This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).







Cynthia L. Pugh,





Gilbert Westreich, M.D.,



Care Delivery Management, Inc.,




Filed January 4, 2005

Klaphake, Judge


Dakota County District Court

File No. C0-03-10250


Robert M. Gardner, Gardner Law Office, Post Office Box 22071, St. Paul, MN  55122-0071 (for appellant)


Richard J. Thomas, Chad J. Hintz, Burke & Thomas, PLLP, 3900 Northwoods Drive, Suite 200, St. Paul, MN  55112 (for respondent Westreich)


Diane B. Bratvold, Rachna B. Sullivan, Rider Bennett, LLP, 333 South Seventh Street, Suite 2000, Minneapolis, MN  55402 (for respondent Care Delivery Management)


            Considered and decided by Harten, Presiding Judge, Klaphake, Judge, and Stoneburner, Judge.

U N P U B L I S H E D   O P I N I O N


            Appellant Cynthia L. Pugh sued respondents Gilbert Westreich, M.D., and Care Delivery Management, Inc. (CDMI), alleging fraud, violation of Minn. Stat. § 325F.69 (2002) (the Minnesota Consumer Fraud Act), tortious interference with contract, and civil conspiracy.  She appeals from a district court order dismissing her complaint pursuant to Minn. R. Civ. P. 12.02(e) (failure to state a claim). 

            Because the complaint fails to set forth a legally sufficient claim for relief, we affirm.


            Appellant was injured in a motor vehicle accident on July 7, 2002.  Her insurer, Metropolitan Property & Casualty Insurance Company (MetLife), paid benefits to appellant, but scheduled a so-called “independent medical exam” (IME) through CDMI, a medical services scheduling business.  CDMI contracted with Westreich, a licensed physician, to perform the IME. Westreich examined appellant and after detailing his findings, concluded that appellant was not in need of further medical treatment.  Based on this report, MetLife refused to pay for any further treatment.  This suit followed.

            In her complaint, appellant alleges that CDMI misrepresented the medical examination as “independent” because CDMI regularly contracts with Westreich to provide such examinations and Westreich “always” concludes that further medical treatment is unnecessary.  Appellant further alleges that Westreich is paid in excess of the usual fee for a physical examination, that he does nothing but insurance examinations and has no private patients, and that Westreich always finds that no medical treatment is necessary, so that insurers will continue to use his services.  Appellant does not state the source of her information for these allegations.  Appellant further alleges that CDMI and Westreich tortiously interfered with her contract with MetLife by arranging a sham examination, and that they conspired together for the purpose of intentionally discontinuing her benefits and defeating any claim she might have for underinsured motorist (UIM) benefits.


            1.         Standard of Review

            This court reviews a dismissal under Minn. R. Civ. P. 12.02 de novo.  Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn. 2003).  The only question on review is whether the complaint, considered alone, sets forth a legally sufficient claim for relief.  Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997).  “[I]t is immaterial whether or not the plaintiff can prove the facts alleged” and a dismissal will not be upheld “if it is possible on any evidence which might be produced, consistent with the pleader’s theory, to grant the relief demanded.”  Martens v. Minn. Mining & Mfg. Co., 616 N.W.2d 732, 739-40 (Minn. 2000) (quotation omitted).  All facts alleged in the complaint must be accepted as true and all reasonable inferences must be drawn in favor of the nonmoving party.  Bodah, 663 N.W.2d at 553.  Extrinsic evidence may not be considered on a motion to dismiss pursuant to rule 12.02, unless the complaint refers to a contract and the contract is central to the allegations of the complaint.  In re Hennepin County 1986 Recycling Bond Litigation, 540 N.W.2d 494, 497 (Minn. 1995).

            2.         Fraud

            In order to establish a cause of action for fraudulent misrepresentation, a party must show:  (1) the false representation or the concealment of a material fact; (2) that the party making the false representation knows that it is untrue or, without knowing, states that it is true; (3) that the false representation is made with intent to induce another to rely on it; (4) that the other party acts in reliance; and (5) that the party acting in reliance suffers pecuniary damage.  Specialized Tours, Inc. v. Hagen, 392 N.W.2d 520, 532 (Minn. 1986).  Where the false representation is a concealment of a material fact, one party must “knowingly conceal[] a material fact that is peculiarly within his own knowledge, and the other party relies on the presumption that the fact does not exist.”  Flynn v. Am. Home Prods. Corp., 627 N.W.2d 342, 350 (Minn. App. 2001) (quotation omitted).  The party failing to communicate the material fact must be under a legal or equitable obligation to communicate it to the other party.  Id.

            Appellant alleges both a fraudulent statement and a fraudulent omission: by calling it an “independent” examination, CDMI intentionally misrepresented the fact that the examination was not independent; and by failing to tell appellant that all persons submitting to an IME by Westreich had their benefits terminated, CDMI intentionally omitted a material fact.  Appellant pleads that because she relied on these fraudulent representations, she was induced to attend the IME, thereby losing her benefits.  Because this is a rule 12 motion, all of these facts must be accepted as true.

            Appellant failed to plead allegations that demonstrate a reasonable reliance on respondents’ misrepresentations or material omissions or that she incurred damages as a result of those misrepresentations.  An insurer who is paying benefits has the right to request that a physician of the insurer’s choice examine an insured; an insured has an obligation to cooperate in the examination.  Minn. Stat. § 65B.56, subd. 1 (2002).  The insurer must schedule this exam in the insured’s city of residence and must pay for the examination.  Id.  The insured may request a copy of the examiner’s report, including details of the examiner’s findings and conclusions.  Id.

            Whether the examination is independent or a complete sham does not, in the statutory sense, affect her obligation to attend the examination however much it may affect the credibility and subsequent use of that examination.  The descriptive term “independent,” or CDMI’s omission of the fact that Westreich was biased, thus should have no effect on whether or not she chose to attend the examination; rather, she was compelled by statute to attend.

            As to damages, appellant alleges that CDMI’s fraudulent misrepresentation and omission caused MetLife to terminate her benefits and discouraged her from pursuing an UIM claim.  Appellant retained the option, however, to pursue further benefits either through arbitration or trial; Westreich’s opinion is not dispositive of the issue.

            As to fraudulent omissions, “one party to a transaction has no duty to disclose material facts to the other except when the parties are in a fiduciary relationship with each other.”  Flynn, 627 N.W.2d at 350 (quotation omitted).  Additionally, “[o]ne who speaks must say enough to prevent his words from misleading the other party,” and “[o]ne who has special knowledge of material facts to which the other party does not have access may have a duty to disclose these facts to the other party.”  Richfield Bank & Trust Co. v. Sjogren, 309 Minn. 362, 366, 244 N.W.2d 648, 650 (1976).  This usually requires an element of reasonable reliance, trust, and confidence of one party on the other for counsel and advice.  See Klein v. First Edina Nat’l Bank, 293 Minn. 418, 422, 196 N.W.2d 619, 623 (1972).  In Klein, a 20-year banking relationship was not sufficient to establish a confidential relationship.  Id.  Here, CDMI had no fiduciary relationship with appellant and appellant had no reason to rely on the advice of CDMI, an independent examination-scheduling agency with which she had no sort of relationship.

            Because appellant has failed to allege a legally sufficient claim for fraud, the district court did not err in dismissing this cause of action against CDMI.

            3.         Consumer Fraud Act

            The Minnesota Consumer Fraud Act (MCFA), Minn. Stat. § 325F.69, subd. 1 (2002), provides that the use of any fraud or false misrepresentations in connection with the sale of merchandise is an unlawful practice.  “Merchandise,” for purposes of the MCFA, includes “services.”  Minn. Stat. § 325F.68, subd. 2 (2002).  The MCFA protects consumers, as opposed to sophisticated investors or merchants.  See Ly v. Nystrom, 615 N.W.2d 302, 309 (Minn. 2000).  The MCFA is broadly construed to protect consumer rights.  Ly, 615 N.W.2d at 308.

            The complaint here alleges that the fraudulent transaction is the contract between MetLife and respondents.  Appellant’s theory is that MetLife was duped by CDMI’s description of the IME as “independent,” by its omission of the fact that Westreich always finds against the injured party, and by Westreich’s “sham” examinations.  The complaint does not allege that appellant was a direct consumer of the services provided by respondents.

            In certain circumstances, however, a party who is not a direct consumer has standing to sue under the MCFA.  In Group Health Plan, Inc. v. Philip Morris Inc., 621 N.W.2d 2 (Minn. 2001), the supreme court considered whether Group Health had standing to sue tobacco companies under the MCFA.  Although Group Health was not a direct consumer of cigarettes, its rights were affected because it provided services for direct consumers of the tobacco companies who were harmed by the tobacco companies’ misrepresentations.  Id. at 11.  The supreme court concluded that because of the broad remedial purposes of the MCFA, “as long as the plaintiff alleges an injury by conduct that violates one or more substantive statutes, it is not necessary to plead under [Minn. Stat. § 8.31, subd. 3a, the private attorney general statute][1] that it is a purchaser of the defendant’s products.”  Id.  Thus, in Group Health, the direct consumer (the cigarette purchaser) was damaged by the fraudulent misrepresentations of the tobacco companies; the third party (Group Health) could bring an action because it was damaged by health claims of the direct consumer, who was an appropriately aggrieved person under the MCFA. 

            Here, the direct consumer of services is MetLife.  An insurer and sophisticated party, such as MetLife, is not protected by the MCFA.  See Ly, 615 N.W.2d at 309 (opining that MCFA not intended to protect sophisticated parties); see also Gas Aggregation Servs., Inc. v. Howard Avista Energy,LLC, 319 F.3d 1060, 1069 (8th Cir. 2003) (concluding that MCFA not applicable to sale of merchandise between sophisticated merchants).  According to the allegations of the complaint, both CDMI and Westreich are heavily involved in the practice of providing IMEs.  Because MetLife, as a sophisticated party, could not make a claim under the MCFA, and because there is no claim that MetLife was damaged in this instance, we conclude that appellant cannot invoke the protection of the MCFA.

            Because the allegations of the complaint are insufficient to support a claim under the MCFA, the district court did not err by dismissing this cause of action.[2]

            4.         Tortious Interference with Contract

            “To establish a prima facie case of tortious interference with contract, a plaintiff must show: (1) the existence of a contract; (2) knowledge of the contract by the alleged wrongdoer; (3) intentional procurement of the contract’s breach; (4) absence of justification; and (5) damages caused by the breach.”  Metge v. Cent. Neighborhood Improvement Ass’n, 649 N.W.2d 488, 500 (Minn. App. 2002), review dismissed (Minn. Oct. 15, 2002).  Proof of all five elements must be established.  Id. 

            The complaint fails to allege a breach of contract.  Respondents provided an IME as permitted under appellant’s contract with MetLife and as mandated by statute.  The services provided conformed with the statutory and contractual requirements:  a physical examination of the insured performed by a licensed medical provider of the insurer’s choice, in the city of the insured’s residence.  Although the IME gave MetLife a reason to terminate benefits, that is also permissible under the contract between MetLife and appellant.  The IME did not preclude appellant from challenging the termination of benefits or pursuing further benefits under the contract. 

            Because appellant failed to plead a breach of contract, her claim for tortious interference with contract is legally insufficient.  The district court thus did not err in dismissing this cause of action.

            5.         Conspiracy

            An action for civil conspiracy must allege an underlying tort.  Harding v. Ohio Cas. Ins. Co., 230 Minn. 327, 337, 41 N.W.2d 818, 824 (1950).  Because appellant’s complaint fails to state a claim on her first three causes of action, the cause of action for conspiracy also fails.  The district court therefore did not err in dismissing this claim.


[1] Minn. Stat. § 8.31, subd. 3a (2002) creates private remedies for persons injured by a violation of Minn. Stat. § 325F.69, which provides only that certain deceptive practices are enjoinable.  Minn. Stat. § 8.31, subd. 3a, allows an injured party to bring a civil action and recover damages, costs, attorney fees, and equitable relief.

[2] Westreich raises the issue of whether professional services, such as legal, medical, or accounting services, are “merchandise” under the MCFA.  While there is a suggestion that these services may not be included under the protections of the MCFA, this issue has not been addressed directly in Minnesota.  See Jensen v. Touche Ross & Co., 335 N.W.2d 720, 728 (Minn. 1983).  Other jurisdictions have apparently excluded these types of services because the close regulation of these professions provides consumers with other means of protection.  See, e.g., Gadson v. Newman, 807 F. Supp. 1412, 1415-17 (C.D. Ill. 1992) (distinguishing business aspects of practice of medicine, which are regulated by consumer statutes, from provision of medical services); Hampton Hosp. v. Bresan, 672 A.2d 725, 730 (N.J. Super. Ct. App. Div. 1996) (same); Gatten v. Merzi, 579 A.2d 974, 976 (Pa. Super. Ct. 1990) (concluding that consumer fraud statute did not apply to professional medical opinions).