Brokerage Concepts v. US Healthcare Inc (Part II)

Opinions of the United

1998 Decisions States Court of Appeals

for the Third Circuit

4-2-1998

Brokerage Concepts v. US Healthcare Inc (Part II)

Precedential or Non-Precedential:

Docket 96-1891,96-1922,96-1923,96-1892,97-1013,97-1014

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Volume 2 of 2

Filed April 2, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NOS. 96-1891, 96-1892, 96-1922, 96-1923

97-1013, and 97-1014

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,

Appellants in No. 96-1891

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.

Appellants 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,

Appellants in No. 96-1922

Brokerage Concepts, Inc.,

Appellant 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.,

Appellants in No. 97-1013

Richard Wolfson; Scott Murphy; and William Brownstein,

Appellants in No. 97-1014

On Appeal From the United States District Court

For the Eastern District of Pennsylvania

(D.C. Civ. No. 95-cv-01698)

Argued: July 22, 1997

Before: BECKER, MANSMANN, and ROSENN,

Circuit Judges.

(Filed April 2, 1998)

a. The Definition of "wrongful".

In Enmons, the Court faced the question whether the use

of violence in a labor strike to obtain higher wages and

other benefits was extortion within the meaning of the

Hobbs Act. The Court reviewed the wording of the Act and

its legislative history and determined that such conduct

was not extortion. In reaching its decision, the Court

interpreted the word wrongful, which is not defined in the

Act, as follows:

The term "wrongful," which on the face of the statute

modifies the use of each of the enumerated means of

obtaining property -- actual or threatened force,

violence, or fear -- would be superfluous if it only

served to describe the means used. For it would be

redundant to speak of "wrongful violence" or "wrongful

force" since, as the government acknowledges, any

violence or force to obtain property is "wrongful."

Rather, "wrongful" has meaning in the Act only if it

limits the statute's coverage to those instances where

the obtaining of the property would itself be "wrongful"

48

because the alleged extortionist has no lawful claim to

that property.

Id. at 399-400 (emphasis added).

The ability to defend against an extortion charge based

on a lawful claim to the property obtained has been dubbed

the "claim of right" defense to extortion. See United States

v. Agnes, 753 F.2d 293, 298 (3d Cir. 1985). Since Enmons

dealt with the use of force to obtain property, and

concluded that it was not extortion, read broadly, Enmons

could stand for the principle that in all extortion cases,

even "inherently" wrongful actions such as the use or

threatened use of force or violence, do not constitute

extortion where the defendant has a lawful claim to the

property obtained. This broad application of Enmons, i.e.,

outside of the labor context, has, however, been uniformly

rejected by the courts of appeals out of a fear that it would

"effectively repeal the Hobbs Act." See United States v.

Cerilli, 603 F.2d 415, 419 (3d Cir. 1979).

The effort to limit the potential impact of Enmons has led

to a line of cases wherein this Court and others have

refused to extend the claim of right defense to defendants

accused of using actual or threatened force or violence to

obtain property outside of the labor context. For example,

in United States v. Agnes, supra, the defendant was

convicted of extortion for using threats of force and actual

violence in seeking property which was arguably his under

state law. On appeal, he argued that the district court erred

in refusing to allow him to assert a claim of right defense

and in failing to properly instruct the jury that it is not

wrongful to obtain property to which one has a legal right.

See 753 F.2d at 297. We noted that defendant's contentions

were predicated on Enmons and held that, contrary to

defendant's suggestion, Enmons did not create a general

claim of right defense in all cases involving the threatened

or actual use of force or violence. Instead we interpreted

Enmons to "create a claim of right defense only in . . .

situations [such as those present in Enmons] in which the

use of force is expressly identified by Congress as being

outside the purview of the Hobbs Act." Id. at 299 (emphasis

added). Other cases, noted in the margin, have similarly

49

limited the reach of the claim of right defense in cases

involving the threatened or actual use of force or violence.21

The present case does not fall within this line of cases

limiting Enmons since it solely involves the accusation of

the wrongful use of the fear of economic loss. Unlike the

use or threatened use of force or violence, the use of

economic fear in business negotiations between private

parties is not "inherently" wrongful. See Sturm, 870 F.2d at

773 (citation omitted); United States v. Clemente, 640 F.2d

at 1077; Hall Am. Ctr. Assoc. Ltd. Partnership v. Dick, 726

F. Supp. 1083, 1095 (E.D. Mich. 1989). Indeed, the fear of

economic loss is a driving force of our economy that plays

an important role in many legitimate business transactions.

This economic reality leads us to conclude that the reach of

the Hobbs Act is limited in cases, such as this one, which

involve the use of economic fear in a transaction between

two private parties. The limitation we apply is that set forth

in Enmons: that a defendant is not guilty of extortion if he

has a lawful claim to the property obtained.

We find support for our conclusion in the law of other

circuits. The Second Circuit recognized the issues and

concerns affecting this case in United States v. Capo, 791

F.2d 1054, 1062 (2d Cir. 1986), vacated in part, on other

grounds, 817 F.2d 947 (2d Cir. 1987) (in banc), when it

stated that:

_________________________________________________________________

21. See United States v. Zappola, 677 F.2d 264, 269, 70 (2d Cir. 1982)

(Enmons inapplicable where businessmen beat and threatened victim to

coerce payment of alleged debt); United States v. Porcaro, 648 F.2d 753,

759-60 (1st. Cir. 1981) (claim of right to property irrelevant where force

or threats are used in resolution of contractual dispute); United States

v.

Kattar, 840 F.2d 118, 123 n.2 (1st Cir. 1988) ("Except in certain labor

contexts . . . using threats of violence to induce the payment of money

is unlawful, regardless of the extortionist's possible legal right to the

funds at issue."); United States v. Sturm, 870 F.2d 769, 772-73 (1st Cir.

1989) (defendants "claim of right" to property obtained from victim is

proper defense outside of labor context only if defendant did not use

"inherently wrongful" means such as force or violence to obtain the

property); United States v. Warledo, 557 F.2d 721, 729-30 (10th Cir.

1977) (Enmons inapplicable to Indian tribe's threats and violence to

pursue allegedly valid claim against railroad); United States v. Cohen,

738 F.2d 287, 289 (8th Cir. 1984).

50

We recognize, of course, that fear of economic loss

plays a role in many business transactions that are

entirely legitimate; awareness of that fear and use of it

as leverage in bargaining, in which each side offers the

other property, services, or rights it legitimately owns

or controls, is not made unlawful by the Hobbs Act.

What the Act reaches is not mere hard bargaining but

the exploitation of the fear of economic loss in order to

obtain property to which the exploiter is not entitled.

(emphasis added).

See also United States v. Clemente, 640 F.2d at 1076-78

(use of fear of economic loss is wrongful when employed to

achieve the wrongful purpose of obtaining property to

which one is not entitled).

The First Circuit has explicitly extended the claim of right

defense to cases involving solely the fear of economic harm.

See Sturm, 870 F.2d at 773 ("[F]or purposes of the Hobbs

Act, the use of legitimate economic threats to obtain

property is wrongful only if the defendant has no claim of

right to that property."). The position of the First and

Second Circuits is mirrored in the federal pattern jury

instructions for the Hobbs Act. In those instructions

"wrongful" is defined as "mean[ing] that the defendant had

no lawful claim or right to the money or the property

(he)(she) sought or attempted to obtain", and district courts

are directed that this definition "should be given only in

cases involving a fear of economic loss or in trials

concerning the use of violence by union leadership to

secure higher wages for the membership as opposed to

securing money for themselves." E. Devitt et al., Federal

Jury Practice and Instructions, Criminal, S 45.08 & notes

(4th ed. 1990). We believe that the position of the First and

Second Circuits is sensible, and adopt it here.

b. Lawful Versus Unlawful Claims to Property

Our conclusion that the defendants are not guilty of

extortion if they had a lawful claim to the property obtained

from Gary's, while focusing our inquiry, does not resolve

the issue before us since the line separating lawful from

unlawful claims to property obtained in business

51

negotiations is by no means self evident. Once again, we

start with Enmons which, although addressing extortion

through force or violence, provides direction as to the

distinction between lawful and unlawful claims to property.

The Court in Enmons, having held that a Hobbs Act

conviction could not be predicated on violence related to

union activity that was aimed at obtaining property to

which the alleged extortionist had a lawful claim, found

that the defendants, union members and officials, had a

lawful claim to the property -- in the form of wages and

other employment benefits -- that they obtained from the

employer. The Court found that where violence is employed

"to achieve legitimate union objectives, such as higher

wages, in return for genuine services which the employer

seeks . . . there has been no `wrongful' taking of the

employer's property; he has paid for the services bargained

for, and the workers receive the wages to which they are

entitled in compensation for their services." 410 U.S. at

400. This scenario was distinguished from cases where

"union officials threatened force or violence against an

employer in order to obtain personal payoffs, and where

unions used the proscribed means to exact `wage' payments

in return for `imposed, unwanted, superfluous and fictitious

services' of workers." Id. In such cases, the union officials

would not have a lawful claim to the property obtained, and

thus the conduct would fall within the reach of the Hobbs

Act.

We find particularly illuminating the application of

Enmons' basic teaching by the District Court for the

Southern District of New York in Viacom Int'l v. Icahn, 747

F. Supp. 205 (S.D.N.Y. 1990), aff'd on other grounds, 946

F.2d 998 (2d Cir. 1991), a case involving the allegation of

extortion through the wrongful use of the fear of economic

loss. In Viacom, the defendants were accused of purchasing

substantial stock in the plaintiff company (Viacom) and

then coercing the plaintiff to buy its stock back for cash,

stock warrants, and free advertising -- all allegedly under

a threat of a corporate takeover. In return for the requested

"greenmail," the defendants agreed not to buy the plaintiff's

stock (or otherwise seek control of the plaintiff) for a period

of eleven years. See id. at 207-09. Following this

52

transaction, the plaintiff brought a civil RICO suit alleging,

inter alia, that defendants had violated the Hobbs Act by

obtaining above-market consideration for their shares from

plaintiff with plaintiff's consent, with such consent induced

through the wrongful use of economic fear. See id. at 210.

On defendants' motion for summary judgment, the court

dismissed as a matter of law the allegation that the

challenged practice constituted extortion. See id. at 213.

The court recognized that it was faced with a case in

which the alleged extortion victim received something of

value -- an eleven-year standstill covenant, 3,498,200

shares of common stock, and, thereby, relief from the

threat of a corporate takeover. It then surveyed existing

case law in which the victim received something of value in

exchange for his property, and found that in these

circumstances "some acts constitute extortion and others

are found to be `hard bargaining.' " Id. at 212-13. The court

drew the following distinction between the two:

In a "hard bargaining" scenario the alleged victim has

no pre-existing right to pursue his business interests

free of the fear he is quelling by receiving value in

return for transferring property to the defendant, but

in an extortion scenario the alleged victim has a pre-

existing entitlement to pursue his business interests

free of the fear he is quelling by receiving value in

return for transferring property to the defendant.

Id. at 213.

Applying this framework, the court used as examples of

extortion, the "personal payoff cases" addressed in Enmons.

In those cases the defendants "had no lawful claim to the

property they received from the victims in exchange for

providing the victims with influence and goodwill which

quelled the victims fears of harm to their economic

interests." Id. While the victim received something of value

in return for this payment, "the victim [was] entitled by law

to be free of the fear he [was] quelling by giving property to

the defendant . . . [and thus] the `something of value' the

victim receive[d] [was], as a matter of law, as `imposed,

unwanted, superfluous and fictitious' as the hiring of a

second worker to do the job that another worker is already

doing." Id. (citations omitted).

53

The court then focused on those cases in which the

victim receives something of value yet the conduct is found

to be hard bargaining. It drew examples of this conduct

from the Second Circuit's opinion in United States v. Capo,

791 F.2d at 1062-63, which stated that:

[a]lthough a job applicant who has long been out of

work may have a fear of not obtaining employment that

would constitute a fear of economic loss within the

meaning of the Act, the Act would not ordinarily reach,

for example, the efforts of a prospective employer to

bargain down the level of compensation to be paid the

applicant. Nor would it reach the normal activities of

an employment agency in dealing with the applicant

even if, for example the agency required payment from

its applicants of some sort of filing fee, service charge,

or contingent fee.

In these cases, the defendant is legally entitled to the

property obtained from the victim since he has provided

real value in exchange for that property, and the victim has

no preexisting right to be free of the fear he is quelling in

return for his payment to the defendant.

A further example of hard bargaining was provided by the

facts of Viacom itself. Since the plaintiff had received

something of value in return for the property transferred to

the defendants, the court looked to whether the law entitled

"Viacom to a right to pursue its business interests free of

the problems and fears caused by the threat of a takeover

by defendants." 747 F. Supp. at 213. The court found that

the law granted no such entitlement and thus that

any intentional exploitation of fear by defendants was

only part of "hard bargaining" in a deal which resulted

in plaintiff receiving a benefit to which it was not

otherwise entitled by law. Accordingly, defendants did

not obtain property from plaintiff to which they had no

lawful claim and therefore did not commit extortion.

Id. at 213-14.

In the present case, the property that U.S. Healthcare

obtained from Gary's was the payments made by Gary's to

CHA pursuant to its TPA contract. In return for this

54

property, U.S. Healthcare gave Gary's access to its provider

network -- something that is of considerable value to

Gary's. Thus, like the court in Viacom, we deal with a very

narrow subset of the potential universe of extortion cases:

one involving solely the accusation of the wrongful use of

economic fear where two private parties have engaged in a

mutually beneficial exchange of property. While we believe

that the fact-bound nature of this type of case will not

supply a generalized precept, we are convinced by the logic

of Viacom that BCI's extortion claim can only survive if

Gary's had a right to pursue its business interests free of

the fear that it would be excluded from the provider

network. Albeit with misgivings, we find that it had no such

right.

The chief obstacle to BCI's claim is the fact that

Pennsylvania, unlike many other states, has not adopted

an "Any Willing Provider" law which compels HMOs to allow

all interested and minimally qualified providers into their

networks. If such a law were in force, then Gary's would

have had a legal entitlement to be a member of the provider

network and thus to be free of the fear that it would be

excluded from that network if it did not switch TPA

providers.22 However, in the absence of such a law, Gary's

has no right of access to the U.S. Healthcare network and

thus U.S. Healthcare could have denied Gary's access to its

network for any reason, or for no reason at all. Under these

conditions, U.S. Healthcare had the right to exchange the

valuable consideration of inclusion in its network in return

for consideration from Gary's in the form of its TPA

contract. We thus conclude that this case provides an

example of hard bargaining rather than extortion.23

_________________________________________________________________

22. Indeed, if Pennsylvania had such a law not only might the outcome

of this suit, at least as it pertains to the RICO counts, be different,

but

it is likely that the underlying facts would never have occurred. Those

facts, which demonstrate how heavy-handed tactics can be effectively

applied by a large corporation (U.S. Healthcare) against a small firm

(Gary's) in this context, might suggest to the Pennsylvania General

Assembly that it is time to enact an Any Willing Provider law in

Pennsylvania.

23. This is also not a case where U.S. Healthcare exerted monopoly

power in the market for pharmaceutical customers. Under such

circumstances, the antitrust laws might well confer on Gary's the legal

right to be free of the economic coercion arising from U.S. Healthcare's

monopoly. However, we are not presented with such a case and thus do

not opine on the potential success of such a theory.

55

BCI raises several arguments in opposition to this

conclusion. First, BCI submits that even if Gary's had no

right to membership in the provider network per se, it did

have a right to compete for membership in that network

free from coercion. BCI attempts to ground this right in our

holding in Addonizio, supra. In that case, we considered

extortion charges based on public corruption in which

government officials demanded kickbacks from contractors,

suppliers and engineers engaged in public works projects

for the city of Newark, New Jersey. In upholding

defendants' extortion convictions, we determined that, while

the contractors have no right to obtain a contract with the

city, they "have a right to expect that when they incur time

and expense to bid on public projects, they will be awarded

contracts when their bids are lowest . . . . The City of

Newark had systematically destroyed this right." 451 F.2d

at 73 (emphasis added).

Our holding in Addonizio is distinguishable since it is

based on the right of private citizens to compete for

government contracts on a level playing field. Such a right

is solidly embedded in public policy. See also United States

v. Collins, 78 F.3d 1021, 1030 (6th Cir.), cert. denied, ___

U.S.___, 117 S. Ct. 189 (1996) (upholding Hobbs Act

conviction of husband of Kentucky Governor charged with

soliciting political contributions in exchange for right to

contend for state contracts since "[payors] acted out of fear

that without payments they could lose the opportunity to

compete for government contracts on a level playingfield,

an opportunity to which they were legally entitled."). In this

case, involving solely private parties, and in the absence of

an Any Willing Provider Law, Gary's had no such right to a

level playing field.

c. Evidence of Other Unlawful Objectives

BCI also argues that even if U.S. Healthcare did not have

the unlawful objective of obtaining property to which it had

no lawful claim, it had three other unlawful objectives that

convert the economic coercion at issue here into extortion.24

_________________________________________________________________

24. Since we conclude that each of these allegations of wrongful

objectives lacks support, we need not decide whether proof that

defendants' possessed one of these objectives would be sufficient to

convert U.S. Healthcare's use of the fear of economic loss into extortion

where U.S. Healthcare had a lawful right to the property obtained.

56

They are (1) violation of Pennsylvania's insurance fraud

statute; (2) violation of New Jersey's Any Willing Provider

law; and (3) violation of U.S. Healthcare's own internal

procedures. Of these three objectives, the jury was only

instructed as to BCI's theory that the defendants use of

economic fear was wrongful because it had the unlawful

objective of violating the Pennsylvania Insurance Fraud

statute, and thus we address only that theory in the text.25

The other two theories, on which the jury was not

instructed, are rejected summarily in the margin.26

The Pennsylvania insurance fraud statute provides that:

a health care provider may not compensate or give

anything of value to a person to recommend or secure

the provider's service to or employment by a patient or

as a reward for having made a recommendation

resulting in the provider's service to or employment by

a patient.

_________________________________________________________________

25. The district court also instructed the jury that one such unlawful

objective would be "a violation of the Federal antitrust laws." In light

of

the fact that we vacate the antitrust verdict, this instruction alone

might

compel us to vacate the jury finding with respect to extortion and,

indeed, to the whole of the RICO count. However, since we find that both

claims fall of their own weight, we need not rely on this flawed jury

instruction as grounds for reversal, and thus do not address BCI's

contention that U.S. Healthcare waived any objection to the instruction.

26. BCI's claim that U.S. Healthcare had the unlawful objective of

violating the New Jersey Any Willing Provider Law, see N.J.S.

26:2J-4.7(a)(2), fails because BCI has RICO standing only to recover for

the loss of its TPA contract with Gary's, all of whose pharmacies are

located in Pennsylvania.

BCI's argument that U.S. Healthcare had the unlawful objective of

violating its own internal regulations is founded on BCI's assertion that

U.S. Healthcare's internal regulations required it to admit into its

network all pharmacies whose applications met U.S. Healthcare's

admission criteria. BCI's brief, however, does not clearly specify the

exact

regulation(s) in which such a requirement is contained, and it is not at

all clear that such regulations exist. At all events, BCI's claim must

fail

since, even if U.S. Healthcare's regulations did contain such a

requirement, we see no reason why violation of an internal regulation

regarding provider admission would be unlawful.

57

18 Pa. Cons. Stat. Ann. S 4117(b)(2) (Purdon 1997). We

disagree with BCI that the jury could reasonably have

concluded that U.S. Healthcare's conduct violated this

statute. By its terms the statute forbids providers from

buying recommendations or referrals of patients, and is

thus properly characterized as an "anti-kickback" statute

directed at providers rather than insurers, such as HMOs.

Even if we ignored the statute's clear focus, BCI's

contention that U.S. Healthcare violated the statute by

referring patients to pharmacies that agreed to give them a

benefit fails for two reasons. First, the record does not

support an inference that U.S. Healthcare recommended

that its members patronize any particular pharmacy in the

network. Second, health care providers generally give HMOs

something of value (at least in the form of lower prices) in

exchange for admission into a network. Thus, if the

allegations in this case violated the statute, HMOs might be

rendered illegal in Pennsylvania. The Pennsylvania General

Assembly could not have so intended.

2. Commercial Bribery

The Pennsylvania commercial bribery statute states that

a "person who holds himself out to the public as being in

the business of making disinterested selection, appraisal, or

criticism of commodities or services" violates the law "if he

solicits, accepts or agrees to accept any benefit to influence

his selection, appraisal or criticism." 18 Pa. Cons. Stat.

Ann. S 4108(b) (Purdon 1983). Thus, in order for the

conduct in this case to constitute commercial bribery, BCI

would have to prove (1) that U.S. Healthcare held itself out

as being in the business of making disinterested selection,

appraisal or criticism of health care providers; and (2) that

it solicited, accepted, or agreed to accept a benefit to

influence that selection, appraisal or criticism.

BCI argues that the jury had sufficient evidence before it

from which to conclude that the defendants held

themselves out to the public as selecting providers

disinterestedly, based solely on the quality of the provider.

BCI points to the testimony of defendant Wolfson to the

effect that U.S. Healthcare holds itself out as having quality

assurance procedures, and to a snippet from

U.S. Healthcare's annual report which boasts of

58

U.S. Healthcare's performance monitoring and quality

assessment systems for the health care providers in its

networks, and which states that the quality assessments

systems "begin with the certification of providers before

they can become eligible to care for our members."

U.S. Healthcare responds convincingly that this evidence

merely documents the reality that provider quality was a

necessary, but not always sufficient, criterion for inclusion

in its network. The "bottom line" is that U.S. Healthcare is

not a disinterested appraiser of health care providers; it is

an HMO. An HMO is designed to provide access to low-cost,

good quality health care, at a profit for the HMO. Thus,

while U.S. Healthcare is required by law to allow only

qualified providers into its network,27 and chooses its

providers from the set of qualified providers, it alone

decides whom within that set to admit largely on the basis

of a provider's willingness to furnish care at managed care

rates. There is nothing disinterested about this process,

and we find no evidence to support a finding that

U.S. Healthcare represented to the public that the process

was, in fact, disinterested.

Finally, we note that the essence of BCI's claim is that

U.S. Healthcare used its quality assurance machinery not

just to assure quality, but also to coerce Gary's into giving

CHA its TPA business. The commercial bribery statute,

however, is not concerned with the motive underlying

U.S. Healthcare's use of its quality assurance procedures,

so long as U.S. Healthcare did not hold itself out as a

disinterested appraiser of pharmacies. Thus, while evidence

of such coercion provides fodder for BCI's tortious

interference claim, see infra, it is misplaced in the context

of an argument regarding the carefully circumscribed crime

of commercial bribery. In sum, since BCI failed to produce

evidence to support a finding that U.S. Healthcare held

itself out as a disinterested appraiser of pharmacies, we

must set aside the jury's finding that some of the

defendants committed commercial bribery.

_________________________________________________________________

27. See 28 Pa. Code. S 9.71 (1997).

59

3. Mail and Wire Fraud

The federal mail and wire fraud statutes, 18 U.S.C.

S 1341 and 18 U.S.C. S 1343, prohibit the use of the mails

or interstate wires for the purpose of carrying out any

scheme or artifice to defraud. See Kehr Packages, Inc. v.

Fidelcor, Inc., 926 F.2d 1406, 1413 (3d Cir. 1991). "A

scheme or artifice to defraud need not be fraudulent on its

face, but must involve some sort of fraudulent

misrepresentations or omissions reasonably calculated to

deceive persons of ordinary prudence and comprehension."

Id. at 1415 (internal quotations omitted).

BCI contends that there was ample evidence for the jury

reasonably to have found that the defendants engaged in a

scheme to defraud Gary's concerning the nature and

purpose of the quality assurance audit and freeze of the

Eagleville store, and the reason for the refusal to process

the Abington store application. BCI submits that, whereas

the defendants led Gary's to believe that legitimate quality

assurance concerns motivated their actions,

U.S. Healthcare really intended to use the audit as a means

to pressure Gary's into switching to CHA as its TPA.

Assuming that BCI is correct regarding U.S. Healthcare's

true motivation (and the record supports their view), the

failure to disclose this motivation does not create a

cognizable "scheme to defraud" in the absence of any

evidence that this omission was "reasonably calculated to

deceive" Gary's.

Here, such a conclusion is not supported by the record

evidence, which instead supports the conclusion that

Gary's was well aware of the fact that the audits were

motivated either by a desire to retaliate against it for

canceling the contract with U.S. Healthcare and switching

to a self-insurance program, or by a desire to encourage it

to choose CHA as its TPA. Indeed, the thrust of plaintiff's

case is that Gary's was so acutely aware of this fact that it

felt that it had no choice but to switch TPA providers.

Moreover, if U.S. Healthcare's intention was to use the

audits as a means of coercing Gary's to switch TPA

60

providers, it would make little sense to conceal this

underlying motivation from Gary's.28

As was the case with BCI's commercial bribery claim, the

evidence of defendants' heavy-handed business tactics and,

specifically, of their misuse of the quality assurance

machinery, while relevant to a tortious interference claim,

cannot be made to fit within the statutory and doctrinal

constraints of the mail and wire fraud statutes.

4. The Travel Act

To make out a violation of the Travel Act, 18 U.S.C.

S 1952, BCI is required to prove interstate travel or use of

an interstate facility with the intent to promote unlawful

activity. See United States v. Zolicoffer, 869 F.2d 771, 774

(3d Cir. 1989). "Unlawful activity" is "extortion, bribery, or

arson in violation of the laws of the State in which

committed or of the United States." 18 U.S.C.S 1952(b)(2).

Thus, BCI's Travel Act claim hinges on the success of its

Hobbs Act and commercial bribery claims. Since we have

determined that the jury's findings of these predicate acts

must be set aside, so too must be the finding of a Travel

Act violation.

D. Conclusion

Having found that the BCI did not present a sustainable

case that defendants committed any of the alleged predicate

acts, we must set aside the verdict that defendants violated

18 U.S.C. S 1962(c) and that they conspired to violate that

section as prohibited by 18 U.S.C. S 1962(d).29

_________________________________________________________________

28. Further, to the extent that BCI contends that U.S. Healthcare's

proffered justification for the audit -- Gary's excessive use of brand

name drugs -- was an overt misrepresentation, we disagree. The record

shows that Gary's employees conceded that the stated reason was

accurate, and that the audit revealed that Gary's was using generic

drugs far less than the network average and inadequately documenting

decisions not to use them. Our conclusion does not diminish BCI's claim

that the audit was intended to coerce Gary's choice of TPA providers

since even a "legitimate" audit may, based on timing and other

circumstances, have a coercive purpose and effect.

29. Defendants have also argued that the aiding and abetting liability

imposed on the three U.S. Healthcare executives cannot survive because

61

V. TORTIOUS INTERFERENCE

In addition to finding for BCI on its federal law claims,

the jury also awarded BCI damages on the theory that

defendants unlawfully and improperly interfered with BCI's

existing and prospective contractual relations with Gary's.

Defendants challenge this verdict on the ground that, as

competitors for Gary's TPA business, they had a privilege to

interfere with BCI's terminable at will contract with Gary's

so long as they did not employ "wrongful means". See

Restatement (Second) of Torts S 768(1)(b) (1979).

Defendants contend that BCI made no legally sufficient

showing of wrongfulness, and thus that the "competitors'

privilege" compels entry of judgment in their favor on BCI's

tortious interference claim. In the alternative, defendants

argue that even if BCI presented a jury question on tortious

interference, a new trial is required because of an error in

the jury charge.

Pennsylvania recognizes both interference with existing

contractual relations and interference with prospective

contractual relations as branches of the tort of interference

with contract. See U.S. Healthcare, Inc. v. Blue Cross of

Greater Philadelphia, 898 F.2d 914, 925 (3d Cir. 1990).

While the two branches of tortious interference are distinct,

they share essentially the same elements. In order to

prevail on a claim for intentional interference with

contractual or prospective contractual relations, a plaintiff

must prove:

(1) the existence of a contractual, or prospective

contractual relation between itself and a third party;

(2) purposeful action on the part of the defendant,

specifically intended to harm the existing relation, or to

prevent the prospective relation from occurring;

(3) The absence of a privilege or justification on the

part of the defendant;

_________________________________________________________________

the statutory analysis applied to securities cases by the Supreme Court

in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A.,

511 U.S. 164 (1994), if applied to the RICO statute, would eliminate

RICO aiding and abetting liability. In view of the dismissal of the RICO

claims, that argument need not be reached.

62

(4) the occasioning of actual legal damage as a re sult

of the defendants' conduct; and

(5) for prospective contracts, a reasonable likeli hood

that the relationship would have occurred but for the

interference of the defendant

Pelagatti v. Cohen, 536 A.2d 1337, 1343 (Pa. Super. 1988);

see also Thompson Coal Co. v. Pike Coal Co., 412 A.2d 466,

471 (Pa. 1979); Birl v. Philadelphia Elec. Co., 167 A.2d 472,

474 (Pa. 1960).

The defendants assert that BCI failed to present sufficient

evidence to satisfy the third element of its claim, which is

the absence of privilege or justification on the part of the

defendants. In support of this contention the defendants

direct us to S 768 of the Restatement (Second) of Torts

which sets forth the competitors' privilege. That section

provides:

S 768. Competition as Proper or Improper Interference.

(1) One who intentionally causes a third person no t to

enter into a prospective contractual relation with

another who is his competitor or not to continue an

existing contract terminable at will does not interfere

improperly with the other's relation if

(a) the relation concerns a matter involved in the

competition between the actor and the other and

(b) the actor does not employ wrongful means and

(c) his action does not create or continue an unla wful

restraint of trade and

(d) his purpose is at least in part to advance his

interest in competing with the other.

(2) The fact that one is a competitor of another f or the

business of a third person does not prevent his causing

a breach of an existing contract with the other from

being an improper interference if the contract is not

terminable at will.

Section 768 has been recognized by Pennsylvania courts,

see Gilbert v. Otterson, 550 A.2d 550, 554 (Pa. Super. Ct.

1988); Franklin Music Co. v. American Broadcasting Co.,

63

616 F.2d 528, 543-44 (3d Cir. 1980), which are guided by

the Restatement of Torts in the area of tortious

interference, see Adler, Barish, Daniels, Levin & Creskoff v.

Epstein, 393 A.2d 1175 (Pa. 1978).

As a threshold matter, the parties dispute whether BCI's

contract with Gary's was prospective or existing, and thus

whether defendants can even seek the protection of S 768.

BCI contends that, since it had an existing contract with

Gary's at the time of defendants' alleged interference,

defendants' status as competitors could not make the

interference proper. See S 768(2). In response, defendants

argue that BCI's contract with Gary's was terminable at

will, and thus that the Restatement would characterize it as

prospective, see Restatement (Second) of Torts S 766 cmt. g.

("an interference with [a contract terminable at will] is

closely analogous to interference with prospective

contractual relations."), thereby bringing defendants'

behavior within the ambit of S 768(1). While the proper

classification of at will contracts in tortious interference

case law has been the subject of some controversy, we need

not enter this debate here since S 768(1), by its terms,

applies to alleged interference with either prospective

contractual relations or existing contracts terminable at

will. There is no question that BCI's contract with Gary's

was terminable at will.30

Turning to the four elements set forth in S 768(1), the

parties do not contest that elements (a) and (d) are

satisfied. BCI and CHA were competitors for Gary's TPA

contract, and defendants had the purpose, at least in part,

of advancing their interests through their competition with

BCI. We also conclude that to the extent that BCI is

arguing that defendants' conduct constituted an unlawful

restraint of trade within the meaning of S 768(1)(c), this

contention is foreclosed by our reversal of BCI's antitrust

claim and BCI's failure to show how defendants conduct

violated any other federal or state statutory or common law

_________________________________________________________________

30. BCI's contract with Gary's provided that"[e]ither party may terminate

this Agreement for any reason or no reason at any time upon thirty (30)

days written notice." This language clearly marks the contract as

terminable at will upon proper notice.

64

anti-competitive prohibition. Thus, the question is whether

defendants' actions were privileged business competition,

which turns on whether they employed "wrongful means" of

inducement in their efforts to secure Gary's TPA contract.

See S 768(1)(b).

The Pennsylvania Supreme Court has yet to provide a

definition of "wrongful means", and thus we turn to the

Restatement for guidance. In defining what kind of means

are wrongful, comment e to S 768 provides, in part, that:

If the actor employs wrongful means, he is not justified

under the rule stated in this Section. The predatory

means discussed in S 767, Comment c, physical

violence, fraud, civil suits and criminal prosecutions,

are all wrongful in the situation covered by this

Section.

Other courts, relying partly on this language, have

interpreted the wrongful means element of S 768 to require

independently actionable conduct on the part of the

defendant. See, e.g. DP-Tek, Inc. v. AT&T Global Information

Solutions Co., 100 F.3d 828, 833-35 (10th Cir. 1997).

Under this standard, wrongful means are those that are

themselves capable of forming the basis of liability for the

defendant. Id. at 834 (citing Amerinet, Inc. v. Xerox Corp.,

972 F.2d 1483 (8th Cir. 1992)). The defendants contend

that the Pennsylvania Supreme Court would adopt this

construction of wrongful means, and that we must

therefore set aside the tortious interference verdict as a

matter of law since BCI has failed to identify any basis on

which the defendants' conduct could be independently

actionable other than the antitrust and RICO theories

which we have found to be legally untenable.

The disposition of BCI's claim, however, does not require

us to determine whether Pennsylvania would limit wrongful

means to those that are independently actionable because

the allegations of wrongful means in this case differ in one

crucial aspect from those in cases such as DP-Tek. Whereas

in DP-Tek the defendant was accused of using wrongful

means in the market in which it and the plaintiff competed,

here BCI has alleged that the defendants employed

economic pressure in what we have deemed the market for

65

pharmacy customers (where BCI was not a competitor) in

order to force Gary's hand in the TPA market (where BCI

and CHA competed). This form of "competition" is

specifically deemed wrongful by the portion of comment e

which directly follows that quoted above. It reads:

The rule stated in this Section rests on the belief that

competition is a necessary or desirable incident of free

enterprise. Superiority of power in the matters relating

to competition is believed to flow from superiority in

efficiency and service. If the actor succeeds in diverting

business from his competitor by virtue of superiority in

matters relating to their competition, he serves the

purposes for which competition is encouraged. If,

however, he diverts the competitor's business by

exerting a superior power in affairs unrelated to their

competition there is no reason to suppose that his

success is either due to or will result in superior

efficiency or service and thus promote the interest that

is the reason for encouraging competition. For this

reason economic pressure on the third person in matters

unrelated to the business in which the actor and the

other compete is treated as an improper interference.

S 768, cmt. e. (emphasis added)

Based on the this section of comment e, we believe that

even if the Pennsylvania Supreme Court were to require

independently actionable means, it would not apply that

requirement in cases, such as this one, where the

defendant exerted "economic pressure" or "a superior

power" in a market unrelated to the competitive market. Cf.

DP-Tek, 100 F.2d at 835 n.8 (citing comment e and noting

that an exception to the independently actionable conduct

requirement may exist "where a plaintiff proffers evidence

that the defendant exerted `a superior power in affairs

unrelated' to the business in which they compete."). The

defendants contend that Pennsylvania, while it has adopted

S 768, would ignore this portion of comment e. We disagree,

since we see no reason why Pennsylvania would subscribe

to the requirements of S 768, but only to selective portions

of the comments explaining that section.

BCI proffered ample evidence from which a jury could

conclude that U.S. Healthcare attempted to acquire Gary's

66

TPA business by threatening Gary's with withdrawal of its

membership in the U.S. Healthcare provider network. BCI

also adduced evidence of heavy-handed tactics by

U.S. Healthcare in the market for pharmacy customers. As

was discussed in the RICO section, a reasonable jury could

have found that U.S. Healthcare used its quality assurance

machinery not only to assure quality, but also to generate

economic pressure on Gary's to switch TPA providers. While

we found that this coercive misuse of the quality assurance

apparatus was not cognizable as commercial bribery or

mail/wire fraud, see supra, it is sufficient, based on

comment e, to constitute wrongful means under

Pennsylvania tortious interference law.

Defendants seek to avoid the clear application of

comment e to their actions by arguing that since both

comment e and federal tying/coercive reciprocal dealing

jurisprudence are concerned with the extension of economic

power from one market to another, the two bodies of law

should be read in tandem, and thus that BCI's failure to

show that the defendants possessed sufficient market

power to violate the Sherman Act should preclude BCI, as

a matter of law, from recovering on its tortious interference

claim. Put differently, defendants assert that they could not

apply "economic pressure" on Gary's in the market for

pharmaceutical customers since they did not have

appreciable market power, under federal law, in that

market. We disagree both with the defendants' reading of

comment e and with the premise that state tortious

interference law and federal antitrust law should be read in

pari materia.

Defendants' argument that the federal market power

requirement must be grafted onto comment e is predicated

on their suggestion that without such a requirement,

comment e would render all reciprocal dealing/tying

arrangements tortious -- even those that are pro-

competitive. (Our reference to pro-competitive tying

arrangements is to those that do not violate the Sherman

Act.) Defendants submit that such a result would be

contrary to the public policy of Pennsylvania as evidenced

by the Commonwealth's failure to pass an Any Willing

Provider law. According to the defendants, this failure

67

indicates that Pennsylvania favors selective contracting

between HMOs and providers, and thereby approves of the

conduct at issue here.

We decline to read an affirmative policy statement into a

legislature's failure to pass a law; to do so would be wholly

speculative. But even if defendants are correct that

Pennsylvania has a policy of allowing HMOs to decide

whom to admit into their networks, it would stretch this

policy beyond its logical constraints to find in it tacit

approval of the use of threatened exclusion from a

pharmacy network to foreclose competition on the merits in

an unrelated market.

Furthermore, we do not agree with defendants' reading of

comment e. Rather, we read the language requiring the

plaintiff to show that the defendant employed "economic

pressure" and "a superior power" in the unrelated market

as requiring evidence that the defendant used its economic

power in that market to coerce the third party's decision in

the competitive market. In order to show coercive pressure,

the plaintiff must prove that the defendant exercised some

market power in the unrelated market -- lest the third

party simply ignore its demands. However, we see no

reason why economic coercion cannot be generated by

market power that, while not sufficient to violate the

Sherman Act, is nonetheless not insignificant, which is the

case here.31

_________________________________________________________________

31. We reject defendants' argument that they are entitled to judgment as

a matter of law since the only direct evidence that Gary's was coerced

consists of hearsay testimony from three BCI employees to whom Gary's

Robin Risler indicated that she was forced to fire BCI, and testimony

from Sandra Chen that Gary Wolf had indicated to her that he was

under pressure to entertain a bid for U.S. Healthcare's TPA service. The

district court properly admitted these statements pursuant to Fed. R.

Evid. 803(3), the "state of mind" exception to the hearsay rule, with the

limiting instruction that the jury should not view the testimony as proof

of the truth of the underlying facts asserted. Defendants contend that

despite this instruction, the jury must have improperly used the

testimony as substantive evidence of coercion, because there was no

other evidence of coercion. We disagree with this conclusion and with

the defendants' view of the evidence, since we believe that there is ample

circumstantial evidence from which a jury could have reasonably inferred

that Gary's was coerced. Defendants are, of course, free to argue their

view of the evidence on remand.

68

Viewing the preceding discussion in a broader context,

defendants' contention that comment e should be read to

include a federal market power requirement ignores the

different purposes and scopes of inquiry of the two bodies

of law. In particular, it fails to recognize both the

gatekeeping role that the market power requirement plays

in federal tying jurisprudence and the quite different

policies of state tort law. Federal antitrust law is directed at

protecting competition rather than individual competitors,

and outlaws only those tying/reciprocal dealing

arrangements that substantially foreclose competition in

the tied product market. The market power requirement of

the per se antitrust jurisprudence serves this goal since it

is presumed that where the defendant exercises appreciable

market power in the tying product market it can leverage

that power to substantially foreclose competition in the tied

product market.

The use of the federal market power screen is, however,

inapposite to state tortious interference law which does not

predicate liability on a showing that the defendant's

conduct had broad anti-competitive effects. Unlike federal

antitrust law, state tortious interference law is designed to

protect competitors not competition. In this regard, it bases

liability for competitors, in part, on the means of

competition employed and their effect on a single

competitive interaction. This inquiry neither requires, nor is

served by, a showing that the defendant exercised

appreciable market power.

In the end, we take a fundamentally different view of

BCI's tortious interference claim from that espoused by the

defendants. As we noted earlier in this opinion, the crux of

defendants' argument is that BCI should not be able to

repackage a failed antitrust claim as tortious interference.

In our view, BCI has attempted just the opposite. That is,

it has taken conduct that constituted tortious interference

with contractual relations and attempted to turn it into

violations of federal antitrust and racketeering laws. While

these attempts have been derailed on this appeal, that

result does not foreclose BCI's state tort law claim.

Despite our determination that BCI adduced sufficient

evidence at trial to allow a reasonable jury tofind that

69

defendants employed wrongful means and thus acted

outside the scope of the competitors' privilege, we must

reverse the judgment and remand the case for a new trial

because of errors in the relevant jury charge. The district

court instructed the jury on "wrongful means" as follows:

It is -- wrongful means to take business away from a

competitor by using economic power in matters that

are unrelated to the business in which the competitors

compete. Thus taking away a competitor's business by

applying economic pressure in an area that is

unrelated to the field in which the parties compete

constitutes wrongful means.

Wrongful means also include any unlawful conduct in

violation of specific statutory provisions or of

established public policy.

To determine whether a defendant's interference was

wrongful, you should consider the following factors:

first, the nature of the actor's conduct; second, the

actor's motive; third, the interests of the other with

which the actor's conduct interferes; fourth, the

interests sought to be advanced by the actor; fifth, the

social interests in protecting the freedom of action of

the actor and the contractual interests of the other;

sixth, the proximity or remoteness of the actor's

conduct to the interference and, seventh, the relations

between the parties.

As set out in the proceeding discussion, the first

paragraph of this instruction, which is derived from

comment e to S 768, provides a proper basis on which the

jury could have determined that the defendants' conduct

was wrongful. However, the second paragraph, while an

accurate statement of the law, necessitates a retrial

because it invited the jury to import the errors in the

antitrust and RICO analysis, as set out supra, into the

tortious interference analysis. Indeed, based on the

prominent position that BCI's antitrust claim occupied at

trial, such infection almost certainly occurred. Faced with

this circumstance, the proper course is for us to remand for

a new trial rather than attempt to divine the basis of the

jury's verdict. See Wilburn v. Maritrans GP, Inc., ___ F.3d

70

___, 1998 WL 100551, *9 (3d Cir. Mar. 10, 1998) ("Where a

jury has returned a general verdict and one theory of

liability is not sustained by the evidence or legally sound,

the verdict cannot stand because the court cannot

determine whether the jury based its verdict on an

improper ground."); Avins v. White, 627 F.2d 637, 646 (3d

Cir. 1980) (" `Where . . . a general verdict may rest on either

of two claims -- one supported by the evidence and the

other not -- a judgment thereon must be reversed.' ")

(quoting Albergo v. Reading Co., 372 F.2d 83, 86 (3d Cir.

1967)); see also McKenna v. Pacific Rail Service, 32 F.3d

820, 831-32 (3d Cir. 1994).32

BCI argues that remand is not required since defendants'

waived any objection to the jury charge. Their argument

has two bases. The first is Fed. R. Civ. P. 51 which requires

any objections to the jury charge to be made at the close of

the charge. As BCI correctly notes, no such objection was

lodged in this case. Despite this failure, we do notfind

waiver since we see no basis on which defendants could

have objected to this portion of the instruction. As noted,

the problem with the court's instruction was not that it

misstated the law, but rather that, in correctly stating the

law, it created the possibility that errors in the RICO and

antitrust verdicts would contaminate the tortious

interference verdict. Thus, it was not until our decision on

appeal that the tortious interference instructions became

erroneous. In such a situation, it would be unfair to visit

_________________________________________________________________

32. We do not believe that any doubt is cast on the applicability of this

general rule by the fact that this case was submitted to the jury on

special interrogatories and thus, unlike the cases cited, the jury did not

render a general verdict. Our reading of the verdict sheet submitted to

the jury in this case indicates that, at least as to the tortious

interference count, the verdict rendered by the jury was the functional

equivalent of a general verdict. The sole question relating to tortious

interference liability posed to the jury was

Do you find that the plaintiff has proven by a preponderance of the

evidence that the following defendants intentionally interfered

with

the plaintiff's existing or prospective contractual relations.

As this interrogatory in no way facilitates our inquiry into the basis for

the jury verdict, we find that the general rule requiring remand stated in

Wilburn and Avins governs.

71

the harsh consequence of waiver on the defendants. This

conclusion is buttressed by the fact that defendants did

object at trial to the jury instructions regarding the alleged

antitrust violation.

BCI also contends that since the case was submitted to

the jury on special interrogatories, defendants' failure to

proffer any interrogatories requiring the jury to specify the

basis on which they found defendants conduct to be

wrongful resulted in a waiver by defendants of any right

they had to a new trial on that basis. This contention is

based on Fed. R. Civ. P. 49(a), which governs the use of

special verdicts in the federal courts. Specifically, plaintiff

relies on that part of Rule 49(a) which provides that if,

when submitting special interrogatories to the jury, "the

court omits any issue of fact raised by the pleadings or by

the evidence, each party waives the right to a trial by jury

of the issue so omitted unless before the jury retires he

demands its submission to the jury." Fed. R. Civ. P. 49(a).33

While, under Rule 49(a), a court may be deemed to have

made a factual finding on an element of an offense that is

necessary to sustain a judgment even though the jury did

not specifically answer an interrogatory concerning that

element, see Watkins v. Fibreboard Corp., 994 F.2d 253,

_________________________________________________________________

33. Rule 49(a) provides:

(a) Special Verdicts. The court may require a jury to return only

a

special verdict in the form of a special written finding upon each

issue of fact. In that event the court may submit to the jury

written

questions susceptible of categorical or other brief answer or may

submit written forms of the several special findings which might

properly be made under the pleadings and evidence; or it may use

such other method of submitting the issues and requiring the

written findings thereon as it deems most appropriate. The court

shall give to the jury such explanation and instruction concerning

the matter thus submitted as may be necessary to enable the jury

to make its findings upon each issue. If in so doing the court

omits

any issue of fact raised by the pleadings or by the evidence, each

party waives the right to a trial by jury of the issue so omitted

unless before the jury retires the party demands its submission to

the jury. As to an issue omitted without such demand the court may

make a finding; or, if it fails to do so, it shall be deemed to

have

made a finding in accord with the judgment on the special verdict.

72

257-58 (5th Cir. 1993), we do not read this rule, by its

terms, as applying to the situation where, as here, the

defendants' objection is not based on the fact that the

wrongfulness issue was not submitted to the jury, but

rather that the court gave a definition of wrongful that has

been rendered erroneous by our decision on this appeal.

Nor would such an application be in keeping with the

purpose of that section of Rule 49(a) that allows the trial

court to "fill in the gaps" of a special verdict. As noted in

Watkins, this ability

is imperative if a special verdict . . . rather than a

general verdict is to continue to be employed.

Otherwise there would always be the danger that the

special verdict would be set aside because the jury had

failed to make a particular finding whereas a general

verdict could not be challenged on this ground.

994 F.2d at 258 (citing 5A Moore's Federal Practice

P 49.03(4) (1993); 9a Charles A. Wright & Arthur R. Miller,

Federal Practice and Procedure S 2507 (1971)). In this case,

even had the jury rendered a general verdict, we would be

constrained to remand for a new trial based on errors in

the charge. Thus, the need to preserve symmetry between

the treatment of general and special verdicts would not be

served, and would indeed be denigrated, by a finding of

waiver predicated on Rule 49(a).

VI. CONCLUSION

For the foregoing reasons, the judgment of the district

court will be reversed and the case remanded with

instructions to grant judgment for the defendants' on BCI's

antitrust and civil RICO claim, and to conduct a new trial

on BCI's claim for tortious interference with contractual

relations.34

_________________________________________________________________

34. On retrial, the jury will have to consider anew whether defendants'

behavior was outrageous enough to warrant an award of punitive

damages under Pennsylvania law. See Takes v. Metropolitan Edison Co.,

655 A.2d 138, 146 (Pa. Super. 1995) ("[P]unitive damages will lie only in

cases of outrageous behavior, where defendant's egregious conduct

73

The parties shall bear their own costs.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

_________________________________________________________________

shows either an evil motive or reckless indifference to the rights of

others.") While the original jury found malice on the part of

U.S. Healthcare and its executives, such a finding may not be inevitable

at retrial where the jury will not be under the mistaken impression that

defendants' conduct violated the Sherman Act, civil RICO, and the

statutes underlying the predicate acts of the RICO count. We, of course,

intimate no view on that subject.

74