We often marvel at how plaintiffs' attorneys find new ways to sue businesses, including under RICO. Take for example the ever-increasing number of "MSP" plaintiffs that we are seeing in the published opinions. We see plaintiffs called
What does all this have to do with RICO? Well, the Act's private right of action incentivized plaintiffs' attorneys to gather claims from payers under the Medicare Advantage program, and then pursue reimbursement. They focused initially on the Medicare Secondary Payer Act's private right of action. They are, however, branching out—including to RICO and other statutory claims—with mixed success. See for example our posts here, here, and here.
A recent example of MSP entities branching out—and striking out—is MSP Recovery Claims,
The district judge ruled that the plaintiffs did not plead valid assignments of claims, and there were two reasons. First, some or all of the plaintiffs' claims were not assignable. Apparently claims under the Medicare Secondary Payer Act are assignable, or else we would not have the "MSP" litigation industry. But RICO claims? State consumer claims? The district court was not persuaded. For some, the answer is a hard no: Claims under
On RICO, the district judge noted that every court to consider the issue has ruled that RICO claims are assignable. But it remains an open question in the Ninth Circuit. In Silvers v.
The district court found "some force" in that argument, but eventually decided that the plaintiffs' pleadings were deficient for other reasons (see below). The court admonished the parties that "if a new motion to dismiss is filed, the parties should more thoroughly address the assignability of RICO claims." Id. at 17.
Second, even assuming that the plaintiffs were bringing assignable claims, they did not sufficiently plead them. A party invoking federal jurisdiction bears the burden of establishing standing. Although an assignee generally has standing to assert the injury in fact suffered by the assignor, "the Court must guard the standing requirement carefully in the assignment context." Id. at *21. As a result, "Plaintiffs must plead facts . . . support a plausible inference (1) the ultimate assignors suffered an injury in fact, and (2) the assignors' claim arising from the injury was validly assigned to Plaintiffs." Id. at *22.
These plaintiffs came up short. Most glaringly, the plaintiffs purported to bring claims on behalf of unpled "assignors" based on "representative assignments." We are not sure what a "representative assignment" is, but it seems to be an assertion of someone else's right, without identifying what the right is or to whom it belongs. That is not allowed:
Standing is not dispensed in gross; instead, a plaintiff must demonstrate standing for each claim he seeks to press and for each form of relief that is sought. Here, Plaintiffs seek standing in gross for unnamed assignors. That is insufficient. If Plaintiffs seek to pursue claims based on valid assignments, Plaintiffs must plead which assignors' claims they seek to vindicate.
Id. (citations omitted). The plaintiffs attached "representative" assignment agreements to their complaint and provided "claims data." But those merely confused matters more: The agreements were heavily redacted, and the data largely undermined the plaintiffs' claims. Id. at *23-*28. "At a minimum, Plaintiffs must plead some specific facts alleging a specific named assignor assigned its claims to Plaintiffs via a valid assignment agreement." Id. at *23.
In the end, the district court dismiss the non-assignable California UCL claims without leave to amend and everything else with leave. So the plaintiffs struck out this time around, but they will get another at bat. We can say, though, that the assignability of RICO claims in the Ninth Circuit is not necessarily a foregone conclusion. The same is true for several states' laws.
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