                                                                    [PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT
                                                                  FILED
                                                         U.S. COURT OF APPEALS
                                  No. 09-12033             ELEVENTH CIRCUIT
                                                               MAY 14, 2010
                                                                JOHN LEY
                                                                  CLERK
                      D. C. Docket Nos. 03-21266 CV-FAM
                               00-1334-MD-FAM

AMERICAN DENTAL ASSOCIATION, in an
associational capacity on behalf of its members,
JOHN MILGRAM, DDS,
SCOTT A. TRAPP, DDS, individually and
on behalf of all other similarly situated,
BYRON C. DESBORDES,

                                                        Plaintiffs-Appellants,

                                      versus

CIGNA CORPORATION,
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
CIGNA DENTAL HEALTH, INC., METLIFE, INC.,
METROPOLITAN LIFE INSURANCE COMPANY,
MUTUAL OF OMAHA INSURANCE COMPANY,

                                                        Defendants-Appellees.



                   Appeal from the United States District Court
                       for the Southern District of Florida


                                 (May 14, 2010)
Before DUBINA, Chief Judge, FAY, Circuit Judge, and ALBRITTON,* District
Judge.

DUBINA, Chief Judge:

       The question presented in this appeal is whether, under Fed. R. Civ. P. 9(b)

and the pleading standard recently articulated by the Supreme Court in Bell

Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007) and Ashcroft v.

Iqbal, __ U.S. __, 129 S. Ct. 1937 (2009), Plaintiffs/Appellants (“Plaintiffs”) have

sufficiently pled factual allegations in their RICO complaint to survive a motion to

dismiss. After reviewing the briefs and record and having the benefit of oral

argument, we affirm the district court order dismissing the complaint.

                                   I. BACKGROUND

       Plaintiffs are three dentists practicing in Illinois, Nebraska, and Maryland.

The American Dental Association (“ADA”), a non-profit dental association

headquartered in Chicago, also asserts representational standing on behalf of its

members. The defendants/appellees are dental insurance companies: Cigna

Corporation, Connecticut General Life Insurance Company, Cigna Dental Health,

Inc., MetLife Inc., and Metropolitan Life Insurance Company (“Defendants”).

Plaintiffs contracted with Defendants to provide dental services to Defendants’


       *
      Honorable W. Harold Albritton, United States District Judge for the Middle District of
Alabama, sitting by designation.

                                              2
members through dental service managed care plans. Plaintiffs now assert

violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”),

18 U.S.C. §§ 1961–1968 (2006), as well as state law claims for breach of contract

and tortious interference with contractual relations and existing and prospective

business expectations. More specifically, Plaintiffs allege, on behalf of

themselves and a putative class of similarly-situated dentists, that Defendants

“engaged in a systematic, fraudulent scheme to diminish payments to Class

Plaintiffs through automatic downcoding, Current Dental Terminology (‘CDT’)

code manipulation and improper bundling.”2 D.E. 111, at ¶ 3.

       Plaintiffs filed this purported class action lawsuit in the Southern District of

Florida in May 2003. The case was originally assigned to Judge Adalberto Jordan.


       2
         The Council on Dental Benefit Programs created an educational manual to include the
Code on Dental Procedures and Nomenclature (“the Code”). Current Dental Terminology, Fifth
Edition (“CDT”) contains recent revisions to the Code. The Code, which is designed as the
national standard for reporting dental services by the Federal Government under the Health
Insurance Portability and Accountability Act of 1996 (“HIPAA”), is currently recognized by
third-party payers, including Defendants, nationwide. An underlying purpose of the Code is to
provide a uniform language that accurately describes the dental, surgical and diagnostic services
a dental service provider has rendered, thereby giving Defendants or their designated payers the
information they need to process a claim for payment. To claim reimbursement for dental
services, dental health care providers complete a standardized form incorporating a CDT coding
system through which procedures are identified by standardized designations. Plaintiffs allege
that Defendants utilized automated programs to manipulate procedure codes on submitted claim
forms and thereby reduce the amount paid for dental services. According to Plaintiffs’
complaint, “downcoding” reduces or denies payment of claims submitted by dental providers by
changing the CDT code assigned to a particular service to a less expensive CDT code. D.E. 111,
at ¶ 40. “Bundling” reduces or denies payment of claims by combining the CDT codes of two or
more appropriately performed and billed procedures into one CDT code. Id. at ¶ 41.

                                                3
Defendants moved to dismiss the RICO and state law claims in the original

complaint. On March 30, 2005, Judge Jordan dismissed all of the RICO

allegations without prejudice on the ground that Plaintiffs’ RICO enterprise

allegations were deficient. Plaintiffs filed their first amended complaint on April

18, 2005. On June 30, 2005, while Defendants’ motion to dismiss the first

amended complaint was pending, Judge Jordan transferred the case to Judge

Frederico Moreno as a case related to the In re Managed Care Litigation Multi-

District Litigation (“Managed Care MDL”), 00-MD-1334, an MDL that has been

ongoing in the Southern District of Florida since 2000.3 On November 28, 2005,

Judge Moreno designated the case as a tag-along action within the Managed Care

MDL and closed it for statistical purposes.

       In February 2008, Judge Moreno denied all pending motions in the case

with leave to re-file, and requested status reports. During the roughly two-year

lull in activity in this case, the United States Supreme Court decided Bell Atlantic


       3
        The Managed Care MDL was originally limited to claims brought by medical doctors
against Humana, Inc., a nationwide managed care organization, and other “major HMOs,” see
Klay v. Humana, Inc., 382 F.3d 1241, 1249–50 (11th Cir. 2004), but grew to include many
disputes between healthcare providers of all kinds (e.g., chiropractors, obstetricians and
gynecologists, and dentists) and managed care companies who use computer software programs
to process claims. Providers have, among other things, claimed RICO violations, alleging that
managed care entities, acting individually and as part of a conspiracy, developed and used certain
claims processing, claims payment and/or other practices in order to “deny, delay, and diminish”
payments allegedly owed. See id. at 1247 & n.1. Among the complained-of practices are
“downcoding” and “bundling.” See id. at 1248.

                                                4
Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007). Although the district

court had not ruled on the motion to dismiss the first amended complaint,

Plaintiffs sought and received Defendants’ consent to file a motion seeking leave

to file a second amended complaint.

      On May 1, 2008, Plaintiffs filed their Second Amended Complaint, which is

at issue in this appeal. The complaint contains six counts. Counts I-IV are federal

RICO and RICO-related claims: RICO conspiracy under 18 U.S.C. § 1962(d)

(Count I), a claim for aiding and abetting RICO violations under 18 U.S.C. § 2

(Count II), a substantive RICO claim under 18 U.S.C. § 1962(c) (Count III), and a

claim for declaratory relief under 18 U.S.C. § 1964(a) and 28 U.S.C. § 2201 for

RICO violations (Count IV). Counts V and VI are state law claims for breach of

contract and tortious interference with contractual relations and with existing and

prospective business expectancies, respectively.

      On June 6, 2008, Defendants moved to dismiss Counts I-IV and VI of the

Second Amended Complaint. They did not move to dismiss the breach of contract

claim (Count V). After briefing, on February 11, 2009, the district court issued a

written order granting the motion to dismiss without prejudice. The court held

that all four RICO claims were deficiently alleged. Citing Twombly, the court held

that Plaintiffs’ substantive RICO allegations “fail to set forth a violation of §

                                           5
1962(c) that is ‘plausible on its face’ because they do not raise a right to relief

‘above [the] speculative level.’” In re Managed Care Litig., No. 03-21266-CIV,

2009 WL 347795, at *4 (S.D. Fla. Feb. 11, 2009) (quoting Twombly, 550 U.S. at

570, 555, 127 S. Ct. at 1974, 1965). The court also found the conspiracy claim

lacking because the Second Amended Complaint did “not contain sufficient

factual allegations about the Defendants agreeing with other entities and/or

persons to engage in the ongoing criminal conduct of an enterprise.” Id. The

court held that the remaining RICO claims were deficient for similar reasons.

      The district court, however, gave Plaintiffs a chance to file another amended

complaint by February 26, 2009. It directed Plaintiffs to “conform with the

pleading requirements announced in Twombly and applied by this Court in

Solomon and Genord,” id. at *7, which are two cases also involved in the

Managed Care MDL. See Solomon v. Blue Cross & Blue Shield Ass’n, 574 F.

Supp. 2d 1288 (S.D. Fla. 2008) (dismissing complaint for failure to state a claim

under Twombly); Genord v. Blue Cross & Blue Shield of Mich., No. 07-21688-

CIV, 2008 WL 5070149 (S.D. Fla. Nov. 24, 2008) (same). The court warned that

similar failure to comply with the new pleading standard would result in dismissal

with prejudice. In re Managed Care Litig., 2009 WL 347795, at *8.




                                           6
      On February 23, 2009, Plaintiffs sought an extension of time to file a third

amended complaint. On February 24, 2009, the district court denied that motion,

stating:

      Given the history of this particular case and the consistent
      insufficiencies of the Plaintiffs’ allegations, the Court would likely
      have had sufficient justification to dismiss Counts I-IV and VI of the
      Second Amended Complaint with prejudice. Because the plaintiffs
      are operating under newer, more stringent pleading requirements, the
      Court decided to afford them one last bite at the proverbial apple. . . .
      At this point, the factual averments necessary to satisfy Twombly are
      either readily included in yet another amended complaint, or simply
      do not exist.


D.E. 143, at 2. Plaintiffs never filed a third amended complaint. On March 2,

2009, the district court dismissed Counts I-IV and VI with prejudice. The district

court entered a final order on March 23, 2009, declining to exercise supplemental

jurisdiction over Count V and dismissing the case in its entirety. Plaintiffs now

appeal the dismissal of the RICO and RICO-related claims in their complaint.

                          II. STANDARD OF REVIEW

      “We review de novo the district court’s grant of a motion to dismiss under

Rule 12(b)(6) for failure to state a claim, accepting the allegations in the complaint

as true and construing them in the light most favorable to the plaintiff.” Mills v.




                                          7
Foremost Ins. Co., 511 F.3d 1300, 1303 (11th Cir. 2008) (quoting Castro v. Sec’y

of Homeland Sec., 472 F.3d 1334, 1336 (11th Cir. 2006)).

                                   III. DISCUSSION

      A. Twombly and Iqbal

      Because the present case reflects the concerns that motivated the Supreme

Court to adopt a new pleading standard in Twombly and Iqbal, a brief discussion

of those decisions is warranted.

      Fed. R. Civ. P. 8(a)(2) requires that a pleading contain “a short and plain

statement of the claim showing that the pleader is entitled to relief” in order to

“give the defendant fair notice of what the . . . claim is and the grounds upon

which it rests.” Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 103 (1957). In

Twombly, the Supreme Court expressly “retired” the “no set of facts” pleading

standard under Rule 8(a)(2) that the Court had previously established in Conley v.

Gibson. Twombly, 550 U.S. at 563, 127 S. Ct. at 1969. Justice Black wrote for the

Court in Conley of “the accepted rule that a complaint should not be dismissed for

failure to state a claim unless it appears beyond doubt that the plaintiff can prove

no set of facts in support of his claim which would entitle him to relief.” 355 U.S.

at 45–46, 78 S. Ct. at 102. In rejecting that language, the Court in Twombly noted

that courts had read the rule so narrowly and literally that “a wholly conclusory

                                          8
statement of claim would survive a motion to dismiss whenever the pleadings left

open the possibility that a plaintiff might later establish some set of undisclosed

facts to support recovery.” 550 U.S. at 561, 127 S. Ct. at 1968 (internal quotation

marks and alterations omitted).

      In Twombly, the plaintiffs alleged an antitrust conspiracy among certain

regional telecommunications providers in violation of the Sherman Act, 15 U.S.C.

§ 1 (2006). Id. at 550, 127 S. Ct. at 1962. Their complaint relied on allegations of

the defendants’ parallel behavior to allege the conspiracy. Id. The Supreme Court

granted certiorari to address the proper standard for pleading an antitrust

conspiracy through allegations of parallel conduct. Id. at 553, 127 S. Ct. at 1963.

Justice Souter, writing for a substantial majority, first noted:

      While a complaint attacked by a Rule 12(b)(6) motion to dismiss does
      not need detailed factual allegations, a plaintiff’s obligation to
      provide the grounds of his entitlement to relief requires more than
      labels and conclusions, and a formulaic recitation of the elements of a
      cause of action will not do.

Id. at 555, 127 S. Ct. at 1964–65 (internal quotation marks, citations, and

alterations omitted). The Court explained that “[f]actual 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).” Id. at

555, 127 S. Ct. at 1965. The Court ultimately held that to survive a motion to

                                           9
dismiss, a complaint must now contain sufficient factual matter, accepted as true,

to “state a claim to relief that is plausible on its face.” Id. at 570, 127 S. Ct. at

1974. Cautioning that its new plausibility standard is not akin to a “probability

requirement” at the pleading stage, the Court nonetheless held that the standard

“calls for enough fact to raise a reasonable expectation that discovery will reveal

evidence” of the claim. Id. at 556, 127 S. Ct. at 1965. The Court was careful to

note that “we do not require heightened fact pleading of specifics,” but concluded

that when plaintiffs “have not nudged their claims across the line from conceivable

to plausible, their complaint must be dismissed.” Id. at 570, 127 S. Ct. at 1974.

Finding that the plaintiffs’ complaint did not plausibly suggest an illegal

conspiracy by merely alleging parallel conduct—because such parallel conduct

was more likely explained by lawful, independent market behavior—the Court

held that the district court properly dismissed the complaint. Id. at 567–70, 127 S.

Ct. at 1972–74.

      The Supreme Court has since applied the Twombly plausibility standard to

another civil action, Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). Iqbal involved a

Bivens action brought by a Muslim Pakistani who had been arrested and detained

following the September 11, 2001, terrorist attacks. Id. at 1943. He sued current

and former federal officials, including John Ashcroft, former Attorney General of

                                            10
the United States, and Robert Mueller, the Director of the FBI. Id. at 1942. Iqbal

alleged that Ashcroft and Mueller adopted and implemented a detention policy for

persons of high interest after September 11, and that they designated him a person

of high interest on account of his race, religion, or national origin, in violation of

the First and Fifth Amendments to the Constitution. Id. at 1944. Iqbal’s

complaint alleged that Ashcroft was the “principal architect” of the policy and

identified Mueller as “instrumental in [its] adoption, promulgation, and

implementation,” but also stated that both men “knew of, condoned, and willfully

and maliciously agreed to subject” Iqbal to harsh conditions of confinement “as a

matter of policy . . . for no legitimate penological interest.” Id. at 1944 (alteration

in original).

       In evaluating the sufficiency of Iqbal’s complaint in light of Twombly’s

construction of Rule 8, the Court explained the “working principles” underlying

its decision in that case. Id. at 1949. First, the Court held that “the tenet that a

court must accept as true all of the allegations contained in a complaint is

inapplicable to legal conclusions.” Id. Second, restating the plausibility standard,

the Court held that “where the well-pleaded facts do not permit the court to infer

more than the mere possibility of misconduct, the complaint has alleged—but it

has not ‘show[n]’—‘that the pleader is entitled to relief.’” Id. at 1950 (quoting

                                           11
Fed. R. Civ. P. 8(a)(2)). The Court suggested that courts considering motions to

dismiss adopt a “two-pronged approach” in applying these principles: 1) eliminate

any allegations in the complaint that are merely legal conclusions; and 2) where

there are well-pleaded factual allegations, “assume their veracity and then

determine whether they plausibly give rise to an entitlement to relief.” Id.

Importantly, the Court held in Iqbal, as it had in Twombly, that courts may infer

from the factual allegations in the complaint “obvious alternative explanation[s],”

which suggest lawful conduct rather than the unlawful conduct the plaintiff would

ask the court to infer. Id. at 1951–52 (quoting Twombly, 550 U.S. at 567, 127 S.

Ct. at 1972). Finally, the Court in Iqbal explicitly held that the Twombly

plausibility standard applies to all civil actions, not merely antitrust actions,

because it is an interpretation of Rule 8. Id. at 1953.

      Applying these principles to Iqbal’s complaint, the Court began by

disregarding as wholly conclusory Iqbal’s allegations that Mueller was

“instrumental” in adopting the detention policy and Ashcroft was the “principal

architect” of the policy, and that they willfully agreed to subject Iqbal to harsh

treatment for a discriminatory purpose. Id. at 1951. The Court then determined

that the remaining factual allegations—that Mueller and Ashcroft approved the

FBI’s policy of arresting and detaining thousands of Arab Muslim men as part of

                                           12
its investigation into the events of September 11—did not plausibly establish the

purposeful, invidious discrimination that Iqbal asked the Court to infer. Id. at

1951–52. The alternative inferences that could be drawn from the facts—namely,

that the arrests were likely lawful and justified by a nondiscriminatory intent to

detain aliens who were illegally present in the United States and who had potential

connections to those who committed terrorist acts—were at least equally

compelling. Id. Accordingly, the Court ruled that Iqbal’s complaint must be

dismissed. Id. at 1954.

      With this precedent in mind, we now turn to the RICO allegations in

Plaintiffs’ Second Amended Complaint.

      B. Plaintiffs’ Allegations of the Predicate Acts of a Pattern of
      Racketeering Activity under 18 U.S.C. § 1962(c)

      Section 1962(c) of the RICO statutes requires that a plaintiff prove that a

defendant participated in an illegal enterprise “through a pattern of racketeering

activity.” 18 U.S.C. § 1962(c). “Racketeering activity” is defined to include such

predicate acts as mail and wire fraud. 18 U.S.C. § 1961(1). “Mail or wire fraud

occurs when a person (1) intentionally participates in a scheme to defraud another

of money or property and (2) uses the mails or wires in furtherance of that

scheme.” Pelletier v. Zweifel, 921 F.2d 1465, 1498 (11th Cir. 1989). In order to



                                         13
prove a pattern of racketeering in a civil or criminal RICO case, a plaintiff must

show at least two racketeering predicates that are related, and that they amount to

or pose a threat of continued criminal activity. H.J. Inc. v. Nw. Bell Tel. Co., 492

U.S. 229, 240, 109 S. Ct. 2893, 2901 (1989). “A party alleging a RICO violation

may demonstrate continuity over a closed period by proving a series of related

predicates extending over a substantial period of time.” Id. at 242, 109 S. Ct. at

2902.

        Because Plaintiffs’ section 1962(c) claim is based on an alleged pattern of

racketeering consisting entirely of the predicate acts of mail and wire fraud, their

substantive RICO allegations must comply not only with the plausibility criteria

articulated in Twombly and Iqbal but also with Fed. R. Civ. P. 9(b)’s heightened

pleading standard, which requires that “[i]n alleging fraud or mistake, a party must

state with particularity the circumstances constituting fraud or mistake.” See also

Ambrosia Coal & Constr. Co. v. Pages Morales, 482 F.3d 1309, 1316 (11th Cir.

2007) (holding that civil RICO claims, which are “essentially a certain breed of

fraud claims, must be pled with an increased level of specificity” under Rule 9(b)).

We have held that pursuant to Rule 9(b), a plaintiff must allege: “(1) the precise

statements, documents, or misrepresentations made; (2) the time, place, and person

responsible for the statement; (3) the content and manner in which these

                                          14
statements misled the Plaintiffs; and (4) what the defendants gained by the alleged

fraud.” Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1380–81

(11th Cir. 1997) (applying the requirements to a RICO fraud complaint). The

plaintiff must allege facts with respect to each defendant’s participation in the

fraud. Id. at 1381.

      Plaintiffs’ complaint alleges that “[d]efendants represented in their on-line

advertising, in their provider agreements and in their fee schedules that their in-

network providers would be compensated for covered procedures based on

commonly accepted dental practice, standard coding practice and Defendants’ fee

schedules.” D.E. 111, at ¶ 28. Plaintiffs argue that these advertisements,

agreements, and fee schedules were fraudulent because they indicated benefits

payments lower than what Plaintiffs believed were due to them under their fee-for-

service agreements with Defendants, which Plaintiffs argue had promised them

timely specified payments “in accordance with standard dental coding

procedures.” D.E. 111, at ¶ 24. In other words, Plaintiffs contend that they

performed multiple procedures worthy of multiple or larger benefits payments, but

that Defendants bundled and downcoded the procedures into fewer claims worthy

of smaller payments. Additionally, Plaintiffs allege that the only way the alleged

scheme of downcoding and bundling claims could work is if Defendants

                                          15
“agree[d]” to employ the “same” devices and tactics. D.E. 111, at ¶ 9. Thus,

Plaintiffs do not allege parallel schemes among competing dental insurers; they

allege a single scheme consisting of identical conduct in which all Defendants

agreed to participate. Therefore, not only did Plaintiffs need to plausibly and

particularly allege facts showing related instances of mail and wire fraud, but also

plausibly allege facts showing that a conspiracy created the alleged scheme.

      Though the complaint sets out at least six examples of e-mail and letter

communications between Defendants and Plaintiffs, including online

advertisements, fee schedules, contracts, and Explanations of Benefits (“EOBs”)

documents, D.E. 111, at ¶¶ 28–33, 49–56, Plaintiffs do not point to a single

specific misrepresentation by Defendants regarding how Plaintiffs would be

compensated in any of these communications, nor do they allege the manner in

which they were misled by the documents, as they are required to do under Rule

9(b). We have held that a plaintiff must allege that some kind of deceptive

conduct occurred in order to plead a RICO violation predicated on mail fraud.

Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1065 (11th Cir. 2007)

(affirming dismissal of plaintiff’s substantive RICO claims where complaint did

not allege that defendants made any affirmative misrepresentations in the

mailings). Here, Plaintiffs’ complaint provides a list of mailings and wires,

                                         16
without ever identifying any actual fraud. If the specific misrepresentations do not

exist, it follows that the complaint has not alleged a right to relief that is “plausible

on its face.” See Twombly, 550 U.S. 570, 127 S. Ct. at 1974.

      For example, Plaintiffs do not allege any misrepresentations in the EOBs

because Plaintiffs allege in their complaint that the EOBs expressly informed

Plaintiffs when their claims were going to be bundled or downcoded and gave the

reasons for doing so. See D.E. 111, at ¶ 56 (“All Defendants have similarly

engaged in bundling and downcoding practices by noting on EOBs . . . that

‘services are not covered when billed with related primary procedures,’ ‘benefits

are not provided for this service as it is considered to be a part of, and inclusive to,

the primary services performed,’ or that, ‘based on information reported or in file,

a different procedure code has been assigned.’”). Plaintiffs have not shown how

they were misled by the EOBs if the language in the EOBs notified them about any

bundling or downcoding of particular procedures.

      Nor does the complaint allege any misrepresentations in the online

advertisements. There are no allegations anywhere that the quoted language of the

advertisements is false. Read as a whole, they amount at most to puffery, not

fraud. See Byrne v. Nezhat, 261 F.3d 1075, 1111 (11th Cir. 2001) (noting that

claims of surgical success in medical journals “seem more akin to puffing than

                                           17
actionable misrepresentations,” in dismissing a civil RICO complaint alleging

violations of section 1962(c) predicated on acts of mail fraud). Additionally,

Plaintiffs make no allegations as to who, if anyone, read the advertisements and

was misled by them.

      Further, the complaint does not connect the allegedly fraudulent

communications to any particular acts of bundling or downcoding that Plaintiffs

find unacceptable. Counsel for Plaintiffs stated at oral argument that this lack of

particularity should be excused because they were at an “informational

disadvantage” as to exactly how Defendants’ software bundled and downcoded

submitted procedures. To the contrary, we think it telling that the three named

plaintiffs, Drs. Milgram, Trapp, and Desbordes, each received EOBs explaining

the reimbursement of specific procedures they had performed, yet the complaint

never offers any examples of which claims were bundled and downcoded.

Perhaps the closest Plaintiffs come to alleging a specific instance of fraud is in

paragraph 49 of the complaint, where they allege that “[d]efendants regularly sent

EOBs [to Plaintiffs] that inappropriately and automatically bundled x-ray

procedures with other procedures.” D.E. 111, at ¶ 49. However, Plaintiffs do not

allege other procedures with which the x-ray codes were bundled. This is at most

an allegation of possible parallel conduct without any allegation of an agreement

                                          18
as to how Defendants would process x-ray billing codes as part of a greater

scheme. In fact, Plaintiffs do not allege how Defendants agreed to employ any of

these procedures as part of a long-term criminal enterprise predicated on acts of

mail and wire fraud. Simply specifying particular dates and contents of

communications cannot automatically constitute a valid claim that a defendant

violated 18 U.S.C. § 1962(c) without also plausibly alleging the existence of a

long-term criminal enterprise.

      In sum, the Second Amended Complaint does not plausibly, under

Twombly, or particularly, under Rule 9(b), allege a pattern of racketeering activity

predicated on a scheme to commit acts of mail and wire fraud. We find no specific

misrepresentations in any of the communications Plaintiffs referenced, no

connection between the alleged misrepresentations and any particular acts of

downcoding or bundling, and no allegations as to how Defendants agreed to

engage in an illegal scheme to defraud dental providers. Plaintiffs may have a

difference of opinion from Defendants regarding the coding that was used in

processing their claims, but we cannot infer a scheme-driven deception from a

complaint that provides no details of fraud or conspiracy. Accordingly, we




                                         19
conclude that the district court did not err in dismissing the substantive RICO

claim in the Second Amended Complaint for failure to state a claim.4

       C. Plaintiffs’ Allegations of Conspiracy under 18 U.S.C. § 1962(d)

       Section 1962(d) of the RICO statutes makes it illegal for anyone to conspire

to violate one of the substantive provisions of RICO, including § 1962(c). 18

U.S.C. § 1962(d). “A plaintiff can establish a RICO conspiracy claim in one of

two ways: (1) by showing that the defendant agreed to the overall objective of the

conspiracy; or (2) by showing that the defendant agreed to commit two predicate

acts.” Republic of Panama v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935,

950 (11th Cir. 1997) (quoting United States v. Church, 955 F.2d 688, 694 (11th

Cir. 1992)). A plaintiff need not offer direct evidence of a RICO agreement; the

existence of conspiracy “may be inferred from the conduct of the participants.” Id.

at 950 (quoting Church, 955 F.2d at 695).


       4
         As somewhat of a last resort, Plaintiffs also argue that the district court did not dismiss
their substantive RICO claim on the basis that the allegations were insufficiently particularized
under Rule 9(b), but that its dismissal was solely grounded on what it held to be a lack of
plausibility under Twombly. We disagree because the district court referenced Rule 9(b) in the
section of its order specifically discussing the section 1962(c) claim. See In re Managed Care
Litig., 2009 WL 347795, at *3. But even if the district court did not apply the proper standard to
the substantive RICO claim, we need not resolve that issue if there is another basis for affirming
its judgment, because “we may affirm its judgment ‘on any ground that finds support in the
record.’” Lucas v. W.W. Grainger, Inc., 257 F.3d 1249, 1256 (11th Cir. 2001) (quoting Jaffke v.
Dunham, 352 U.S. 280, 281, 77 S. Ct. 307, 308 (1957)). The district court’s dismissal of the
substantive RICO claim is still due to be affirmed because Plaintiffs have not pleaded the claim
with sufficient particularity under Rule 9(b).

                                                 20
      Here, the allegations in Plaintiffs’ complaint do not support an inference of

an agreement to the overall objective of the conspiracy or an agreement to commit

two predicate acts. In analyzing the conspiracy claim under the plausibility

standard, Iqbal instructs us that our first task is to eliminate any allegations in

Plaintiffs’ complaint that are merely legal conclusions. 129 S. Ct. at 1950.

Plaintiffs offer conclusory statements such as “[d]efendants have not undertaken

the above practices and activities in isolation, but instead have done so as part of a

common scheme and conspiracy,” D.E. 111 at ¶ 67, and “[e]ach Defendant and

member of the conspiracy, with knowledge and intent, agreed to the overall

objective of the conspiracy, agreed to commit acts of fraud to relieve Class

Plaintiffs of their rightful compensation, and actually committed such acts.” D.E.

111, at ¶ 68. These are the kinds of “formulaic recitations” of a conspiracy claim

that the Court in Twombly and Iqbal said were insufficient. See Twombly, 550

U.S. at 557, 127 S. Ct. 1966 (noting that “a conclusory allegation of agreement at

some unidentified point does not supply facts adequate to show illegality”); Iqbal,

129 S. Ct. at 1950–51 (holding that Iqbal’s bare allegation that defendants

Ashcroft and Mueller agreed to adopt a discriminatory policy was not entitled to

the presumption of truth and should be ignored under Twombly). Plaintiffs also

allege that “[i]n order for the fraudulent schemes described above to be successful,

                                           21
each Defendant and other members of the conspiracy had to agree to enact and

utilize the same devices and fraudulent tactics against the Class Plaintiffs.” D.E.

111, at ¶ 69. We are “not required to admit as true this unwarranted deduction of

fact.” See Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1268 (11th Cir. 2009)

(rejecting plaintiff’s allegation that the alleged scheme necessarily required the

cooperation of the alleged conspirators); Twombly, 550 U.S. at 566, 127 S. Ct. at

1971 (rejecting plaintiffs’ argument that as soon as one defendant gave in, the

conspiracy would not work, because there were logical reasons why defendants

would independently engage in similar conduct).

      After eliminating the wholly conclusory allegations of conspiracy, we turn

to Plaintiffs’ remaining factual allegations. Plaintiffs attempt to bolster their

conspiracy allegations by describing the following “collective” or parallel actions

taken by Defendants, from which they now argue the existence of an agreement

may be inferred: the collective development and use of automated processes to

manipulate CDT codes, i.e. downcoding and bundling; the use of the same claims

procedures, including the data that dentists are required to provide in submitting

claims, the forms on which dentists must submit their data, and the coding that

dentists use to submit their data; and Defendants’ participation in trade

associations and private, jointly owned partnerships and corporations. D.E. 111,

                                          22
at ¶¶ 70–71. Assuming for the sake of argument that parallel conduct has actually

been alleged here,5 and accepting these factual allegations as true, as we are

required to do under Iqbal, see 129 S. Ct. at 1950, we think that the Supreme

Court’s holding in Twombly forecloses any possibility that Plaintiffs’ allegations

of parallel conduct plausibly suggest a conspiracy. The Court stated in Twombly

that “when allegations of parallel conduct are set out . . . they must be placed in a

context that raises a suggestion of a preceding agreement, not merely parallel

conduct that could just as well be independent action.” 550 U.S. at 557, 127 S. Ct.

at 1966. The Court held that allegations of parallel conduct, accompanied by

nothing more than a bare assertion of a conspiracy, do not plausibly suggest a

conspiracy, stating that “without that further circumstance pointing to a meeting of




       5
         We are not convinced that Plaintiffs actually allege parallel conduct with regard to their
allegation that Defendants used the same downcoding and bundling methods, because there is no
indication from the complaint that Defendants used the same software to downcode and bundle
procedures in the same way over an extended period of time. See D.E. 111, at ¶ 42 (“To
accomplish this downcoding and bundling, Defendants used services and software such as those
sold and licensed by Dentistat Inc. (‘Dentistat’) and McKesson Corporation (‘McKesson’), such
as ClaimsCheck Dental, CodeReview, and AutoCoder, or comparable software, which, among
other things, are capable of modifying code protocols.”) (emphases added); D.E. 111, at ¶ 46
(“Through the use of Dentacom, Proclaim and other systems, Defendant Cigna aggressively
reduces the payment of claims by systematically downcoding, bundling and pending provider
claims for payment.”) (emphasis added).

                                                23
the minds, an account of a defendant’s commercial efforts stays in neutral

territory.” Id.6

       These conclusions are especially true where, as here, there is an “obvious

alternative explanation” for each of the collective actions alleged that suggests

lawful, independent conduct. See Twombly, 550 U.S. at 568, 127 S. Ct. at 1972

(finding that industry developments provided a “natural explanation” for

defendants’ alleged conduct that helped to foreclose plaintiffs’ suggestion of

conspiracy); Iqbal, 129 S. Ct. at 1951–52 (finding that though some of the

plaintiff’s allegations were “consistent with” purposeful discrimination, the

complaint as a whole supported a plausible and legitimate motive by law

enforcement officers to protect the nation from “suspected terrorists”). As for

Plaintiffs’ allegation that Defendants downcoded and bundled some submitted

claims, insurance companies must use computers and software to efficiently

process claims, and the use of downcoding and bundling may be proper in order to

decrease physicians’ costs and potentially increase profits. See In re Managed

Care Litig., 430 F. Supp. 2d 1336, 1348 (S.D. Fla. 2006), aff’d sub nom. Shane v.

       6
        The Court acknowledged that certain examples of a parallel conduct might be sufficient
to imply a conspiracy, such as “parallel behavior that would probably not result from chance,
coincidence, independent responses to common stimuli, or mere interdependence unaided by an
advance understanding among the parties.” 550 U.S. at 557 n.4, 127 S. Ct. at 1966 n.4 (quoting
6 P. Areeda & H. Hovenkamp, Antitrust Law ¶ 1425, pp. 167–85 (2d ed. 2003)). The conduct
alleged here does not fall into any of these categories.

                                              24
Humana, Inc., 228 F. App’x 927 (11th Cir. 2007) (unpublished). In fact,

Plaintiffs’ brief only decries the use of “improper” bundling, which implies that

some bundling of claims is commonly acceptable. Brief of Appellant at 1.

Additionally, the Department of Health and Human Services has taken the position

that the inverse processes of “upcoding” and “unbundling” are fraudulent billing

practices under Medicare, which supports the use of automated claims processing

systems. See Medicare at Risk: Emerging Fraud in Medicare Programs: Hearing

Before the Senate Committee on Governmental Affairs, Permanent Subcommittee

on Investigations, 105th Cong. (1997) (statement of Michael F. Mangano,

Principal Deputy Inspector General, U.S. Department of Health and Human

Services), available at http://www.hhs.gov/asl/testify/t970626b.html. The use of

automated systems that bundle and downcode may just as easily have developed

from independent action in a competitive environment as it would from an illegal

conspiracy, because each insurer would have an economic interest in decreasing

physicians’ costs and increasing profits. See In re Managed Care Litig., 430 F.

Supp. 2d at 1348. The complaint does not plausibly suggest that by using similar

methods to downcode and bundle claims, Defendants have acted in any way

inconsistent with the independent pursuit of their own economic self-interest.

Accordingly, Defendants’ parallel conduct is equally indicative of rational

                                         25
independent action as it is concerted, illegitimate conduct and thus “stays in

neutral territory.” See Twombly, 550 U.S. at 557, 127 S. Ct. at 1966.

      As for Plaintiffs’ allegation that a conspiracy may be inferred from

Defendants’ participation in trade associations and other professional groups, it

was well-settled before Twombly that participation in trade organizations provides

no indication of conspiracy. Twombly, 550 U.S. at 567 n.12, 127 S. Ct. 1971 n.12;

see also Consol. Metal Prods., Inc. v. Am. Petroleum Inst., 846 F.2d 284, 293–94

(5th Cir. 1988) (“A trade association by its nature involves collective action by

competitors. Nonetheless, a trade association is not by its nature a ‘walking

conspiracy’ . . . . [T]he establishment and monitoring of trade standards is a

legitimate and beneficial function of trade associations.”).

      Plaintiffs have not plausibly alleged sufficient facts regarding Defendants

agreement with other entities or persons to engage in the ongoing criminal conduct

of an enterprise. Plaintiffs’ allegations of Defendants’ parallel conduct, absent a

plausibly-alleged “meeting of the minds,” fail to “nudge[] their claims across the

line from conceivable to plausible.” See Twombly, 550 U.S. at 557, 570, 127 S.




                                         26
Ct. at 1966, 1974. Accordingly, we conclude that the district court did not err in

dismissing the RICO conspiracy claim in the Second Amended Complaint.7

                                      V. CONCLUSION

       The RICO allegations in Plaintiffs’ Second Amended Complaint “stop[]

short of the line between possibility and plausibility.” See Twombly, 550 U.S. at

557, 127 S. Ct. at 1966. As explained above, Plaintiffs failed to sufficiently plead


       7
         We recognize that many of our sister circuits have held that if a plaintiff fails to state a
claim of a primary RICO violation, then the plaintiff’s civil RICO conspiracy claim necessarily
fails. See GE Invest. Private Placement Partners II v. Parker, 247 F.3d 543, 551 n.2 (4th Cir.
2001); Efron v. Embassy Suites, P.R., Inc., 223 F.3d 12, 21 (1st Cir. 2000); Discon, Inc. v.
NYNEX Corp., 93 F.3d 1055, 1064 (2d Cir. 1996), vacated on other grounds, 525 U.S. 128, 119
S. Ct. 493 (1998); Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1191 (3rd Cir. 1993);
Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364, 367 n.8 (9th Cir. 1992); Danielsen v.
Burnside-Ott Aviation Training Ctr., Inc., 941 F.2d 1220, 1232 (D.C. Cir. 1991); Craighead v.
E.F. Hutton & Co., 899 F.2d 485, 495 (6th Cir. 1990); In re Edwards, 872 F.2d 347, 352 (10th
Cir. 1989). This court has not expressly stated such a rule. In Jackson v. Bellsouth Telecomm.,
372 F.3d 1250 (11th Cir. 2004), we affirmed the dismissal of a RICO conspiracy claim because
the complaint failed to allege a substantive RICO claim, but we emphasized that “the RICO
conspiracy [claim] add[ed] nothing” because it “simply conclude[d] that the defendants
‘conspired and confederated’ to commit conduct which in itself does not constitute a RICO
violation.” Id. at 1269. In an unpublished opinion, we characterized our holding in Jackson as
follows: “where a plaintiff fails to state a RICO claim and the conspiracy count does not contain
additional allegations, the conspiracy claim necessarily fails.” Rogers v. Nacchio, 241 F. App’x
602, 609 (11th Cir. 2007) (citing Jackson, 372 F.3d at 1269) (emphasis added). Unlike in
Jackson, Plaintiffs’ conspiracy count contains additional allegations, separate from the
allegations in the substantive RICO count. Accordingly, there appears to be no controlling
authority in our circuit or in the Supreme Court instructing us to adopt the reasoning of our sister
circuits and dismiss Plaintiffs’ conspiracy claim because the substantive RICO claim was
deficiently alleged. See also Beck v. Prupis, 529 U.S. 494, 506 n.10, 120 S. Ct. 1608, 1616 n.10
(2000) (expressly declining to resolve whether a plaintiff suing under section 1964(c) for a RICO
conspiracy must allege an actionable violation under section 1962(a)–(c)). Because Plaintiffs’
conspiracy count fails to state a claim under Twombly and Iqbal’s plausibility standard, we find it
unnecessary to decide in this case whether Plaintiffs’ conspiracy claim must also fail because of
the deficiencies in the substantive RICO count.

                                                 27
a pattern of racketeering activity predicated on a scheme to commit acts of mail

and wire fraud. Plaintiffs also failed to plausibly allege a conspiracy to commit

RICO violations, as they merely offered conclusory allegations of agreement

accompanied by statements of parallel behavior, which just as easily suggest

independent, lawful action. For the aforementioned reasons, we affirm the district

court order dismissing Plaintiffs’ RICO and RICO-related claims for failure to

state a claim.8

AFFIRMED.




       8
         The only argument Plaintiffs make with respect to the claim for aiding and abetting
RICO violations under 18 U.S.C. § 2 (Count II) is in a footnote, which states that their arguments
apply with equal force to that claim. Plaintiffs do not offer any argument with respect to their
claim for declaratory relief for RICO violations (Count IV). We conclude that the district court
properly dismissed these claims for the same reasons that it dismissed the section 1962(c) and
section 1962(d) claims. Additionally, Plaintiffs raise several other arguments on appeal with
respect to the district court’s order dismissing their complaint. For example, Plaintiffs assert that
the district court erroneously found Twombly to have created a heightened pleading standard and
wrongly compared their RICO allegations to those in the Solomon and Genord cases that the
court had earlier dismissed for failure to state a claim. Because we hold that the Second
Amended Complaint fails to state a claim for relief under the plausibility pleading standard
articulated by the Supreme Court in Twombly and Iqbal, we conclude that these contentions are
meritless.



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