of 1990, Rehkop was hired as a Certified Registered Nurse Anesthetist by the Berwick Healthcare Corporation to provide services at the Berwick Hospital Center. Berwick Hospital Center provided anesthesia services to the public, participating in Medicare, Medicaid and Medical Assistance as these programs are established and administered by the United States of America and the Commonwealth of Pennsylvania. An anesthesiologist, David Kasputis, M.D., was hired to provide the anesthesia services; Alex Keris was the Chief Nurse Anesthetist and Manager of the Anesthesia Department. Keris was Rehkop's direct supervisor. For the anesthesia services provided, Keris and Kasputis submitted claims for payment to the federal and state programs and received payment for covered patients.
Rehkop alleges that Keris and Kasputis submitted fraudulent claims and received payment, through the United States Postal Service, to which they were not entitled, subjecting them to civil and criminal penalties under 42 U.S.C. §§ 1320a, 7a and 7b and Pa. Stat. Ann. tit. 62, § 1407 and constituting mail fraud under 18 U.S.C. § 1341.
Rehkop further alleges that he was required to complete claim forms, but when he learned that the claims were fraudulent, he refused to do so. He contends that he reported the activity to Henry Mandel, Vice-President of Human Resources of Berwick Hospital Center. Although Mandel advised Rehkop that he would discuss the matter with Chief Financial Officer David Matisse, Mandel did not contact Rehkop, so Rehkop approached Matisse directly. Matisse allegedly told Rehkop that he had discussed the situation with both Thomas Spatt, Chief Executive Officer of Berwick Hospital Center, and with the Board of Directors of Berwick Healthcare Corporation and was told not to pursue the matter. Rehkop then reported these activities to the Federal Bureau of Investigation.
Rehkop contends that it was after these conversations that he began to receive unfounded and untrue disciplinary actions signed by Keris. He also experienced lengthy delays in the payment of funds due him for his professional services and as reimbursement for expenses. On October 31, 1994, Keris informed Rehkop that he was terminated.
Subsequently, Rehkop filed a complaint in the United States District Court for the Middle District of Pennsylvania alleging that the Berwick Healthcare Corporation, the Berwick Hospital Center, the Wyoming Valley Healthcare System, Inc., Alex Keris, David Kasputis, Henry Mandel, David Matisse, Thomas Spatt, and the Board of Directors of the Berwick Healthcare Corporation conspired to commit and did commit mail fraud (by submitting fraudulent claims for reimbursement) from approximately January, 1990 through at least October 31, 1994. Specifically, Rehkop alleged that in furtherance of the conspiracy, they undertook a plan of activity which led to his termination in order to conceal the conspiracy and to impeach his credibility should he assist *5 the government in prosecuting them. Rehkop avers that these acts constitute "predicate acts" which violate 18 U.S.C. § 1962(c) and that each of the defendants entered into a conspiracy to commit these acts in violation of 18 U.S.C. § 1962(d).
All of the defendants filed motions to dismiss in which they contended that Rehkop lacked standing to pursue a civil RICO claim against them. By orders dated October 10, 1995, the district court granted these motions and dismissed Rehkop's complaint in its entirety, pursuant to Fed. R. Civ. P. 12(b)(6). II.
In enacting RICO, Congress declared that [a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court . . . .
18 U.S.C. § 1964(c). In order to have standing to pursue a
claim under section 1964(c), a plaintiff must first demonstrate
that the defendant committed a violation of one or more
subsections of section 1962, and second, that the violation was a
substantial cause of the injury to his business or property.
Shearin v. E.F. Hutton Group, Inc.,
In Shearin v. E.F. Hutton Group, Inc., the plaintiff,
like Rehkop, maintained that she was terminated from her job at
Hutton Trust in furtherance of a RICO conspiracy and
additionally, that the defendants allegedly violated 18 U.S.C. §§
1962(a), (b), (c) and (d). The starting point for our analysis
of Shearin's standing under section 1964(c) was the Supreme
Court's opinion in Sedima, S.P.R.L. v. Imrex Co.,
III.
In Count I of his complaint, Rehkop alleged that while he was employed as a nurse anesthetist at the Berwick Hospital Center, the defendants conspired to defraud Medicare and Medicaid by filing fraudulent claims for payment using the U.S. Postal Service. Rehkop averred that these acts constituted "predicate acts" which violate 18 U.S.C. § 1962(c), upon which a civil RICO claim may be based pursuant to 18 U.S.C. § 1964(c). A violation of § 1962(c) requires (1) the conduct (2) of an enterprise (3) through a pattern of racketeering activity. Sedima, 473 U.S. at 495. In addition, the plaintiff only has standing if he has been injured in his business or property by the conduct constituting the violation. Id.
Here, in addressing Rehkop's assertion that the
defendants violated 18 U.S.C. § 1962(c), the district court
concluded that the filing of fraudulent claims with Medicare and
Medicaid may constitute a predicate act providing the basis for
liability under section 1962(c). See United States v. Khan, 53
F.3d 507 (2d Cir. 1995). We agree with this conclusion. We also
agree with the court's conclusion that Rehkop's complaint,
however, failed to allege that he suffered an injury which was
substantially caused by the defendants' alleged violations of
section 1962(c). In this regard, the district court observed
that the only injury Rehkop alleged was his firing from Berwick
Hospital Center. The defendants' alleged racketeering
activities, however, did not substantially cause Rehkop to lose
his job. Rather, the direct victims of the alleged racketeering
were the Medicare and Medicaid programs and the taxpayers. Thus,
Rehkop did not have standing to sue the defendants pursuant to
section 1964(c) based upon their alleged violations of section
1962(c). Shearin,
Rehkop also claimed that the defendants entered into a conspiracy to commit violations of section 1962(c) in violation of 18 U.S.C. section 1962(d) which provides that: "It shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of this section." The district court held that Rehkop lacks standing to pursue a conspiracy claim under section 1962(d) because, in its opinion, such a claim requires that the plaintiff state a viable cause of action under another section of 1962 as well. Insofar as Rehkop could not go forward on his section 1962(c) claim, the court reasoned, his section 1962(d) claim also failed.
The district court's decision was influenced by
Lightning Lube, Inc. v. Witco Corp.,
Lightning Lube is thus distinguishable. In this case, Rehkop's allegations state a violation of section 1962(c). The reason he cannot pursue such a claim is that he was not harmed by the section 1962(c) violation. Nonetheless, the defendants' alleged violation of section 1962(c) can serve as the object of a section 1962(d) conspiracy, and if Rehkop was harmed by reason of the conspiracy, he may pursue a section 1962(d) claim.
Thus, this case is within Shearin's rule that a plaintiff's allegation that he or she was harmed in furtherance of a conspiracy under 1962(d) states a claim for relief under section 1964(c). Although the defendants contend that Rehkop has failed to allege a distinct RICO enterprise; that he has failed to plead his allegations of fraud with sufficient particularity as required by Fed. R. Civ. P. 9(b); and that he has not adequately pled the existence of a conspiracy, we need not reach these issues at this juncture. On remand, the plaintiff will have ample opportunity to amend so as to sharpen his pleadings and refine his theories.
We acknowledge that a majority of courts have disagreed with Shearin and have held that only injuries caused by RICO predicate acts provide standing to sue for conspiracy claims. We need not defend Shearin here. It is the law of this circuit, and there will be time to explore its correctness if the issue goes en banc. See section 9.1 of our Internal Operating Procedures; O. Hommel Company v. Ferro Corporation, 659 F.2d 340, 354 (3d Cir. 1981) (". . .a panel of this court cannot overrule a prior panel precedent.").
Although other courts of appeals have taken a different path than we did in Shearin, the Supreme Court has not spoken on this issue and Congress has not acted to remedy the division. As a result, we continue to be bound by our Internal Operating Procedures and appropriately must follow our precedent set forth in Shearin. Therefore, Rehkop's termination, as with Shearin's hiring and firing, is sufficient to constitute an overt act of an alleged conspiracy and an injury sustained by reason of a violation of section 1962.
IV.
Accordingly, we will reverse the judgment of the district court dismissing the section 1962(d) claim. In addition, we will vacate the judgment of the district court dismissing Rehkop's claims pursuant to the Pennsylvania *8 Whistleblower Law, Pa. Stat. Ann. tit. 43, §§ 1421 et seq., and wrongful discharge so that they may be reconsidered by the district court. In all other respects, we will affirm the judgment of the district court.
Each side to bear its own costs.