Full opinion text
MEMORANDUM DECISION AND ORDER PRO, District Judge. Plaintiffs are employers and employees who contracted for health insurance, through employee benefit plans, with Defendant Hu-mana Health Insurance of Nevada, Inc. (“Humana Insurance”), during the period 1985 to 1988. One group of Plaintiffs used the health care services of Humana Hospital-Sunrise (“Sunrise Hospital”), an acute care facility located in Las Vegas, Nevada, which is owned and operated by Defendant Huma-na, Inc. (“Humana”), and a Participating Hospital under the insurance agreements. The insurance agreements required those insured with Humana Insurance to pay all expenses up to the designated deductible amount, and 20% of the expenses beyond that, with the insurance company to pay the other 80%. The liability of an insured had a cap called a “personal expense limit” which was the maximum the insured would have to pay in any given year, regardless of the total health care expenses. In 1984, Humana Insurance and Sunrise Hospital entered into an agreement whereby Humana Insurance would pay Sunrise Hospital a discounted amount for that portion of the hospital charges for which it was responsible. However, the portion of the charges paid by the insureds was not discounted but was still based on the usual and customary rates. Plaintiffs assert that Humana Insurance failed to pass along the discounts it had arranged for itself to its insureds either in the form of reduced premiums or reduced co-payments. Previous Orders of this Court have granted Plaintiffs’ Motions for Class Certification, thereby permitting both a Premium Payor Class and a Co-Payor Class to maintain this action. By their Second Amended Complaint (#370), filed August 12, 1991, Plaintiffs assert three claims for relief. Plaintiffs’ First Claim for Relief is brought by the Co-Payor Class which consists of employees who obtained health insurance benefits under an employee benefit plan as defined under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. There Plaintiffs allege that Defendants breached fiduciary duties owed to the Co-Payor Class under ERISA; engaged in transactions prohibited by ERISA; and retained excessive compensation. Plaintiffs’ Second Claim for Relief alleges a violation of Section 2 of the Sherman Act, 15 U.S.C. § 2 and is brought on behalf of the Co-Payor Class and Premium Payor Class, which consists of individuals or entities paying all or a portion of the Humana-Insurance premiums during the period 1985 to 1988. Plaintiffs’ Third Claim for Relief, brought on behalf of both the Co-Payor Class and Premium Pay- or Class, alleges that Defendants engaged in a scheme to defraud in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968. Before the Court is- a Motion for Summary Judgment (# 804), filed on June 22, 1993, by Defendants Humana and Humana Insurance. On July 7, 1992, Defendants filed a Correction (# 808). Plaintiffs filed their Opposition (#820) on August 7, 1992, which was followed by an Errata (# 822) filed on August 12, 1992. Defendants filed their Reply (# 841) accompanied by a Supplemental Affidavit (#842) on October 19, 1992. Additionally, the parties have filed the following supplementary motions: (1) Supplement to Plaintiffs’ Opposition (#834), filed on September 80, 1992. (2) Second Supplement to Plaintiffs’ Opposition (# 849), filed on November 16, 1992. (3) Defendants’ Supplemental Memorandum (#868), filed on February 22, 1993. Plaintiffs filed a Third Supplement and Opposition (#890) on May 17, 1993. On June 2, 1993, Defendants filed a Supplemental Memorandum (# 895) in response. (4) Defendants’ Second Supplemental Memorandum (#891), filed on May 21, 1993. (5) Plaintiffs’ Fourth Supplement to Opposition (#896), filed on June 8, 1993. Defendants filed a Response (# 909), on July 1, 1993. (6) Defendants’ Third Supplemental Memorandum (# 901), filed on June 23, 1993. Plaintiffs filed a Response to Defendants’ Second and Third Supplemental Memoran-da (# 908) on July 1, 1993. (7) Plaintiffs’ Response to (#895) and Fifth Supplement to Opposition (# 902), filed on June 25, 1993. (8) Defendants’ Supplemental Memorandum of Points and Authorities (#903), filed on June 29, 1993. (9) Defendants’ Fourth Supplemental Memorandum (# 910), filed on July 2, 1993. On July 7, 1993, this Court heard oral argument on Defendants’ Motion for Summary Judgment and its progeny. I. STANDARD OF REVIEW Pursuant to Federal Rule of Civil Procedure 56, summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” The party moving for summary judgment has the initial burden of showing the absence of a genuine issue of material fact. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir.1982). Once the movant’s burden is met by presenting evidence which, if uncontro-verted, would entitle the movant to a directed verdict at trial, the burden then shifts to the respondent to set forth specific facts demonstrating that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). If the factual context makes the respondent’s claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986); California Arch. Bldg. Prod. v. Franciscan Ceramics, 818 F.2d 1466, 1468 (9th Cir.1987), cert. denied, 484 U.S. 1006, 108 S.Ct. 698, 98 L.Ed.2d 650 (1988). If the party seeking summary judgment meets this burden, then summary judgment will be granted unless there is significant probative evidence tending to support the opponent’s legal theory. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 1593, 20 L.Ed.2d 569 (1968); Commodity Futures Trading Commission v. Savage, 611 F.2d 270 (9th Cir.1979). Parties seeking to defeat summary judgment cannot stand on their pleadings once the movant has submitted affidavits or other similar materials. Affidavits that do not affirmatively demonstrate personal knowledge are insufficient. British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1790, 60 L.Ed.2d 241 (1979). Likewise, “legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid motion for summary judgment.” Id. A material issue of fact is one that affects the outcome of the litigation and requires a trial to resolve the differing versions of the truth. See Admiralty Fund v. Hugh Johnson & Co., 677 F.2d 1301, 1305-06 (9th Cir.1982); Admiralty Fund v. Jones, 677 F.2d 1289, 1293 (9th Cir.1982). All facts and inferences drawn must be viewed in the light most favorable to the responding party when determining whether a genuine issue of material fact exists for summary judgment purposes. Poller v. CBS, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). After drawing inferences favorable to the respondent, summary judgment will be granted only if all reasonable inferences defeat the respondent’s claims. Admiralty Fund v. Tabor, 677 F.2d 1297, 1298 (9th Cir.1982). The trilogy of Supreme Court cases cited above establishes that “[sjummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy and inexpensive determination of every action.’ ” Celotex Corp., 477 U.S. at 327, 106 S.Ct. at 2554, quoting Fed.R.Civ.P. 1. See also Avia Group Int’l, Inc. v. L.A. Gear Cal., 853 F.2d 1557, 1560 (Fed.Cir.1988). II. ERISA A. Facts & Procedural History In their First Claim for Relief, Plaintiffs’ Co-Payor Class seeks approximately $85 million in damages against Defendant Humana Insurance for violation of its fiduciary duties under ERISA. At the heart of this entire case is a provision within the Humana Care Plus Policy under which members of the Co-Payor Class were insured. This provision states that the employee/insured would pay 20% of all covered charges incurred while in a hospital up to a certain amount (usually $5,000), and that Humana Insurance would be responsible for the remaining 80%. See Opposition (# 820), Exhibit 85 at 7-1 (Humana Insurance master group health insurance policy HCP-84-NV-l). From 1984 to 1988, Humana Insurance obtained substantial discounts, allegedly between 40% and 96%, from Sunrise for services rendered to the insureds in the Co-Payor Class. Errata (#822) at 49-50, Exhibit #39; Opposition (#820), Exhibits 38, 40. Instead of sharing these discounts with the insureds by reducing the amount of eo-pay-ments due, Humana Insurance only applied the discount to the amount for which they would have been responsible under the policy. Motion for Summary Judgment (# 804) at 10-12. Based on these actions, the Co-Payor Class asserts that Humana Insurance breached several of its fiduciary duties under ERISA including: (1) Humana Insurance engaged in a transaction involving the plan on behalf of a party, Sunrise, whose interests were adverse to those of the health benefits plans and/or its participants or beneficiaries in violation of 29 U.S.C. § 1106(b)(2); (2) Humana Insurance dealt with plan assets in its own interest or for its own account by erroneously interpreting the individual insurance contracts as requiring co-payments based on gross charges and effectuating the co-payment billings through contract administration in violation of 29 U.S.C. § 1106(b)(1); (3) Humana Insurance received consideration (e.g. the discounts) from Sunrise involving the assets of the plan in violation of 29 U.S.C. § 1106(b)(3); (4) Humana Insurance did not act in the sole interest of the insureds in interpreting the insurance contracts in violation of 29 U.S.C. § 1104(i)(A)(i); (5) Humana Insurance failed to discharge its duties -with respect to the plan in accordance with the documents and instruments governing the plan in violation of 29 U.S.C. § 1104(1)(D). See Errata (#822) at 173-193. On September 26, 1989, this Court denied Defendant Humana Insurance’s Motion to Dismiss (# 13) the Co-Payor Class’ claim for breach of fiduciary duty. In denying Humana Insurance’s Motion, this Court held, citing Sixty-Five Security Plan v. Blue Cross and Blue Shield, 583 F.Supp. 380, 387 (S.D.N.Y.1984), aff'd on reh’g, 588 F.Supp. 119 (1984), that given the discretion of Humana Insurance to negotiate reimbursement rates on behalf of the health benefit plans, Humana Insurance should be considered a fiduciary under ERISA. Order (# 79) at 9. This Court further held that the plain meaning of the contract language indicated that the insureds should have paid 20% of the net hospital charge and not the gross charge, and consequently, by failing to distribute the negotiated discount among the Co-Payor Class, Humana Insurance may have violated its fiduciary duties. Id. at 10. Finally, this Court found that Humana Insurance’s failure to reduce its insurance premiums did not constitute a breach of fiduciary duty and that the establishment of co-payment rates was distinguishable from the fiduciary duties imposed in the approval or denial of insurance claims. Id. at 6-9, 10. On July 9, 1991, this Court entered a second Order (#364) which again refused to dismiss the Co-Payor Class’ claim for breach of fiduciary duties under ERISA. In the Order, this Court reaffirmed its holding that Humana Insurance was a fiduciary under Sixty-Five Security Plan and acknowledged that the Co-Payor Class was also asserting that Humana Insurance engaged in prohibited transactions in violation of 29 U.S.C. § 1106(b). Order (# 364) at 4. This Court went on to hold that Plaintiffs were not asserting a claim for benefits, but instead were “seeking recovery for having overpaid hospital stays, because Humana Insurance as fiduciary should have acted in their interest and assured that Plaintiffs were not paying based on a ‘fraudulent’ rate.” Id. at 6. In addition, in rejecting Humana Insurance’s argument that Plaintiffs could not assert a claim for breach of fiduciary relief in their individual capacity, this Court found that: This case presents a unique situation in that the whole plan was affected by the alleged breach by Humana Insurance, but there was only monetary harm to individual participants and beneficiaries if and when they were required to pay copay-ments. The only meaningful remedy is recovery by these individual Plaintiffs, and the provisions of § 1132(a)(3) permit such recovery. Id. at 14. In support of the instant Motion for Summary Judgment on Plaintiffs’ ERISA claim, Defendant Humana Insurance advances three alternative arguments: (1) Plaintiffs are precluded from bringing a claim for breach of fiduciary duty since they are seeking relief to benefit only themselves (e.g., the Co-Payor Class) and not the plan as a whole; (2) Humana Insurance did not act as a fiduciary in entering into the discount arrangement with Sunrise; and (3) if a claim for breach of fiduciary duty is allowed, monetary relief should be limited to recovery of the allegedly excessive coinsurance payments. Motion for Summary Judgment (#804) at 14-35. Plaintiffs respond that: (1) this Court has already correctly ruled that regardless of the fact that only the Co-Payor Class was financially injured by Humana Insurance’s discounting scheme, since all the insureds were “affected” by the scheme, the Co-Payor Class may properly pursue a constructive trust for Humana Insurance’s alleged violations of fiduciary duty; (2) this Court correctly ruled that Humana Insurance was rendered a fiduciary by negotiating a discount with Humana Hospital Sunrise since such an act constituted discretion in the administration of a plan; and (3) under ERISA, damages for Humana Insurance’s alleged breach of fiduciary duty should be measured by the sum of the total discount received by Huma-na Insurance from Sunrise and not simply the percentage of the discount that Humana Insurance should have shared under the terms of the insurance contract. B. Discussion 1. May the Co-Payor Class Assert a Claim for Breach of Fiduciary Duty? Notwithstanding this Court’s Order (#364) of July 9, 1991, Humana Insurance once again asserts that the Co-Payor Class may not pursue its claims for breach of fiduciary duty, as the class seeks monetary relief on behalf of themselves as individuals and not on behalf of their respective employee benefit plans. In support of its position, Humana Insurance cites two recent Ninth Circuit cases, Horan v. Kaiser Steel Retirement Plan, 947 F.2d 1412 (9th Cir.1991) and Williams v. Caterpillar, Inc., 944 F.2d 658 (9th Cir.1991), as new authority upon which this Court should rely to reverse its earlier decision. Although it does not appear that either of these cases charts new waters in the rough seas of ERISA interpretation, these decisions do present a forceful argument for reconsidering this Court’s earlier interpretation of Russell, Sokol, and Mur-dock. See Order (#364) at 7-14. To begin, this Court reaffirms its earlier interpretation of Russell to the effect that the substantive remedies afforded by 29 U.S.C. § 1109 are limited, and that § 1109 does not allow for the recovery of extra-contractual damages by individual beneficiaries. See Order (# 364) at 8-9; Russell, 473 U.S. at 142-144, 105 S.Ct. at 3090-91. In coming to this conclusion, the Supreme Court in Russell specifically found that even though ERISA requires plan fiduciaries to serve the interests of participants and beneficiaries, § 1109 provides remedies for breach of fiduciary duties only on behalf of the plan, and not the individual beneficiary. Id. Subsequently, the Ninth Circuit adopted the reasoning used in Russell to foreclose the availability of extra-contractual damages under 29 U.S.C. § 1132(a)(3). See Sokol, 803 F.2d at 534-537. In doing so, the Ninth Circuit emphasized, just as the Supreme Court did in Russell, that the remedies allowed under § 1132(a)(3) are limited and that § 1132(a)(3) “emphasizes the protection of the plan, not the direct protection of the beneficiaries.” Id. 803 F.2d at 536-537. The two recent cases cited by Defendant Humana Insurance, Horan and Williams, restate the interpretation of Russell and Sokol summarized above. For example, in holding that Plaintiffs in Horan could not bring a claim for breach of fiduciary duty under § 1132(a)(3), the Ninth Circuit stated: An individual beneficiary may bring a fiduciary breach claim, but must do so for the benefit of the plan. An individual beneficiary may not pursue a fiduciary breach claim to recover benefits or remedies beyond those provided by a plan. Any recovery for a violation of sections 1109 and 1132(a)(2) must be on behalf of the plan as a whole, rather than inuring to individual beneficiaries. The Supreme Court reasoned the fiduciary duty provisions in ERISA are primarily concerned with protecting the integrity of the plan, which in turn protects all beneficiaries, rather than remedying each wrong suffered by individual beneficiaries. We have extended the reasoning in Russell to section 1182(a)(3) which allows recovery of ‘other appropriate equitable relief.’ Section 1132(a)(3) also does not provide an action for an individual beneficiary to recover extra-contractual remedies. Under Russell and Sokol, the plaintiffs fail to present a fiduciary breach claim if the only remedy sought is for their own benefit, rather than for the benefit of the Plan as a whole. Horan 947 F.2d at 1417-18 (citations omitted). Similarly, in Williams the Ninth Circuit recognized that “the Supreme Court has held that equitable relief under ERISA is limited to relief protecting the .integrity of the plan as a whole and does not extend to individual plan participants.” Williams, 944 F.2d at 665. In this Court’s previous Order (# 364) of July 9,1991, it found that, based on Murdock and § 1132(a)(3), the only “meaningful remedy” in this case would be to allow the Co-Payor Class to sue Humana Insurance for breach of fiduciary duty. See Order (# 364) at 14. In light of the additional clarification yielded by the Horan and Williams, this Court now recognizes that this conclusion was incorrect. First, it is undisputed that the members of the Co-Payor Class are seeking approximately $85 million in damages in their individual capacity for various breaches of fiduciary duty pursuant to § 1132(a)(3). As set forth in Sokol, Horan, and Williams, however, § 1132(a)(3) does not allow individual beneficiaries to sue for a breach of fiduciary duty on their own behalf. See Horan 947 F.2d at 1417-18; Williams, 944 F.2d at 665; Sokol, 803 F.2d at 536-537. Second, this Court’s previous reliance on Murdock as authority for allowing the Co-Payor Class to seek damages under § 1132(a)(3) must be acknowledged as tenuous. Although the Court in Murdock did allow plan beneficiaries (and not the plan itself) to benefit from a constructive trust funded with the ill-gotten profits of the plan administrator, the Court in Murdock also limited its ruling to the “circumstances of this ease.” Murdock, 861 F.2d at 1417. These circumstances included the fact that (1) the ERISA plan which had been defrauded no longer existed, (2) under the terms of the plan (which were altered by the errant fiduciary) any damages paid to the plan would have simply reverted to the wrongdoer, and (3) the damages to be received for the breach of fiduciary duty were to be put into a constructive trust in favor of all plan participants. Id. at 1408-09, 1417. Here, although Defendants’ conduct as alleged by Plaintiffs is clearly questionable, the level of impropriety alleged is less severe than that which occurred in Murdock. The injury in Murdock was directed primarily against the plan and not against particular beneficiaries, the various benefit plans purportedly affected by Humana Insurance’s breach of fiduciary duty still exist, and, most importantly, this Court’s prior Order (# 364) would afford relief only to a select group of beneficiaries. Upon reconsideration and based on these distinctions, this Court finds that Murdock does not provide persuasive authority to support this Court’s earlier interpretation of § 1132(a)(3). Finally, this Court also recognizes that a claim for breach of fiduciary duty is neither the only nor the most appropriate remedy for the wrongs asserted by the Co-Payor Class. After careful consideration of the facts and the injury alleged by the Co-Payor Class in this case, it is clear that the crux of the current dispute rests on the reasonableness of Humana Insurance’s interpretation of the co-payment provision in the insurance contract. Such a claim is more appropriately brought pursuant to 29 U.S.C. § 1132(a)(1)(B) which allows a beneficiary to seek benefits due under the terms of the plan. See e.g., Eaton v. Blue Cross and Blue Shield of Alabama, 681 F.Supp. 759, 760-62 (S.D.Ala.1988). Accordingly, this Court finds that the cause of action provided by ERISA to compensate the Co-Payor Class for the questionable conduct of Humana Insurance is a claim for benefits pursuant to § 1132(a)(1)(B) and not a claim for breach of fiduciary duty under § 1109 or § 1132(a)(3). In sum, based on the holdings in Horan, Williams and Sokol, the limited precedential value of Murdock, and the availability of a more appropriate remedy pursuant to § 1132(a)(1)(B), this Court finds that the Co-Payor Class should not be allowed to pursue claims against Humana Insurance for breach of fiduciary duty. Accordingly, this Court hereby modifies its earlier Order (# 364) of July 8, 1991, and will grant Humana Insurance’s Motion for Summary Judgment as to the first claim for relief set forth in Plaintiffs’ Second Amended Complaint (# 370). Plaintiffs’ Co-Payor Class will be permitted, however, to file a Third Amended .Complaint seeking appropriate relief under § 1132(a)(1)(B). 2. Damages This Court also finds that even if it were to allow Plaintiffs’ Co-Payor Class to seek a claim for breach of fiduciary duty, Humana Insurance would still be entitled to partial summary judgment on the issue of damages. Plaintiffs argue that “equity and poetic justice” require that Humana Insurance pay to the beneficiaries the entire discount it obtained from Sunrise. Errata (#822) at 126. In contrast, Humana Insurance asserts that Plaintiffs’ calculations are incorrect, and that the appropriate measure of damages in this case would be simply a refund of the overcharged co-payment. See Reply (# 841) at 22-27. Section 1109(a) provides that: Any person who is a fiduciary with respect to the plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally hable to make good to such plan any losses to the plan resulting from such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including the removal of such fiduciary. Similarly, under § 1132(a)(3), a “beneficiary” may seek “other appropriate equitable relief'’ to redress breaches of fiduciary duty or to enforce the provisions or terms of the plan. “Where there has been a breach of fiduciary duty, ERISA grants to the Courts broad authority to fashion remedies for redressing the interests of participants and beneficiaries.” Donovan v. Mazzola, 716 F.2d 1226, 1235 (9th Cir.1983), cert. denied, 464 U.S. 1040, 104 S.Ct. 704, 79 L.Ed.2d 169 (1984). Notwithstanding this, any loss or profit which is disgorged as a result of a breach of fiduciary duty must have a causal connection with the breach. Leigh v. Engle, 727 F.2d 113, 137 (7th Cir.1984). Uncertainties in the determination of damages, however, should be resolved against the wrongdoer. Kim v. Fujikawa, 871 F.2d 1427, 1431 (9th Cir.1989); Leigh, 727 F.2d at 138-39. Plaintiffs argue that they are entitled to the entire discount yielded by Sunrise as this amount constitutes the ill-gotten profits Hu-mana Insurance obtained as a result of its breach. The difficulty with Plaintiffs’ position, however, is that their calculation ignores the facts of the case and has no “causal connection” to the breach. To illustrate this, assume, as Plaintiffs do, that on a gross hospital charge of $5,000, the insured beneficiary paid $1,000 in co-payments and Humana Insurance paid $550 on its obligation. The net amount received by Sunrise equals $1,550, and the net discount given by the hospital amounts to $3,450. Assuming Plaintiffs are correct in their interpretation of the co-payment provision that the insureds were responsible for 20% of the net charges and not the gross charges, the amount which should have been paid by the insureds is $310 (.20 x $1,550). Therefore, since the insured paid $1,000 rather than the $310 which was required under the contract, the insured overpaid, and Humana Insurance profited, $690. As illustrated above, it is clear that the amount asserted by Plaintiffs, or $3,450, is not a true measure of Humana Insurance’s “ill-gotten profit.” To adopt this figure would ignore the reality that the gross hospital charge ($5,000) was never in fact paid and would contradict Plaintiffs’ interpretation of the co-pay provision that the 20/80 split should apply only on the net hospital charge ($1,550). Accordingly, since Plaintiffs’ measure of damages fails to establish a “causal connection” between the actual profits obtained by Humana Insurance and its breach of fiduciary duty, their calculation of damages must be rejected. The proper measure of damages would be to restore the trust beneficiaries to the position they would have occupied but for the breach of trust. Donovan v. Bierwirth, 754 F.2d 1049, 1056 (2nd Cir.1985). Applying this remedy to the facts of the present situation, Humana Insurance would be required to disgorge the amount of the discount which it should have paid under the proper interpretation of the co-pay provision. Using the hypothetical insured described by Plaintiffs, this would amount to $690. In so doing, the primary purpose of § 1109(a) to “undo” the harm caused by the breach of fiduciary duty would be realized. The interests of the beneficiaries would be furthered by removing the fiduciary’s ill-gotten profits, and consistent with the holding in Leigh, only those profits which are “causally connected” with Humana Insurance’s breach of fiduciary duty would be disgorged. See Leigh, 727 F.2d at 138—189; Bierwirth, 754 F.2d at 1056. Accordingly, even if the Co-Payor Class could assert a claim for breach of fiduciary duty under the present facts, partial summary judgment would still be appropriate in this case with respect to Plaintiffs’ excessively broad view of “ill-gotten profits.” 8. Leave to Amend Plaintiffs’ Complaint In their Opposition, Plaintiffs argue that in the “unlikely event that this Court completely reverses itself and rules that ERISA offers no remedy to Plaintiffs,” this Court should allow Plaintiffs to reinstate their state law claims. Errata (# 822) at 95, n. 2. This Court disagrees. First, under this Order, Plaintiffs are not without an ERISA remedy. The Co-Payor Class properly may file an Amended Complaint to state a claim under § 1132(a)(1)(B). See supra at 17. Moreover, Plaintiffs’ state law claims (which would apply to Plaintiffs’ recent proposed claim under Nevada’s RICO statute, N.R.S. § 207.470) are preempted by ERISA. See Order (#79) at 14-15; Olson v. General Dynamics Corp., 960 F.2d 1418, 1420-23 (9th Cir.1991), cert. denied, — U.S. -, 112 S.Ct. 2968, 119 L.Ed.2d 588 (1992); Kanne v. Connecticut General Life Ins. Co., 867 F.2d 489, 493-494 (9th Cir.1988), cert. denied, 492 U.S. 906, 109 S.Ct. 3216, 106 L.Ed.2d 566 (1989). Finally, as this Court has indicated previously, given the procedural history of this case which has seen three extensive rounds of dispositive motions, to allow the parties to address new theories of liability would strain the letter and spirit of Fed.R.Civ.P. 15(a). Accordingly, Plaintiffs’ request to reinstate their prior state law claims was properly denied in this Court’s October 13,1992 Order (#840), and will not be reconsidered here. III. ANTITRUST A. Facts Plaintiffs’ Second Claim for Relief seeks approximately $181 million in damages against Defendants Humana and Humana Insurance for monopolization or attempted monopolization under section 2 of the Sherman Act, 15 U.S.C. § 2. The “Antitrust Class” consists of individual employees and employers who allegedly paid excessive policy premiums and co-payments to Humana and Humana Insurance between 1985 and 1988. See Second Amended Complaint (# 370) at 11, ¶ 41; 17, ¶ 51. In their opposition, Plaintiffs argue that Humana and Humana Insurance monopolized or attempted to monopolize two independent submarkets including: (1) Clark County for-profit acute care hospitals; and (2) those hospitals used by Humana Insurance’s insureds. Errata (# 822) at 290-292. As proof of this actual or attempted monopolization, the Antitrust Class alleges that during the relevant time period, Humana made “supracompetitive” or “monopoly” profits. Plaintiffs maintain that with regard to the for-profit acute care hospital submarket, Sunrise had “60% of the licensed beds” and derived “58.6% of the total gross patient revenues excluding medicare and medicaid patients” during the relevant time period. Id. at 305. Also, with respect to the submarket of hospitals used by Humana Insurance’s insureds, Plaintiffs allege that Sunrise enjoyed an 80% share within this market. Id. Plaintiffs claim that in order to maintain or enhance its monopolistic position, Defendants acted anti-competitively in several ways, including: (1) Humana refused to unbundle level III neonatal care to other health care plans; (2) Humana improperly diverted critical care patients to other hospitals; (3) Hu-mana threatened to revoke physician office space if they did not admit patients to Sunrise; (4) the discount arrangement between Humana and Humana Insurance allowed Sunrise to understate hospital profits and avoid regulatory cost containment while misleading its insureds; (5) Humana threatened physicians and lawmakers who challenged its practices; and (6) Humana Insurance improperly tied use of its insurance policy with treatment at Sunrise. Errata (#822) at 283-290. Finally, with regard to the antitrust injury suffered by the Antitrust Class, Plaintiffs allege that, as a result of Defendants’ monopolistic activity, its members were forced to pay excessive co-payments and insurance premiums. Errata (#822) at 276-77, 308-311. B. Discussion 1. Elements of a Section 2 Claim In order to prevail on a claim of monopolization under Section 2 of the Sherman Act, a plaintiff must demonstrate: (1) possession of monopoly power in the relevant market; (2) willful acquisition or maintenance of that power; and (3) causal antitrust injury. Oahu Gas Service, Inc. v. Pacific Resources, Inc., 838 F.2d 360, 363 (9th Cir.1988), cert. denied, 488 U.S. 870, 109 S.Ct. 180, 102 L.Ed.2d 149 (1988). To establish a Section 2 claim for an attempt to monopolize, a plaintiff must demonstrate four elements: (1) specific intent to control prices or destroy competition; (2) predatory or anti-competitive conduct directed toward accomplishing that purpose; (3) a dangerous probability of success; and (4) causal antitrust injury. McGlinchy v. Shell Chemical Co., 845 F.2d 802, 811 (9th Cir.1988). Both market definition and market power are essentially questions of fact, whereas questions of whether specific conduct is anti-competitive or whether a party has standing to assert a violation of the Sherman Act are questions of law. Austin v. Blue Cross and Blue Shield of Alabama, 903 F.2d 1385, 1387 (11th Cir.1990); Oahu, 838 F.2d at 363, 368. 2. The Need for Market Analysis As an initial matter, Plaintiffs argue that they need not formally define a “relevant market,” as Humana and Humana Insurance made “supracompetitive profits” during the relevant time period, and that this alone adequately demonstrates market power. Errata (#822) at 278-283. Such an argument is without merit. First, by definition, any allegation that Defendants made “excessive” profits necessarily requires that Plaintiffs compare the profit performance of Humana with that of its competitors. See Kintner, Federal Antitrust Law, § 12.10, at 361 (1980). To argue, as Plaintiffs do, that Defendants' profits were “excessive” without knowing what the relevant market was or who its competitors were renders any antitrust analysis vacuous. Second, although prior Ninth Circuit law has held that a detailed market analysis is not uniformly fatal to a claim under the Sherman Act, in order to avoid such an analysis a plaintiff must be able to demonstrate that the anti-competitive acts alleged actually resulted in detrimental effects on eompetition. Bhan v. NME Hosp., Inc., 929 F.2d 1404, 1413 (9th Cir.), cert. denied, — U.S. -, 112 S.Ct. 617, 116 L.Ed.2d 639 (1991); Morgan, Strand, Wheeler & Biggs v. Radiology, Ltd., 924 F.2d 1484, 1489 n. 3 (9th Cir.1991); Thurman Industries, Inc. v. Pay ’N Pak Stores, Inc., 875 F.2d 1369, 1373 (9th Cir.1989); Oltz v. St. Peter’s Community Hospital, 861 F.2d 1440, 1448 (9th Cir.1988) (no need for detailed market analysis where evidence clearly demonstrated competitive harm to patient market in Helena through increase of price and decrease in competition for anesthesiological services). In the present case, Plaintiffs rely on conclusory allegations that Defendants made excessive profits and do not explain how these profits have resulted from anti-competitive conduct. See Errata (# 822) at 278-83. Such allegations clearly do not demonstrate a definable market or demonstrate market power which would obviate the need of a proper market analysis. Finally, even though courts have allowed proof of excessive profits 'to be used as evidence of market power, such proof may be misleading and subject to various interpretations. See Kintner, § 12.10; Areeda & Turner, Antitrust Law, § 507-516 (1978). As such, citing excessive profits without a more detailed analysis of the meaning of such profits is unsatisfactory proof of market power. Telerate Systems, Inc. v. Caro, 689 F.Supp. 221, 238 (S.D.N.Y.1988). Accordingly, since allegations of Defendants’ “excessive” profits do not clearly demonstrate market power or detrimental effects on competition, Plaintiffs still have the burden of proving that Defendants exercised monopoly power within the boundaries of a properly defined competitive market. 3. Defining the Relevant Market Under Section 2, “defining the relevant market is indispensable to a monopolization claim.” Thurman Industries, Inc., 875 F.2d at 1373. A market is typically defined as the pool of goods or services that qualify as economic substitutes because they enjoy reasonable interchangeability of use and cross-elasticity of demand. Morgan, 924 F.2d at 1489; Thurman, 875 F.2d at 1373. The determination of a market usually requires an inquiry into the nature of the product and the geographic areas of effective competition. Oahu, 838 F.2d at 364. “For antitrust purposes, defining the product market involves the identification of the field' of competition; the group or groups of sellers or producers who have actual or potential ability to deprive each other of significant levels of business,” while “a geographic market is an area of effective competition where buyers can turn for alternate sources of supply.” Morgan, 924 F.2d at 1489-90; see also Bhan, 669 F.Supp. 998, 1018-19 (E.D.Cal.1987), affirmed, 929 F.2d 1404 (9th Cir.), cert. denied, — U.S. -, 112 S.Ct. 617, 116 L.Ed.2d 639 (1991) (another consideration in defining product market may be production dimension which is the ability of competing firms to easily supply a good or service if one firm limits its output). Finally, the plaintiff has the burden of proving the scope of the relevant market. Id. at 1019. 4. Plaintiffs’ Relevant Markets Plaintiffs offer two distinct markets which they contend Defendants monopolized or attempted to monopolize. These include: (1) those hospitals used by Humana Insurance insureds; and (2) all major for-profit acute care hospitals in Clark County, Nevada. Errata (# 822) at 290-292. Plaintiffs, however, fail to present sufficient evidence to support these market definitions. a. Hospitals . Used by Humana . Insurance, Insureds With regard to those hospitals used by Humana Insurance insureds, Plaintiffs offer no facts to support such a market definition other than to refer to a recent United States Supreme Court decision Eastman Kodak Co. v. Image Technical Services, — U.S. -, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992), and conclude that the hospitals used by Humana Insurance insureds should be considered a relevant submarket. Errata (# 822) at 291-292; 804-805. Providing no factual or legal basis for such a submarket, Defendants are entitled to summary judgment on this aspect of Plaintiffs’ Section 2 claims. See Seidenstein v. National Medical Enterprises, Inc., 769 F.2d 1100, 1106 (5th Cir.1985); Drs. Steuer & Latham v. Nat. Med. Enterprises, 672 F.Supp. 1489, 1514 (D.S.C.1987). b. Major For-Profit Acute Care Hospitals The second market which Plaintiffs maintain Defendants monopolized or attempted to monopolize is that of major for-profit acute care hospitals in Clark County. This market allegedly consists of three hospitals, including Sunrise, Valley Hospital (“Valley”), and Desert Springs Hospital (“Desert Springs”), and excludes Clark County’s five remaining acute care hospitals, Boulder City Hospital (“Boulder City”), Community Hospital of North Las Vegas (“Community”), St. Rose De Lima Hospital (“St. Rose”), University Medical Center (“UMC”), and Women’s Hospital (“Women’s”). Errata (#822) at 291. In support of this market definition, Plaintiffs assert the following facts: (1) Only Sunrise, Valley, Desert Springs, and University Medical Center (“UMC”) have a comparable range of hospital services; (2) Humana Insurance contracted with Boulder City, Community, and St. Rose to be preferred providers in its insurance program; (3) Donald Stewart, Executive Director of Sunrise, when testifying before the Nevada Senate, stated that the smaller primary care hospitals in Clark County do not compete against the large hospitals; (4) UMC did not compete in the same market since it charged lower prices for its services and, being a non-profit county hospital, was perceived to be the “indigent” hospital in Clark County; Errata (#822) at 290-305. In analyzing Plaintiffs’ second alleged market, the primary issue to be decided is whether Plaintiffs have presented sufficient evidence to support their allegation that the relevant service market for antitrust purposes consists of Clark County’s major for-profit acute care hospitals. This Court finds that Plaintiffs have failed to do so. Plaintiffs’ assertion that Boulder City, Community, St. Rose, and Women’s are not competitors of Sunrise because they do not offer a comparable range of hospital services misconstrues the alleged injury in this ease. Although this Court would agree with the proposition that certain hospital services under certain facts may constitute a relevant submarket, throughout this litigation Plaintiffs have not claimed or offered any evidence regarding the monopolization of specific hospital services such as open heart surgery or renal dialysis, etc. See Errata (#822) at 297. The antitrust injury alleged by Plaintiffs in this case is the actual or attempted monopolization of the general acute care hospital market in Clark County. See Errata (# 822) at 813-315. Given that Boulder City, Community, St. Rose, and Women’s all offer a variety of hospital services within this market, these hospitals have the ability to deprive Sunrise of significant levels of business and therefore, must be considered to be competitors of Sunrise. See Reply (#841) at 99-105; Errata (# 822) at 296-97; Morgan, 924 F.2d at 1489 (competitors are “the group or groups of sellers or producers who have actual or potential ability to deprive each other of significant levels of business”); Thurman, 875 F.2d at 1374-1377 (specialty stores selling same products as more comprehensive home centers within same competitive market); see also United States v. Rockford Memorial Corp., 898 F.2d 1278, 1284 (7th Cir.1990), cert. denied, 498 U.S. 920, 111 S.Ct. 295, 112 L.Ed.2d 249 (1990); Weiss v. York Hosp., 745 F.2d 786, 826 (3rd Cir.1984), cert. denied, 470 U.S. 1060, 105 S.Ct. 1777, 84 L.Ed.2d 836 (1985); United States v. Carilion Health System, 707 F.Supp. 840, 847 (W.D.Va.1989), aff'd, 892 F.2d 1042 (4th Cir.1990). Plaintiffs further allege that Boulder City, Community, and St. Rose are not competitors of Sunrise because these three hospitals are also preferred providers under the Hu-mana insurance policy. Although it is true that to Humana Insurance insureds, having preferred provider status at Boulder City, Community, and St. Rose made these hospitals more competitive with Sunrise and with each other, the simple fact remains that the acute care hospital service market in Clark County does not serve only Humana Insurance insureds. See supra at n. 18 (Humana Insurance’s percentage of Clark County residents with medical insurance was 15% to 24% during relevant time period). Accordingly, because these institutions competed for patients independent of any relationship which they might have had with Humana Insurance, any argument raised by Plaintiffs that these hospitals did not compete in the same market as Sunrise must be rejected. Finally, Plaintiffs argue that UMC should not be considered a competitor of Sunrise because UMC charged lower prices than other hospitals, and because it is a non-profit county hospital, UMC was perceived to be the “indigent” hospital. This Court finds such arguments unpersuasive. First, the facts in this ease reveal that during the relevant time period UMC offered a wide range of acute care hospital services and had contracts for these services with nearly all managed care plans in Nevada. See Motion for Summary Judgment (# 804) at 74V76; Exhibit # 120; Exhibit # 122; Exhibit #128; Exhibit #125 at 51-60. In addition, UMC competed with Sunrise for beds under Certificate of Need applications, attempted to recruit doctors from other Las Vegas hospitals, upgraded its facilities and equipment, and advertised to improve its public image. Id. at 77-78; Exhibit # 122; Exhibit # 125 at 60-62; Exhibit # 129; Exhibit # 131; Exhibit # 133; see also Supplemental Affidavit of Harold M. Ting (# 842), Exhibit 8 (UMC’s 1989-1990 marketing plan which identifies Sunrise as a competitor). Such factors clearly demonstrate that UMC was a significant competitor for patients in Clark County’s acute care hospital market. With regard to Plaintiffs’ pricing argument, as the Ninth Circuit has recognized before, “the scope of the relevant market is not governed 'by the presence of a price differential between competing products.” Twin City Sportserv., Inc. v. Charles O. Finley & Co., 512 F.2d 1264, 1274 (9th Cir.1975). This is particularly so where, as here, the pricing for hospital services commonly is subject to discounting through third-party pay-ors, and where other factors such as location, physician affiliation, and the perceived quality of the institution are more likely to affect competition than price. See Motion for Summary Judgment (# 804), Exhibit # 8, Affidavit of Harold M. Ting at 9; Exhibit # 120, at 17. Although it is no doubt true that being perceived as an “indigent hospital” negatively affected UMC’s ability to attract commereially-insured patients, the facts also clearly demonstrate that this did not deter UMC from actively pursuing and providing services to them. See supra at 34-35; Reply (# 841), Supplemental Affidavit of Barry C. Harris, Exhibit N, at 14-16; Supplemental Affidavit of Harold M. Ting, Exhibit Z, at 17-21; see also United States v. Rockford Memorial Corp., 717 F.Supp. 1251, 1284-85 (N.D.Ill.1990); Nonprofit Hospital Mergers: Proceed With Caution, 20 Cumb.L.Rev. 719, 720-28 (1989-90) (describing generally the market forces which cause nonprofit hospitals to compete with for-profit hospitals). To argue that UMC, the second largest acute care hospital in Clark County, was entirely removed from the competitive market for hospital services because it was perceived by some as a “county hospital” which also served indigent patients simply ignores the competitive reality of the Clark County hospital market. This Court concludes that, based on the record in this case, the Antitrust Class has failed to properly establish either of its proposed submarkets. To the extent a relevant competitive market is defined by the parties, this market would be the general acute care hospital service market in Clark County consisting of Boulder City, Community, Desert Springs, St. Rose, Sunrise, UMC, Valley, and Women’s hospitals. 5. Monopoly Power Within the Relevant Market Once a relevant market is established, the inquiry shifts to whether the alleged monopolist exercised or had the potential to exercise market power. Although no single factor has been held determinative, the evaluation of market power usually depends on an evaluation of market share and barriers to entry. See Oahu, 838 F.2d at 366. A helpful framework for evaluating market share which has been used repeatedly by courts was articulated by Judge Learned Hand in United States v. Alum. Co. of America, 148 F.2d 416, 424 (2d Cir.1945), where he found that a ninety percent market share is enough to constitute a monopoly, a sixty percent market share is doubtful, and “certainly thirty-three percent is not.” Id.; Syufy Enterprises v. American Multicinema, Inc., 793 F.2d 990, 995 (9th Cir.1986), cert. denied, 479 U.S. 1031, 1034, 107 S.Ct. 876, 884, 93 L.Ed.2d 830, 838 (1987); Rebel Oil Co., v. Atlantic Richfield Co., 808 F.Supp. 1464, 1468 (D.Nev.1992); see also Barry, 805 F.2d at 874; Areeda & Turner, Antitrust Law, § 518.3 at 522-523 (1991 Supp.). In addition, declining market share may reflect the absence of market power. Output as opposed to capacity is a more accurate measure of market share, and excess capacity, if it can be reasonably be determined, may limit the exercise of market power. Oahu, 838 F.2d at 366; Carilion, 707 F.Supp. at 848-49; Areeda & Turner, Antitrust Law, §§ 520(a), 521(e) (1991 Supp.). In determining the market share of hospitals, facts that need to be examined include the percentage shares of patient days and admissions of the various competitors. Facts which are relevant to hospital capacity include the number of licensed beds within the hospitals as well as their respective occupancy percentages. An examination of these facts in the present case reveal the following: (1) Patient Days — Sunrise’s market share of Clark County hospital patients in terms of patient days was 35% in 1985, 33% in 1986, 32% in 1987, and 32% in 1988; (2) Admissions — Sunrise’s market share of Clark County hospital patients in terms of admissions was 34% in 1985, 32% in 1986, 30% in 1987, and 30% in 1988; (3) Number of Licensed Beds — Sunrise’s percentage of licensed beds in Clark County was 36% in 1985, 35% in 1986, 35% in 1987, and 35% in 1988; (4) Occupancy Percentage — Sunrise’s capacity utilization of all beds was 52% in 1985, 48% in 1986, 52% in 1987, and 53% in 1988 compared to a Clark County average utilization rate of 53% in 1985,44% in 1986, 56% in 1987, and 58% in 1988. As can be seen from the above figures, throughout the relevant time period, Sunrise had approximately one third of the Clark County market for acute care hospital services. Although it is true that at the time in question, Nevada’s Certificate of Need requirements acted as a potential entry barrier to new participants, the evidence also demonstrates that during the relevant time period there was substantial excess bed capacity at existing hospitals. This excess capacity would temper any competitive advantage Sunrise might have realized from such regulations. Accordingly, this Court further finds that Plaintiffs have failed to establish that Defendants had the ability to exercise monopoly power within Clark County’s acute care hospital market during the relevant time period. See Thurman, 875 F.2d, at 1377-80; Barry, 805 F.2d at 874; Bhan, 669 F.Supp. at 1022-23. 6. Antitrust Injury Finally, even if this Court could find that Plaintiffs have adequately defined a relevant competitive market and have shown Defendants monopolized or attempted to monopolize that market, this Court would nevertheless have to conclude that Plaintiffs have not adequately demonstrated antitrust injury. Although Plaintiffs claim that they have suffered antitrust injury as a result of paying excessive premiums and/or co-payments, such monetary losses relate, if at all, to Defendant Humana Insurance’s allegedly erroneous interpretation of the health insurance contract, and not the alleged anti-competitive acts of Sunrise (e.g. the diversion of critical care patients and refusal to unbundle level III neonatal services). This, coupled with the fact that Plaintiffs were only indirect purchasers of hospital services whose premiums and co-payments were undoubtedly subject to a number of other influences (e.g. competition in the health insurance market, state regulation, etc.) external to the cost of hospital services, clearly demonstrates that Plaintiffs’ Antitrust Class has not suffered “antitrust injury.” Cf. Austin, 903 F.2d at 1390-93. C. Conclusion In light of Plaintiffs’ failure to adequately demonstrate the alleged submarkets, the fact that Defendants could not exercise market power, and the failure of Plaintiffs to demonstrate antitrust injury, Defendants are entitled to summary judgment on Plaintiffs’ Second Claim for Relief. IV. RICO A. Overview The Third and final Claim for Relief alleged by Plaintiffs in their Second Amended Complaint is a violation of RICO pursuant to 18 U.S.C. § 1964(c) brought by Plaintiffs Co-Payor Class and Premium Payor Class. In support of this claim, both classes of Plaintiffs assert that during 1985 to 1988: (1) Humana and Humana Insurance acted as members of an “association in fact” enterprise or, alternatively, that Humana, a person within the meaning of 18 U.S.C. § 1964(3), associated with Humana Insurance, an enterprise within the meaning of 18 U.S.C. § 1961(4); (2) that Humana and Hu-mana insurance entered into a secret agreement to discount amounts owed by Humana Insurance for hospital charges incurred by Humana Insurance insureds; (3) Humana and Humana Insurance concealed and/or misrepresented this agreement to Plaintiffs in the numerous mailings, telephone calls, and television/radio advertisements; and (4) that such acts (a) were intended to and did induce the Premium Payor Class into buying policies they would not have otherwise purchased, and (b) defrauded the Co-Payor Class into paying excessive co-payments. Second Amended Complaint (#370) at 18, 22-23; Errata (# 822) at 103-109, 221-223, 251-253. In support of their Motion for Summary Judgment (#804), Defendants Humana and Humana Insurance assert the following arguments: (1) Plaintiffs cannot prove that the alleged misrepresentations and/or omissions of Defendants were intended to defraud them since (a) it is undisputed that the Humana Insurance policy mirrored other health plans in place during the relevant time period and, (b) the discount arrangement was disclosed to Nevada regulators. Motion for Summary Judgment (# 804) at 98-116; (2) New precedent requires this Court to reverse its prior ruling that Humana is a “person” distinct from Humana Insurance, the “enterprise,” under 18 U.S.C. § 1962(e). Motion for Summary Judgment (# 804) at 131-136; (3) The Premium Payor Class cannot show that they suffered RICO injuries, or even assuming they could, that these injuries were proximately caused by Defendants’ actions. Motion for Summary Judgment (# 804) at 116-126; (4) Under RICO, the only damages which the Co-Payor Class is entitled to recover is the amount of excess co-payments which the class paid as a result of Defendants’ allegedly improper interpretation of the policy. Motion for Summary Judgment (# 804) at 126-131; (5) The MeCarran-Ferguson Act Precludes Plaintiffs’ RICO cause of action. Motion for Summary Judgment (# 804) at 136-146. B. Requirements of RICO, 18 U.S.C. § 1962(c) Liability pursuant to .18 U.S.C. § 1962(c) requires a Plaintiff to demonstrate (1) the conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Sun Savings and Loan Assoc. v. Dierdorff, 825 F.2d 187, 191 (9th Cir.1987). “Racketeering activity” is any act indictable under various provisions of Title 18 of the United States Code, see 18 U.S.C. § 1961, and includes the predicate acts alleged in this case of mail fraud and wire fraud pursuant to 18 U.S.C. §§ 1341, 1343. Id. In order to commit mail fraud under § 1341, Plaintiffs must demonstrate that: “(1) the defendants formed a scheme or artifice to defraud: (2) the defendants used the United States mails or caused a use of the United States mails in furtherance of the scheme; and (3) the defendants did so with the specific intent to deceive or defraud.” Schreiber Distributing v. Serv-Well Furniture Co., 806 F.2d 1393, 1400 (9th Cir.1986). Similarly, in order to commit wire fraud pursuant to § 1343, Plaintiffs must show: “(1) the formation of a scheme or artifice to defraud; (2) the use of the United States wires or causing a use of the United States wires in furtherance of the scheme; and (3) specific intent to deceive or defraud.” Id. Under these provisions, fraud refers to “‘(1) a false representation (2) in reference to a material fact (3) made with knowledge of its falsity (4) and with the intent to deceive.’” United States v. Bonallo, 858 F.2d 1427, 1433 (9th Cir.1988). A failure to disclose or concealment may also serve a basis for a fraudulent scheme under mail and wire fraud statutes; however, such nondisclosure must arise from a failure to comply with an independent statutory or fiduciary duty. California Arch. Bldg. Prod. v. Franciscan Ceramics, 818 F.2d 1466, 1472 (9th Cir.1987), cert. denied, 484 U.S. 1006, 108 S.Ct. 698, 98 L.Ed.2d 650 (1988); United States v. Dowling, 739 F.2d 1445, 1449 (9th Cir.1984), rev’d on other grounds, 473 U.S. 207, 105 S.Ct. 3127, 87 L.Ed.2d 152 (1985). C. Plaintiffs’ Failure to Demonstrate Intent to Defraud The first argument raised by Defendants in support of their Motion for Summary Judgment (# 804) on Plaintiffs’ RICO claims is that there is no evidence to suggest that Defendants had - “specific intent to deceive or defraud” the Plaintiffs. More specifically, Defendants contend that insofar as the development of the policy in question is concerned: (1) during the period in question, the health care industry was just beginning to experiment with preferred provider arrangements, and no industry standards were in place governing how co-payment discounts should be administered; (2) that the policy in question was simply modeled after one developed and already in place in Florida; (3) Medicare employs an analogous system for the payment of co-payments; (4) confidentiality clauses were common in the industry for such discount arrangements to ensure the protection of proprietary information; and (5) that only 9.54% of all Humana Insurance insureds resulted in paying higher co-payments if the discount given Humana Insurance would have been shared. Motion for Summary Judgment (#804) at 99-108. Defendants further assert that various parties other than Defendants were aware of the co-payment arrangement, that Defendants disclosed the discount arrangement to Nevada regulators at various times between 1984 and 1986, and that on June 6, 1986, while at hearings before the Nevada Department of Insurance (“DOI”), Defendants directly informed DOI officials that bills issued to insureds did not reflect any discounts received by Humana Insurance from Humana. Motion for Summary Judgment (#804) at 110-116. Plaintiffs respond that notwithstanding any disclosures made by Defendants to third parties, Defendants failed to disclose the co-payment scheme to Plaintiffs directly, and even had attempted to conceal it. According to Plaintiffs, Defendants’ Motion for Summary Judgment (#804) raises a material question of fact regarding whether Defendants had the requisite “intent” required under the mail and wire fraud statutes. See Errata (# 822) at 1-46, 219-221. In determining whether Defendants satisfy the “intent” requirement of the mail and wire fraud statutes, Plaintiffs must demonstrate that the fraud was active and not merely constructive. United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir.1980), cert. denied, 447 U.S. 928, 100 S.Ct. 3026, 65 L.Ed.2d 1122 (1980). Specific intent may be shown by examining the scheme to determine whether it “was reasonably calculated to deceive persons of ordinary prudence and comprehension.” Sun Savings, 825 F.2d at 196; Schreiber, 806 F.2d at 1400; Bohonus, 628 F.2d at 1172; see also United States v. Green, 745 F.2d 1205, 1209 (9th Cir.1984), cert. denied, 474 U.S. 925, 106 S.Ct. 259, 88 L.Ed.2d 266 (1985) (specific intent to defraud means to deceive or mislead, and does not include situations where act involved was the result of ignorance, mistake, or accident). Notwithstanding the facts asserted by Defendants, viewing all inferences in favor of Plaintiffs as this Court must do, it is clear that a material question of fact exists as to whether Defendants’ interpretation of the co-payment provision, which was furthered through the use of United States mails or •wires, was specifically intended to mislead or deceive Plaintiffs or whether it was the result of ignorance, mistake, or accident. Accordingly, Defendants Motion for Summary Judgment (# 804) on this ground must be denied. D. Person/Enterprise Distinction Plaintiffs next allege that Humana and Humana Insurance acted as members of an “association in fact” enterprise or, alternatively, that Humana, a person within the meaning of 18 U.S.C. § 1964(3), associated with Humana Insurance, an enterprise within the meaning of 18 U.S.C. § 1961(4), to defraud Plaintiffs. As this Court recognized in its July 9, 1991 Order (#364), such allegations satisfy the “person/enterprise” requirements of 18 U.S.C. § 1962(e). See River City Markets v. Fleming Foods West, 960 F.2d 1458, 1460-62 (9th Cir.1992); U.S. v. Feldman, 853 F.2d 648, 656-59 (9th Cir.1988), cert. denied, 489 U.S. 1030, 109 S.Ct. 1164, 103 L.Ed.2d 222 (1989); cf. Glessner v. Kenny, 952 F.2d 702, 710-14 (3rd Cir.1991). Accordingly, Defendants are not entitled to summary judgment on this ground. E. RICO Damages for the Premium Payor Class The third argument asserted by Defendants in support of summary judgment is that the Premium Payor Class has not demonstrated the requisite causal nexus between the RICO damages they seek and the fraud alleged as a predicate act. This Court agrees. At the outset, the Premium Payor Class notes that the nondisclosure of the discounting arrangement betwe