UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _____________

No. 19-3340 _____________ ST. LUKE’S HEALTH NETWORK, INC., DBA St. Luke’s University Health Network; SAINT LUKE’S HOSPITAL OF BETHLEHEM, PENNSYLVANIA, DBA St. Luke’s University Hospital, Bethlehem Campus; ST. LUKE’S QUAKERTOWN HOSPITAL; CARBON-SCHUYLKILL COMMUNITY HOSPITAL, DBA St. Luke’s Miners Memorial Hospital; BLUE MOUNTAIN HOSPITAL, individually and on behalf of all others similarly situated, DBA St. Luke’s Hospital, Palmerton Campus, Appellants

v.

LANCASTER GENERAL HOSPITAL; LANCASTER GENERAL HEALTH; UNIVERSITY OF PENNSYLVANIA HEALTH SYSTEM; UNIVERSITY OF PENNSYLVANIA TRUSTEES; JOHN DOE 1; JOHN DOE 2 ______________

Appeal from the United States District Court for the Eastern District of Pennsylvania (Civ. Action No. 5-18-cv-02157) District Judge: Honorable Jeffrey L. Schmehl ______________

Argued March 31, 2020 ______________ Before: GREENAWAY, JR., PORTER, and MATEY, Circuit Judges.

(Opinion filed: July 22, 2020)

Brian W. Barnes [ARGUED] David H. Thompson Cooper & Kirk 1523 New Hampshire Avenue, N.W. Washington, DC 20036 Douglas J. McGill Webber McGill 760 Route 10 Suite 104 Whippany, NJ 07981 Counsel for Appellants Kevin W. Fay [ARGUED] Peter J. Hoffman Jeffrey P. Lewis Eckert Seamans Cherin & Mellott 50 South 16th Street Two Liberty Place, 22nd Floor Philadelphia, PA 19102 Counsel for Appellees

2 ______________

OPINION _______________ GREENAWAY, JR., Circuit Judge.

This case involves a state-run program to reimburse Pennsylvania hospitals for treating indigent patients. Plaintiffs-Appellants are a group of hospitals and their related health care networks that seek civil remedies from Defendants- Appellees, another hospital and hospital system, for violations of the Racketeer Influenced & Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1964(c)–(d). Plaintiffs allege that Defendants submitted fraudulent claims for reimbursement, in violation of the wire fraud statute, 18 U.S.C. § 1343, and received an unduly inflated proportion of the available funding. As a result, Plaintiffs claim they were reimbursed an artificially smaller share of funds. The District Court dismissed Plaintiffs’ claims for lack of RICO standing, an additional requirement to Article III standing. It found that Plaintiffs failed to plead sufficient facts to demonstrate that their injury was caused by Defendants’ alleged fraud.

Because we find Plaintiffs’ theory of liability adequately alleges proximate causation, we will reverse the District Court and remand for further proceedings consistent with this opinion.

3 I. BACKGROUND

A. Tobacco Settlement Act and Extraordinary Expense Program

In 1998, Pennsylvania and forty-five other states entered into a master settlement agreement with certain cigarette manufacturers. As part of the settlement, the cigarette manufacturers disbursed funding to the states to cover tobacco- related health care costs. To allocate the funds to hospitals providing care to indigent patients, the Pennsylvania General Assembly enacted the Tobacco Settlement Act in 2001 (the “Act”). P.L. 755, No. 77 (codified at 35 Pa. Stat. § 5701.101 et seq. (2001)).

This case concerns the Hospital Extraordinary Expense Program (“EE Program”) established under the Act. The EE Program reimburses participating hospitals for “extraordinary expenses” incurred for treating uninsured patients.1 T