899 F.2d 951 (10th Cir. 1990), 87-1823, Reazin v. Blue Cross and Blue Shield of Kansas, Inc.

Docket Nº:87-1823.
Citation:899 F.2d 951
Party Name:Walter L. REAZIN, M.D.; HCA Health Services of Kansas, Inc., d/b/a Wesley Medical Center; Health Care Plus, Inc.; and New Century Life Insurance Co., Plaintiffs-Appellees, v. BLUE CROSS AND BLUE SHIELD OF KANSAS, INC., Defendant and Counterclaim Plaintiff-Appellant, and HMO Kansas, Inc., Additional Counterclaim Plaintiff-Appellant, v. HOSPITAL CORP
Case Date:March 29, 1990
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
FREE EXCERPT

Page 951

899 F.2d 951 (10th Cir. 1990)

Walter L. REAZIN, M.D.; HCA Health Services of Kansas,

Inc., d/b/a Wesley Medical Center; Health Care

Plus, Inc.; and New Century Life

Insurance Co., Plaintiffs-Appellees,

v.

BLUE CROSS AND BLUE SHIELD OF KANSAS, INC., Defendant and

Counterclaim Plaintiff-Appellant,

and

HMO Kansas, Inc., Additional Counterclaim Plaintiff-Appellant,

v.

HOSPITAL CORPORATION OF AMERICA, Additional Counterclaim

Defendant-Appellee.

No. 87-1823.

United States Court of Appeals, Tenth Circuit

March 29, 1990

Page 952

[Copyrighted Material Omitted]

Page 953

[Copyrighted Material Omitted]

        Motion for Leave to File Petition for Rehearing Out of Time

        Denied May 22, 1990.

Page 954

        Daniel R. Shulman, Gray, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, Minn. (Gary D. McCallister, Davis, Wright, Unrein, Hummer & McCallister, Topeka, Kan., and Joseph M. Alioto, Alioto & Alioto, San Francisco, Cal., with him on the briefs), for appellants.

        Robert H. Rawson, Jr., Jones, Day, Reavis & Pogue, Cleveland, Ohio (Robert M. Duncan, Joe Sims, and Joseph F. Winterscheid, Jones, Day, Reavis & Pogue, Cleveland, Ohio, and Donald R. Newkirk, Fleeson, Gooing, Coulson & Kitch, Wichita, Kan., with him on the briefs), for plaintiffs-appellees.

        Before MOORE, ANDERSON, and BRORBY, Circuit Judges.

        STEPHEN H. ANDERSON, Circuit Judge.

        Blue Cross and Blue Shield of Kansas, Inc. ("Blue Cross") appeals an adverse verdict entered in an antitrust and state law tortious interference case. Both the antitrust and state law claims arose out of the same set of facts.

        The parties have attempted to make this case very complex, but the antitrust issues are relatively straightforward. Plaintiffs' theory was that Blue Cross, alarmed by a perceived competitive threat from Hospital Corporation of America ("HCA") through its acquisitions of a major Wichita hospital now called HCA Health Services of Kansas, Inc. d/b/a Wesley Medical Center ("Wesley"), Health Care Plus, Inc. ("HCP"), and New Century Life Insurance Co. ("New Century"), determined to "hurt" Wesley and thereby send a message to other hospitals not to do business with entities Blue Cross believed were competitors. It did this by agreeing with Wesley's competitors, St. Joseph Hospital and St. Francis Hospital ("the Saints"), to terminate Wesley's contracting provider agreement and to reduce the maximum allowable payments it would make to the Saints, thereby increasing Wesley's costs of doing

Page 955

business and causing a shift of Blue Cross patients from Wesley to the Saints. The threatened termination of Wesley because of its affiliation with a Blue Cross competitor made other hospitals less willing to affiliate with, or enter into relationships with, Blue Cross competitors. The result was that Kansas health care consumers were restricted in their access to and benefits from health care financing arrangements involving entities other than Blue Cross, and were deprived of the benefits of competition in that arena. The jury agreed with plaintiffs and found multiple antitrust violations by Blue Cross.

        Given our standard of review, we uphold the jury's verdict because we find sufficient evidence supports it. In so holding, we reach the following specific conclusions: (1) Wesley has standing to assert its antitrust claims and proved an antitrust injury; (2) Blue Cross entered into an agreement with the Saints which restrained trade in the market of health care financing; (3) Blue Cross had market and monopoly power and it willfully maintained its monopoly power; (4) Wesley adequately proved its damages; (5) the court properly instructed the jury on the various antitrust claims involved; (6) the court properly instructed the jury on plaintiffs' state law claims and sufficient evidence supports the jury's verdict on those claims; (7) Blue Cross suffered no prejudice from the court's supplemental "Allen " charges or any communications with the jury during deliberations; (8) the court properly granted plaintiffs' motion for summary judgment on the counterclaim; and (9) the award of attorneys' fees and costs is affirmed in all respects except we remand for a recalculation of the expert witness fees awarded.

        PROCEDURAL HISTORY

        Plaintiffs Walter L. Reazin, M.D., Wesley, HCP, and New Century brought this antitrust action against Blue Cross. Plaintiffs alleged violations of sections 1 and 2 of the Sherman Anti-Trust Act, 15 U.S.C. Secs. 1 and 2, as well as violations of state law, arising out of Blue Cross' threatened termination of its contracting provider agreement with Wesley. They sought damages and other relief. 1 Blue Cross and its wholly-owned subsidiary, HMO Kansas, Inc. ("HMOK"), counterclaimed against plaintiffs as well as HCA, alleging: that HCA's acquisitions of Wesley, HCP, and New Century violated the antitrust laws; that HMOK's failure in Wichita was the result of an unlawful boycott and concerted refusal to deal or an unreasonable restraint of trade; that plaintiffs had monopolized, attempted to monopolize, and/or conspired to monopolize the market for health care financing and health care services; and, asserting tortious interference with prospective advantage, in violation of Kansas law. They sought damages and other relief.

        Pursuant to plaintiffs' motion, the district court separated the trials of the complaint and the counterclaim. After a six-week jury trial on plaintiffs' complaint, and four weeks of deliberation, the jury returned a verdict in favor of Wesley, finding that Blue Cross had violated section 1 of the Sherman Act by engaging in a conspiratorial restraint of trade, had violated section 2 by monopolizing the relevant market, and had tortiously interfered with Wesley's present and prospective business relations in violation of Kansas law. It awarded Wesley $1,542,980 in actual damages for the antitrust violations and $1.00 in actual nominal damages and $750,000 in punitive damages for the tortious interference

Page 956

claim. 2

        Numerous post-trial motions followed. Ultimately, in a 124-page written opinion, the district court denied Blue Cross' motions to set aside the verdict and dismiss the case for lack of jurisdiction, for a directed verdict, and for judgment n.o.v. or for a new trial. Reazin v. Blue Cross & Blue Shield, Inc., 663 F.Supp. 1360 (D.Kan.1987) ("Reazin II "). 3 It also denied plaintiffs' motion for injunctive relief against Blue Cross under Section 16 of the Clayton Act, 15 U.S.C. Sec. 26. After trebling the actual damages awarded Wesley, the court entered judgment in the amount of $5,378,941.00, plus interest. It awarded plaintiffs their requested sum of $2,176,983.75 in attorney's fees, and a total of $246,844.99 in other fees and costs. Finally, it granted plaintiffs' motion for summary judgment on the counterclaim. Blue Cross appeals essentially all of the district court's rulings, and is joined by HMOK with respect to the grant of summary judgment on the counterclaim.

        FACTS

        The complex facts and history of this case have been thoroughly recounted in the two district court opinions. See Reazin I, 635 F.Supp. 1287, and Reazin II, 663 F.Supp. 1360. We recite here only the basic undisputed facts relevant to this appeal.

        Blue Cross, a non-profit company formed in 1983 by combining Blue Cross of Kansas, Inc. and Blue Shield of Kansas, Inc., is the largest private health care financing organization in Kansas. 4 It is chartered under a special enabling act. It is approximately fifteen times bigger than the next largest private health care financing organization, in terms of percent of earned health insurance premiums. Pl.'s Ex. 508K, Addendum to Answer Brief of Appellees Vol. I.

"In 1985, all hospitals and approximately 90% of all physicians in [the Blue Cross] service area [which includes the entire state except for Johnson and Wyandotte Counties] were under contract with [Blue Cross] as providers of medical services to the company's subscribers. No other health insurance company has contracts with all of the hospitals in [Blue Cross'] service area. [Blue Cross] is also the federal Medicare intermediary in Kansas, administering the Medicare program throughout the company's service area; as well, it is one of the larger third-party administrators of self-insured programs in the state."

        Reazin II, 663 F.Supp. at 1372 (citations to record omitted). Blue Cross is required under its enabling legislation to pursue cost containment as its primary goal.

        Wesley is the largest, and "by far the strongest," hospital in Wichita. Reazin I, 635 F.Supp. at 1297. It is a major teaching hospital, as well as a provider of clinical services, medical research, and outreach care programs. There was testimony that Wesley is considered one of the premier hospitals in Kansas and has historically been a low-cost provider of quality health care. Wesley's competitors in Wichita are the Saints and Riverside Hospital.

        HCP is a health maintenance organization ("HMO") founded in 1981, which provides private health care financing to businesses and individuals in Kansas, including Sedgwick County and Wichita. 5

Page 957

        HCA, based in Nashville, Tennessee, "through its subsidiary corporations, is engaged in the business of providing health care services, private health care financing and hospital management services." Reazin II, 663 F.Supp. at 1373. In terms of the number of hospitals owned or managed, HCA is the largest for-profit hospital company in the United States. However, Dr. Thomas Frist, the chairman and chief executive officer of HCA, testified that HCA "represent[s] less than three percent ... of the hospital sector in this country [and] ... close to fifty percent of [HCA's] revenues come through third-party...

To continue reading

FREE SIGN UP