Court Opinion

ID: 13818
Source: CourtListenerOpinion
Date Created: 2010-04-25 06:30:09+00
Date Added: 2024-06-11T15:03:28.353429
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REVISED
                   UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT

                             No. 96-30525

                            RAJIV KHURANA,

                                                 Plaintiff-Appellant,

                                VERSUS

         INNOVATIVE HEALTH CARE SYSTEMS, INC.; KARRY TEEL;
         CARL HOLDEN; WILLIAM MALONE; I.H.S. RIVER REGION
         HOSPITAL OF VACHERIE, LA., INC.,

                                                 Defendants-Appellees.

            Appeal from the United States District Court
                for the Eastern District of Louisiana
                           December 12, 1997

Before WIENER, PARKER, Circuit Judges, and LITTLE,* Chief District
Judge.

PARKER, Circuit Judge:

     Dr. Rajiv Khurana appeals the district court’s dismissal of

his complaint pursuant to Fed. R. Civ. P. 12(b)(6) on the basis

that he did not have standing to bring his civil claims under the

Racketeer Influenced and Corrupt Organizations Act (“RICO”) and

     *
        Chief Judge of the Western District of Louisiana, sitting by
designation.
alternatively, because Khurana failed to plead a RICO enterprise

separate and distinct from the defendant in some of his civil

claims based on 18 U.S.C. § 1962(c).         Finding that Khurana may have

standing for some of his civil RICO claims, we affirm in part and

reverse and remand in part.

                         FACTS AND PROCEEDINGS BELOW

       For purposes of this appeal, we accept the following factual

allegations as true.

       Dr. Rajiv Khurana (“Khurana”) filed suit in Louisiana state

court against the defendant-appellees, alleging defamation and

wrongful discharge from his position as Medical Director of River

Region Hospital in Vacherie, Louisiana,1 as well as civil claims

under      the   Racketeer   Influenced    and   Corrupt   Organizations   Act

(“RICO”), U.S.C. § 1961 et seq., based on violations of 18 U.S.C.

§ 1962(b), (c), and (d).2        Khurana’s civil RICO claims arise from

   1
        Khurana’s state law claims were remanded to state court following
the district court’s Fed. R. Civ P. 12(b)(6) dismissal of his RICO claims.
Only issues related to the dismissal of Khurana’s RICO claims are before
the panel.
       2
           18 U.S.C. § 1962(b)-(d) is as follows:

              (b) It shall be unlawful for any person through a
           pattern of racketeering activity or through collection of
           an unlawful debt to acquire or maintain, directly or
           indirectly, any interest in or control of any enterprise
           which is engaged in, or the activities of which affect,
           interstate of foreign commerce.
            (c)    It shall be unlawful for any person employed by or
           associated with any enterprise engaged in, or the
           activities of which affect, interstate or foreign
           commerce, to conduct or participate, directly or
           indirectly, in the conduct of such enterprise’s affairs
           through a pattern of racketeering activity or collection
           of unlawful debt.
            (d)    It shall be unlawful for any person to conspire to
           violate any of the provisions of subsection (a), (b), or

                                       2
a Medicare and Medicaid fraud scheme in which the appellees were

engaged.

     River Region Hospital (“River Region” or “hospital”) is an

owned   subsidiary    of   Innovative    Health     Care     Systems,   Inc.

(“Innovative”).    Both River Region and Innovative are defendant-

appellees in this action.      Defendant-appellees also include Karry

Teel and Carl Holden, who hold offices in both Innovative and River

Region, and William    Malone, River Region’s administrator.

     Khurana is a practicing physician with dual specialities in

psychiatry and neurology.      In July 1993, Khurana was hired to be

River   Region’s   Assistant   Medical   Director    under    a   three-year

contract.    Khurana agreed to join River Region as its Assistant

Medical Director on the basis of fraudulent misrepresentations as

to the legitimacy of the hospital’s operations and qualifications.

In June of 1994, Khurana was named the hospital’s Medical Director.

After his promotion, he became aware that the hospital was engaging

in fraudulent Medicaid and Medicare practices.         He was discharged

from his position as Medical Director six months later in January

of 1995.    The hospital went out of business in 1996.

     After the appellees removed the suit to federal court, Khurana

filed an amended complaint alleging that the appellees committed a

variety of RICO predicate acts (wire and mail fraud, extortion,

bribery, witness tampering, and violation of the Travel Act, 18

U.S.C. § 1952) and that these acts constituted a pattern of

racketeering activity in violation of § 1962(b) and § 1962(c).

        (c) of this section.

                                    3
Khurana also alleged a conspiracy, in violation of 18 U.S.C.

§ 1962(d), to violate 18 U.S.C. § 1962(b) and § 1962(c).             In his

complaint, Khurana contended (1) that he was fraudulently induced

into “harmful employment associations” which caused him a loss of

legitimate business opportunity and damage to his professional

reputation, (2) that he was wrongfully discharged which caused him

a loss in earnings, benefits and reputation, and (3) that the

appellees’ “illegal competition” with him in his private and

hospital practices caused him a loss in business income.

       The appellees filed a motion to dismiss Khurana’s RICO claims

pursuant to Fed. R. Civ. P. 12(b)(6).         The appellees argued to the

district court that (1) Khurana did not have standing to assert the

RICO   claims,   and   that   (2)   Khurana   failed   to   allege   a   RICO

“enterprise” separate and distinct from a RICO “person,” i.e., a

perpetrator, associated with or employed by the enterprise as

required for claims based on 18 U.S.C. § 1962(c).             The district

court granted the motion and Khurana now presents this panel with

the same two issues in his appeal.

                                DISCUSSION

                         I. Standard of Review

       We review the dismissal of a complaint for a failure to state

a claim for which relief can be granted under Fed. R. Civ. P.

12(b)(6) de novo.      Fernandez-Montes v. Allied Pilots Ass’n, 987
F.2d 278, 284 (5th Cir. 1993).      A claim may not be dismissed unless

it appears beyond doubt that the plaintiff cannot prove any set of

facts in support of his claim which would entitle him to relief.

                                      4
Benton v. United States, 960 F.2d 19, 21 (5th Cir. 1992).               For

purposes of our review, we must accept the plaintiff’s factual

allegations as true and view them in a light most favorable to the

plaintiff.    Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th

Cir. 1995).

                    II.   § 1964(c) RICO Standing

     The   appellant   argues   that   the   district   court   erred   in

dismissing the RICO claims because proper causation between his

injuries and RICO violations was pleaded, giving him standing. The

appellees collapse the appellant’s injuries into one mass of

discharge complaints and contend that Khurana cannot have standing

for any of his claims because he was not the target of any

Medicaid/Medicare fraud scheme. We disagree that Khurana’s alleged

injuries may be viewed as a homogeneous group.          We consider the

injuries individually because Khurana’s standing for each turns on

a proximate causation inquiry.

     A.    Overview of § 1964(c) Standing

     Section 1964(c) provides 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 and shall recover threefold
       the damages he sustains and the cost of the suit,
       including a reasonable attorney’s fee.

18 U.S.C. § 1964(c).      In order to establish standing under §

1964(c), a plaintiff must show (1) a violation of § 1962, (2) an

injury to his business or property, and (3) that his injury was

proximately caused by a RICO violation.       See Holmes v. Securities

Investor Protection Corp., 503 U.S. 258, 112 S. Ct. 1311, 117 Lans. Ch.
5
Ed. 2d 532 (1992); Cullom v. Hibernia Nat’l Bank, 859 F.2d 1211,

1214 (5th Cir. 1988).          Khurana challenges the district court

determination that his injuries were not proximately caused by RICO

violations.

       When   the    Supreme   Court   announced    the   proximate   cause

prerequisite to § 1964(c) standing in Holmes, 503 U.S. 258, it

directed us to “the many shapes this concept took at common law.”

Id. at 268.

         [W]e use “proximate cause” to label generically the
         judicial   tools   used    to   limit   a   person’s
         responsibility for the consequences of that person’s
         own acts. At bottom, the notion of proximate cause
         reflects “ideas of what justice demands, or of what
         is administratively possible, or of what is
         administratively possible and convenient.”        W.
         Keeton, D. Dobbs, R. Keeton & D. Owen, Prosser &
         Keeton on Law of Torts § 41, p. 264 (5th ed. 1984).

Id. at 268.         In Holmes, the Court held that an alleged stock

manipulation scheme that disabled two broker-dealers from meeting

obligations to customers did not proximately cause the claimed

injury of a plaintiff-corporation subrogated to the rights of the

broker-dealers’ non-purchasing customers.          Such was too remote an

injury to satisfy the proximate cause requirement because only an

intervening insolvency connected the RICO conspirators’ acts to the

customers’ injuries.      Id. at 271.      Taking guidance from the common

law’s enunciation of proximate causation, the Court reasoned that

those injured only “indirectly” by racketeering activity do not

have § 1964(c) standing.3       Id. at 268, 274.    Allowing for recovery

   3
        The Court noted that in using such a term, it did “not necessarily
use it in the same sense as courts before us have.” Holmes, 503 U.S. at
274 n.20.

                                       6
for the Holmes’ secondary victims would run afoul of proximate

causation standards.          Id. at 274.    In her concurrence, Justice

O’Connor explained that the “words ‘by reason of’ [in § 1964(c)]

operate . . . to confine RICO’s civil remedies to those whom the

defendant has truly injured in some meaningful sense.”4                Id. at

279.        The proximate cause requirement is intended to preclude

recovery by plaintiffs who “complain[] of harm flowing merely from

the misfortunes visited upon a third person.”           Id. at 268.

        In    Holmes,   the   Court   acknowledged   that    articulating   a

definition of “proximate cause” for purposes of § 1964(c) standing

analysis was difficult:5 “the infinite variety of claims that may

arise make it virtually impossible to announce a black-letter rule

that will dictate the result in every case.           Thus, our use of the

term ‘direct’ should be merely understood as a reference to the

proximate cause enquiry that is informed by the concerns set out in

the text.” 503 U.S. at 274 n.20.6     These concerns have been cited

        4
             To repeat, 18 U.S.C. § 1964(c) is as follows:

            Any 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
            and shall recover threefold the damages he sustains and
            the cost of the suit, including reasonable attorney’s
            fees.

(emphasis added).
    5
        In fact, it is generally true that an articulation of the meaning
of “proximate cause” is a “fruitless quest for a universal formula.”
Prosser & Keeton on Torts § 42, p. 279. “The search for some test or
formula which will serve as a universal solvent for all of the problems of
‘proximate cause’ has occupied many writers.” Id. at 276.
    6
             In his concurrence, Justice Scalia offered a thought in the same
vein.

                                        7
as the demands of justice, a reluctance to open the flood gates to

administratively      inconvenient        and   unmanageable   litigation,

Standardbred Owners Ass’n v. Roosevelt Raceway Assocs., 985 F.2d
102, 104 (2d Cir. 1993) (citing Holmes, 112 S. Ct. at 1316 n.10,

1318), the potential for duplicative recoveries and superfluous

deterrence, In re Am. Express Co. Shareholder Litig., 39 F.3d 395,

401 (2d Cir. 1994), and the statutory goal of encouraging directly

injured victims to act as private attorneys general to vindicate

the law, Mendelovitz v. Vosicky, 40 F.3d 182, 185 (7th Cir. 1994);

Bieter Co. v. Blomquist, 987 F.2d 1319, 1325 (8th Cir. 1993).

       Given that factual causation (i.e., “cause-in-fact” or “but-

for” causation) is now clearly insufficient to confer § 1964(c)

standing, see, e.g., Standardbred, 985 F.2d at 104, we are left

with the common law of proximate causation in making civil RICO

standing determinations.      “[T]he holding of Holmes is no more than

that   common   law   ideas   about   proximate    causation   inform   the

understanding of RICO.”       Israel Travel Advisory Serv., Inc. v.

Israel Identity Tours, Inc., 61 F.3d 1250, 1257 (7th Cir. 1995),

cert. denied, — U.S. —, 116 S. Ct. 1847, 134 L. Ed. 2d 948 (1996).

The pertinent inquiry in determining the existence of proximate, or

“legal,” cause is “whether the conduct has been so significant and

important a cause that the defendant should be held responsible.”

         The degree of proximate causality required to recover
         damages caused by predicate acts of sports bribery, for
         example, will be quite different from the degree required
         for damages caused by predicate acts of transporting
         stolen property.
503 U.S. at 288 (Scalia, J., concurring) (statutory citations omitted).

                                      8
Chisholm v. TransSo. Fin. Corp., 95 F.3d 331, 336 (4th Cir. 1996)

(quoting Prosser & Keeton on Torts § 42, p. 272 (5th ed. 1984)).

The proximate cause determination for RICO standing is guided by

indications     of     preconceived   purpose,     specifically   intended

consequence, necessary or natural result, reasonable foreseeability

of result, the intervention of independent causes, whether the

defendant’s acts are a substantial factor in the sequence of

responsible causation, and the factual directness of the causal

connection.     See, e.g., Chisholm, 95 F.3d at 338; In re Am.

Express, 39 F.3d at 400; Standardbred, 985 F.2d at 104.

       B.   Termination as a Result of a § 1962(b) or § 1962(c)
            Violation

       Khurana claimed that he was discharged from his position as

Medical Director of River Region Hospital because he refused to

participate in and attempted to stop the appellees’ RICO activities

and that his discharge was an act in furtherance of the appellees’

fraud scheme.        Those claims are foreclosed for a § 1962(b) or §

1962(c) violation.      In Cullom v. Hibernia Nat’l Bank,7 we held that

an employee who refuses to participate in an activity that violates

RICO and is constructively discharged for such a refusal does not

have standing to sue under § 1964(c).            859 F.2d 1211, 1212 (5th

Cir. 1988).     We found that such a situation lacked the necessary

“causal connection” between the discharge and the predicate acts.

Id. at 1216 (discussing and relying on RICO “whistle blower” cases

   7
        While Cullom predated Holmes, like Holmes, it imposed a proximate
causation requirement for § 1964(c) standing. Thus, Holmes did not disturb
the our holding in Cullom.

                                      9
and citing Sedima, 473 U.S. 479).             In order to have standing,

Khurana’s     injury,    here   his     discharge,     must     “flow       from   the

commission of the predicate acts.”           Id. (quoting Sedima, 473 U.S.

at 497).       In our proximate causation discussion in Cullom, we

explained that “Cullom’s injury resulted from SNB’s decision to

fire    him    after    he   refused    to   participate        in    the    alleged

scheme . . . [N]either Cullom’s injury nor SNB’s decision to fire

Cullom resulted from the alleged predicate acts.”                    Id. at 1216.

       Just as in Cullom, Khurana pleaded predicate acts for the

alleged violations which did not proximately cause his termination.

Accordingly,     Khurana     lacks     standing   to    bring    a     civil   claim

asserting termination injuries resulting from a § 1962(b) or §

1962(c) violation.

       C.     Loss of Business Income as               a Result of “Illegal
              Competition” with Khurana’s              Hospital and Private
              Practices

       We confront the same standing questions with respect to

Khurana’s standing to bring his civil RICO claim for “illegal

competition:” was there (1) an alleged injury to property or

business (2) proximately caused by (3) a RICO violation?                           See

Holmes, 503 U.S. at 258; Cullom, 859 F.2d at 1214.

       Khurana alleges that the defendants illegally competed with

his post-termination medical practice.                 The defendants treated

psychiatric patients for which they illegally obtained Medicaid and

Medicare reimbursement, thus depleting the available number of

reimbursable patients in the region, some of whom might otherwise

have been treated by Khurana and other area hospitals at which he

                                        10
practiced.

       Khurana’s loss of business income is too remote to satisfy the

proximate causation requirement.           See Holmes, 503 U.S. at 267, 272

(“direct-injury     limitation     [is]    among    the     requirements      of   §

1964(c)”).      Khurana’s injury does not “flow,” Sedima, 473 U.S. at

497,   from    either   the   conspiracy     to    engage    in   a   pattern      of

racketeering activity or from any engagement in a pattern of

racketeering activity.        There are intervening factors between the

defendants’      fraudulently      obtaining       Medicaid       and   Medicare

reimbursement and Khurana’s loss of business income, e.g., a

significant reduction of the available pool of patients in that

market, patients’ choices of physicians, Khurana’s ability to

accommodate additional patients, and exhaustion of state-allocated

funds.        Justice   Scalia   offered     an    apt    observation    in     his

concurrence in Holmes.

         Life is too short to pursue every human act to its
         remote consequences; “for want of a nail, a kingdom
         was lost” is a commentary on fate, not the statement
         of a major cause of action against a blacksmith.
503 U.S. at 287. The necessary contributing factors to this injury

to Khurana make it clear that such an injury was not proximatley

caused by the defendants.        See, e.g., Pillsbury, Madison & Sutro v.

Lerner, 31 F.3d 924 (9th Cir. 1994) (finding proximate cause

lacking because plaintiff subleased office space from another

entity and direct harm ran to the master tenant since plaintiff’s

harm was contingent on the master tenant’s decision to pass the

rent increase through to the subletter-plaintiff); Imagineering

Inc. v. Kiewet Pacific Co., 976 F.2d 1303, 1312 (9th Cir. 1992)

                                      11
(finding no        “direct      relationship”           between    defendants’        conduit

scheme     and    plaintiffs’          failure      to     earn    certain       profits    on

subcontracts because intervening inability of prime contractors to

secure the contracts was direct cause of plaintiffs’ injuries);

Firestone v. Galbreath, 976 F.2d 279, 284, 285 (6th Cir. 1992)

(finding only indirect injury where grandchildren alleged that

defendants       stole     from    grandmother           during    her       lifetime,   thus

decreasing the size of her estate and their inheritance); cf.,

e.g., Beiter Co. v. Blomquist, 987 F.2d 1319 (8th Cir. 1993)

(finding proximate cause where bribery of council member could have

caused     rejection       of     developer’s           development      proposal).         In

addition,        Khurana    was        a    distanced         victim    of    any    “illegal

competition;” the state and federal government were more directly

injured.    See Rehkop v. Berwick Healthcare Corp., 95 F.3d 285, 289

(3d Cir. 1996) (noting that Medicare and Medicaid programs and

taxpayers are victims of Medicaid/Medicare fraud).                             As such, the

risk of multiple recoveries indicates an absence of proximate cause

in   the   same     fashion       in       which   it    is    absent    in    the   case   of

shareholders’ RICO claims that are derivative of a corporation.

See Holmes, 503 U.S. at 273; Manson v. Stacescu, 11 F.3d 1127, 1131

(2d Cir. 1993) (finding no “direct relation” because shareholder’s

injury is generally derivative of injury to corporation and thus

not directly related to defendant’s injurious conduct).                               Khurana

thus lacks § 1964(c) standing for all of his RICO claims premised

on any injuries from “illegal competition.”

      D.     Loss of Opportunity and Damage to Professional Reputation
             as a Result of “Fraudulent Hiring”

                                               12
      Khurana’s set of RICO claims based on injuries resulting from

being hired at River Region must be examined under the same

proximate causation requirement.

             1.       Loss of Business Opportunities and Damage to
                      Professional Reputation as a Result of Substantive
                      RICO Violations

      The   injuries        pleaded      by     Khurana      are     denigration    to   his

professional reputation via the “harmful employment associations”

that resulted from being “fraudulently lured” into his position at

the   hospital        and   the   loss     of    foregone        legitimate     employment

opportunities.          In Sedima, the Court held that the injury relied

on by a plaintiff must be the result of a § 1962 violation. 473
U.S. at 496.          The Court explained that for standing based on a §

1962(b)     or    §     1962(c)    violation,            a   valid    RICO   injury      must

necessarily stem from predicate acts that underpin the § 1962

violation.       Id. at 497.       The necessary racketeering activities are

those activities catalogued in § 1961(1).                        Id. at 495.        Khurana

contends that the defendants caused him injury by fraudulently

inducing him to accept employment via mail and wire fraud, thereby

damaging his reputation through association with their fraudulent

activities        and    depriving       him        of   other     legitimate      business

opportunities.

             a.       Professional Reputation Damage

      Khurana         pleaded     injury       proximately         resulting    from     the

defendants’ violations of § 1962(b) and § 1962(c) when he asserted

the injury of business reputation harm.                            For § 1962(b) and §

1962(c) violations, the injurious conduct must be racketeering acts

                                               13
as listed in § 1961(1).      According to Khurana’s pleadings, he

detrimentally relied on the appellees’ misrepresentations as to the

legitimacy of the hospital’s operations in taking his position with

the hospital.    Such reliance on a predicate fraud act can indicate

the necessary proximate relationship between the injury asserted

and the injurious conduct. See Chisholm v. TransSo. Fin. Corp., 95
F.3d 331, 337 (4th Cir. 1996) (citing cases); Standardbred, 985
F.2d at 104. In Standardbred, the defendants acquired a race track

financed by municipal bonds. In the application for the bonds, the

defendants stated an intent to operate the race track and assured

the plaintiffs of such as well.                 The defendants subsequently

stopped racing.    The Second Circuit held that the plaintiffs had §

1964(c) standing because in the fraudulently induced belief that

the   racing    would   continue,       they     purchased,       relocated   and

reconstructed capital equipment for use at the track and designed

their purchases and training of horses with the intent to race them

at the track.    Khurana similarly relocated himself and his medical

practice to this hospital, a significant financial and professional

decision,      allegedly     as     a        result   of        the    appellees’

misrepresentations      as   to   the        legitimacy    of    the   hospital’s

operations.

      In addition, the damage to Khurana’s professional reputation

was a foreseeable result of the various racketeering acts of wire

and mail fraud.    See discussion supra Part II.C.               Khurana, as the

hospital’s director, was essentially the figurehead of a fraud-

ridden, now defunct institution.             The act of fraudulently hiring

                                        14
him can be a proximate cause of any damage that his professional

reputation has suffered.         Damage to his professional reputation is

easily    seen   as    a   natural     outgrowth      of   such   an   employment

association. As the predicate acts were pleaded as responsible for

Khurana’s acceptance of his employment with River Region, we find

that the pleadings presented the claim of necessary proximate cause

for Khurana’s standing for this claim.            See Cox v. Adm’r U.S. Steel

& Carnegie, 17 F.3d 1386, 1399 (11th Cir. 1994) (finding proximate

cause where defendants’ conduct was substantially responsible for

claimed injuries); see also generally Prosser & Keeton on Torts §

41, p. 268 (discussing substantial responsibility and proximate

cause).

            b.    Legitimate Employment Opportunity

     Regarding     Khurana’s      claimed      loss   of   legitimate   business

opportunity, we begin our consideration by noting that RICO civil

standing   is    not   limited    to    only    the   immediate    victim   of   a

defendant’s RICO violation.          See Zervas v. Faulkner, 861 F.2d 823,

823, 833 (5th Cir. 1988) (“A requirement that the nexus between the

injury and a predicate act be ‘direct’ may . . . be overly

restrictive.”); Mid Atl. Telecom, Inc. v. Long Distance Servs.,

Inc., 18 F.3d 260, 263 (4th Cir. 1994) (rejecting adoption of a

rule that only injuries suffered by the immediate victim of a

predicate act satisfy the “by reason of” requirement of § 1964(c)).

In Mid Atlantic, a plaintiff telephone company accused one of its

competitors of violating RICO by defrauding its customers with

fictitious charges, enabling it to charge lower rates to entice new

                                        15
subscribers.   The plaintiff company alleged that it lost revenues

from subscribers who were defrauded into accepting the fraudulent

lower rates of the defendant company.       The Fourth Circuit rejected

the argument that the plaintiff company lacked standing because the

customers were the directly injured parties and only they were

proximately injured by its alleged misconduct.           Similarly, Khurana

may not have been the intended target of the fraud scheme, but like

the telephone company in Mid Atlantic, he pleaded the loss of a

legitimate business opportunity resulting from the defendants’

alleged racketeering acts.     Holmes did not preclude a RICO claim

for “indirect” injuries, but rather instructed the federal courts

to employ common law proximate causation principles.             See Israel

Travel, 61 F.3d at 1257.    Some indirect RICO injuries, such as this

one, satisfy the proximate causation requirements of common law.

Id.   In fact, we have previously rejected a direct versus indirect

injury test as the dispositive standing inquiry for civil RICO

claims.   See Ocean Energy II, Inc. v. Alexander & Alexander, Inc.,

868 F.2d 740, 746 (5th Cir. 1989); see also Reynolds v. East Dyer

Dev. Co., 882 F.2d 1249 (7th Cir. 1989) (avoiding using direct

versus indirect terminology to make standing determinations and

instead focusing on causation); Prosser & Keeton on Torts § 42, p.

273-74 (discussing direct versus indirect as only one of several

theories of proximate causation).

      In Mid Atlantic, the Fourth Circuit noted that the plaintiff

was not   seeking   to   vindicate   the   claims   of    its   competitor’s

customers, but rather its own alleged distinct and independent

                                     16
injuries of lost customers and lost revenues.                        Id. at 264.      We

agree    with   the   Fourth       Circuit      that    distinct     and   independent

injuries are in keeping with the Supreme Court’s understanding of

proximate cause in Holmes.            Khurana pleads his own injury of loss

of legitimate employment opportunity.                   In Holmes, an intervening

event, the insolvency of the securities brokership, broke the

causal link between the plaintiff’s injury and the defendant’s

conduct, 503 U.S. at 262, 264, so that the plaintiff was a

“secondary victim.”          Id. at 273.         In contrast, the plaintiff in

this case seeks to recover for losses substantially attributable to

the defendants’ conduct.

     Finally, as explained before, the fact that Khurana pleaded

reliance on the defendants’ racketeering acts as a cause of this

injury    indicates      a    valid      claim     that    the     racketeering      acts

proximately     caused       him    to    forego       other     legitimate   business

opportunities.        See Chisholm, 95 F.3d at 337; Standardbred, 985
F.2d 102.   Khurana claims that he was fraudulently induced to take

his position with the hospital and argues that such proximately

caused him to lose other legitimate business opportunities.                           As

Khurana’s loss of other employment opportunities was foreseeable by

the defendants and could certainly be anticipated as a natural

consequence     of    their    alleged       misrepresentations,           Khurana   has

sufficiently pleaded that the alleged substantive violations of §

1962(b) and § 1962(c) proximately caused his business opportunity

loss.     See Chisholm, 95 F.3d at 337 (relying on plaintiff’s

detrimental reliance on defendants’ material misrepresentations to

                                           17
find proximate cause and noting that “[i]n order for the scheme to

succeed, the appellants needed to be convinced that the ‘private

sales’     referenced      in     the    TransSouth      notices      were

legitimate . . . . concealment of the nature of the ‘private sales’

was the very linchpin of the scheme.”); cf. Shearin v. E.F. Hutton

Group, Inc., 885 F.2d 1162, 1170 (3d Cir. 1989) (affirming the

dismissal of a RICO claim based on a “loss” of the plaintiff’s

former job where there was no allegation that the employer reneged

or the plaintiff was “duped out of her old job”).

           .     Standing for a § 1962(d)-based Civil RICO Claim for
                 Loss of Business Opportunity and Damage to
                 Professional Reputation as a Result of Hiring

     Khurana pleaded that the defendants conspired to commit RICO

violations, and in doing so, injured his professional reputation

and caused him a loss of legitimate business opportunity.               In

Cullom, we held that a “retaliatory” discharge lacks sufficient

causation for § 1964(c) standing for a substantive RICO violation.

However, Cullom was limited to a causation inquiry and did not

address standing for a RICO civil claim premised on conspiracy

acts, i.e., acts in furtherance of a conspiracy to commit a pattern

of racketeering, a violation of § 1962(d).8

     There is a division of circuit authority on the question of

     8
        In this section we consider civil standing for a § 1962(d)
violation. Based on our previous discussion in Part II.D.1., we also
recognize that Khurana pleaded proximate cause for § 1962(d) violations
causing reputation damage and business opportunity loss where the § 1962(d)
violations are predicated upon the racketeering acts of wire and mail fraud
already discussed. Accordingly, we also reverse the district court’s
dismissal of Khurana’s claims on that basis, subject to our discussion in
Part III in which we affirm the dismissal of some of Khurana’s claims as
to the corporate defendants.

                                    18
whether § 1964(c) civil RICO standing for a § 1962(d) violation may

be   premised     on   injury      proximately       caused    by    overt   acts    in

furtherance of the conspiracy that are not § 1961(1) predicate

acts.   See Reddy v. Litton Indus., Inc., 502 U.S. 921, 921, 112 S.

Ct. 332, 332, 116 L. Ed. 2d 272 (1991) (White, J., dissenting from

denial of certiorari and noting circuit split); Bowman v. Western

Auto Supply Co., 985 F.2d 383, 386 (8th Cir. 1993) (collecting

cases).     The    Third     and    Seventh      Circuits     have   held    that    the

injurious acts for § 1964(c) standing for a claim based on a §

1962(d) violation may be racketeering acts as listed in § 1961(1)

as well as overt acts in furtherance of the conspiracy.                      Schiffels

v. Kemper Fin. Servs., Inc., 978 F.2d 344 (7th Cir. 1992) (adopting

reasoning of Shearin); Shearin v. E.F. Hutton Group, Inc., 885 F.2d
1162 (3d Cir. 1989); see also Gagan v. Am. Cablevision, Inc., 77
F.3d 951, 958-59 (7th Cir. 1996) (reviewing circuit split and

following Schiffels); Rehkop v. Berwick Healthcare Corp., 95 F.3d
285, 290 & n.6 (3rd Cir. 1996) (noting circuit split and applying

Shearin).   In contrast, for example, the Second Circuit has held

that because a conspiracy, an agreement to commit predicate acts,

cannot by itself cause any injury and because RICO’s purpose is to

target RICO activities and not other conduct, standing may be

founded only upon injury from overt acts that are also § 1961

predicate   acts,      and   not     upon    overt    acts     furthering      a    RICO

conspiracy. See Terminate Control Corp. v. Horowitz, 28 F.3d 1335,

1344-45 (2d Cir. 1994).

      Section 1962(d) provides that “[i]t shall be unlawful for any

                                            19
person to conspire to violate any of the provisions of subsection

(a), (b), or (c) of this section.”             It is well-established that we

must follow a plain meaning statutory interpretation unless a

statutory provision presents an ambiguity or an inconsistency with

a statute’s legislative purposes.                   United States v. Ron Pair

Enters., Inc., 489 U.S. 235, 242, 109 S. Ct. 1026, 1030, 103 L. Ed.
2d 290 (1989).           Like the Seventh Circuit, we refuse to place “a

limitation on RICO standing that RICO itself does not impose.”                   See

Schiffels, 978 F.2d at 346.          Since § 1962(d) does not require that

a predicate racketeering act actually be committed, it follows that

the act causing a § 1964(c) claimant’s injury need not be a

predicate act of racketeering.           A person injured by an overt act in

furtherance of a RICO conspiracy has been injured by reason of the

conspiracy, and thus has § 1964(c) standing.                 See Id. at 349.      To

interpret otherwise would ignore § 1964(c)’s provision for civil

liability     for,       inter   alia,   a    violation     of   §   1962(d)   that

proximately injures a person’s property or business.                  Buttressing

this position is the Supreme Court’s and Congress’s direction that

“RICO   is    to    be    read   broadly”     and    “‘liberally     construed   to

effectuate its remedial purpose.’”                  Sedima, 473 U.S. at 497-98

(quoting Pub. L. No. 91-452, § 904(a), 84 Stat. 947).

        In addition, while the Second Circuit noted that RICO was

designed     to    combat    substantive      violations,    Hecht    v.   Commerce

Clearing House, Inc., 897 F.2d 21, 25 (2d Cir. 1990), the provision

for conspiracy violations was part and parcel of Congress’s intent

and plan and cannot be ignored.                 See Sedima, 473 U.S. at 499

                                         20
(noting that although RICO used in ways not originally envisioned,

Congress and not the courts must amend statute).

     Having determined that Khurana’s standing is not precluded by

the necessity of causative racketeering acts, we must consider

whether his pleading sufficiently alleges proximate causation for

§ 1964(c) standing premised on an underlying § 1962(d) violation.

     In Shearin, the Third Circuit held that the plaintiff’s hiring

as window dressing and firing to preserve the fraud both qualified

as conspiracy acts for a § 1962(d)-based civil claim.

       Shearin’s hiring and firing plausibly constitute
       overt acts that not only would establish a
       conspiracy, but in this case were allegedly
       essential to it.    Assuming that the hiring and
       firing were injuries, those injuries did occur “by
       reason of” Hutton’s violation of section 1962(d).
885 F.2d at 1168-69.      Similar facts are presented here.            Hiring

Khurana allegedly allowed the defendants to pose as a medical

facility qualifying for federal funds, which allowed them to

fraudulently obtain Medicare and Medicaid reimbursement.               As in

Shearin, it appears that the hiring of Khurana was an overt act

critical to the conspiracy.           As the hiring of Khurana was an

alleged   predicate   conspiracy      act,    any   lost    opportunity    for

legitimate   employment     and   damage     to   professional     reputation

“flowed” from RICO predicate acts, see Cullom, 859 F.2d at 1215,

and Khurana has pleaded the necessary proximate cause for his claim

of hiring injuries based on a § 1962(d) violation. Khurana thus has

cleared, from a pleading standpoint, the proximate cause hurdle for

standing for these claims.

     E.    Standing   for    a    §   1962(d)-based        Civil   Claim   for

                                      21
            Termination Injuries

     We explained earlier that Khurana does not have standing under

§ 1964(c) to pursue a § 1962(b) or § 1962(c) claim for termination

injuries.    However, he may have § 1964(c) standing to pursue a

claim for termination injuries as a result of an act in furtherance

of a conspiracy.       RICO racketeering acts as well as acts in

furtherance of a RICO conspiracy may provide standing to sue for

civil conspiracy claims if they are the proximate cause of an

injury.

     Khurana alleged that he was discharged from his position as

Medical   Director    in   furtherance   of   the   appellees’   scheme   of

Medicaid fraud.      “The discharge was intended to remove Plaintiff

from continuing to have access to information about defendants and

to intimidate him to hinder and prevent his testimony as a witness

in future proceeding,” “to eliminate his access to information

concerning the defendants’ illegal activities” and was an act “to

maintain control of and conduct” the enterprise.         In addition, and

probably most importantly, Khurana alleges that terminating him had

the effect of rescinding Khurana’s order of ten days previous in

which Khurana suspended the admission to the hospital of illegal

Medicaid patients.     Khurana alleges that he was terminated so that

the defendants could “continu[e] their illegal procurement of

Medicaid and Medicare funds and minimiz[e] impediments thereto.”

As such, Khurana has presented the necessary proximate causation

for standing to pursue his claim for termination injuries because

the termination was an alleged overt act in furtherance of the

                                    22
alleged RICO conspiracy.           Such an allegation presents sufficient

causation to confer standing.               See Rehkop, 95 F.3d at 290-91

(holding that the plaintiff’s termination constituted an overt act

in furtherance of an alleged conspiracy and thus the plaintiff had

RICO standing); Schiffels, 978 F.2d at 350-51 (holding that a

plaintiff-employee may have RICO standing when he alleges that he

was fired in an attempt to prevent him from causing the conspiracy

to   unravel     by   disclosing    scheme);    Shearin, 885 F.2d    at   1170

(holding that allegation that plaintiff was fired in furtherance of

a conspiracy in violation of § 1962(d) stated a claim for relief

under § 1964(c)); White v. Hall, 683 F. Supp. 639, 642 (E.D. Ky.

1988) (finding civil RICO standing for discharged employee for

alleged § 1962(d) violation where the plaintiff alleged that part

of conspiracy was to cover up illegalities by terminating employees

refusing to participate in schemes).

III.        The Enterprise-Person            Distinction   for     a     § 1962(c)
            Violation

       Khurana    also   contends    that    the   district   court      erred   in

dismissing his claims under 18 U.S.C. § 1962(c) and § 1962(d) (to

the extent involving a conspiracy to violate § 1962(c)) for failure

to plead a RICO enterprise which is separate and distinct from the

RICO person referenced in § 1962(c).

       We must consider this contention in relation to Khurana’s

remaining § 1962(c) claims.           The remaining § 1962(d) claims must

also be considered in relation to this issue to the extent that

they are based on a conspiracy to commit a § 1962(c) violation.

Ashe v. Corley, 992 F.2d 540, 544 (5th Cir. 1993).               Section 1962(c)

                                        23
provides that

       [i]t shall be unlawful for any person employed by or
       associated with any enterprise engaged in, or the
       activities of which affect, interstate or foreign
       commerce, to conduct or participate, directly or
       indirectly, in the conduct of such enterprise’s
       affairs through a pattern of racketeering activity
       or collection of unlawful debt.

18 U.S.C. § 1962(c).          The statutory definition of enterprise

includes “any individual, partnership, corporation, association, or

other alleged legal entity, and any union or group of individuals

associated in fact although not a legal entity.”            18 U.S.C. §

1961(4). Khurana alleged that the enterprise is an association-in-

fact of all five defendants (the three individuals and the two

corporate entities).

     The   district   court    dismissed   Khurana’s   claims   that   were

bottomed on § 1962(c) on the alternative basis (from the dismissal

on the basis of standing) that Khurana failed to plead a RICO

defendant that was distinct from the enterprise in his § 1962(c)-

premised claim and his claim based on a conspiracy to commit a §

1962(c) violation in violation of § 1962(d).

     For purposes of a claim based on § 1962(c), RICO persons

associated with or employed by an enterprise must be distinct from

the RICO “enterprise.”        Crowe v. Henry, 43 F.3d 198, 205-06 (5th

Cir. 1995).     Section 1962(c) imposes liability on an employee or

associate of an enterprise conducting affairs of the enterprise

through a pattern of racketeering activity and, logically, such an

individual cannot employ or associate with itself.              See, e.g.,

Ashe, 992 F.2d at 544.    Accordingly, some of Khurana’s claims that

                                    24
are based on 18 U.S.C. § 1962(c) fail because his pleadings do not

contain a sufficient distinction between the persons who allegedly

committed the unlawful acts and the enterprise with which they are

employed or associated.

       Khurana has failed to plead a corporate defendant distinct

from the enterprise in that the association-in-fact enterprise that

he pleaded is in reality a “stand-in,” or another name, for the

corporate entity. See Riverwoods Chappaqua Corp. v. Marine Midland

Bank, N.A., 30 F.3d 339, 344 (2d Cir. 1994).             By alleging as a RICO

enterprise a group consisting solely of a bank and several of its

employees,     the   plaintiffs     in   Riverwoods     Chappaqua    effectively

identified the RICO enterprise as the corporate defendant.                      The

distinctiveness requirement may not be avoided

         by alleging a RICO enterprise that consists merely
         of a corporation defendant associated with its own
         employees or agents carrying on the regular affairs
         of the defendants . . . . Where employees of a
         corporation associate together to commit a pattern
         of predicate acts in the course of their employment
         and on behalf of the corporation, the employees in
         association with the corporation do not form an
         enterprise distinct from the corporation.

Id.    While it is theoretically possible for a corporation to play

a   separate   active   role   in    RICO      violations     committed    by   its

employees and agents, see Securitron Magnalock Corp. v. Schnabolk,

65 F.3d 256, 263 (2d Cir. 1995), cert. denied, — U.S. —, 116 S. Ct.
916, 133 L. Ed. 2d 846 (1996); Brittingham v. Mobil Corp., 943 F.2d
297, 302 (3d Cir. 1991); Petro-Tech, Inc. v. Western Co. of No.

Am.,   824 F.2d 1349,   1361    (3d      Cir.   1987),   when   the   alleged

association-in-fact entity is in reality no different from the

                                         25
association of individuals or entities that constitute a defendant

“person”     and        carry    out        its    activities,        the    distinctiveness

requirement is not met in regard to that defendant.                             See Parker &

Parsley Petroleum v. Dresser Indus., 972 F.2d 580, 583-84 & n.3

(5th Cir. 1992) (finding an association-in-fact of employees of

corporation        to    be     the    defendant         corporate     entity    functioning

through its employees in the course of their employment); Glessner

v. Kenny, 952 F.2d 702, 712 (3d Cir. 1991); Brittingham, 943 F.2d

at   302    (“Without         allegations          or    evidence     that    the    defendant

corporation had a role in the racketeering activity that was

distinct from the undertaking of those acting on its behalf, the

distinctiveness requirement is not satisfied.”).                             Khurana has not

alleged that defendants River Region Hospital or Innovative had any

active role in the activities of its affiliated entity, employees

or officers.            See Glessner, 952 F.2d at 712 & n.10.                        In fact,

Khurana alleged the exact opposite, terming the corporate entities

“passive instruments” in his complaint.

      In addition, the distinctiveness requirement is not satisfied

by pleading a subsidiary corporation or affiliated entity as a

perpetrator-defendant                 if     the        parent     corporation       and   the

subsidiary’s roles in the alleged racketeering activities are not

sufficiently distinct.                Discon, Inc. v. Nynex Corp., 93 F.3d 1055,

1063-64 (2d Cir. 1996) (distinctiveness requirement not satisfied

where      three    corporate              defendants       that      constituted      alleged

enterprise, although legally separate, “operated within a unified

corporate     structure”          and       were    “guided      by   a     single   corporate

                                                   26
consciousness”), cert. denied, — U.S. —, 118 S. Ct. 49, — L. Ed. 2d

— (1997); Compagnie De Reassurance D’Ile de France v. New England

Reins. Corp., 57 F.3d 56 (1st Cir. 1995); Lorenz v. CSX Corp., 1
F.3d 1406, 1412 (3d Cir. 1993) (“A RICO claim under § 1962(c) is

not stated where the subsidiary merely acts on behalf of, or to the

benefit of, its parent.”); Chamberlain Mfg. Corp. v. Maremont

Corp., 919 F. Supp. 1150, 1154-58 (N.D. Ill. 1996)(holding that

where    enterprise   was   an   association-in-fact        of    the    parent

corporation and its subsidiary, it lacked its own distinct legal

identity for purposes of § 1962(c)).          In this case, Khurana did not

plead any distinct roles for the subsidiary River Region and the

parent corporation Innovative so that they might be regarded as

having any distinctiveness from the alleged enterprise.             “We would

not take seriously . . . an assertion that a defendant could

conspire with his right arm, which held, aimed and fired the fatal

weapon.”   United States v. Computer Sciences Corp., 689 F.2d 1181,

1190 (4th Cir. 1982).        As the association-in-fact pleaded by

Khurana is in reality the corporate entity, we must affirm the

district court as to its dismissal of these claims against the

corporate entities as the distinctiveness requirement is not met in

relation to these two defendants.             River Region and Innovative

cannot   simultaneously     be   both   the    enterprise   and    the   named

defendants.     See Securitron, 65 F.3d at 263.              Therefore, we

conclude that Khurana’s attempt to circumvent the distinction

requirement in regard to the corporate defendants by pleading an

association-in-fact theory must be rejected.

                                    27
     We must also consider the claims in relation to the other

named defendants, the officers and employees of the two corporate

entities.     See, e.g, Banks v. Wolk, 918 F.2d 418, 424 (3d Cir.

1990)   (leaving   RICO    action   intact   against   certain     individual

defendants while dismissing the corporate defendant for failure to

withstand distinctiveness requirement); Kehr Packages, Inc. v.

Fidelcor, Inc., 926 F.2d 1406, 1411 (3d Cir. 1991) (considering

§ 1962(c) claim separately for each defendant’s fulfillment of

distinctiveness and other requirements).           As we explained above,

Khurana’s complaint essentially pleads the corporation as the

enterprise.     Section 1962(c) may impose liability on individual

corporate   officers      and   employees    who   conduct   the    corporate

enterprise which employs them through a pattern of racketeering

activity.     See Jaguar Cars, Inc. v. Royal Oaks Motor Car Co., 46
F.3d 258, 266-269 (3d Cir. 1995); United States v. Robinson, 8 F.3d
398, 407 (7th Cir. 1993); Sever v. Alaska Pulp Corp., 978 F.2d
1529, 1534 (9th Cir. 1992); Ashland Oil, Inc. v. Arnett, 875 F.2d
1271, 1280 (7th Cir. 1989); McCullough v. Suter, 757 F.2d 142, 144

(7th Cir. 1985); see also Securitron, 65 F.3d at 263.          Accordingly,

we reverse the dismissal of the remaining § 1962(c)-related claims

against the three individual defendants.

                                 CONCLUSION

     For the foregoing reasons, we REVERSE in part and AFFIRM in

part. We affirm the district court’s dismissal of Khurana’s claims

based on alleged violations of § 1962(c) and § 1962(d) (to the

extent they allege conspiracy to violate § 1962(c)) against the two

                                     28
corporate   defendants.      We   also   affirm   the   district   court’s

dismissal of all claims alleging injury from “illegal competition.”

Additionally, we affirm the district court’s dismissal of Khurana’s

claims alleging termination injuries as a result of § 1962(b) and

§ 1962(c) violations. We reverse the district court’s dismissal of

all other claims with directions to reinstate them for further

proceedings consistent with this opinion.9

     9
         Our reversal of the dismissal of these claims is not meant to
express any opinion as to other issues related to these claims which the
district court may address on remand. Given that the parties did not brief
any other issues to the district court and that only the appellant briefed
the properness of his pleadings of RICO violations, we have concerned
ourselves only with the district court’s legal conclusions supporting its
dismissal of Khurana’s RICO claims, namely the issues of proximate
causation for his standing and the necessary distinctiveness for the §
1962(c)-related claims. We leave any other issues or challenges for the
district court’s consideration in the first instance. See Youmons v.
Simon, 791 F.2d 341, 348 (5th Cir. 1986) (declining to consider challenges
to the particularity with which mail and wire fraud allegations were
pleaded in a RICO claim, preferring to remand to district court because the
district court did not consider such challenges); Morosani v. First Nat’l
Bank of Atlanta, 703 F.2d 1220, 1222 (11th Cir. 1983) (refusing to decide
at interlocutory appeal stage theories for dismissing RICO claims that were
not decided by district court, preferring to remand theories for district
court to address in first instance).

                                    29