Antitrust Law Daily Wrap Up, RICO—E.D Pa.: State judge avoids racketeering claims arising from medical malpractice suit, (Jun 20, 2014)

By Greg Hammond, J.D.

An individual’s RICO claims against a state judge, his wife, and various hospitals and medical practice providers, arising from the settlement of a medical malpractice suit, were dismissed with prejudice by the federal district court in Philadelphia, Pennsylvania. In granting six motions to dismiss the RICO claims, the court determined that: (1) the plaintiff lacked standing under RICO; (2) there were numerous deficiencies in all of her RICO claims; and (3) she was barred by the applicable four-year statute of limitations (Sarpolis v Tereshko, June 17, 2014, Tucker, P).

Background. Karen Sarpolis filed a medical malpractice claim, on her own behalf and on behalf of her deceased daughter, against Chestnut Hill Hospital and various other medical service providers. Judge Tereshko, the presiding state court judge, issued an order for the parties to attend a mandatory settlement conference, and after the case was settled, issued an order marking the case as “discontinued.” More than four years later, Sarpolis filed a malfeasance complaint against Judge Tereshko, alleging that he engaged in improper conduct by not disclosing his wife worked at Post & Schell, P.C.—an opposing counsel’s law firm. In her first amended complaint, Sarpolis alleged that Tereshko, his wife, and various hospitals and medical service providers engaged in civil conspiracy and various RICO violations. The case was before the district court on six motions to dismiss.

RICO standing. In order to bring a civil RICO claim, according to the court, Sarpolis was required to demonstrate (1) she suffered an injury to her “business or property” and (2) her injury was proximately caused by the defendants’ violation of section 1962 of RICO. The court found that Sarpolis failed to satisfy either element, reasoning that she only alleged speculative injuries, which are not cognizable under RICO. In addition, because she failed to allege a violation of section 1962, she was unable to demonstrate proximate causation of any alleged injury.

Alleged RICO violations. Under Sarpolis’ 1962(c) claim, she was required to allege that the various defendants conducted an enterprise through a pattern of racketeering activity resulting in damage to her business or property. However, the court found that she failed to allege a pattern of racketeering activity because: (1) Judge Tereshko was not an officer of any court of the U.S., invalidating Sarpolis’ obstruction of justice and bribery predicate act claims; (2) a state court medical malpractice action is not an “official proceeding” under section 1515, invalidating her witness tampering predicate act claim; and (3) she failed to sufficiently plead mail and wire fraud. The court also noted that Sarpolis’ allegations are, and probably were, properly litigated in the context of a medical malpractice action, and it would be improper to allow Sarpolis to re-litigate her medical malpractice case by “recasting it as a conspiracy action.”

Sarpolis’ 1962(b) claim was also found to be insufficient, according to the court, as she merely restated the statutory elements of the claim instead of offering facts to demonstrate how the defendants engaged in racketeering activity. In addition, her 1962(d) claim was found to be time barred under the appropriate four-year statute of limitations.

Conspiracy. The court also dismissed Sarpolis’ civil conspiracy claim because: (1) her underlying fraud claim was barred by the two year statute of limitations; (2) she was not entitled to the equitable remedy of statutory tolling, as she failed to exercise due diligence in bringing this action; (3) the court was not a proper forum for her claim for fraud in the inducement when entering the settlement agreement; and (4) Sarpolis failed to allege that the defendants’ sole motivation was to cause her harm.

The case number is 13-5521.

Attorneys: Karen Sarpolis, pro se. Mary E. Butler, Administrative Office of PA Courts, for Allan Tereshko. David H. Colvin (Fox Rothschild LLP) for Post & Schell, PC. Chauvron S. Regis (Duane Morris LLP) for Pa. Professional Joint Liability Underwriter's Association. John M. Myers (Montgomery McCracken Walker & Rhoads LLP) for University of Pa. Community Health Network. Stuart Turville O'Neal, III (Burns White LLC) for Community Health Systems, Inc. Nicholas M. Centrella (Conrad O'Brien) for Chop Newborn Care.

Companies: Post & Schell, P.C.; Pa. Professional Joint Liability Underwriter's Association; University of Pa. Community Health Network; Community Health Systems, Inc.; Chop Newborn Care

Cases: RICO PennsylvaniaNews