Brokerage Concepts, Inc. v. U.S. Healthcare, Inc.
| Decision Date | 02 April 1998 |
| Docket Number | No. 96-1922.,No. 96-1891.,No. 97-1014.,No. 96-1892.,No. 96-1923.,No. 97-1013.,96-1891.,96-1892.,96-1922.,96-1923.,97-1013.,97-1014. |
| Citation | 140 F.3d 494 |
| Parties | BROKERAGE CONCEPTS, INC., v. U.S. HEALTHCARE, INC.; Corporate Health Administrators, Inc.; United States Health Care Systems Of Pennsylvania, Inc., D/B/A The Health Maintenance Organization Of Pennsylvania; Richard Wolfson; Scott Murphy; William Brownstein Richard Wolfson, Scott Murphy And William Brownstein, Richard Wolfson; Scott Murphy; and William Brownstein, in No. 97-1891, U.S. Healthcare, Inc.; United States Health Care Systems of Pennsylvania, Inc., d/b/a The Health Maintenance Organization of Pennsylvania and Corporate Health Administrators, Inc., in No. 96-1892, U.S. Healthcare, Inc.; Corporate Health Administrators, Inc.; United States Health Care Systems of Pennsylvania, Inc., d/b/a The Health Maintenance Organization of Pennsylvania; Richard Wolfson; Scott Murphy; William Brownstein, in No. 96-1922, Brokerage Concepts, Inc., in No. 96-1923, U.S. Healthcare, Inc.; United States Health Care Systems of Pennsylvania, Inc., d/b/a The Health Maintenance Organization of Pennsylvania and Corporate Health Administrators, Inc., in No. 97-1013, Richard Wolfson; Scott Murphy; William Brownstein, in No. 97-1014. |
| Court | U.S. Court of Appeals — Third Circuit |
Patrick W. Kittredge, Lisa G. Miller, Kittredge, Donley, Elson, Fullem & Embick, LLP, Philadelphia, PA, Robert E. Bloch, Roy T. Englert, Jr. (argued), Donald M. Falk, Robert L. Bronston, Mayer, Brown & Platt, Washington, DC, for U.S. Healthcare, Inc., Corporate Health Administrators, United States Health Care Systems of Pennsylvania, Inc. d/b/a The Health Maintenance Organization of Pennsylvania.
Richard L. Bazelon (argued), A. Richard Feldman, Bazelon & Lees, Philadelphia, PA, for Brokerage Concepts, Inc.
Before: BECKER, MANSMANN, and ROSENN, Circuit Judges.
The revolutionary changes in the health care field over the past decade have spawned many novel market arrangements. Perhaps the most significant development is the ascendency of managed-care driven health maintenance organizations ("HMOs"), whose hold over a large number of subscribers has permitted them to wield considerable economic power over health care providers. This antitrust, civil RICO, and state law tortious interference case against defendant U.S. Healthcare, one of the nation's largest HMO's, two of its wholly-owned subsidiaries, and three of its top officers, is an exemplar of the legal fallout from this development.
This appeal presents several quite difficult and important first impression questions for us, including: (1) whether the defendants' use of economic fear in the context of hard business bargaining constitutes wrongful conduct amounting to extortion for civil RICO purposes; (2) whether the inability of the plaintiff to prevail on antitrust and extortion-based civil RICO claims forecloses a successful state law tortious interference claim based on the same facts; and (3) whether the defendants' hard bargaining constituted "wrongful means" so as to forfeit the defense of privileged business competition to a tortious interference claim.
The lawsuit emanates from U.S. Healthcare's refusal to approve the application of a new Abington, Pennsylvania store of "I Got It at Gary's" ("Gary's"), a small southeastern Pennsylvania pharmacy, health and beauty aid chain, for membership in U.S. Healthcare's network of medical prescription providers. U.S. Healthcare conditioned membership in its provider network on Gary's agreement to discontinue its contractual relationship with plaintiff Brokerage Concepts, Inc. ("BCI"), a health care consulting firm whose specialty is serving as a Third Party Administrator ("TPA") for health benefit self-insurers (such as Gary's), and to give its TPA business to a U.S. Healthcare subsidiary, Corporate Health Administrators ("CHA").
U.S. Healthcare also applied pressure on Gary's in other ways — through "hard-ball" negotiation tactics, which deliberately left Gary's "hanging" as to whether its new application would be approved, and a seemingly vindictive audit of Gary's generic prescription drug dispensing policy at one of its stores that was already part of the U.S. Healthcare network. Since U.S. Healthcare subscribers constituted a significant portion of its customer base, Gary's understandably yielded to the pressure and gave its TPA business to CHA. BCI thereupon sued in federal district court asserting Sherman Act and civil RICO claims, as well as a claim of tortious interference with contractual relations under Pennsylvania law. BCI sought compensatory and treble damages, injunctive relief, and counsel fees on its antitrust and civil RICO claims, and compensatory and punitive damages on its state law tortious interference claim. Gary's is not a party to the lawsuit.
The case proceeded to trial before a jury, which rendered a verdict finding U.S. Healthcare and its officers liable to BCI on all of BCI's claims, and awarding compensatory and punitive damages. On post-trial motions, the district court upheld the verdict but ruled that: (1) BCI must elect between the punitive damages awarded on its state law claim and the treble damages awarded on its federal claims (i.e., that it cannot recover both); and (2) if it elects the state law remedies, BCI cannot also collect the attorney's fees that are available under its RICO and antitrust claims. The defendants' appeal of the district court's denial of its post-verdict motion for judgment as a matter of law or, in the alternative, for a new trial, attacks the jury verdict on all fronts, asserting that the verdict is tainted by erroneous evidentiary rulings and jury instructions, and also that there is insufficient evidence to sustain any of the claims under proper instructions. BCI cross-appeals, contending that, under Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 218-19 (3d Cir.1992), the district court erred in requiring BCI to elect which remedies it will recover, and also in refusing to award injunctive relief to BCI under either RICO or the antitrust laws.
Because all three of BCI's claims are grounded upon U.S. Healthcare's leveraging of its economic power, and because, under the jury instructions given by the district court, the RICO and state law claims may depend on the existence of a viable antitrust claim, the threshold...
To continue reading
Request your trial
-
Smithfield Foods v. United Food and Commercial
... . 585 F.Supp.2d 789 . SMITHFIELD FOODS, INC. and Smithfield Packaging Company, Plaintiffs, . ... unions by organized crime groups, all lead us to conclude that Congress anticipated that RICO ...., Inc., 393 F.3d 36 (1st Cir.2004); Brokerage Concepts v. United States Healthcare, 140 F.3d ......
-
Young v. Annarino, No. 1:99CV113.
...threatened force, violence or fear.' The `fear' may be of economic loss as well as of physical harm." Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 503 (3rd Cir.1998). The undersigned has concluded that three of the Plaintiffs voluntarily resigned; thus, no extortion coul......
-
Dow Chemical Co. v. Exxon Corp.
......v. . EXXON CORP. and Exxon Chemical Patents, Inc., Defendants. . C.A. No. 96-584-SLR. . United ...Berwick Healthcare Corp., 95 F.3d 285, 287-89 (3d Cir.1996) ...Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 ......
-
Hurley v. Atlantic City Police Dept.
......Chemical Leaman Tank Lines, Inc., 687 F.2d 108, 111-12 (5th Cir.1982)). Third, ... work environment by mixing different concepts from Title VII and the LAD. Specifically, ...Toys R Us, Inc., 132 N.J. 587, 626 A.2d 445 (1993), in ... F.3d 350, 361 (3d Cir.1998); see also Brokerage Concepts v. U.S. Healthcare, Inc., 140 F.3d 494, ......
-
Table of cases
...1 (1979), 11, 13, 107 Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297 (3d Cir. 2007), 17 Brokerage Concepts v. United States Healthcare, 140 F.3d 494 (3d Cir. 1998), 17, 119 Brown Shoe Co. v. United States, 370 U.S. 294 (1962), 20, 21 Bus. Elecs. Corp., v. Sharp Elecs. Corp . , 485 U.S. 717 (......
-
Table of cases
...7 Broadway Delivery Corp. v. United Parcel Serv. of Am., 651 F.2d 122 (2d Cir. 1981), 109 Brokerage Concepts, Inc. v. U.S. Healthcare, 140 F.3d 494 (3d Cir. 1998), 107 Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), 26, 27, 49, 109, 110, 169 Brown Shoe Co. v. Uni......
-
Table of Cases
...49, 57, 60 Broadcom Corp. v. Qualcomm, Inc., 501 F.3d 297 (3d Cir. 2007), 80, 81, 82, 85, 123, 129 Brokerage Concepts v. U.S. Healthcare, 140 F.3d 494 (3d Cir. 211, 213, 261 Bronx Legal Servs. v. Legal Servs. for N.Y. City, 2003 WL (S.D.N.Y. 2003), 99 145558 Table of Cases 299 Brooke Group ......
-
An Overview of the Principal Federal Antitrust Statutes
...case of monopoly power, and courts 90 . See ALD , supra note 1, at 199-206; see, e.g. , Brokerage Concepts v. United States Healthcare, 140 F.3d 494, 511 (3d Cir. 1998); Amey, Inc. v. Gulf Abstract & Title, Inc . , 758 F.2d 1486, 1502-03 (11th Cir. 1985). 91 . Conspiracies to monopolize rar......