United States District Court, E.D. Louisiana
YI-ZARN WANG, M.D.
OCHSNER MEDICAL CENTER -KENNER, L.L.C., ET AL.
ORDER AND REASONS
L. C. ELDMAN UNITED STATES DISTRICT JUDGE
the Court are two motions: (1) a motion to dismiss by
defendants Ochsner Medical Center - Kenner, L.L.C., Ochsner
Clinic Foundation, Ochsner Clinic L.L.C., and Ochsner Health
System; and (2) a motion to dismiss by Dr. J. Philip
Boudreaux. For the reasons that follow, the motions are
civil Racketeer Influenced and Corrupt Organizations Act and
state law litigation arises from allegations by Dr. Yi-Zarn
Wang that Ochsner Medical Center-Kenner, L.L.C. and its
affiliates, and fellow doctor, Dr. J. Phillip Boudreaux,
schemed to defraud him by steering neuroendocrine cancer
patients from Dr. Wang to Dr. Boudreaux, by trumping up false
accusations that Dr. Wang violated hospital policy, and
ultimately by suspending Dr. Wang and terminating his
privileges at the hospital based on the trumped up
accusations and in violation of hospital
initially obtaining a dental degree in his native Republic of
China, Dr. Yi-Zarn Wang moved to the United States, where he
finished post-graduate school and enrolled in the School of
Medicine at The Oregon Health Sciences University. After
obtaining his MD degree, Dr. Wang participated in the Barnes
Hospital/Washington University Surgical Residency Program in
St. Louis, Missouri, a world class surgical oncology
discipline under numerous renowned surgeons.
1994, Dr. Wang joined the faculty at Louisiana State
University Health Sciences Center in New Orleans. Before
Hurricane Katrina, he served as Chief of General Surgery and
Director of Surgical Education; he also ran surgical cancer
care for indigent patients in Louisiana. After Katrina, he
relocated and joined the group at Ochsner Medical
Center-Kenner, L.L.C. to serve neuroendocrine patients. He
partnered with J. Phillip Boudreaux, another surgeon who
specialized in neuroendocrine cancer treatment.
many years, Ochsner promoted Dr. Wang's skills and
specialized abilities for patients requiring neuroendocrine
cancer surgery. A pioneer in the field, Dr. Wang had
developed complicated approaches to surgery and other
treatment options for neuroendocrine cancer. For example, Dr.
Wang was the first surgeon in the world to intrude lymphatic
mapping technique to define surgical resection margin of
midgut neuroendocrine tumors to eliminate recurrence and to
preserve ilocecal valve in selective patients to reduce
post-operative diarrhea. Dr. Wang was the first surgeon to
pioneer intra-operative chemotherapy; through this treatment,
Dr. Wang targeted midgut neuroendocrine tumor (NET) patients
who are often diagnosed at an advanced stage with extensive
mesenteric lymph node and liver metastasis. In these cases,
even with surgery, small specks of cancerous tissues can
still remain. Dr. Wang's treatment targets the potential
tumor residuals in mesenteric lymph node dissection beds
using a safe and local application of chemotherapy agent
5-fluorouracil (5-FU). The 5-FU is delivered via
intraoperative application of 5-FU saturated gel foam strips
secured into the mesenteric defect following the extensive
lymphadenectomy. Dr. Wang then mastered the radio-guided
surgery for neuroendocrine tumor cytoreductive procedures
including a minimally invasive approach to address the lymph
nodes metastasis in the neck and upper mediastinum. Dr. Wang
also developed techniques to safely dissect and remove tumors
encasing major blood vessels to the liver and intestine and
became well known for taking on “unresectable”
patients from different states and countries.
Wang became the preeminent NET surgeon at Ochsner Kenner and
was the most sought out NET surgeon for academic speaking
engagements, professional organizations, and NET patients.
This notoriety prompted recruitment efforts by multiple
hospitals starting in 2010. It is alleged that Dr. Wang's
potential move and loyalty became a concern to Dr. Boudreaux
and the hospital. Because they feared losing Dr. Wang, it is
alleged, Dr. Boudreaux and Ochsner Kenner sought to minimize
Dr. Wang's practice by steering Dr. Wang's patients
to Dr. Boudreaux's practice.
accomplish this, starting as early as 2010, Dr. Boudreaux
worked with Ochsner Kenner employee, Pam Ryan, who controlled
intake communications with patients,  to divert NET patients away
from Dr. Wang to Dr. Boudreaux. It is alleged that Ms. Ryan
would mislead patients from seeing Dr. Wang, direct those
patients instead to Dr. Boudreaux, and that she would
“penalize” or sabotage those who insisted on
seeing Dr. Wang. Nurse Ryan's patient-steering conduct
was motivated by “an inappropriate relationship.”
According to the allegations of the complaint, Dr. Boudreaux
increased his own annual earnings through this scheme,
earning approximately $100, 000 more each year from 2010 to
Wang says he discovered the scheme in 2015 and lists about a
dozen instances where Ms. Ryan or, on one occasion an
unidentified staff member, misled patients by advising the
patients that Dr. Wang was unavailable or not accepting new
patients, even though Dr. Wang was actually available and
accepting new patients. Dr. Wang also alleges that the
patient steering scheme was confirmed by two online patient
reviews. Through this patient information, Dr. Wang says it
became clear to him that a scheme to defraud him of money or
property by false representations was calculated to deceive
him (through non-disclosure) as well as his patients (through
misleading statements and concealing material facts).
Wang says he reported to LSU the misleading statements made
to his patients and the potential of an inappropriate
relationship fueling the patient diversion. LSU told Dr. Wang
that he needed to address those issues with Ochsner Kenner
and request a new nurse. On October 10, 2015, Dr. Wang met
with Ochsner CEO Stephen Robinson to report his concerns. Dr.
Wang showed Mr. Robinson emails and communications from his
patients regarding Ms. Ryan's patient steering conduct.
light of this report, it is alleged, Mr. Robinson, Dr.
Boudreaux, and others combined to retaliate against Dr. Wang.
Dr. Wang alleges that Dr. Boudreaux knew that if Dr. Wang was
forced out, Dr. Boudreaux could then be the leading surgeon
in Kenner and would inherit Dr. Wang's patients without
the need to steer the patients. Ochsner Kenner, it is
alleged, was heavily invested in the neuroendocrinology
department and worried about Dr. Wang's loyalty to the
hospital; the hospital did not want to suffer the financial
loss it would experience if it lost Dr. Wang's patients.
solution, it is alleged, was to ruin Dr. Wang's
reputation and keep his patients at Ochsner. Ochsner Kenner
and Dr. Boudreaux had to come up with a plan to tarnish Dr.
Wang's reputation. Acting on this plan, in early December
2015, Ochsner Kenner and Dr. Boudreaux targeted Dr.
Wang's use of Non-Operative Treatment of Appendicitis
(NOTA) to trump up a charge that Dr. Wang violated Ochsner
Kenner policy. NOTA has received national prominence as
accepted treatment for appendicitis; the practice is both
scientifically accepted in the medical community and also
often practiced at Ochsner Kenner by many physicians.
Wang preferred NOTA for treating appendicitis. Despite the
substantial literature supporting NOTA, on December 18, 2015,
the Medical Staff Vice-President at Ochsner Kenner, Najy
Masri, wrote to Dr. Wang admonishing him for offering NOTA as
an option to his patients. Dr. Masri demanded that Dr. Wang
immediately discontinue NOTA for his Ochsner Kenner patients.
Dr. Masri also noted that the medical leadership council
would refer this matter to the Medical Executive Committee
for further review in January.
Wang responded by detailing the national medical
community's acceptance of NOTA; he also requested a
meeting to discuss the developments and the trend toward
adopting NOTA. On February 4, 2016, the Ochsner Kenner
Medical Executive Committee (OK-MEC or the Committee) wrote
to Dr. Wang requesting that he provide literature supporting
NOTA. Dr. Wang did so; he provided the Committee with
evidence of clinical acceptance of the treatment, including
five randomized clinical trials, seven meta-analyses, and 60
March 2016, the OK-MEC Chair, Dr. Dasa, called Dr. Wang
regarding a meeting that occurred on March 17, 2016. Dr. Dasa
informed Dr. Wang that the committee would permit Dr. Wang to
use antibiotic therapy for uncomplicated appendicitis on the
condition that, if the patient failed to improve within 24
hours, Dr. Wang must cease antibiotic treatment and instead
intervene with surgery. To confirm this conversation, the
Committee wrote to Dr. Wang on April 26, 2016. Dr. Wang used
NOTA for his patients, with their consent, for a 24-hour
trial period. If the patient responded appropriately, the
in April 2016, Dr. Wang was treating a patient with
appendicitis; he disclosed to the patient the basic medical
information required for informed consent. In front of
students and residents, he discussed the treatment options,
including the 24 hour rule. Dr. Wang noted this in the
patient's chart. The patient responded to the IV
antibiotic therapy within the 24-hour benchmark as
demonstrated by an improving clinical exam, afebrile and
reducing WBC. Dr. Wang offered the patient a surgical option
the following morning even with her signs of improvement. She
declined surgery, opting to continue antibiotic therapy. IV
antibiotics were switched to PO on the second hospital day.
The patient was observed in the hospital for an additional 24
hours to make sure she would do well on PO antibiotics. She
did. She was discharged to home on PO antibiotics on the
third day with instruction that 15% of patients might fail
the antibiotic therapy or have recurrence; she was told to
return if her condition worsened or recurred. This successful
treatment followed the medical standard of care and also the
Ochsner Kenner policy.
26, 2016, the Committee held a secret emergency meeting
regarding Dr. Wang's use of NOTA. During the meeting, the
Committee suspended Dr. Wang for five days. The grounds for
the suspension were the Committee's allegation that Dr.
Wang had violated the February 4, 2016 letter requiring that
he discontinue NOTA at OMC-K. The Committee's decision
directly contradicted its prior confirmation to Dr. Wang both
on the phone and in writing that he could perform NOTA for 24
hours. Dr. Vinod Dasa drafted a letter on behalf of the
Committee; the letter outlined the factually inaccurate and
contradictory charges, which it is alleged Ochsner knew were
false, unsupported, and misleading and made with the intent
to injure Dr. Wang. Dr. Dasa also called Dr. Wang to inform
him of the suspension.
Kenner conditioned Dr. Wang's return from the five-day
suspension on signing a performance review plan. To sign the
review plan would effectively oblige Dr. Wang to waive appeal
rights related to NOTA, admit that his performance needed
improvement, admit that he acted in a derogatory manner, and
admit to the suspension. Dr. Wang refused to sign the plan.
When Dr. Wang returned to Ochsner Kenner after his five-day
suspension, he was told that he no longer had privileges at
the hospital because he failed to sign the plan; a plan Dr.
Wang characterizes as pretextual.
the peer review process (culminating in Dr. Wang's
five-day suspension and the revocation of his privileges) was
a sham is allegedly demonstrated by Ochsner Kenner's
various breaches of the bylaws.  Ochsner Kenner breached
the bylaws by failing to adhere to the provisions regarding
the investigation and suspension of Dr. Wang's
privileges. The Committee only has authority to
“recommend suspension of clinical
privileges for a term” after the OK-MEC or other
committee follows the investigative procedures outlined in
the bylaws.  Section 7.3(A)(1) of the bylaws requires that
the OK-MEC provide Dr. Wang notice of the investigation.
Section 7.3(b)(4) requires that OK-MEC provide Dr. Wang with
an “opportunity to meet with the investigating
committee before it makes its report.” But Ochsner
Kenner neither informed Dr. Wang of the investigation, nor
did it allow Dr. Wang an opportunity to meet with the
committee prior to its report.  Similarly, under Section
7.3(C)(3), after the OK-MEC makes a recommendation by a
report identifying its findings and conclusions, the bylaws
require the committee to refer the recommendation to the
governing board of Ochsner Kenner. But this did not happen
with Dr. Wang, who alleges that OK-MEC simply held a secret
meeting and decided to suspend Dr. Wang's privileges
while breaching the procedural protection of the bylaws. 
Section 7.4(A)(1) limits summary suspensions to cases where
OK-MEC finds that “failure to take such action may
result in imminent danger to the health and/or safety of any
individual or seriously impair the ability of hospital staff
members to perform their duties.” But OK-MEC skipped
the investigation stage yet made no finding of
“imminent danger” in its May 27 letter in which
OK-MEC implied that this was a “final finding of
responsibility, ” in violation of the bylaws.  By
attempting to skirt the hearing process and conditioning Dr.
Wang's return on a waiver of rights to a hearing or
appeal process, OK-MEC violated the bylaws. The May 27 letter
essentially revoked Dr. Wang's privileges and violated
the bylaws' requirements regarding notice for hearings.
result of his suspension and the revocation of his
privileges, Dr. Wang has not maintained privileges at any
hospital except Physicians Medical Center in Houma. And, he
lost his job at LSU. It is also alleged that Ochsner Kenner
and Dr. Boudreaux have continued to misrepresent Dr.
Wang's availability to patients in that Dr. Wang's
patients are being referred to Dr. Boudreaux, implying that
Dr. Wang is no longer practicing medicine, and failing to
disclose Dr. Wang's contact information. Dr. Wang was
also required to report the suspension to the Louisiana Board
of Medical Examiners. As a result of what transpired at
Ochsner Kenner, Dr. Wang's reputation has been damaged.
23, 2017, Dr. Wang sued Ochsner Medical Center-Kenner,
L.L.C., Dr. J. Phillip Boudreaux, Ochsner Clinic Foundation,
Ochsner Clinic, LLC, and Ochsner Health System in this Court,
and on that same day he filed an amended complaint in which
he alleges: (A) as to all defendants: violations of the
Racketeer Influenced & Corrupt Organizations (RICO) Act,
conspiracy to violate the RICO Act,  violations of the Louisiana
Unfair Trade Practices and Consumer Protection Law (LUTPA);
and (B) as to the Ochsner entities: breach of contract (for
Dr. Wang's loss of privileges), negligent
misrepresentation (for misrepresentations made during the
peer review process), tortious interference with contract
(for costing Dr. Wang his job at LSU), tortious interference
with prospective relations (for deterring patients from Dr.
Wang). Dr. Wang alleges entitlement to actual
damages (including lost wages, lost employee benefits, lost
profits, and other direct financial damages); consequential
damages (damage to Dr. Wang's economic welfare, mental
anguish and physical suffering, harm to Dr. Wang's
reputation, lost business reputation, and attorney's
fees); statutory trebling and exemplary damages warranted by
the defendants' alleged malicious, willful, and egregious
conduct. In compliance with this Court's standing order,
Dr. Wang filed a RICO Case Statement. Dr. Boudreaux and,
separately, the Ochsner entities now seek to dismiss each of
Dr. Wang's claims for failure to state a claim upon which
relief may be granted.
12(b)(6) of the Federal Rules of Civil Procedure allows a
party to move for dismissal of a complaint for failure to
state a claim upon which relief can be granted. Such a motion
is rarely granted because it is viewed with disfavor. See
Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247
(5th Cir. 1997)(quoting Kaiser Aluminum & Chem.
Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045,
1050 (5th Cir. 1982)).
Rule 8(a)(2) of the Federal Rules of Civil Procedure, a
pleading must contain a "short and plain statement of
the claim showing that the pleader is entitled to
relief." Ashcroft v. Iqbal, 556 U.S. 662,
678-79 (2009)(citing Fed.R.Civ.P. 8). "[T]he pleading
standard Rule 8 announces does not require 'detailed
factual allegations, ' but it demands more than an
accusation." Id. at 678 (citing Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
considering a Rule 12(b)(6) motion, the Court
“accept[s] all well-pleaded facts as true and view[s]
all facts in the light most favorable to the
plaintiff.” See Thompson v. City of Waco,
Texas, 764 F.3d 500, 502 (5th Cir. 2014) (citing Doe
ex rel. Magee v. Covington Cnty. Sch. Dist. ex rel.
Keys, 675 F.3d 849, 854 (5th Cir. 2012)(en banc)). But,
in deciding whether dismissal is warranted, the Court will
not accept as true legal conclusions. Id. at 502-03
(citing Iqbal, 556 U.S. at 678).
survive dismissal, “‘a complaint must contain
sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face.'”
Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir.
2009)(quoting Iqbal, 556 U.S. at 678)(internal
quotation marks omitted). “Factual allegations must be
enough to raise a right to relief above the speculative
level, on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).”
Twombly, 550 U.S. at 555 (citations and footnote
omitted). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S.
at 678 (“The plausibility standard is not akin to a
‘probability requirement, ' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.”). The Court's task “is to
determine whether the plaintiff stated a legally cognizable
claim that is plausible, not to evaluate the plaintiff's
likelihood of success.” Thompson v. City of Waco,
Texas, 764 F.3d 500, 503 (5th Cir. 2014)(citation
omitted). This is a “context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 556 U.S.
at 679. “Where a complaint pleads facts that are merely
consistent with a defendant's liability, it stops short
of the line between possibility and plausibility of
entitlement to relief.” Id. at 678 (internal
quotations omitted) (citing Twombly, 550 U.S. at 557).
“[A] plaintiff's obligation to provide the
‘grounds' of his ‘entitle[ment] to
relief'”, thus, “requires more than labels
and conclusions, and a formulaic recitation of the elements
of a cause of action will not do.” Twombly,
550 U.S. at 555 (alteration in original) (citation omitted).
notice pleading requirements are based on Rule 8. Rule 9(b)
imposes a heightened pleading standard on pleadings alleging
(b) Fraud or Mistake; Conditions of Mind. In alleging fraud
or mistake, a party must state with particularity the
circumstances constituting the fraud or mistake. Malice,
intent, knowledge, and other conditions of a person's
mind may be alleged generally.
Fed. R. Civ. P. 9(b). A plaintiff must plead “the
particulars of time, place, and contents of false
representations, as well as the identity of the person making
the misrepresentation and what he obtained thereby.”
Benchmark Elecs. V. J.M. Huber Corp., 343 F.3d 719,
724 (5th Cir. 2003)(quoting Tel-Phonic Servs., Inc. v.
TBS Int'l, Inc., 975 F.2d 1134, 1139 (5th Cir.
1992). “[A] plaintiff must state the factual basis for
the fraudulent claim with particularity and cannot rely on
speculation or conclusional allegations.” United
States ex rel. Rafizadeh v. Continental Common, Inc.,
553 F.3d 869, 873 (5th Cir. 2008). Indeed, the Fifth Circuit
“interprets Rule 9(b) strictly, requiring the plaintiff
to specify the statements contended to be fraudulent,
identify the speaker, state when and where the statements
were made, and explain why the statements were
fraudulent.” Flaherty & Crumrine Preferred
Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 207 (5
Cir. 2009)(citation omitted). Simply put, to comply with Rule
9(b), plaintiffs must plead the “who, what, when,
where, and how” of the alleged fraud. United States
ex rel. Williams v. Bell Helicopter Textron Inc., 417
F.3d 450, 453 (5th Cir. 2005)(internal citation and quotation
marks omitted). If a plaintiff alleges fraud by omission,
“Rule 9(b) typically requires the claimant to plead the
type of facts omitted, the place in which the omissions
should have appeared, and the way in which the omitted facts
made the misrepresentations misleading.” Carroll v.
Fort James Corp., 470 F.3d 1171, 1174 (5th Cir. 2006).
9(b)'s particularity requirement applies to RICO claims
that rest on predicate acts of mail and wire fraud. See
Williams v. WMX Technologies, Inc., 112 F.3d 175, 177
(5th Cir. 1997); Landry v. Air Line Pilots Ass'n
Intern. AFL-CIO, 901 F.2d 404, 430 (5th Cir. 1990).
Racketeer Influenced and Corrupt Organizations Act (RICO), 18
U.S.C. § 1961-1968, prohibits certain conduct involving
a “pattern of racketeering activity.” As an
enforcement mechanism, 18 U.S.C. § 1964(c) provides a
private right of action for treble damages to “[a]ny
person injured in his business or property by reason of a
violation of section 1962 of this chapter.” To pursue a
private RICO claim, a plaintiff must show that he has been
injured “by reason of” a violation of RICO's
criminal prohibitions; a RICO plaintiff must “establish
both but-for cause and proximate cause in order to show
injury ‘by reason of' a RICO violation.”
Torres v. S.G.E. Mgmt., L.L.C., 838 F.3d 629, 636
(5th Cir. 2016)(internal citations omitted). “When a
court evaluates a RICO claim for proximate cause, the central
question it must ask is whether the alleged violation led
directly to the plaintiff's ...