Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-87-01823/USCOURTS-ca10-87-01823-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

---

PUBLISH 

.. 1LT.. ""-" 'D 

~• itc:-3 Sratt;11 (t.Ji.m (>f Appeals 

'ff;fltl~ c~·:vit 

MAR 2 G 1990 

IN THE UNITED STATES COURT OF APPEA:b~B RT L J..JOECKER 

Clerk 

FOR THE TENTH CIRCUIT 

WALTER L. REAZIN, M.D.; RCA 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. I 

and 

Defendant and Counterclaim 

Plaintiff-Appellant, 

HMO KANSAS, INC., 

v. 

Additional Counterclaim 

Plaintif f-Appellan t , 

HOSPITAL CORPORATION OF AMERICA, 

Additional Counterc l aim 

Defendant-Appellee. 

} 

) 

) 

) 

} 

} 

} 

) 

) 

) 

) 

) 

} 

) 

) 

) 

} 

) 

) 

) 

} 

) 

) 

) 

No. 87-1 823 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF KANSAS 

(D.C. NO. 85-6027-K) 

Dani el R. Shulman, Gray, Pl ant, Mooty, Mooty & Bennett, P .A., 

Minneapol is, Minnesota (Gary D. McCallister, Davis, Wright, 

Unrein, Hummer & McCallister, Topeka: Kansas, and Joseph M. 

Alioto, Alioto & Alioto, San Francisco, California, with him on 

the bri efs), Attorneys for Appellants. 

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 1 
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, Kansas , with him on the 

briefs) , Attorneys for Appellees. 

Before MOORE, ANDERSON, and BRORBY, Circuit Judges. 

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 fac ts. 

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 

compe titive ·threat from Hospi tal Corporation · of America ("HCA") 

through its acquisitions of a major Wichi ta 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 

Insur ance Co. ("New Century" ), dete rmined to "hurt" Wesley and 

thereby send a message to other hospitals not to do business with 

entities Blue Cross believed were competi tors. It did this by 

agreei ng with Wesley 's compet itors, St. Joseph Hosp ital 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 business and causi ng a shift of Blue Cross patients from 

Wesley to the Sa ints. The threatened termination of Wesley 

-2-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 2 
because of its affil iation 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 t o and 

benefits from health care financing arrangements involving 

entities oth~r than Blue Cross, and were deprived of the benefi t s 

of competition in tha t arena. The j ury 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 c l aims and prpved 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 a·nd monopol y power and it will fully ma i ntained 

its monopoly power; (4) Wesley adequately proved its damages; {5) 

the court properly instructed the jury on the various antitrust 

claims invol ved; (6) the court properl y instructed the jury on 

plaintiffs' state law claims and suff i cient ev i dence supports the 

jury's verdic t on those claims; (7) Blue Cross suffered no 

prejudice f r om the court's supplemental "Allen'' charges or any 

communications with the jury during de l ibera t i ons; (8) the court 

properly granted plaintiffs' motion for summary judgment on the 

counterclaim; and (9) the award of attorneys' f ees and costs i s 

affirmed in all respects except we remand for a recal cul ation of 

the expert witness f ees awarded. 

-3-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 3 
PROCEDURAL HISTORY 

Plaintiffs Wa lter L. Reazin, M. D., Wesley, HCP, and New 

Century bro ught this antitrust action against · Blue Cross. 

Plaintiffs alleged violations of sections 1 and 2 of the Sherman 

Antitrust Act , 15 u.s.c. §§ l and 2, as well as violations of 

state law, arising out of Blue Cross' threa tened termination of 

it~ contracting provider agreement with Wesley. They sought damages and other relie£ . 1 Blue Cross and its wholly-owned 

subsidiary, HMO Kansas, Inc . ("HMOK " ) , countercl a imed against 

plaintiffs as well as HCA, alleging: that HCA' s acquisitions of 

We sley , HCP, and New Century violated the an titrust laws; that 

HMOK's fa ilure in Wichita was the resul t of an unlawful boycott 

and concerted refusal to deal or an unreasonable restrai nt of 

trade ; that plaintiffs had monopolized, attempted to mo nopol iz e, 

and/or conspired to monopolize the ma rket for health care financing and hea lth care se rvices ; and, asse rting tortious interference 

1 As provided in section 4 of the Clayton Act : 

"Any perso n who shall be injured in his business or 

property by reason of anything for bidden in the antitrust laws may sue therefor in any district court of the 

United States in the district in which defendant resides 

••. without respect to the amount in controversy, and 

shall recover threefold the damages sustained, and the 

cost of the suit, including a reasonable attorney ' s 

fee ." 

15 U.S.C. § 15. Section 16 of the Clayton Act provides as 

follows: 

"Any person, firm, corporation , or association 

shall be entitled to sue for and have injunctive relief, 

in any court of the United States having jurisdiction 

over the parties, against threa tened loss or damage by a 

viola tion of the antitrust laws •. , ." 

15 u.s.c . § 26. 

-4-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 4 
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. Afte r a sixweek jury trial on plaintiffs' complaint, and four weeks of 

deliberation, the jury returned a verdict i n favor of Wes ley, 

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 wi th 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 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, fo r a directed verdict, and fo r 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 deni ed 

2 The jury found that HCP had suffered no injury as a result of 

the antitrust violations and concluded that HCP had failed to 

establish all the elements of tortious interference. The distri ct 

court had earlier concluded that plaintiffs Reazin and New Century 

lacked standing to seek damages. See note 3, infra. 

3 In an earlier written opinion, the dis trict court had granted 

in part and denied in part defendant's mo tion for summary judgment 

on plaintiffs' entire complaint. Reazin v. Blue Cross & Blue 

Shield, Inc., 635 F. Supp. 1287 (D. Kan. 1986) ("Reazin I"). The 

district cour t held tha t plaintiffs Reazin and New Century lacked 

standing to bring a private damage antitrust action under Sect ion 

[footnote continued ... 1 

-5-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 5 
plaintiffs' motion for injunctive relief against Blue Cross under 

Section 16 of the Clayton Act, 15 u.s.c. § 26. After trebling the 

actual damages awarded Wesley, the court entered judgment in the 

amount of $5~378,941 .0 0, 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 countercl aim. 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 cha rtered under a special enabl ing act. It is approximately 

fifteen times bigger than the next largest private heal th care 

financing organ ization, in te rms of percent of earned health 

[ •.• footnote continued] 

4 of the Clayton Act, 15 u.s.c. § 15. 

granted defendant's motion for summary 

respects, that motion was denied. 

To t hat extent, the court 

judgment. In a ll other 

4 Blue Cross of Kansas, Inc. wa s formed in 1941 pursuant to 

special enabling legislation. 

-6-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 6 
insurance premiums. Pl.'s Ex. 50BK, 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 omi tted). 

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 P. Supp. at 1297. It is a major teachi ng 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 an~ Riverside 

Hospital. 

HCP is a health maintenance organization ("HMO") founded in 

1 981, which provides private health care financing to businesses 

and individuals in Kansas, including Sedgwick County and Wichita. 5 

5 HMOs and preferred provider organizations ("PPO"s) are socalled "alternative delivery systems" which have emerged as costeffective alternatives to traditional indemnity insurance. HMOs 

and PPOs are prospective reimbursement arrangements, in which a 

member or subscriber pays a monthly amount to medical care 

providers who then oversee all the health care needs of the 

member. In an HMO or PPO, the member typically pays less for 

[footnote cont i nued •.. ] 

-7-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 7 
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 I I , 663 F . Supp. at 1373. In terms of the 

number of hospitals owned or managed , HCA is the largest forprofit hospital company in the Un ited States. However, Dr. Thomas 

Frist, the chairman and chief executive officer of HCA, testified 

t hat HCA 11 tepresent[sJ less than three pe rcent • . . of t he 

hospital sector in this country [and] .•• close to fifty percent 

of [HCA's] revenues come through third-party insurers, of which 

Blue Cross is a large percentage ... R. Vol. 32 at 3187-88 . 

New Century is a Califor nia corporation with its principal 

executive offices in Nashvill e . Its activities include the provision of private heal ~h care financing. In June 1983, it received 

its certificate of authority to do business. in Kansas.6 

The parties stipulated to the following additional and 

relevant facts: 

"On April 25, 1985 , HCA consummated the acquisi tion 

of New Century Life Insurance Company. 

[ .•• footnote cont inued] 

health care coverage than under a traditional indemnity insurance 

plan, but is limited in his or her choice of medical care 

providers. The district court, in its two opinions, described the 

trends a nd developmen ts in the field of medical care wh ich led to 

criticism of traditional indemnity i nsurance and to the development of alternative delivery systems and which provide the 

background to this case. See Reaz in I, 635 F. Supp. at 1297-99; 

Reazin II, 66 3 F. Supp . at-r372-75. 

6 Wh ile New Century was determined on Blue Cross' motion for 

summary judgment to lack standing to seek damages, HCA' s acquisition of New Century remained relevant to Blue Cross • Ru le of 

Reason defense and to Blue Cross' counterclaim. 

-8-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 8 
On July 11, 1985, HCA acquired Wesley Medical 

Center. The acquisition was effected through HCA Health 

Services of Kansas, Inc., a wholly-owned subsidiary of 

HCA. 

On August 14, 1985, HCA acquired Health Care Plus. 

The acquisition was effected through Health Care Pl us of 

America, Inc., a wholly-owned subsidiary of HCA. Since 

its acquisition, Health Care Plus has con t inued to 

develop, market and sell health care financing products 

in competition with Blue Cross. 

on August 29, 1985, at a special meeting, the 

Executive Committee of the Blue Cross Board of Directors 

voted to terminate the existing contracting provider 

agreement between B?~e Cross and Wesley, effective 

December 31, 1985. l J 

7 The contracting provider agreement between Wesley and Blue 

Cross was part of a new agreement, the "Contracting Provider 

Agreement (Hospital ) of the Competitive Allowance Program 

('CAP')," which Blue Cross instituted in early 1984. The district 

court described CAP as follows: 

"The CAP program established the maximum amount [Blue 

Cross] would reimburse a medical provider for services 

within [a J particular diagnostic related group. 

Providers contracting with [Bl~e Cross] under the CAP 

program commit themselves to a maximum allowable payment 

('MAP') for each service provided to the subscribers. 

The MAPs are based on uniform diagnostic-related 

groupings (DRGs) of medical services . . . . [T]he 

'hold harmless' provision ensures subscribers will not 

receive bills for covered medical expenses in excess of 

the contract amount [Blue Cross] pays a participating 

provider." 

Reazin II, 663 F. Supp. at 1375 (citations to record omitted). 

The CAP contr acting provider agreements also contained a "most 

favored nations•• clause, pursuant to which participating provide rs 

agreed to promptly inform Blue Cross of, and make available to 

Blue Cross, any lower rates i t charged to competing insurance 

companies. Thus, Blue Cross was assur ed of receiving the lowest 

rates its participating hospitals charged. We sley had been a 

contracting provider with Blue Cross since the 1940s. In early 

July 1985, approximately two months before Blue Cross decided to 

terminate Wesley's contracting provider agreement, Blue Cross had 

renewed the agreement. 

There was considerable testimony about the significant 

advantages in being a contracting provider hospital and the 

considerable disadvantages to not having that status. See also 

[footnote cont inued--.--•. ] 

-9-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 9 
On or about August 29, 1985, Blue Cross formally 

advised Wesley by letter of the decision of its 

Executive Committee to terminate Wesley's contracting 

provider agreement . on that same date, Blue Cross 

released details of the termination to the local media 

in Wichita. In an August 29 news release, Blue Cross 

indicated that subsequent to the effective date of 

Wesley ' s termination as a participating hospital, Blue 

Cross payments would be sent directly to the subscriber 

and could not be assigned to Wesley. 

On September 5, 1985, G. Wayne Johnston, President 

of Blue Cross, met privately with A.B. Davis , Jr., 

Chairman a nd Ch ief Execut ive Officer of We sley , and Mr. 

Robert J. O'Brien, Wesley's executive Vice Presi dent-- Corporate Devel opment , to discuss Wesley's t erminat ion . Also in attendance at the September 5 meeting was Marlon 

R. Dauner , Senior Vice President of Blue Cross . 

On September 9, 1985 , Mr. Johnston spoke with Mr. 

Davis. 

On September 10, 1985 , David . G. Williamson, Vice 

Chairman of HCA, telephoned Mr. Johnst on to discuss Blue 

Cross' decision to terminate Wesley. 

On Sept ember 10, 198 5, Blue Cross ran a full-page 

ad in the Wichita Eag Beacon announcing that Wesley 

would be a noncontracting hospital effective January 1, 

1986. 

[ .•. footnote continued] 

Reazin I , 63 5 F. Supp . at 1295-96. From the perspective of Blue 

Cross subscribers, Wesley ' s loss of its contracti ng provi der 

status would mean that those subscriber s using Wesley (1) would 

not have the same assurance of predictability of health care costs 

wh ich the max imum allowable payment concept guarantees; (2) would 

not get the benefit of the "hold harmless" clause limiting their 

l iabili ty; and (3) would not have access to direct payment of 

claims fr om Blue Cross to the hospital. 

The contracting provider agreement with Wesley was never , in 

fact, terminated because , pending resolution of this suit , the 

part ies ag reed to maintain Wesley's contracting provider status. 

The max i mum allowable payments were, however , reduced for all 

hospitals, and We sley agreed to accept those reduced payments. In 

1986, before the tri al in this case, HCA informed Blue Cross that 

i t was withdrawing from the health care financing field and 

divesting HCP. Blue Cross the reafter signed a new cont rac ting 

provider agreement with We sley . 

-10-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 10 
8 

On or about September 10, 1985, Blue Cross issued a 

publication entitled "Health Plan" to certain subscribers in Kansas. 

At a meeting of the Blue Cross Executive Committee 

held on September 19, 1985, Wesley sought reconsideration of Blue Cross' termination decision. Blue Cross 

has refused to reverse its decision to terminate 

Wesley's contracting provider agreement. At the 

September 19, 1985 meeting, Blue Cross' Executive Committee approved a reduction in the Peer Group V MAPs for · 

all covered services. The reduction affects only 

Wichita hospitals in Peer Group v. The MAPs for other 

peer groups in Kansas remain unchanged. 

By letter dated September 25, 1985, Donald A. 

Wilson, President of the Kansas Hospital Association, 

asked Blue Cross to comment on its termination of 

Wesley. Blue Cross issued a r~~ly dated October 3, 

1985, to all Kansas hospitals.l J 

By letter dated October 15, 1985, Administrative 

Services of Kansas, Inc., a subsidiary of Blue Cross, 

advised Wesley that effective January 1, 1986, said 

subsidiary would terminate its lease agreement with 

Wesley for electronic data processing equipment 

transmitting inquiries via telecommunication lines to 

said subsidiary. The leas~ agreement. enabled Wesley to 

obtain prompt benefits verification. The lease agreement was being terminated because of the termination of 

The letter included, in pertinent part: 

"We cannot stand idly by and watch insurance-hospital 

corporations, such as HCA, monopolize the delivery and 

financing of care by seeking to enroll Blue Cross and 

Blue Shield subscribers in their insurance programs. 

Vertical integration is a strategy some hospitals may 

feel to be in their best interest. However, if 

hospitals decide to compete with Blue Cross and Blue 

Shield in the manner that HCA is competing, Blue Cross 

and Blue Shield must make a business decision about its 

future relationship with these entities. Hospitals that 

wish to continue their current relationship with Blue 

Cross and Blue Shield, that do not seek to enroll subscribers in other programs, and that wish to cooperate 

with Blue Cross and Blue Shield as a major marketing arm 

of the hospital, will experience no change in the 

contractual relationship that has historically served 

Kansans well." 

Plaintiff's Ex. 468C, Addendum to Answer Brief of Appellees Vol. I 

(emphasis added). 

-11-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 11 
Wesley[•~ contracting provider agreement with Blue 

Cross. 

Blue Cross does not honor or recognize the assignment of benefits by subscribers to noncontract ing 

hospitals under the terms of the subscriber agreements. 

Part V.f. of the standard Blue Cross subscriber 

agreement provides that insurance proceeds will be paid 

directly by Blue Cross to participating hospitals, but 

that proceeds for medical services performed by nonparticipating hospitals will be paid directly to the 

subscriber and cannot be assigned to any other person or 

entity." 

R. Vol. III, Tab 207 at Instruction 15 (paragraph letters 

omitted). 

ANTITRUST ISSUES 

Blue Cross filed a motion under Fed. R. Civ. P. 12{b) to set 

aside the verdict and dismiss the ca~e for lack of jurisdiction, 

asserting th~t its challenged conduct is exempt from the application of the antitrust laws under the McCarran-Ferguson Act, 15 

U.S.C. §§ 1011-1015. The district court disagreed, holding that 

no McCarran-Ferguson exemption applied and that i t had jurisdiction. We affirm for the reasons set forth in the district court's 

discussion of this issue. Reaz in II , 663 F. Supp. at 1401-09. 

The district court denied Bl ue Cross' motions for a directed 

verdict, for a judgment n.o.v., or a l ternatively for a new trial. 

Reazin II, 663 F. Supp. 1360. "'Motions for a directed verdict 

· and for judgment n.o.v. are considered under the same standard.'" 

Zimmerman v. First Fed. Sav. & Loan Ass'n, 848 F.2d 1047, 1051 

(lOth Cir. 1988) (quoting Hurd v . American Hoist & Derrick Co., 

9 In fact, the lease agreement also was never act ually 

terminated. 

-12-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 12 
734 F.2d 495, 498 (lOth Cir. 1984}). We may reverse the denial of 

such motions "only if the evidence points but one way and is 

susceptible to no reasonabl e inferences supporting the 

[plaintiffs} ; we must construe the evidence and inferences most 

favor ably to the nonmoving party [plaintiffs]." Zimmerman, 848 

F.2d at 1051 • . We ••may not we igh the evidence · or pass upon the 

witnesses• credibility, or substitute [our) judgment for that of 

the jury." Hurd v. American Hoist & Der rick Co., 734 F.2d 495, 

498 (lOth Cir. 1984). Thus, if reasonable minds cou l d differ over 

the verdict , the motion for judgment n.o.v. was properly denied. 

We review the denial of Blue Cross' motion for a new trial under 

an abuse of disc retion standard. Patty Precision Prods., Co. v. 

Brown & Sharpe Mfg. Co ., 846 F.2d 1247 , 1251 (lOth Cir. 1988); 

Brown v . McGraw-Edison Co., 736 F.2d 609, 616 (lOth Cir •. 1984). 

A. Section 1 

Section l of the Sherman Act prohibits .. [ e]very contract, 

combina tion ••• or conspiracy, in restraint of trade or commerce 

II 15 u.s. c. § 1. This has been interpreted to prohibit 

only "unreasonable•• restraints. Business Elecs. Corp. v. Sharp 

Elecs. Corp., 108 s. Ct. 1515, 1519 (1988); Arizona v. Maricopa 

County Medical Soc•y, 457 U.S. 332 , 342-43 (1982); Drur y InnColorado Springs v. Olive Co., 878 F.2d 340, 342 {lOth Cir. 1989}. 

To affirm the district court•s denial of Blue Cross• motions for 

judgment n.o.v. or for a new trial on the section 1 claim, there 

must be sufficien t evidence supporting the jury 's finding of an 

-13-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 13 
agreement which unreasonably restrained trade in the relevant 

market--private health care financing . 1D 

The district court submitted plaintiffs' section 1 claim to 

the jury under the Rule of Reason. "As stated by the Supreme 

Court, 'the inquiry mandated by the Rule of Reason is whether the 

challenged agreement is one that promotes competition or one that 

suppresses competition.'" Smith Mach. Co. v . Hesston Corp., 878 

F.2d 1290, 1298 (lOth Cir. 1989) (quoting National Soc'y of 

Professional Eng'rs v. United States, 435 U.S . 679, 691 (1978)), 

cert. denied, 58 u.s .L . .W. 3526 {U.S. Feb. 20, 1990). The 

factfinder must "decide whether under all the circumstances of the 

case the restricti ve practice impos es an unreasonable restraint on 

competition ." Maricopa County Medical Soc'y, 457 U.S. at 343. In 

making that decision. "a variety of actual market factors" must be 

examined. Smith ·Mach. Co., 878 F.2d at 1298 (citing Chicago Bd. 

of Trade v. United States, 246 u.s . 231 , 238 (1918)). The 

plaintiff bears the burden of proving the "'adverse effect on 

competition. 1 '' Smith Mach. co., 878 F.2d at 1298 (quo ting 

Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 29, 31 

{1984)). As the above statement s indicate, the adverse impact 

10 The district court instructed the jury that "the relevant 

produc t market in this case is private health care financing." R. 

Vol. III, Tab 207 at Instruction 37. In denying Blue Cross' 

McCarran-Ferguson Act exemption claim, the court stated that 

"(t ] h is case proceeded under all parties' agreement [ that] 

'private health care financing' includes 'sel f-insurance and selfinsured administration' products. 11 Reazin II, 663 F . Supp. at 

1403. Additionally, the court noted that "[t]he market for 

private health care financing embraces de fendant's activities wi t h 

and through its subsidiary, [HMOK). 11 Id. As discussed more 

fully, infra , Blue Cross argues that the court should have 

instructed the jury to make findings as to the produc ts constituting the market of private health care financing. 

-14-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 14 
: 

must be on competition, not on any individual compet itor or on 

plaintiff's business. See Westman Comm'n Co. v. Hobart Int'l, 

Inc., 796 F.2d 1216 , 1220 (lOth Cir . 1986) , cert . denied, 486 u.s. 

1005 (1988}; Christofferson Dairy v. MMM Sales, 849 F.2d 1168, 

1172 (9th Cir. 1988) . Additionally, "we must bear in mind that 

the purpose of the antitrust ~aws is the promotion of consumer 

welfare. [W]e consider [defendant's] refusal to deal in 

light of its effect on consumers, not on competitors." Westman 

Comm'n Co ., 796 F.2d at 1220 (citations omi tted). 

The jury found that Blue Cross had engaged in a contract, 

combination , or conspiracy with St. Franc i s and/or St. Joseph 

Hospi tals, encompassing within its terms the termination of Wesley 

as a contracting provider, and the reduction of the max i mum a1~owable payments for the remaining Peer Group V hospitals. 11 See 

Reazin II , 663 F. Supp. at 1~98 . . Blue Cross argues on .appeal that 

the district court erred in denying its motions for judgment 

n.o.v. or for a new trial on the section l claim, asserting that 

(1) it engaged in independent, as opposed to concerted, activity 

when it terminated Wesl ey; (2} it did not unreasonably restrain 

trade in the health care financing market, and (3) it lacked 

market power .12 It also argues that Wesley failed to establish 

11 Peer Group V includes the four Wichita hospitals and "is one 

of two geograph ically determined peer groups in the state." 

Reazin I , 635 F. Supp. at 1294. 

12 In Westman Comm'n Co., 796 F.2d at 1229, this court stated 

that " section one of the Sherman Act does not proscribe refusals 

to deal absent a showi ng of monopoly or market power on the part 

of the manufacturer." Thus, Bl ue Cross argues that, absent proof 

of at least market power , its refusal to deal with Wesley does not 

violate section 1 . See also Schachar v. Am. Academy of 

[footnote continued •.. ] 

-15-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 15 
antitrust injury, standing , or recoverable damages. We take up 

standing and antitrust injury first. 

(i) Standing and Injury 

Blue Cross argues that Wesley fai l ed to establish a ntitrust 

injury and standing. Standing and antitrust injury are esse ntial 

elements in a private antitrust damages action brought unde r 

section 4 of the Clayton Act. See Cargi ll, Inc. v. Monfor t, Inc. , 

479 U.S. 104, 110 (1986); Associated Gen . Contractors, Inc . v. 

California State Council of Carpenters, 459 u.s. 519 (1983}; Aspen 

Highlands Skiing Corp. v. Aspen Skiing Co., 738 F .2d 1509 , 1523 

(lOth Cir. 1984) , aff'd, 472 U. S. 585 (1985); Central Nat ' l Bank 

v. Rainbolt, 720 F. 2d 1183, 1187 (lOth Cir. 1983 ). They are 

related , although they are often treated separately by courts. 

See Alberta Gas Chems .. , Ltd. v . E.I. DuPont de Nemours & Co., 826 

F. 2d 1235, 12 40 (3d Cir. i987) ("It has been suggested tha t 

although standing is closely related to antitrust i njury , the two 

concepts are distinct. Once antitrust injury has been 

demonstrated by a causal relationship between the harm and the 

challenged aspect of the alleged violation, standing analysis is 

employed to search for the most effective plaintiff fr om among 

those who have suffered loss."), cert. denied , 486 U.S. 10 59 

[ ••• foo tno te con tinued] 

Opt hamalogy, Inc., 870 F.2d 397 (7th Cir . 1989) ( "the first 

question in any rule of reason case is market power. " ); Ball 

Memorial Hosp., Inc. v . Mutual Hosp . Ins ., Inc. , 784 F.2d 1325, 

1334 (7th Cir. 1986) ("Market power is a necessary ingredient in 

every case under the Rule of Reason."). In certain c ircumstances, 

it may be that a detailed market analysis is not required. See 

note 24, infra . 

-16-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 16 
(1988). See generally Page, The Scope of Liability for Antitrust 

Violations, 37 Stan. L. Rev. 1445, 1483-85 (1985). The close connection between them has, however, been underscored recently. See 

Areeda & Turner, Antitrust Law, ~ 334.1 (Supp. 1989) (Recent 

Supreme Court cases "closely link standing to a showing of 'antitrust injury.'"); Bell v. Dow Chern. Co., 847 F.2d 1179, 1182 (5th 

Cir. 1988) ("Antitrust injury is a component of the standing 

inquiry, not a separate qualification."). 

Plaintiffs argue Blue Cross has waived the right to object to 

Wesley's standing or the existence of compensable injury because 

it failed to so object in its motion for a directed verdict. 1 3 In 

denying Blue Cross' motion for judgment n.o.v. or for a new trial, 

the district court concluded that Blue Cross was barred from 

challenging Wesley's standing under section 1 : 

"Throughout this lit~gation, defendant · has never challenged Wesley's standing under § 1, and it may not do so 

now. Indeed, defendant's position at the summary judgment stage was that Dr. Reazin, New Century, and HCP 

lacked standing because Wesley was the o~ly plaintiff 

with appropriate standing under § 1. Fa1ling to raise 

this issue, either at summary judgment or on its motion 

for directed verdict, defendant is now barred from 

13 Blue Cross did not challenge Wesley' s standing in either its 

motion for summary judgment or the pretrial order. See Motion of 

Blue Cross and Blue Shield of Kansas, Inc. for Summary-Judgment, 

R. Vol. I , Tab 50 at p.2; Pretrial Conference Order, R. Vol. II, 

Tab 76. The district court noted that Blue Cross failed to 

challenge Wesley's standing in its motion for directed verdict. 

Blue Cross finally challenged Wesley's standing in its Alternative 

Motion for Judgment Notwithstanding the Verdict or New Trial. 

Defendants' Alternative Motion for Judgment Notwithstanding the 

Verdict or New Trial, R. Vol. IV, Tab 246 at 2. 

Plaintiffs do not appear to object to the district court's 

rulings that plaintiffs New Century and Reazin lacked standing to 

pursue damages but had standing to seek injunctive relief. See 

Reazin I, 635 F. Supp. at 1309-20. 

-17-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 17 
pursuing this contention on a motion for JNOV or new 

trial." 

Reazin II , 663 F . Supp. at 1425 (emphasis original in part, added 

in part) (citation omitted).l4 

Courts do not agree on whether antitrust standing can be 

waived. Compare NCAA v. Bd. of Regents, 468 U.S. 85, 97 n.l4 

(1984) (Court did not address antitrust injury issue not raised by 

the parties); General Inv. Co. v. New York Cent. R.R. Co., 271 

u.s. 228, 230-31 (1926); R.C. Dick Geothe rmal Corp. v. 

Thermogenics, Inc., 890 F.2d 139 , 154 (9th Cir . 1989) (en bane) 

(Norris, J., dissenting); Berkey Photo, Inc . v. Eastman Kodak Co., 

603 F.2d 263, 303 (2d Cir. 1979) (standing issue not raised below 

waived on appeal), cert. de.nied, 444 U.S. 1093 (1980), with R.C. 

Dick Geothermal Corp., 890 F.2d at 145 (ma jority opinion noted 

that standing is "not a jurisdictional question but one properly 

raised at any stage of the litigation''); Pinney Dock & Transp. Co. 

v. Penn Cent. Corp., 838 F . 2d 1 445, 1461 (6th Cir. 1988) (court 

addressed antitrust standing i ssue not raised below, as a matter 

of its discretion '''to be exercised on the facts. of individual 

cases"') (quoting Si ngleton v. Wulff, 428 U.S. 106, 121 (1976)) , 

cert. denied, 109 S. Ct. 196 (1988) . 

We need not decide whether Blue Cross can now properly challenge Wesley's standing and the existence of antitrust injury 

because, applying the Supreme Court's guidelines set forth in 

14 While the district court did not specifically address antitrust injury, impl icit in its d i scussion was its rejection of the 

combined argument Blue Cross made in its motion for judgment 

n.o.v . that Wesley failed to prove antitrust injury and lacked 

standing. 

-18-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 18 
Cargill, Inc. v. Monfort, Inc., 479 u.s. 104 (1987), Associated 

General Contractors, Inc. v. California State Council of 

Carpenters, 459 U.S. 519 (1983), Blue Shield v. McCready, 457 U.S. 

465 (1982), and Brunswick Corp. v. Pueblo Bowl-0-Mat, Inc ., 429 

U.S. 477 (1977), we conclude Wesley had standing and demonstrated 

the requisite injury.l5 

Wesley introduced evidence at trial that, because of Blue 

Cross' announced termination of Wesley as a contracting provider 

hospital , it (1) spent money on advertisements to reassure 

patients that Blue Cross subscribers were still welcome at Wesley , 

(2) reduced its prices in order to retain its market share, and 

(3) lost patients. Blue Cross responds that "[n]one of these 

claimed injuries flowed from the exclusion of competition from the 

health care financing market, or from an increase in p rices for 

consumers, of health insurance." Brief of Appel~a.nts a t J4. Blue 

Cross thus argues that, for example, Wesley's alleged in jury 

resul ting from its reduction of its maximum allowable payments in 

15 Taken toge ther, those cases reveal the follow ing factors to 

be considered in determining antitrust standing: the causal connection between the antitrust violations and plaintiff's injury; 

the defendant's intent; the nature of the plaintiff's injury; the 

directness or indirectness of the connection between the plaintiff's injury and the allegedly unlawful market restraint; the 

speculativeness of the plaint iff's damages; and the "ris k of 

duplicative recoveries •.. or the danger of complex apportionment of damages." Associated Gen. Contractors, 459 U.S. at 544. 

The nature of the plaintiff's injury factor is designed to 

implement the requirement that only antitrust injuries are 

redressable under section 4. An anti trust injury is an "injury of 

the type the antitrust laws were intended to prevent and that 

flows from that which makes defendants' acts unlawful." Brunswick 

Corp., 429 U.S. at 489. An injury which is merely causally linked 

in some way to an alleged antitrust violation is insuffi cient. 

Cargill, Inc., 479 U.S. at 109; Brunswick Corp., 429 U.S . at 489. 

-19-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 19 
order to retain its market share is an injury resulting from 

increased competition and from ac tion benefiting consumers and 

therefore is not antitrust injury. 

The Supr eme Cou rt has suggested tha t Brunswick should not be 

read overly narrowly--"while an increase in price resulting from a 

dampening of competitive market forces is assuredly one type of 

injury for which § 4 potenti ally of fers redress, ..• that is not 

the only form of injury remediable under § 4." McCready, 457 U.S. 

at 482-83 (citation omitted) . The Supreme Court specifically 

noted that "'(tJhe statute does not confine its protection to 

consumers, or to purchasers, or to competitors .. I II Id. at 472 

{quoting Mandeville Island Farms, Inc . v. American Crystal Sugar 

Co., 334 u.s. 219, 236 {1948)) . 16 "Where the injury a l leged is so 

integral an aspect of the conspiracy alleged , there can be no 

question but that the loss· was .prec i sely 'the type of loss that 

the claimed violations ..• would be likely to cause.'" 

McCready, 457 U.S . at 479 (quoting Brunswick Corp., 429 U.S. at 

489}; cf. Associated Gen. Contractors, 459 U.S. at 537-45 (union 

denied standing to argue that mult i employer association and its 

members coerced certain third parties and some of the 

multiemployer association's members to enter into business 

relationships with nonunion firms, thereby restraining the union's 

business activities.). 

16 We are also aware that the Supreme Court may be concerned 

about reading section 4 of the Clayton Act too broadly. See 

Associated Gen. Contractors, 459 u.s. at 529-530 & n.l9 . We do 

not believe we have done so in this case. 

-20-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 20 
Blue Cross challenges Wesley' s standing on the ground that it 

"was not in the relevant market selected by the court, health care 

financing, either as a consumer or as a competitor." Brief of 

Appellants at 33 . While it is true that Wesley was not itself a 

direct participant in the provision of health care financing, it 

was, by virtue of its affiliation with HCA and HCP, a perceived 

competitor of Blue Cross. Indeed, as the district court stated, · 

"that is the precise reason [Blue Cross] undertook the conduct at 

issue in this case." Reazin II, 663 F. Supp. at 142 6 n.l7. In 

any event, as the Supreme Court has specifically he l d, an 

antitrust plaintiff need not necessarily be a competitor or 

consumer. See McCready, 457 u.s. at 472. Where the plaintiff's 

injury is "inextricably intertwined" or "so integral an aspect of 

the conspiracy alleged" plaintiff has established an antitrust 

injury·. Id. at ·484, 4 79. Here , Wesley '·s claimed injuries wer.e an 

"integral aspect" of the conspiracy to restrai n trade in t he 

health care financing market. Indeed, Wesley was the direct 

victim of Blue Cross ' actions. See Associated Gen. Contractors, 

459 U.S. at 529-30 n.l9. There was also evidence that Blue Cross 

specifically intended to harm Wesley. 

(ii) Agreement 

Section 1 requires the existence of an agreement between the 

allegedly conspiring parties. See Fisher v. City of Berkeley, 475 

U.S. 260, 266 ( 1986 }; Smith Mach. Co., 878 F.2d at 1294; McKenzie 

v. Mercy Hosp., 854 F.2d 365 (lOth Cir. 1988). We are well aware, 

as Blue Cross urges on us, that a business retains t he right under 

-21-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 21 
section 1 to unila te rally announce the terms on which it will deal 

and refuse to deal with those who will not comply. Monsanto Co. 

v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984); Uni ted States v. 

Colgate & Co., 250 U.S. 300 (1919); Motive Parts Warehouse v. 

Facet Enterps., 774 F.2d 380, 386 (lOth Cir. 1985). 

The challenged agreement need not be in writing or even be 

explicit. "[C)onspiratorial conduct may be established by 

circumstantial evidence." Cayman Explor. Corp. v. United Gas Pipe 

Line, 873 F.2d 1357, 1361 (lOth Cir. 1989) (citing Loew's, Inc. v. 

Cinema Amusements, Inc ., 210 F.2d 86, 93 (lOth Cir.), cert. 

denied, 347 U.S. 976 (1954}); see also Monument Builders, Inc. v. 

American Cemetery Ass'n., 891 F .2d 1473 (lOth Cir. 1989). Where 

e vidence of a conspiracy is ambiguous, the Supreme Court has 

stated, "[t}o survive a motion for summa ry judgment or for a 

directed v~rdict, a plaintiff seeking damages for. a vlqlation of 

§ 1 must present evidence ' that tends to exclude the possibility' 

that the alleged conspirators acted independently ." Matsushita 

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986) 

(quot ing Monsanto Co., 465 U.S. at 764); see also Monument Builders, 891 F .2d at 1481 n.8 ("The [Supr e me ] Court [in Ma tsushita and 

Monsanto Co.) did not intend to end reliance on circumstantial 

proof of conspiracy, but rather to avoid reliance exclusively on 

evidence which is 'as consistent with permissible competition as 

with illegal conspiracy.'") (quoting Matsushita, 435 U.S. at 588). 

Blue Cross argues that the evidence failed to establish the existence of an agreement . 

-22-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 22 
We agree with the district court that sufficient 'circumstantial evidence supports the jury 's finding of an agreement. 

See Reazin II, 663 F. Supp. at 1421-24. The evidence and 

testimony concerning the precise circumstances under which the 

Saints accepted the reduced maximum allowable payments and learned 

of the proposed Wesley termination were conflicting. However, the 

series of meetings between Blue Cross and the Saints during 'the 

spring and summer of 1985 concerning a new HMO program "established an existing forum" within which discussions relating to 

Wesley's termination and the maximum allowable payments reduction 

could, and eventually did, take place. Reazin II, 663 F. Supp. at 

1422. John Knack, the vice-president of Blue Cross who was 

intimately involved in the proposed Wesley termination, testified 

in his deposition (read into the record at trial) that "right from 

·the first meeti!'lg [the Saints] i ndicated they. would cbnsider a 

discount." R. Vol. 28 at 2602. Marlon Dauner, the senior vicepresident of Blue Cross, also intimately involved in the entire 

Wesley termination decision, testified at trial that the three 

decisions--to cancel Wesley' s contracting provider agreement, to 

abandon the Choice Care program, and to seek reduced MAPs--were 

"related." R. Vol. 17 19 at 970. 

17 Choice Care was a PPO which Blue Cross attempted to introduce 

into Wichita in 1985, after ceasing to market HMOK. Blue Cross 

solicited competitive bids from all Wichita hospitals for partici -

pation in the Choice Care program. Wesley and St. Francis were 

initially selected as the successful bidders. After Blue Cross 

altered some of the provisions of the proposed Choice Care 

program, Wesley was unhappy with its submitted bid. During June 

and July of 1985, Wesley and Blue Cross officials met in an effort 

to resolve these problems. Wesley wanted to submit a new bid but 

was not permitted to. On July 31 , 1985, Wesley received the 

[footnote continued ••. ] 

-23-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 23 
The chief financial officer of St . Francis, Stephen Harris, 

prepared a memorandum dated September 3 to Sister Sylvia Egan, the 

chief executive office r of St. Franc is, which stated in pertinent 

part: 

"When you left fo r Wisconsin [on August 16 ], we were 

worki ng with Blue Cross on various options that would 

allow Blue Cross to cancel Wesley ' s Blue Cross contract. 

At that time, Blue Cross felt they needed a 25% discount 

from the 1986 MAPs in order to offer a large enough 

discount [to] the 'employer' so t hat the program would 

be supported and the 'Wesley Boyco tt' wou l d work. 

After a lot of discussion involving several different 

scenario [sic], we agreed on a straight 20% discount 

from the 1986 MAPs." 

Plaintiffs' Ex. 4, Addendum to Answer Brief of Appellees Vol. I . 

St. Joseph's vice-president of administration , Edward 

Sullivan, wrote a memorandum to his superior, William Leeker, 

after this lawsuit was filed, in which he stated tha t "[i]mplementation of [the] new 1986 MAPs would .be delayeo if the HCA suit 

is successful in gaining a t emporary i njunction. In that case the 

original 1986 MAPs would be used ." Plain tiffs' Ex . 5 , I d. 

(emphasis original). In fact , the new reduced MAPs were lmplemented, even though Robert Pearcy, Blue Cross ' former direc tor 

of institutional relations, testified in his deposition , which was 

read into the record at trial , that there had been an agreemen t 

after this lawsuit was fi led to utilize the original 1986 max imum 

allowable payments. Plaintiffs ' Ex . 551 at p.64, Addendum to 

Answer Br ief of Appellees Vol. II. Thus, the re was ample evidence 

that the decision to terminate Wesley and the decision t o reduce 

[ . . • footnote con ti nued] 

proposed Choice Care contract from Blue Cross. Blue Cross decided 

in August to abandon the Choice Care program i n Wichita . 

-24-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 24 
the maximum allowable payments were interrelated and part of a 

common design to increase Wesley's costs of doing business and to 

drain patients from Wesley to the Saints, thereby harming 

Wesley.l8 

Viewing the evidence in the light most favorable to 

plaintiffs, as we must, we affirm the district court's conclusion 

that sufficient evidence supports a finding ·of "'a conscious commitrnent to a common scheme,'" Monsan to Co., 465 u.s. at 764 (quoting Edward J. Sweeney & Sons , Inc. v. Texaco , Inc ., 637 F . 2d 105, 

111 (3d Cir. 1980), cert. denied, 451 u.s. 911 {1981)), sufficient 

to satisfy section l's requirement of an agreement. 19 

{iii) Unreasonable Restraint o f Trade 

An additional essential element in a section 1 claim is the 

existence of an unreasonable restraint of trade. See Drei ling y. 

Peugeot Motors of Ame rica, Inc ., 850 F.2d 137 3 , 1381 {lOth Cir. 

1988); Christofferson Dairy, 849 F.2d at 1172. 

The jury found an unreasonable restraint of trade i n the 

private health care financing market. The district court 

concluded that ample evidence supported the jury' s findings. It 

18 Indeed, there was abundant evidence tha t the only reason the 

Saints agreed to t he r educed maximum a l lowable payment s was 

because they anticipated a shift of patients f rom Wesley to the 

Saints as a result of the termination of Wesley 's contracting 

provider agreement. 

19 We likewise affirm the district court ' s rejection of Blue 

Cross' argument that there could be no agreement because the only 

Blue Cross agents with the authority to terminate the wesley 

contract, the execu tive committee, had no knowledge of the alleged 

c onspiracy in which Bl ue Cross ' senior manageme nt staff may have 

participated. 

-25-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 25 
summarized the evidence as follows: 

"[ T]he market restrai nt alleged in this case is within 

private health care f i nanc ing . [Blue Cross'] abandon- ment of its indemnity insurance in favor of a 'new PPO', 

under which it will contract only with providers not 

aligned with competing i nsurance companies, injects a 

market distortion . . . . [Blue Cross] discriminated 

against a particular class of medical provider, and 

there was abundant evidence from which the jury could 

have found defendant ' s conduct was undertaken with the 

intent and effect of preventing providers from contract- ing with other insurance companies. At issue in this 

case is not a pristine 'agreement to purchase services 

from certain sellers, and not from another.• Rather, 

substantial evidence demonstrated, and the jury appar- en tly foun d , [Blue Cross ' ] conduc t restrict e d the abil- ity of other buyers (competing health care financ ing 

organizations) to purchase hospital services on a 

competitive basis through alternative delivery systems, 

thereby restraining competition in the health care 

fina ncing ma rket . " 

Reazin II, 663 F. Supp . at 1412-13. The court also emphasi zed the 

fact that there was ~conduct involving at least i n part a 

horizontal conspiracy between competing providers." Id . at 1414 . 

It was further infl uenced by evidence that Blue Cross ' motive . for 

undertaking the conduct it did was anticompet itive. 

Blue Cross argues there was no unreasonable restraint of 

trade in the private health care financing market because (1) 

Wesley, the onl y party the jury found to have been injured , was 

not in the health care financing market , but only in the health 

care services mar ket ; (2) no evidence demonstrated that the announced termination of Wesley's contract prevented hospitals from 

ve rtically integrati ng into health care financing or prevented 

health care financing businesses from contracting with hospitals; 

and {3) the effects in the health care financing market were 

procompetitive and proconsumer , in that insurer premiums for Blue 

Cross subscribers were reduced, new opportunities for Blue Cross 

-26-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 26 
competitors were created, and no consumers were restricted in 

their health care options . 

We agree with the district court that sufficient evidence 

supports the jury's finding of an unreasonable restraint of trade 

in the market for private health care financing. It is not 

dispositive to us that Wesley was in the health care services 

market and not itself in the health care financing market . As 

plaintiffs argue and the district court noted, Wesley was, by 

virtue of its affiliation with HCA and HCP, a perceived competitor 

of Blue Cross. Indeed, in the Blue Cross Executive Committee 

meeting August 29, 1985 , when the formal decision to terminate 

Wesley was made, Blue Cross' President Wayne Johnston spec ifically 

asked the Commit tee whether Blue Cross "wish ( ed] to continue to do 

business with entities that openly desire to compete with the 

~rganizati on and enrol l Blue Cross subscribers i n their 

programs." Plaintiffs' Ex. 10, Addendum to Brief of Appellants 

Vol. I . Further, Wesley was a competitor of Blue Cross ' coconspirators, the Saints. Thus, this case does not involve only, 

as defendants argue, the termination of a vertical relationship, 

akin to a dealer termination . Rather , this case also involves a 

horizontal conspiracy among competitors to harm another 

compet itor . See Business El ecs. Corp., 108 S. Ct. at 152 5. 

Blue Cross argues that the jury specifically found that HCP, 

the only plaintiff i n the relevant market of health care financing, had suffered no injury. According to Blue Cross, this 

establishes that no unreasonable restraint of trade occurred in 

the relevant market. The finding of no injury to HCP does not 

-27-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 27 
alter our conclusion that competition in the health care financing 

market was adversely affected. As the district court noted, HCP 

specifically made no effort to quantify its damages. The peculiar 

posture of this case, with the parties having voluntarily agreed 

to maintain the status quo and to delay actual termination of 

Wesley's contracting provider agreement pending resolution of this 

suit, may indeed explain why HCP continued to contract with other 

Wichita hospitals, including the Saints, after the threatened 

termination. 20 

We further disagree with Blue Cross' assertion that no 

evidence demonstrated that the announced termination of Wesley's 

contract prevented hospitals from vertically integrating into 

health care financing or prevented health care financing businesses from contracting with other hospitals. Indeed, several 

ho~pital administrators testified that Blue Cross' threatened 

termination of Wesley gravely concerned them and affected their 

involvement in private health care financing. 21 Cf. R.C. Dick 

20 One hospital administrator, however, testified that, after 

the threatened termination, his hospital proceeded with a proposed 

contract with HCP only because the contract contained a termination clause permitting the hospital to terminate the contract on 

six months' notice. 

21 Lynne Jeane, the executive director of Humana Hospital in 

Dodge City, Kansas, testified that Blue Cross' letter to all 

Kansas hospitals "confirmed what we understood was a threat. The 

announcement of the cancellation of Wesley's policy confirmed that 

they would carry out the threat . . . . [WJe have taken a position that we will wait and see what the outcome of this situation 

is before we attempt to provide any product." R. Vol. 2S at 2547. 

Ingo Angermeier, the associate administrator of Asbury Hospital in 

Salina, Kansas, testified that he told Blue Cross' Marlon Dauner 

that he "was concerned that [his] right as a provider to compete 

was being threatened." R. Vol. 20 at 1248. He further testified 

that his hospital had "substantially slowed down [its] discussion 

[footnote continued ••. ] 

-28-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 28 
Geothermal Corp., 890 F.2d at 152 { 11 Dick Geothermal failed to 

provide testimony from a single other developer that the 

developer's investment decisions were in any way influenced by the 

defendants' level of production ••• ~). 

Finally, we reject Blue Cross' argument that the evidence 

established that the effects of Blue Cross' conduct were 

procompetitive and proconsumer. While there was testimony that 

premiums for some subscribers were reduced following the 

threatened termination of Wesley and the implementation of the 

reduced maximum allowable payments, that does not convince us that 

Blue Cross' challenged actions were procornpetltive and 

proconsumer. Indeed, two of plaintiffs' experts, William Guy and 

Dr. George Hay, plainly testified that Blue Cross• actions would, 

in the long run, harm consumers because they would slow down or 

inhibit the development of alternative delivery systems, thereby 

reducing the options available to consumers. They further 

testified that such systems would cause health care costs to 

decrease, thereby benefiting consumers.22 Thus, sufficient 

[ ••• footnote continued] 

about a PPO," as a result of the threatened Wesley termination and 

the letter to all Kansas hospitals from Blue Cross President Wayne 

Johnston letter. rd. at 1292. Dale Martin, the Administrator and 

Chief Executive Officer of Graham County Hospital in Hill City, 

Kansas, testified that his hospital 11 ha[s] not had any more 

discussions with anybody concerning HMOs or PPOs since [he] 

received (the Johnston] letter. 11 R. Vol. 28 at 2645. 

22 In response to Blue Cross' argument that its actions only 

benefited consumers, we note that there was evidence that Wesley 

had historically been not only the largest, but also the premier 

and one of the most cost-effective hospitals in Wichita. In view 

of Blue Cross' mandate to pursue cost containment, we view with 

some suspicion the argument that the termination of the largest 

and one of the most cost-effective hospitals promotes cost 

[footnote continued ..• ] 

-29-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 29 
evidence supports the jury's conclusion that Blue Cross' actions 

resulted in an unreasonable restraint of trade. 

(iv) Marke t and Monopoly Power 

Blue Cross argues that, absent a showing of market power, 

plaintiffs' section l claim fails. Plaintiffs evidently assumed 

they must establish market power, as they presented considerable 

evidence relating to that issue. Thus, we review the evidence of 

Blue Cross' market power, noting that the Supreme Court has 

suggested that there may be situations in which a specific and 

detailed showing of market power may not be necessary in a section 

1 Rule of Reason case. See note 24, infra. 

"To demonstrate 'market power,' a plaintiff may show evidence 

of either 'power to control prices' or 'the power to exclude 

competition."'· Westman Corrun'n Co., 796 F.2d at 1 225 n.3 (emphasis 

original). Market power is to be distinguished from monopoly 

power, which in this circuit requires proof of both power to 

control prices and power to exclude competition. See Bright v. 

Moss Ambulance Serv., Inc., 824 F.2d 819, 824 (lOth Cir. 1987); 

Shoppin' Bag, Inc . v. Dillon Cos., 783 F.2d 159, 163 (lOth Cir. 

1986). Market and monopoly power only differ in degree--monopoly 

power is corrunonly thought of as "substantial" market power. See 

Areeda & Turner, Antitrust Law, ' 801 (1978). We discuss the two 

concepts together here, since the same evidence relates to each. 

[ ... f ootnote continued] 

containment and thereby benefits consumers, either i n the short 

run or over the long run. 

-30-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 30 
Power over price and power over competition may , in turn, 

depend on various mark et characteristics, including the existence 

and intensity of entry barriers, elasticity of supply and demand, 

the number of firms in the market, and market trends. See 

Shoppin' Bag, 78 3 F .2d at 162 (in evaluating market powe r, "[m] any 

cases . •• look at market trends, number and strength of other 

competitors, and entry barriers ").23 

Market share is relevant to the determination of the existence of mark et or monopoly power, but "market shar e alone is insufficient to establish market power." Bright , 824 F . 2d a t 824; 

see also Colorado Interstate Gas Co. v. Natural Gas Pipeline Co., 

885 F . 2d 683, 69 5 (lOth Cir. 1989 ); Shoppin ' Bag, 783 F.2d at 162i 

Landes & Posner, Market Powe r in Antitrust Cases , 94 Harv. L . Rev. 

937, 947 (1981). It may or may not reflect actual power to 

control price or exclude competition. See generally Ba ll Memor ial 

Hasp., 789 F.2d at 13 35. Courts have not compl etely agreed on 

whether a particular market share should be given conclusive or 

merely presumptive effect in dete rmining market or monopoly power , 

or. whether market s hare is only a starting po int in the inquiry 

23 In Shoppin' Bag, 783 F.2d at 162 , we approved the following 

instructions on determining market strength: 

"Market strength is often indicated by market share. 

Market share alone, however , is not enough to determine 

a firm' s capacity to achieve monopoly. 

Other factors you should consider include the 

number and strength of the defendant's competitors, the 

difficulty or ease of entry into the market by new 

competitors, consumer sensitivity to change in prices, 

innovations or developments in the market, whe ther the 

defendant is a multimarket firm, as well as other 

evidence presented to you that you may deem persuasive 

regarding defendant's market strength . " 

-31-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 31 
into market or monopoly power. Compare Valley Liquors , Inc . v . 

Renfield Importers, Ltd ., 822 F .2d 656, 667 (7th Cir. } ( 11Without a 

showing of special mar ket conditions or other compelling evidence 

of market power , the l owest possible market share legally sufficient to sustain a finding of monopolization is between 17% and 

25%."), cert. denied, 484 U.S. 977 ( 1 987) , and Dimmitt Agr i 

Indus., Inc . v . CPC I nt ' l, Inc ., 679 F.2d 516, 529 (5th Cir . 1982) 

("market shares in the range of 16 to 25 percent , such as those 

held by [defendant ] are insufficient--at least absent other 

compelling structural evidence--as a matter of law to support 

monopolization.,), cert . de nied , 460 u.s. 108 2 (1983), with Hayden 

Publishing Co . v. Cox Broadcasting Co rp. , 730 F.2d 64 , 69 n.7 (2d 

Cir. 1984) ("a party may have monopoly power in a particular 

market , even though its market share is l ess than 50%"} and 

Broadway Delivery Corp. v. Uni ted Parcel Serv. · of America, 651 

F.2d 122,. 128 (2d Cir .) ("The trend of guidance from the Supreme 

Court and the practice of most courts endeavoring to follow that 

guidance has been to give only weight and not conclusiveness to 

market share evidence . . "), cert. den ied , 454 U. S. 968 ( 1981) . See 

also Areeda & Turner , Antitrust Law, ,, 518 . 3c ( " there is a substantial merit in a presumption that mar ket shares below 50 or 60 

percent do not constitute monopoly power ." ) (emphasis added). 

This court recently stated in dicta : 

"While the Supreme Cou rt has refused to spec ify a 

minimum market share necessary to indicate a defendant 

has monopoly power, lower courts generally require a 

minimum market share of between 70% and 80% ." 

Colorado Inte rstate Gas Co., 885 F.2d at 694 n .l8 (ci ting 2 E. 

Ki ntner , Federal Antitrust Law , § 1 2.6 (1980); Areeda & Turner, 

-32-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 32 
Antitrust Law, t 803). We do not view Colorado Interstate Gas as 

establishing a firm market share percentage required before a 

finding of monopoly power can ever be sustained. We prefer the 

view that market share percentages may give rise to presumptions, 

but will rarely conclusively establish or eliminate market or 

monopoly power. 

As indicated, entry barriers are relevant to the analysis of 

market or monopoly power. Entry barriers are particular characteristics of a market which impede entry by new firms into that 

market. Entry barriers may include high capital costs or regulatory or legal requirements such as patents or licenses. See 

generally Colorado Interstate Gas Co., 885 F.2d at 695-96 n.2l; 

Westman Comm'n Co., 796 F.2d at 1225-26 n.3; L. Sullivan, Antitrust Law, ~ 23 (1977); Areeda & Turner, Antitrust Law, t 409 

{1978} ("The principal sources [of entry barriers) ar~ (l) legal 

license • ; {2) control over an essential or superior resource 

(3) entrenched buyer preferences • and (4) capital 

market evaluations imposing higher capital costs on new 

entrants .•.• "). As leading commentators have noted, "[s]ubstantial market power can persist only if there are significant 

and continuing barriers to entry." Areeda & Turner, Antitrust 

Law, ,! 505; accord Cargill, 479 U.S. at 119-20 n.l5. 

The foregoing discussion illustrates that market power, to be 

meaningful for antitrust purposes, must be durable. See Areeda & 

Turner, Antitrust Law, ~ 505 {"the significance of market power 

depends not only on its degree but also on its durability."). See 

generally Colorado Interstate Gas Co., 885 F.2d at 695-96 & n.21; 

-33-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 33 
L. Sullivan, Antitrust Law, 1111 22-32 . The jury found that Blue 

Cross possessed both market power and monopoly power in the 

relevant market. The district court refused to disturb those 

findings . It concluded plaintiffs presented sufficient evidence 

that Blue Cross had both power over competition and power over 

price. 24 

24 The district court "agree(d] with plaintiffs' suggestion the 

finding of market power may well be unnecessary given the jury's 

find ings of actual anticompetitive restraint of trade." Reazin 

II , 66 3 F . Supp. at 1416. The district court relied on FTC v. 

Indiana Fed 'n of Dentists, 476 u.s. 447 (1986) , in reaching that 

conclusion. The Supreme Court in Indiana Fed'n of Dentists 

suggested two situations where an elaborate analysis of market 

power may be unnecessary . First , "' the absence of proof of market 

power does not justify a naked restriction on price or output .'" 

Id. at 460 (quoting NCAA v . Bd . of Regents, 468 U. S. 85, 109- 10 

(1984)) . Such a restriction "'requires some competitive 

justification.'" Indiana Fed'n of Dentists, 476 u.s. at 460 

(quot i ng NCAA v . Bd . of Regents, 468 U. S. at 110). Second , even 

where a restraint is not sufficiently "naked," "'proof of actual 

de~rimental effect~ . such as a red~ction of ou~put' can obviate 

the need for an inquiry into market power, which is but a 

' surrogate for detrimental effects.'" Indiana Fed'n of Dentists, 

476 U.S . at 460-61 (quoting Areeda & Turner, Antitrust Law, t 1511· 

(1986)). 

Indiana Fed'n of Dentists involved a horizontal agreement 

among Federation members to withhold den tal X-rays from patients' 

insurance companies. Such an agreement could either be viewed as 

a ''naked restraint" on output, or as resulting in such actual 

detrimental effects that, absent any procompetitive justification, 

it cou l d be condemned without proof of market power. The Court 

agreed that ample evidence supported the find ing that actual 

detrimental effects had been proven , because " in two localities 

. • • Federation dentists constituted heavy majorities of the 

practicing dentists and •.. as a result of the efforts of the 

Federation, insu rers in those areas were, over a period of years, 

actually unable to obtain compliance with their requests for 

submission of x rays." Indiana Fed'n o f Dentists, 476 u.s. at 460 

(emphasis added) . We need not decide whether the restraint i n 

this case is of such a nature or resulted in such effects as to 

obviate the need for detailed proof of market power, because 

plaintiffs did present detailed evidence as to Blue Cross' market 

power. We further express no opinion on the situations where such 

proof may be foregone. 

-34-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 34 
Blue Cross argues on appeal that the jury and the district 

court erred in finding market or monopoly power for the following 

reasons: (l) plaintiffs' expert erroneously equated power to 

exclude competition with power over prices, in contravention to 

this court's analysis in Shoppin' Bag, 783 F.2d at 163-64;25 (2) 

there was no evidence of Blue Cross' pricing power, and Blue Cross 

could have no such power in view of the fact that its rates were 

subject to approval and regulation by the Kansas Commissioner of 

Insurance; (3) entry barriers were nonexistent; and {4) Blue 

Cross' market share was. insufficient to permit the inference of 

market power and, furthermore, it was declining. 

Noting once again our standard of review, we hold that sufficient evidence supports the jury's findings of market and 

monopoly power. Estimates of Blue Cross' market share varied.· An 

internal memorandum prepared by a Blue Cross employee estimated 

that .. 60% of all medically insured Kansans are insured with Blue 

Cross and Blue Shield of Kansas." Plaintiffs' Ex. 41, Addendum to 

Brief of Appellants Vol. I. One of plaintiffs' experts, William 

Guy, testified that, based on his own calculations, Blue Cross' 

25 In Shoppin' Bag, 783 F.2d at 164, this court noted: 

u[W]e believe that both elements have been necessary 

since the test's initial inception. While the concepts 

of price and competition are closely connected, it is 

conceivable that if a company has obtained control over 

prices that it stili may not have the power to exclude 

other competitors from the market. • • • The differences between the elements will vary according to the 

factual scenarios which arise. Thus, easy distinctions 

between the concepts will not always be possible. It 

seems that in most instances a true evaluation of market 

power will not ultimately be possible without substantial data presented on both elements." 

-35-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 35 
percentage of all medically insured Kansans, including selfinsureds, was, "conservative[ly]," forty-seven percent. R. Vol. 

34 at 3393-94. Another of plaintiffs• experts, Professor Raymond 

Davis, testified that Blue Cross receives sixty-two percent of the 

insurance premiums in its service area compared to less than five 

percent for its next largest rival. Dr. George Hay testified that 

Blue Cross' market share was "somewhere between forty-seven and 

sixty-two percent." R. Vol. 35 at 3529. However measured, Blue 

Cross is by far the largest private source of health care financing in its service area .• 26 By virtue of its size, Blue Cross has 

economic leverage over hospitals. As Blue Cross' president, Wayne 

Johnson, conceded, Blue Cross' membership base gives Blue Cross 

»clout" over hospitals. R. Vol. 18 at 780-81. While Blue Cross 

argues vigorously that self-insureds should be included in any 

estimates of Blue Cross' market .share, and that inclusion of ·selfinsurance lowers Blue Cross' market share from sixty percent to 

forty-five percent, inclusion of self-insurance would not 

26 In addition to receiving some 62% of all earned health 

insurance premiums in its service area, compared to less than 5% 

for other insurance companies, Blue Cross was the largest nonfederal source of revenue for hospitals. For example, there was 

testimony that Blue Cross accounted for 16% of St. Francis' 

revenues, compared to less than 5% from Blue Cross' next largest 

competitor. Wesley's chairman and chief executive officer, Jack 

Davis, testified that Blue Cross accounted for approximately 18% 

of Wesley's revenues. R. Vol. 14 at 71. The same held true for 

hospitals outside Wichita. The associate administrator of Asbury 

Hospital testified that approximately 19% of Asbury's revenues 

came from Blue Cross, while the next largest insurance company 

accounted for at most 5%. R. Vol. 20 at 1231. 

-36-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 36 
significantly alter Blue Cross' relative dominance of the 

market. 27 

Blue Cross' market share is such that there could be at most 

a presumption of a lack of monopoly or market power. We disagree 

with Blue Cross that such a market share prohibits, as a matter of 

law, a conclusion of market or monopoly power. The fact that the 

share may have declined somewhat does not persuade us to the 

contrary. See Oahu Gas Serv. v. Pacific Resources, Inc., 838 F.2d 

360, 366-67 (9th Cir.) (,.'A declining market share may reflect an 

absence of ma~ket powerJ but it does not foreclose a finding of 

such power.'") (quoting Greyhound Computer Corp. v. IBM, 559 F.2d 

27 "Self-insurance,. refers to the situation where an employer, 

typically a large employer, itself performs the function of 

insurer for its employees. The employer often hires a third 

party, such as Blue Cross, to administer the program. In the 

testimony from various witnesses concerning Blue Cross' market 

share, substantial time was devoted to whether self-insurance and 

self-insureds should be included within the market of private 

health care financing, the market within which Blue Cross' market 

share was relevant. 

Blue Cross' argument to this court is that the jury, as a 

result of the district court's failure to instruct on the make-up 

of the market, must have ignored self-insurance, because inclusion 

of self-insurance in the relevant market necessarily lowers Blue 

Cross' market share below that which could sustain a finding of 

market or monopoly power. We disagree. There was conflicting 

testimony on the proportion of all insureds who participate in a 

self-insurance program in Kansas. Plaintiffs' expert, Raymond 

Davis, testified that he was unable to obtain hard data on that 

question either from Blue Cross or from the Kansas Insurance 

Commissioner. There was testimony that on a national basis 39% of 

those insured were self-insured, but there was also testimony as 

to why that figure might not be an accurate reflection of the 

self-insurance situation in Kansas. 

Thus, the jury heard substantial, and conflicting, evidence 

both as to the percentage of the total insurance market that selfinsurance represented as well as the propriety of including selfinsurance when measuring Blue Cross' market share. We cannot say 

that the jury could not have found market or monopoly power from 

the evidence presented. 

-37-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 37 
488, 496 n.l8 {9th Cir. 1977), cert. denied, 434 U.S. 1040 

(1978)), cert. denied, 109 S. Ct. 180 {1988). We turn, therefore, 

to other characteristics of the private health care financing 

market at issue and to more specific evidence of Blue Cross' power 

over price and competition. 

Certain historical advantages contributed to Blue Cross' 

dominant position in Kansas. Blue Cross was the first health care 

insurance company in Kansas. It is chartered under special enabling legislation. 28 Until 1985, Blue Cross was the only insurance company with the ability to contract directly with hospitals, 

which gave it the unique ability to negotiat~ price, to establish 

maximum allowable payments, to impose a hold harmless clause, and 

to utilize its most favored nations clause. Until 1970, it had 

certain tax advantages not available to other insurance companies, 

R. Vol. 22 at 1487-90, which, while arguably ·not relevant as entry 

barriers to competition now, may have contributed to Blue Cross' 

initial dominance in Kansas. Blu~ Cross is also the only Medicare 

intermediary, and Medicare accounts for a substantial portion of 

each hospital's revenues. Plaintiffs' experts testified as to why 

Blue Cross had achieved its position of dominance and why it was 

unlikely that Blue Cross' dominant position in the market in this 

case would be eroded soon. 

Plaintiffs' experts also testified as to Blue Cross' power 

over price and power to exclude competition. William Guy testi28 The district court described that as "legislation giving it 

[Blue Cross] the state's imprimatur.~~ Reazin II, 663 F. Supp. at 

1417. There was also testimony that being a contracting provider 

with Blue Cross was viewed as the "Good Housekeeping" seal of 

approval. 

-38-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 38 
fied that alternative delivery systems were nthe first real challenge to our traditional system of delivering financing of care.» 

R. Vol. 34 at 3375. He testified that Blue Cross• most favored 

nations clause hindered the development of alternative delivery 

systems, thereby interfering with the introduction of competition. 

R. Vol. 34 at 3404. He further testified that, despite Blue 

Cross• average annual rate increase of 23.75% from 1980 through 

1983, Blue Cross still maintained its dominance. The jury could 

reasonably infer from that testimony that Blue Cross had power 

over price. 

Another of plaintiffs' experts, Dr. George Hay, similarly 

testified that Blue Cross• only real competition would come from 

alternative delivery systems. Blue Cross faced little challenge 

from other traditional indemnity insurance companies. Because 

Blue.cross was in a position to use its leverage over hospitals· to 

exclude or slow down the development of alternative delivery 

systems, it thereby had power to exclude competition. He further 

opined that the power to exclude such alternative delivery systems 

gave Blue Cross power over price. 29 

29 Dr. Hay testified: 

"[T)hese new forms of competition [alternative delivery 

systems], that•s where the downward pressure on price is 

going to come from. That's what is going to cause 

health care costs to Kansas consumers to be lower, all 

right. If Blue Cross can stop that, can suppress it or 

can slow it down, that means that the cost of health 

care financing in Kansas is going to be higher than it 

otherwise would and that means that because Blue Cross 

has the power to do that, the power to stop it or slow 

it down, in a very real sense Blue Cross has the power 

over price, the power to prevent those price pressures, 

all right, from corning about to the advantage of Kansas 

[footnote continued •.• ] 

-39-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 39 
Further, there was testimony that Blue Cross' threatened 

termination of Wesley in fact did exclude competition, in that it 

inhibited hospitals from pursuing alternative delivery systems. 

There was also considerable testimony on the effect of Blue Cross' 

most favored nations clause, and the jury could reasonably have 

concluded that that clause contributed to Blue Cross' power over 

price. 30 We reject Blue Cross' argument that Blue Cross could 

[ ••• footnote continued] 

consumers." 

R. Vol. 35 at 3538-39. Blue Cross argues that Dr. Hay erroneously 

equated power over competition with power over price, in 

contravention of Shoppin' Bag, 783 F.2d at 164. However, in 

Shoppin' Bag, we specifically noted that the "concepts of price 

and competition are closely connected" and that "easy distinctions 

between the concepts will not always be possible.~~ Id. Further, 

in United States v. E.I. duPont de Nemours & Co., 3sr-u.s. 377, 

392 (1956), the case relied on in Shoppin' Bag in its discussion 

of monopoly power, the Court specifically stated: 

"Price and competition are so intimately entwined that 

any discussion of theory must treat them as one. It is 

inconceivable that price could be controlled without 

power over competition or vice versa.~~ 

Thus, we perceive no error in Dr. Hay's linkage of power over 

competition to power over price. Moreover, as we discuss further, 

plaintiffs introduced evidence of both Blue Cross' power over 

price and its power to exclude competition. 

30 The fact that the First Circuit has recently concluded that, 

as a matter of law, a "Prudent Buyer" policy utilized by Blue 

Cross and Blue Shield of Rhode Island, essentially identical to 

the most favored nations clause in this case, did not constitute 

monopolization in violation of section 2 does not alter our conclusion on the existence of Blue Cross' monopoly power here. See 

Ocean State Physicians Health Plan, Inc. v. Blue Cross & Blue 

Shield, 883 P.2d 1101 (1st Cir. 1989). In Ocean State, Blue Cross 

conceded its monopoly power. Id. at 1110. The only question was 

whether Blue Cross violated section 2. By contrast, the most 

favored nations clause here is not itself challenged as unlawful 

monopolization. Rather, it is only considered as evidence of, or 

as contributing to, Blue Cross• market or monopoly power. We need 

not reach the question addressed in Ocean State of whether use of 

the most favored nations clause could itself violate section 2. 

-40-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 40 
. .. have no power over price because its rates were subject to 

approval and regulation by the Kansas Commissioner of insurance.31 

We further disagree with Blue Cross' argument that entry 

barriers in the relevant market were non-existent and that the 

existence of some 200 insurance companies operating in Kansas 

demonstrates that fact. While it is true that only capital and 

31 The district court rejected this argument. The court opined 

that Blue Cross had waived that argument because, while ass~rted 

in Blue Cross' answer as a defense, it was abandoned in Blue 

Cross' motion for summary judgment and in the pre-trial order. 

Even if not waived, the district court concluded the argument was 

meritless under the immunity test of Parker v. Brown, 317 U.S. 341 

(1943). 

Blue Cross does not make any broad immunity argument on 

appeal. It does, in passing, reassert the argument that, because 

Blue Cross' rates were subject to approval and regulation by the 

Kansas Commissioner of Insurance, Blue Cross could not control 

prices and therefore lacked monopoly, and possibly market, power. 

The district court rejected that specific argument, stating: 

"[T]he factual predicate for such an argument is simply 

absent in this case. Defendant's own economic expert, 

Peter Hamilton, was specifically asked at his deposition 

two weeks prior to trial: 'What role, if any, does the 

fact that Blue Cross is regulQted by the Insurance 

Commissioner of Kansas play in your opinions?' His 

unequivocal answer: 'None at this time.' (Hamilton 

Depo., p. 57). At trial, [Blue Cross] called Dr. 

Hamilton to present its best defense to market and 

monopoly power, Dr. Hamilton's testimony was utterly 

bereft of any reference whatsoever to state rate 

regulation." 

Reazin II, 663 F. Supp. at 1419. 

We agree with the district court that Blue Cross effectively 

abandoned this argument. Furthermore, Blue Cross does not direct 

us to any materials indicating the nature of the regulation at 

issue and has thus failed to prove that the Insurance Commissioner 

engages in the kind of regulation which might indicate that Blue 

Cross lacks any control over price. Finally, not only did Blue 

Cross' expert, Dr. Hamilton, fail to mention state regulation in 

his discussion of Blue Cross' monopoly and market power, but a 

number of Blue Cross employees, as well, testified about Blue 

Cross' pricing policies without mention of state regulation. 

-41-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 41 
licensing were necessary to initially en ter the health care 

financing market , the fact remains that no other entrant remot e ly 

approached Blue Cross' domination of the market. That e vidence 

cuts against the argument that entry barriers wer e insubstanti al. 

See Oahu Gas Services, 838 F.2d at 367 (''The second entrant, .Aloha 

Gas , did win some accounts, but the evidence that that firm 

remained very small could reasonably preclude a decision that 

Aloha' s entry reflected a breakdown of barriers to entry.''). 

Furthe r , other peculiar characteristics of the health care financing market i n Kansas, such as Blue Cross' unique ability, until 

1985, to contract directly with hospitals, and the widespread 

impression that Blue Cross a lone had the Kansas legislature's 

spec i al imprimatur made it more diffi cu l t for othe r insurance 

companies to compe te with Bl~e Cross. 32 

In sum, ·bearing in mind our standard of review in. this case, 

we conclude that sufficient evidence supports the jury's findings 

of monopoly and market power and we find no legal error in those 

findings . 

32 We thus agree with the d istrict court that Ball Memorial 

Hosp ., Inc . v. Mu tual Hosp. Ins ., 784 F. 2d 1325 (7th Cir. 1986), a 

case on which Bl ue Cross heavily rel ies, is distinguishable. I n 

Ball Memorial, Blue Cross' market share was smaller {27% of a ll 

patients in Indiana) and the heal th insurance market was evidentl y 

more competitive , with s ome 1000 f i rms licensed to do business in 

Indiana , and more than 500 sell i ng insurance at the time of the 

decision. To the extent t hat the Ball Memorial court opined that 

entry barriers in the health care f i nanci ng market are always low, 

in any health care financing market in the country, we respectfully disagree . See also Reazin II, 663 F . Supp. at 1420 n.l6; 

Reazin I , 635 F . Supp:-af 1328-31. 

-42-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 42 
• 

(v) Damages 

Blue Cross argues the damages award to Wesley should be set 

aside because Wesley's evidence of lost profits resulting from the 

loss of patients following Blue Cross' threatened termination of 

Wesley was speculative and unsubstantiated. 33 

"The Supreme Court has recognized that an antitrust plaintiff 

is rarely able to prove its damages with mathematical precision." 

Aspen Highlands, 738 F.2d at 1525. While an antitrust damages 

award may not be the result of mere "'speculation or conjecture,'" 

it may be the result of "'a just and reasonable estimate of the 

damage based on relevant data." Id. at 1526 (quoting Bigelow v. 

RKO Radio Pictures, 327 u.s. 251, 264 (1946}). 

Blue Cross specifically challenges the damages award for lost 

profits because it argues that Wesley's chief operating officer, 

Donald Stewart, presented "unsupported speculation" that_Wesley's 

declining percentage of Blue Cross subscribers resulted from the 

announced termination. Blue Cross claims the evidence demonstrates merely a small decline in Wesley's market share which was 

simply coincidental with the announced termination. In other 

words, Blue Cross appears to argue insufficient evidence supported 

the necessary causal link between Blue Cross' challenged 

activities and Wesley's claimed damage. We disagree. We have 

carefully reviewed the damages evidence presented in this case and 

find that Wesley's claimed damages were supported by sufficient 

evidence. 

33 Blue Cross does not appear to challenge on appeal the award 

of punitive damages under the state law tortious interference 

claim. Accordingly, we do not address it. 

-43-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 43 
Blue Cross makes only a passing reference in its appellate 

briefs to an argument it made strenuously below, that any damage 

award in this case would be speculative because the contracting 

provider agreement with Wesley was never termina ted . 34 As did the 

district court, we note that the unique posture of this case 

necessarily al t.ered plaintiffs' evidence of damages. Nonetheless, 

Wesley adequately documented the damages it actually sustained by 

virtue of the threatened termination of its contracti ng provider 

agr eement. 

B. Secti on 2 

Section 2 of the Sherman Act provides: 

"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or 

persons., to monopolize any part of the trade or commerce 

• • • shall be deemed gu.il ty of a felony · . . . " 

15 u.s. c . § 2. The jury was instructed on the elements of 

attempted monopolization , conspiracy to monopolize , and the 

completed offense of monopolization. It found Blue Cross guilty 

of the offense of monopolizat ion . 

34 As the district court noted in Reazin I : 

"The case is presently before the Court in a unique 

posture because of the parties' voluntary agreement to 

preserve the status quo, continuing to abide by the 

terms of the Wesley/[Blue Cross] contracting provider 

agreement pending the outcome of this suit. The Court 

perceives the case as primarily a declara tory j udgment 

action which will be tried to the jury to determi ne 

whether what is now the proposed termination of Wesley's 

contract, along with the formatio n and effect of the 

revised [Bl ue Cross] contracting provider agreements 

with the remaining Wich ita hospitals, would vi olate the 

antitrust laws i f carried out. " 

Reazin I, 635 F. Supp. at 1316. 

-44-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 44 
"The elements of monopolization under Section 2 are 

' the possession of monopoly power in the relevan t 

market ' and 'the willful acquisition or maintenance of 

that power as distinguished from growth or development 

as a consequence of a superior product , business acumen , 

or historic accident .'" 

Bright v. Moss Ambulance Serv., 824 F.2d 819 , 823 ( lOth Cir. 1987) 

(quoting United States v. Grinnell Corp., 384 U.S. 563 , 570-71 

(1966)); see also Aspen Highlands Skiing Co. v. Aspen Highlands 

Ski ing Corp., 472 U.S. 585, 596 n.l9 (1985}. "Of course, the fact 

of injury and damages suffered by reason of a viola tion of the 

antitrust l aws must also be shown for a · privat e litigant to 

recover on a clai m of monopolization ." Aspen Highlands, 738 F.2d 

at 1519 n.12. Whi le a "specific intent" to monopoli ze is 

necessary to establish an attempt to monopoliz e claim, 11 general 

intent is all that i s required to support a monopolization claim. 11 

Id. at 1521 n.l6. 

We have·already held tha t sufficient evidence supports the 

jury's f i nding of monopoly power. We have also a l ready concluded 

that Wesley had standing and proved anti trust injury and damages. 

We tu rn , therefore, to whether s ufficient e vidence suppo rts the 

find ing that Blue Cross willfully acquir ed or main tained that 

power "as distinguished fr om growth or development as a consequence of a supe rior product, business acumen , or historic 

accident ." Bright , 824 F.2d at 823 (quoting United States v. 

Grinnell Corp . , 384 U.S . 563, 570-71 (1966)) . We have little d ifficulty concluding that Blue Cross' total conduct in this case--

threateni ng to terminate Wesley 's contracting provider agreement 

and reducing the maximum allowabl e payments for the remaining Peer 

Group V hospitals, thereby coercing other hospi tals into not doing 

-45-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 45 
business with Blue Cross competitors--constituted willful maintenance of its monopoly power. A general intent to do so is amply 

supported by the record. 

C. Jury Instructions 

Blue Cross argues that the court erroneously instructed the 

jury on certain of the elements necessary under sections 1 and 2. 

"When examining a challenge to jury instruction, we 

review the record as a whole to determine whether the 

instructions 'state the law which governs and provided 

the jury with an ample understanding of the issues and 

the standards applicable.'" 

Big Horn Coal Co. v. Commonwealth Edison Co., 852 F.2d 1259, 1271 

(lOth Cir. 1988) (quoting Ramsey v. Culpepper, 738 F . 2d 1092, 1098 

(lOth Cir. 1984)). We address each a l leged error in turn. 

During ju~y deliberations, the jury asked whether it could 

consider "the public;: interest" if it found the procompetitive and 

anticompetitive effects of Blue Cross' conduct "balance[d] out 

against each other.'' The court responded "yes," over Blue Cross' 

objection. Blue Cross argues the "court's answer impermissibly 

allowed the jury to consider matters other than market effects, 

and to find a violation where anticompetit i ve effects did not 

outweigh procompetitive effects." Brief of Appellants at 27. 

This interchange between jury and court must be viewed in 

context. Instruction 46, to which Blue Cross did not object , 

stated in part: 

11TO determine whether there was an unreasonable 

restraint, you need not find a specific injury, but must 

find conduct which appears to be reasonably calculated 

to , or tends to, prejudice the public interest . That 

public interest is that competition be open and 

unrestrained ." 

-46-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 46 
R. Vol. III, Tab 207 at Instruction 46. The jury ' s question was 

as follows: 

"If the jury finds, (in acco rdance with Instructions 47 

through 52) that the reasonable and unreasonable (pro 

versus anti-competitive) e ffects in the market balance 

out against each other , is the fact that there did exist 

conduct [as per Instruction 46] which appeared to be 

reasonabl y calculated , or tended to prejudice the public 

interest, to be given any weight in deciding the ques- tion of unreasonable restraint?" 

R. Vol. III at Tab 211. 

We find no reversible error in the court' s response . 

Instructions 46 through. 52 made abundantly clear to the jury that 

they were to find an unreasonable restraint of trade only if t hey 

found an adverse impact on competition. The "public interest" 

referred to in Instruction 46 was specifically defined as "open 

and unrestra ined competition." Thus , we do not view the court' s 

response as invi ting the. jury to consider matters other than ·the 

effects of the alleged restraint on competition, nor as allowing a 

finding of an unreasonable restraint where the anticompetitive 

effects did not outweigh the procompetitive effects. 

Again during deliberations, the jury inquired whet her entry 

barriers encompassed simply "gaining a share of the market or does 

this refer to a new product simply being licensed into Kansas. " 

R. Vol. III at Tab 211 . The court responded: 

"Instruction 43 contains certain factors you may 

consider in determining Blue Cross' market power or 

monopoly power , if any. Factor 5 of that instruction 

inquires of you as to the ease with which new firms may 

enter the industry , and in the Court's view, is self- explanatory . 

In t he interest of clari ty , howe ver , 'barriers to 

entry' fairly implies or assumes the ability to become a 

meaningful competitor." 

-47-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 47 
Id. Blue Cross argues the court's answer was wrong because entry 

barriers only contemplate the prerequisites to entry and the 

concept does not require that a new entrant be able to compete 

meaningfully. 

While we agree with Blue Cross that the antitrust laws do not 

guarantee any competitor the right to be a meaningful or significant competitor, we also must view ~ntry barriers in terms of 

their relevance to the antitrust laws. Entry barriers are 

relevant to the inquiry into a defendant's market power. If entry 

barriers are substantial, a market participant may be able to 

achieve or maintain market or monopoly power and use that power 

anticompetitively because its actions can go unchecked by new 

competitors. Thus, the relevance of entry barriers stems from 

their impact on competition in a given market. See United States 

v. Waste Management, Inc., 743 F.2d 976, 983 (2d Cir. 1984) (in 

finding low entry barriers, court noted that new entrants could 

"compete successfully" with other companies). Where the particular "entry barrier" in question, such as regulatory approval, 

means no more than that a new entrant has a "ticket" or "pass" to 

enter the market, but where other substantial entry barriers 

prohibit the new entrant fxom ever gaining a sufficient share of 

the market to discipline anticompetitive action by other market 

participants, then the first kind of "entry barrier" is not 

meaningful in antitrust terms. Thus, we agree with the district 

court that it properly focused the jury's attention on barriers to 

meaningful competition--competition which could inhibit anticompetitive conduct. See Reazin II, 663 F. Supp. at 1435-37. 

-48-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 48 
Blue Cross makes two challenges to Instruction 18. First, 

Blue Cross argues that the court's instruction, over objection, 

that the issue was "whether Blue Cross' termination of Wesley and 

related actions and communications are likely to have a future 

anticompetitive effect in any relevant market," was wrong because 

the Sherman Act only prohibits past or existing restraints of 

trade, not future ones. Second, Blue Cross argues the court 

wrongly limited the jury's use of evidence of RCA's allegedly 

anticompetitive conduct by the following language: 

"I hereby instruct. you that the evidence concerning HMO 

Kansas and surrounding circumstances in 1983 and 1984 

was admitted for the limited purpose of allowing Blue 

Cross to set forth historical information about Wichita 

and the health care financing market. I further instruct you that this evidence is relevant only for that 

limited purpose and should not be considered for any 

other purpose. I further instruct you that it should be 

considered by you, if at all, only if you believe it 

helps you decide what will the likely future competitive 

impact of the Blue Cross .conduct at issue . in this cas~-­

Blue Cross' announced termination oe Wesley Medical 

Center and its related actions and communications." 

R. Vol. III, Tab 207 at Instruction 18. Blue Cross argues that 

limiting instruction inhibited its legitimate Rule of Reason 

defense. 

We find no error in Instruction 18 . The peculiar posture of 

this case requires a finding o~ no error in the phrase concerning 

the "likely future competitive impact of the Blue Cross conduct." 

We likewise reject the argument that the instruction inhibited 

Blue Cross' legi tima te Rule of Reason defense. As the district 

court noted, it had struggled throughout this case to walk the 

fine line between permitting Blue Cross to present i ts Rul e of 

Reason defense, and thereby present evidence as to general market 

-49-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 49 
conditions, and yet not permitting a full trial of Blue Cross' 

counterclaim. We view the challenged instruction as simply 

reminding the jury of that distinction and properly channeling 

their attention toward the permitted use of the evidence of 

general market conditions--Blue Cross' Rule of Reason defense. 

Blue Cross also objects to the court's instruction on the 

product market in this case. The court instructed the jury that 

the relevant product market was "private health care financing." 

R. Vol. III, Tab 211 at Instruction 37. Blue Cross argues the 

court should have instructed the jury to make findings as to the 

products constituting the relevant market. In particular, Blue 

Cross' concern is whether the jury included self-insurance in the 

relevant market. 

Market definition is a question of fact. Westman Comm'n Co. 

v. Hobart Int' l I Inc. 1 796 F. 2d 1216, 1220 (lOth Ci r .' 1986) •. 

Definition of the relevant market requires first "a determination 

of the product market." Id. at 1221. "This inquiry necessitates 

an examination of which commodities are 'reasonably interchangeable for consumers for the same purposes.'" Id. (quoting United 

States v. E.I. duPont de Nemours & Co., 351 u.s. 377, 395 {1956)). 

The relevant geographic market must also be determined. Westman 

Comm'n Co., 796 F.2d at 1222. The jury defined the geographic 

market in this case as the State of Kansas, excluding Johnson and 

Wyandotte Counties. 

We find no error in the district court's refusal to specifically direct the jury to make findings as to the products constituting the relevant market. The jury heard ample, and conflicting, 

-50-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 50 
evidence as to the propriety of including self-insurance in the 

relevant market, the percentage of Kansans insured through self -

insurance, and the effect that inclusion of self-insurance in the 

relevant market would have on the issues in this case. Thus, the 

issue of what "products 11 constitute the market of private health 

care financing was fairly before the jury. 

In its instructions on unreasonable restraints of trade, the 

court stated, "if you find defendant possessed mark et power in the 

market, then any action taken by it with the actual or probable 

effect of foreclosing competition , gaining a competitive 

advantage, or destroying a competitor would be an unreasonable 

restraint of trade." R. Vol. III, Tab 207 at Instruction 47. 

Blue Cross objects to the highlighted portion of the inst ruct ion 

on the ground that it impermissibly allowed the jury to find an 

antitrust violation from the · legitimate activity of seeking to 

gain a competitive advantage. Viewed in the context of all the 

instructions given the jury, we perceive no error. The jury was 

instructed on seve ral occasions that the antitrust laws do not 

prohibit vigorous and successful competition and tha t merely 

attempting to succeed in business through vigorous competition is 

not unlawful. See id. at Instructions 12, 51. We are therefore 

unpersuaded that the jury would have taken that single challenged 

phrase and pena lized Blue Cross for engaging in legitimate 

competitive activity . 

Blue Cross further objects to the court's instruction that 

HCA's actions were "in and of themselves ... not illegal or 

violative of the antitrust laws." Id. at Instruction 1 9. Blue 

-51-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 51 
Cross argues tha t instruction was not necessary and only served to 

prejudice Blue Cross. We disagree. While the legality of HCA's 

a ctions was an issue in the counterclaim, plaintiffs' complaint 

addressed only the legality of Blue Cross' actions, to which the 

legality of HCA's actions was irr elevant . The sentence preceding 

the challenged sent ence correctly reminded the jury that "vertical 

integration ••. in and of itself is not violative of any law, 

including antitrust laws." Id . Viewed in context, this instruction simpl~ remi~ded the jury that it could not consider any 

illegality by HCA as a defense to charges of anticompetitive 

conduct by Blue Cross. 

Finally, Blue Cross charges that the court "repeatedly commented to the jury adversely concerning the evidence Bl ue Cross 

offered in support of its defense." Brief of Appellants at 31. 

It · further charges . that the court com·pounded the .. prejudice by 

refusing to instruct the jury that the court's comments were not 

evidence. After carefull y reviewing the entire record in this 

case, we find no prejudice to Blue Cross resulting from any 

allegedly unfavorable commen ts by the district court to the jury 

concerning Blue Cross ' evidence. Nor do we find any error in the 

district court's exclusion of evidence rel ating to HCA's 

activi ties in other parts of the country. 

We therefore affirm the d i strict cou r t's denial of Blue 

Cross' motions for judgment n.o.v. or for a new trial on the 

antitrust claims. 

-52-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 52 
STATE LAW CLAIMS 

Plaintiffs also charged that Blue Cross' c onduct in this case 

amounted to tortious interference with Wesley 's present and fu ture 

relations with Blue Cross subscribers, in violation of Kansas 

law. 35 The jury fou nd fo r Wesley on its c laim of tortious interfer ence and awarded a ctual damages of $1.00 and punitive damages 

of $750,000.36 The district court denied Bl ue Cross' motion for 

judgment n.o.v. or a new trial on that claim. Blue Cross appe als, 

argui ng that the court erroneously instructed the j ury on the 

elements of tortious interference and t hat the evidence fails to 

support the jury 's verdi ct . 

The district court instructed the jury as follows: 

"To find for plai ntiff Wesley Medical Center on its 

claim of tortious interfer ence by Blue Cross, Wesley 

must prove and you must find : 

1. That there .e xisted a present business relations hip 

and/or the expectancy of a fu tur e r ela tions hip with 

economic benefits between Wesle y and Blue Cros~' 

subscribers; 

2. That Blue Cross actually knew o f this present 

business relationship and/or expectancy of future 

relationship; 

35 Plaintiffs initially argued Blue Cross ' actions a lso interfer ed wi th Wesley ' s present and future business rel ations with 

patients, doctors, nurses, other medical personnel , administrators 

and staff, as well as with HCP's and Ne w Century' s prese nt and 

fu ture business r elations with hospitals and other providers of 

health care services. The jury was only p resented with a special 

interrogatory relating to Wesley's rela tionship with Blue Cross 

subsc ribers. 

36 The jury found t hat one of the elements of plaintiff HCP 's 

tort ious interference claim was not establis hed. That e lement 

the r equiremen t that Blue Cross have undertaken its allegedly 

unlawful conduct "with the wrongful intent of injuring or 

destroying the business o f " HCP. 

-53-

was 

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 53 
3. That, but for Blue Cross' deliberate use of the 

media and other efforts to discourage its subscribers 

from using Wesley, plaintiff Wesley was reasonably 

certain to have continued in the existing relationship 

or realized future expectancies; 

4. That Blue Cross undertook this conduct with the 

wrongful intent of i nj uring or destroying Wesley's 

business; 

5. That Wesley suffered injury, loss or damages to its 

business r elations as a direct or p r oximate result of 

Blue Cross' misconduct." 

R. Vol. III , Tab 207 at Instruction 84. Blue Cross argues that 

that instruction permitted the jury to find tortious interference 

without finding that Blue Cross had engaged in misconduct . 

The elemen ts of tortious interference under Kansas law are: 

"(1) the existence of a business relationship or expectancy with the probability of future economic benefit to 

the plaintiff; (2) knowledge of the r elationship or 

expectancy by the defendant ; (3) that, except for the 

conduct of the defendant, plaintiff was reasonably 

certain to have ·continued the re lati onship or rea lized 

the expectancy; "(4) intentional misconduct by d&fendant; 

and ( 5 ) damages suffered by plaintiff as a direct or 

proximate cause of defendant's misconduct." 

Turner v. Halliburton Co., 722 P.2d 1106, 1115 (Kan. 1986) (citing 

Maxwell v. Southwest Nat 'l Bank, 59 3 F. Supp. 250, 253 (D. Kan . 

1984)). Thus, improper conduct is a requ ir ement . However , as the 

Kansas Supreme Court noted in Turne r , "[a] person may be privi1eged o r justified to interfere with contractual relations in certain situations." Turner, 722 P. 2d at 1115 . Or, put another way, 

defendant's conduct may not be improper. 37 The court in Turner 

37 The Kansas Supreme Co urt referre d to the Restatement (Second) 

of Torts§ 7 67 (1979), which discusses whether conduct is proper 

or improper: 

"'In determining whe ther an ac tor's conduct in intentionally interfering with a cont ract or a prospective 

[footnote contihued •.• ] 

-54-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 54 
required the plaintiff to prove uactual malice" to ove rcome the 

qua l ified privi lege recognized there . 

We conclude the j ury instruct ions did not misstate Kansas law 

and permit the jury to fi nd t ortious interference wi thout a f inding of misconduct by Blue Cross. Ins truction 84 i tself i ncludes 

the word ''misconduct ." Instruction 87 specifically states, "[i)n 

order t o find that Blue Cross tor tiously interfered with the business relations of plai nt iffs, you must find tha t the alleged 

interference was both wrongful and intentional." R. Vol . I II, Tab 

207 at I nstruction 87 (emphasis added). That suffi ci e ntly 

informed the jury of the need to find misconduct by Blue Cross. 

Blue Cross also argues the court 11 imp rope rly permitted t he 

jury to find liability bas ed solely upon 'deliberate use of t he 

media ' even though a l l of the alleged statements of Blue Cross 

were fac tually true and ·not d efama tory . " Brief of Appellant, at 

[ •.. footnote continued] 

contractual relations of another is imp roper o r no t , 

conside ra tion is given to the following factors: 

(a) the nature of the actor's cond uct, 

(b) the actor's motive, 

(c) the interests of the o ther with which the actor's 

conduct interferes, 

(d) the interests s ought to be advanced by the actor, 

{e ) the social interests in protecting the freedom o f 

action of the a ctor and the contractual interests of the 

other, 

{f) the proximity or remoteness o f the acto r's conduct 

to the inte rfer ence, and 

(g) the relat ions be tween the part ies.'" 

Turner, 72 2 P .2d a t 1116-17. 

-55-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 55 
36. Blue Cros s a r gues its media communications were privileged 

under the First Amendment unless Wesl ey proved actual malice or 

knowledge of falsity. 

The court 's instruction No . 88 , concerni ng competit i ve 

privilege, s tated: 

"This competitive pri vilege is a qualifi ed privilege , and if you find Blue Cross' conduct is motivated 

p rima rily by malicious, anticompetitive or pr edatory 

purposes, rat her than lega l , fa i r a nd reasonable competition, you must conclude defendant's c onduc t falls 

ou tside this qualified privilege, and is not justifi ed." 

R. Vo l . III , Tab 207 a t Instruction 88. We agree with the 

distri ct court that the instruction "a dequat ely informed the jury 

of the degree of motive it must find before i t could impose 

liability upon def endant." Reazin I I , 663 F. Supp. at 1430. 

I nasmuch as the jury f ound several antitrust violations by Blue 

Cross, which we have uphel d in this appeal , suf ficient evidence 

~upports the jury's verdict of tortious interference. 

"ALLEN" CHARG ES AND COMMUN ICATIONS WITH JURY 

Finally, Blue Cross argues that the district court' s supplemental Allen instructions, 38 given to the jury on the ten t h and 

fourteenth days of deliber ation, coerced t he jury into reaching 

its verdict, thereby impermissi bly prejudicing Blue Cross. We 

disagree. 

38 "An Allen charge derives its name f r om j ury inst ructions 

approved by the Supreme Court in Allen v. Uni t ed States, 164 U.S. 

4 9 2 , 50 1-0 2 , 1 7 5 S • C t . 15 4 , 1 5 7 - 5 8 , 41 L • Ed . 52 8 ( 18 9 6 ) • " 

Un i ted Sta tes v. Porte r, 881 F.2d 878, 888 n.9 (l Oth Cir.), c ert. 

denied, 110 s. Ct. 348 (1989). 

- 56-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 56 
Blue Cross asserts that the supplemental Allen charges, given 

during jury deliberations, contravened United States v. Blandin, 

784 F.2d 1 048 (lOth Cir. 1986) , in which this court, in dicta, 

stated, " If the Allen instruction is given at all, it should be 

incorporated into the body of the court's original instructions to · 

the jury. I t should not be given during the course of deliberations." Id. at 1050. As we have subsequent ly made clear, 

"Blandin did not adopt a ~ ~ ru le prohibiting an Allen instruction once a jury commenced deliberations." United States v. 

Mobile Ma terials, Inc., 881 F .2d 866, 878 (lOth Cir. 1989) (per 

curiam}, cert . denied, 110 S. Ct. 837 {1990); see also United 

States v. McK inney, 822 F.2d 946, 951 (lOth Cir. 1987) ("Although 

it is a preferred rule of procedure that an Allen instruction be 

given the jury at the same time as other instructions, it is not a 

~ se rule"} (emphasis original). Rather, .... Allen-type cases must 

be reviewed on a case-by-case basis to determine the coercive 

effect of the instruction." McKinney, 822 F.2d at 951; see also 

Mobile Materials, 881 F.2d a t 878. 

After reviewing the facts of this case, we conclude that the 

Allen charges given in this case were not coercive and do not 

merit reversal of the jury's verdict. The language used by the 

district court is subs tantiall y the same as language this court 

has found to be non-coercive. See, ~' Un i ted States v. Dyba, 

554 F.2d 417, 420-21 (lOth Cir.), cert. denied, 434 u.s. 830 

(1977}; Munroe v. United States, 424 F.2d 243, 245-46 (lOth Cir. 

1970); Un i ted States v. Wynn, 415 F.2d 135 , 137 (lOth Cir. 1969), 

cert. denied, 397 u.s. 994 (1970). Any differences between the 

-57-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 57 
Allen charges given in those cases and the Allen charges given in 

this case do not alter our conclusion. 

While the district court did remind the jury that plaintiffs 

labored under the preponderance of the evidence standard rather 

than the h~gher beyond a reasonable doubt standard, the court also 

directed the jurors to· review carefully the court's original 

instructions, which set forth all the elements of plaintiffs' 

case. The court also reminded the jurors, as it did in its 

original instructions, that "no juror is expected to yield a 

conscientious conviction that he or she may have as to the weight 

or the effect of the evidence." R. Vol. III, Tab 207 at 

Instruction 97. In sum, while we continue to urge caution in the 

use of Allen instructions, we do not find, under the particular 

facts of this case, that the given instructions coerced the jury 

and prejudiced Blue Cross.39 

Blue Cross also argues that the district court "erred in 

permitting private communications bet\veen its law clerks and the 

jury.~~ Brief of Appellants at 17. We find no error. The court's 

communications with the jury all related to the progress the jury 

was making towards reaching a verdict and occurred after the jury 

had been deliberating for a considerable period of time. The 

39 Some three-and-one-half months after the verdict was 

returned, a juror submitted a letter to the court in which the 

juror claimed her verdict was coerced. See Reazin II, 663 F. 

Supp. at 1443 n.20. The court denied Blue Cross' motion for a 

hearing into the letter. Blue Cross argues that denial was error. 

We disagree. We regard this as a classic example of a juror 

attempting to impeach her own verdict, which we will not permit in 

this case. See Tanner v. United States, 483 u.s. 107 (1987); 

United States-Y. Miller, 806 F.2d 223, 225 n.2 (lOth Cir. 1986}; 

Holden v. Porter, 405 F.2d 878, 879 (lOth Cir. 1969). 

-58-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 58 
record confirms the district court's conclusion that " [n]othing 

was done without the prior knowl edge and approval, or at least 

acquiescence, of counsel . II Reazin II, 663 F . Supp. at 

1442. 40 

COUNTERCLAIM 

In the i r counterclaim, Blue Cross, along with HMOK, 41 charged 

that plaintiffs and HCA (1) engaged in a group boycott and 

concerted refusal to deal, ~ se in violation of section 1; (2} 

restrained trade in violation of the Rule of Reason under section 

1; (3) monopolized, attempted to monopolize, and/or conspired to 

monopolize the health care financing and health care services 

market in v i olation of section 2; (4) viol ated section 7 of the 

Clayton Act, 15 u.s.c. § 18; 42 and (5) interfered with prospective 

advantage in violation of Kansas law. 43 · As the district court 

40 Blue Cross made several motions for a mistrial during the 

jury's deliberations. In its third such motion, made four days 

before the jury returned its verdict, Blue Cross did not even 

raise the court's communications with the jury as a ground for 

motion . See R. Vol. 44 at 85-86. 

the 

41 HMOK was an HMO which Blue Cross attempted to introduce into 

Wichita in 1984. Ultimately, in 1985, Blue Cross withdrew HMOK 

from Wichita. The counterclaim largely revolves around the 

reasons for HMOK's lack of success in the Wichita market. The 

district court thoroughly explored the evidence relating to HMOK's 

failure in its two opinions. See Reaz in I, 635 F. Supp. at 1300-

01; Reazin II, 663 F. Supp. at-r376-1377 , 1465-68. 

42 Section 7 of the Clayton Act , 1 5 U.S . C. § 18 , prohibits 

acquisitions the effect of which ''may be substantially to l essen 

competit ion, or to tend to crea t e a monopoly." 

43 While Blue Cross listed 

statement, it does not brief 

judgment on the interference 

consider it abandoned. 

it as an issue in its docketing 

the district court's grant of summary 

with prospective advantage claim. We 

-59-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 59 
noted, "[w]ith the exception of the S 7 claim, all of the claims 

in the counterclaim are based in whole or in part on the allegation HCA, HCP and physicians in Wichita conspired to boycott HMOK 

'as a condition and in connection with [the] negotiation and sale 

of Health Care Plus to HCA.'" Reazin II, 663 F. Supp. at 1460 

(quoting R. Vol. I, Tab 25, Answer & Counterclaim at 20-21). 44 

The district court granted plaintiffs' motion for summary judgment 

on the entire counterclaim. In so doing, it characterized the 

counterclaim as "a defensive ploy, a maneuver, probably suggested 

and instigated by defense counsel, to divert attention from 

plaintiffs' complaint." Reazin II, 663 F. Supp. at 1461. It 

further observed that it addressed_ the motion for summary judgment 

"in the extraordinary posture of having received the documentary 

evidence and having heard, firsthand, the live testimony of the 

witn~sses." Id. a~ 1462. 

Pursuant to Fed. R. Civ. P. 56(c), summary judgment is 

appropriate when "there is no genuine issue of material fact and 

the moving party is entitled to judgment as a matter of 

law." Under the Supreme Court's recent guidelines for the granting of summary judgment, summary judgment must be granted against 

a party "who fails to • • . establish the existence of an element 

essential to that party's case, and on which that party will bear 

the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 

44 Blue Cross also argues the acquisitions violate sections 1 

and 2, although the counterclaim itself was not completely clear 

on that point. Additionally, in the pretrial order, Blue Cross 

agreed that a remaining legal issue was "[w]hether HCA acquired 

Wesley, Health Care Plus, and New Century in violation of section 

7 of the Clayton Act." No mention was made of sections 1 and 2. 

-60-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 60 
317 , 322 (1986}. For a plaintiff to avoid summary judgment, there 

must be sufficient evidence from which a jury could find for the 

plaintiff. Anderson v . Liberty Lobby, I nc. , 477 u.s. 242, 249 

(1986}. A mere " scintil la 11 of evidence is insufficient. We must, 

of course , construe the evidence and d r aw all inferences in a 

light most favorable to the nonmoving party . Matsushita Elec. 

Indus. Co. v . Zenith Radio Corp., 47 5 u.s. 574 , 587 {1986}; 

McKenzie v. Mercy Hasp., 859 F.2d 365, 367 {lOth Cir. 1988}; Key 

Fin. Planning Corp. v. ITT Life Ins. Corp ., 828 F.2d 635, 638 

(lOth Cir . 1987). 

After carefully considering all of the evidence in the light 

most favorable to Blue Cross and HMOK , we affirm the grant of summary judgment in favor of plaintiffs for substantially the rea s ons 

set fort h i n the district court's thorough treatment of the 

counterclaim. See Reazfn II·, 663 F~ ~upp. at 1459-83. 

ATTORNEY'S FEES AND COSTS 

Neither Blue Cross nor plaintiffs devote more than one and 

-one-half pages of their respective 50-page briefs to the issue of 

attorneys' fees . Blue Cross' cha llenges to the award of 

attorneys ' fees and costs are therefore somewhat conclusory. 

Blue Cross argues (1) the district court erred in awarding 

"all expenses claimed by p l aintiffs (~, expert witness f ees) , 

re9ardless of whether the expenses were a llowable under 28 u.s.c. 

§§ 1821 and 1920; " (2) the fee award improperly included fees to 

plaintiffs who were not prevailing parties; (3) plaintiffs failed 

to apportion their time among claims on which they prevailed and 

-61-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 61 
claims on which they did not or between prosecuting the main claim 

and defending the counterclaim; and (4) the fe es were excessive 

for the work done . 

"[A]n attorneys' fee award by the d istrict cou rt will be 

upse t on appeal only if it represents an abuse of discretion." 

Mares v . Credit Bureau of Ra ton , 801 F . 2d 1197 , 1201 (lOth Cir. 

1986); see also Pennsylvania v. Delaware Valley Citizens' Council 

for Clean Air, 478 U.S. 546, 561 (1986). "Findings on underlying 

quest ions of fact are subject to the clearly erroneous standard of 

review.,. Mares, 801 F .. 2d at 1201. Certain of Blue Cross' arguments are easily dismissed. Plaintiffs' Memorandum .in Support of 

Plaintiffs ' Application for Attorneys' Fees and Bill Costs, and 

supporting affidavits, spec ifically state that hours attributed to 

defense of the counterclaim were excluded. See Memorandum , R. 

Vol. 4, Tab 258 at 15 ; Affidavit of Joe Sims at 3; Affidavit.of 

Donald R. Newkirk at 3. Furthermore , we see no need for Wesley 

specifically to apportion its time between claims on which it 

prevailed and on those on which it did not because Wesley was 

clearly a prevailing party under Supreme Court guide lines . See 

Texas State Teachers ' Ass'n v. Garland Indep. School Di st., 489 

U.S. , 109 S. Ct. 1486 , 1492 ( 1989) ("A prevailing party must 

be one who has succeeded on any significant claim affording it 

some of the relief sought •.. " ) . It does not matter that Wesley 

did not prevail on every issue or every claim brought . See id.; 

see also Ramos v. Lamm, 713 F.2d 546, 556 (lOth Cir. 1983) ("If 

the plaintiff has obtained ' excellent results,' the attorney' s 

fees should encompass all hours reasonably expended; no reduction 

-62-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 62 
should be made because the plaintiff failed to preva il on every 

contention: ' the result is what matters.'") (quoting Hensley v . 

Eckerhart , 461 u.s. 424, 435 (1983)). All of Wesley's claims 

arose out of a common core of facts. The relief sought by Wesley 

was to have Blue Cross' ant icompetitive actions stopped and to 

recover damages suffered because of such actions. On that it 

succeeded . 

Blue Cross argues the fee award improperly included fees for 

certain plaintiffs (i .e. New Century, Reazin and HCP) who were not 

"prevailing" parties. We reject this argument for the reasons set 

forth in the district court opinion. See Reaz in II, 663 F. Supp. 

at 1455. 

Blue Cross' argument about expert witness fees all owed as 

costs is somewhat conclusory. We assume Blue Cross argues that 

the total amovnt awarded, $168,227.25, must exceed the'$30.00 perday limit set forth in 28 u.s.c. § l82l{b). 45 That, Blue Cross 

argues, contravenes Crawford Fitting Co . v. J . T . Gibbons, Inc., 

46 482 u.s. 437 (1987). 

45 28 U.S.C. § 1920 provides that a federal court may tax as 

costs against the losing party certain items, including "fees and 

disbursements for • • . witnesses. " 28 U. S. C. § 1920 ( 3) . 28 

U.S.C. § 1821 defi nes the witness fees specified in section 

1920{ 3) . In addition to an a ttendance fee of $30.00 per day, 

section 1821 also permits a witness to recove r for travel expenses 

to and from trial and provides a subsistence allowance if the 

witness must stay overnight to attend tri al. 

46 In Crawford Fitting, the Supreme Court held that " absent 

expl icit statutory or contractual authorization for the taxation 

of the expenses of a litigant's witnesses as costs, federal courts 

are bound by the limitations set out in 28 u.s.c. § 1821 and 

§ 1920. 11 Id. at 445. Specifically , the Court held that Fed. R. 

Civ. P. 54Td) did not permit an award of expert witness fees in 

excess of the limits contained in 28 u.s.c. § 1821 . Bl ue Cross 

[footnote conti nued .•• ] 

-63-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 63 
The district court stated as follows concerning the expert 

witness fees: 

"Reasonable expert witness fees may be awarded if that 

expert testimony was reasonably necessary. Ramos, 713 

F.2d at 559. Plaintiffs seek to recover $168,227.25 as 

expert witness fees paid to Dr. Geo rge Hay, Dr. Ray 

Davis, and William Guy. Each of these expert witnesses' 

testimony was indispensable for plai ntiffs' recovery. 

These witnesses provided crucial testimony concerning 

central issues such as market definition, market power, 

and defendant's business practices and position in the 

market. They also provided invaluable foundation testimony regarding the natu re of the health care industry 

and health care financing mechanisms. Their appearance 

and testimony was reasonably necessary; recovery of 

those fees is therefore granted . " 

Reazin II , 663 F. Supp. at 1457. The district court thus appeared 

to award the fees as part of the award of at torneys' fees under 

section 4 of the Clayton Act, 15 u.s.c. § 1 5. In Ramos, the case 

relied on by the district court, we specifically awarded, as part 

of an award.of a ttorneys' fees under 42 u.~.c. § 1988, ''reasonable 

expert witness ·fees'' if the witness' testimony was "reasonably 

necessary." 713 F.2d at 559. 

crawford Fitting has, however, caused many courts to reconsider the propriety of taxing expert witness fees against the 

losing party . As indicated, the Court in Crawford Fi tti ng 

specifically addressed only the authority of a feder al court under 

Rule 54(d) to tax expert witness fees beyond the statutory limits 

[ ••• footnote continued } 

argues that same rule applies to 15 u .s.c. § 15{a) permitting a 

prevailing antitrust plaintiff to recover ''the cost of suit." 

Thus, section 15{a) cannot permit costs beyond those expressly 

permitted in 28 U.S.C. § 1821 . 

Plaintiffs respond that Crawford Fitting is limited to cases 

where a court invokes Rule 54(d). It says nothing about awards o f 

costs under 15 U.S.C. § 15 . 

-64-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 64 
contained in 28 u.s.c. §§ 1920 and 1821 . None theless the Court 

employed broad l anguage. "We will not lightly infer that Congress 

has repealed §§ 1920 and 1821, either through Rule 54 (d) or any 

other provision not referring explicitly to witness fees ." 

Crawford F itting, 482 u.s. at 445 (emphasis added). This circuit 

has noted, even after Crawford Fitting , that "in the appropriate 

case, expert witness fees may be reimbursed as part of an 

attorneys' fee a ward." Purr v. AT & T Technolog ies, Inc., 824 

F .2d 1537, 1550 (lOth Cir. 1987).47 

The narrower question before us in this case , however , is 

whether the e~pert witness fees were properly allowed in full as 

part of "the cost of suit, including a reasonable attorney's fee" 

under section 4 of the Clayton Act, 15 U.S.C. § 15 . This court 

has not specifically addressed that issue, either before or after 

Crawford Fitting. Among those courts which have addressed the 

question , it appears the majority do not allow such fees in excess 

of the amount allowed by 28 u.s.c. § 1821. See, , Barber & 

Ross Co. v. Lifetime Doors, Inc., 810 F.2d 1276, 1282 (4th Cir.) 

{"we agree with the prevailing view that 'costs of suit ' under § 4 

[15 U.S.C. § 15] does not include expert expenses except in cases 

of exceptional circumstances'') , cert . d enied, 484 u.s. 823 (1987); 

47 In several diversity cases, however, we have stated that 

"[aJbsent express statutory or contractual authorization for the 

taxation as costs the fees of a party 's expert wi tness, federal 

courts are bound by the limitations set out in 28 U.S.C. §§ 1821 

and 1920." Mi ller v. Cudahy Co., 858 F.2d 1449, 1461 (lOth Cir. 

1988) {citing Crawford Fitting), cert . denied, 109 S. Ct. 3265 

(1989); see also Chaparral Resources, Inc. v. Monsanto Co., 849 

F.2d 1286 (lOth Cir. 1988}; Cleverock Energy Corp. v. Trepel , 609 

F.2d 1358 , 1 363 (lOth Cir. 1979 ), cert . denied, 446 U.S. 909 

(1980). 

-65-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 65 
Illinois v. Sangamo Constr. Co., 657 F.2d 855, 866 (7th Cir. 1981 ) 

("recovery of spec i fic expenses pursuant to Section 4 of the 

Clayton Act [15 u.s.c. § 15 ] is governed by the recovery of costs 

under Rule 54{d) and 28 u.s.c. § 1920")~ Berkey Photo, Inc. v. 

Eastman Kodak Co., 603 F.2d 263, 309 n.75 (2d Cir. 1979) ("the 

only costs recoverable by a successful plaintiff in a private 

antitrust action suit are those normally allowable under 28 u.s.c. 

S 1920 and Fed. R. Civ. P. 54(d)."), cert. denied, 440 U.S. 1093 

(1980); Ott v. Speedwriting Publishing Co., 518 F.2d 1143, 1149 

(6th Cir. 1975) ('' t he fees o f expert witnesses are not i ncluded in 

the recoverable costs in an antitrust action"); Seven Gables Corp. 

v. Sterling Recreation Org., 686 F. Supp. 1418, 1421 (W.D. Wash. 

1988} ("The court does not interpret the provision o f the Clayton 

Act providing for recovery of attorney's fees as explicit statu-

. . tory authorization for comperisating plaintiff~ for fees paid to 

experts beyond that authorized by the cost statutes"); ArthurS. 

Langenderfer, Inc. v. S.E. Johnson, Co., 684 F. Supp. 953, 960 

(N.D. Ohio 1988) ("The costs recoverable under Secti on 4 of the 

Clayton Act are limited to those costs recoverable under Fed. R. 

Civ. P . 54(b) and 28 u.s.c. S 1920"); Int'l Wood Processors v. 

Power Dry, Inc., 598 F. Supp. 299 (D.S.C. 1984), aff'd, 792 F.2d 

416 (4th Cir. 1986); Beech Cinema, Inc. v. Twentieth Century Fox 

Film Corp., 480 F. Supp. 1195, 1 198 (S.D.N.Y. 1979), aff'd, 622 

F.2d 1106 (2d Cir. 1980); see also Int' l Woodworkers v. Champion 

Int'l Corp., 790 F.2d 1174, 1180 {5th Cir. 1986) ("a statute which 

provides only for an award of 'costs' or 'attorneys' fees' but 

which fails to add r ess expert wi tness' fees will not be const rued 

-66-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 66 
to authorize the taxing of expert witness fees in excess of the 

§ 1821 amount 11 ), aff'd sub nom Crawford Fitting Co. v. J.T. 

Gibbons, Inc., 482 u.s. 437 (1987); but~ Hasbrouck v. Texaco, 

Inc., 631 F. Supp. 258 (E.D. Wash. 1986) (allowing expert witness 

fees as costs in antitrust case), aff'd in part and rev'd in part , 

879 F.2d 632 (9th Cir. 1989). We see no reason to depart from 

that prevailing view, and we find support for that view in 

Crawford Fitting. 48 Because we cannot tell from the record before 

us wha t proportion of the expert witness fees awarded in this case 

exceeded the statutory .limits of 28 u.s.c. §§ 1920 and 1821, we 

remand to the district court fo r a recalculation of the expert 

witness fees taxable against Blue Cross. 

Finally, Blue Cross argues the attorneys' fees awarded are 

"excessive." It asserts that {1) the .district court erroneously 

awarded as reasonable ~whatever fees HCA paid to plaintiffs' 

counsel," allegedly contrary to Pennsylvania v. Delaware Valley 

Citizens ' Council for Clean Air, · 478 U.S. 546 (1986); (2) the fees 

awarded were four times the fees charged to Blue Cross ; and (3} 

48 In reaching this conclusion, we are aware that the quest ion 

of whether expert witness fee s should be viewed as "costs" or as 

expenses of litigation recoverable as attorneys' fee s has 

engendered some disagreement among courts. And, particularly in 

view of Crawford Fitting, we are aware of the hotly contested 

issue of whether expert witness fees are recoverable as part of 

the attorneys' fees a prevailing party may recover under 42 O.S.C. 

§ 1988. Compare Friedrich v. City of Chicago, 888 F.2d 511 (7th 

Cir. 1989} with West Virginia Univ. Hosps. , Inc. v. Casey, 885 

F.2d 11 (3d Cir. 1989), cert. granted, 58 USLW 3545 (U.S. Feb. 26, 

1990). Although this circuit has held that such expe rt witness 

fees can be included in an award of attorneys' fees under 42 

U. S.C. § 1988, we decline in this case to extend that reason ing to 

section 4 of the Clayton Act. 

-67-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 67 
the hourly rates permitted greatly exceeded the hourly rates 

charged by counsel in the community for comparable work . 

.,[T]he benchmark for the awards under nearly all of 

[the statutes awarding fees ) is that the attorney's fee must be 

'reasonable.'" Id. at 562 (1986}; Mares, 801 F.2d at 1201. To 

determine what is a 11 reasonable 11 fee, the court must determine 

reasonable hours and reasonable rates for the work done. The 

district court carefully reviewed the hours spent on this case and 

determined that they were reasonable. We find no error in that 

determination. 

· The court then considered a reasonable rate for the hours 

spent. "The first step in setting a rat e of compensation for the 

hours reasonably expended is to determine what lawyers of 

comparable skill and experience prac ticing in the area in which 

the litigation occurs would qharge for their time. n Ramos,. 713 

F.2d at 555; see a lso Blum v. Stenson, 465 u.s. 886, 895 (1984). 49 

As the district court noted, the hourl y rates requested and 

awarded to some of plaintiffs' attorneys "represent the actual 

current b illing rates for the Jones, Day attorneys who represented 

them." Reazin II, 663 F. Supp. at 1453 . Local Wichita counsel 

sought and received lower hourly rates than their normal billing 

rates. Id. 

49 In Ramos, we further stated that "[a]bsent more unusual 

circumstances than we see in this case, the fee rates of the local 

area should be applied even when the lawyers seeking fees are from 

another area." 713 F.2d at 555. We thus contemplated the 

possibility that 11 unusual c ircumstances" might warrant a departure 

from local hourly rates. The district court in this case found 

such "unusual circumstances." 

-68-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 68 
A lawyer 1 s customary billing rate i s not a concl usive facto r. 

See Spulak v. K Mart Corp., 1990 U.S. App. LEXIS 581 (lOth Cir. 

1990); Ramos, 713 F.2d at 555 . The district court specifically 

found that: 

11Ther e is abundant evidence from which I find Wichita 

attorneys do occasionally charge $200.00 an hour or more 

for complex litigation. With a ll my respect and endearment for Wichita attorneys and law firms , i t remains 

true there is neither a lawyer nor a firm in this town 

which could have devoted to this case the timely 

expertise, experience, and manpower put forth by Jones, 

Day. 11 

Reazin II , 663 F. Supp. at 1454 . We decline to disturb those 

findings. We therefore affirm the dete rmination of hourly rates 

awarded to plaintiffs' attorneys. 

Having concluded that the district court properly determined 

that both the number of hours requested and the hourly rates were 

reasonable, and finding no other reason ~o disturb the district 

court 1 s award, we affirm the award of attorneys' fees, with the 

exception that we remand to the district court to recalcula te the 

expe rt witness fees awarded. 

CONCLUSION 

We have carefully considered the mul titude of arguments made 

by the parties in t his appeal, addressing those we deemed 

appropriate. For the reasons stated in this opinion, we affirm 

the judgment of the district court in its entirety, with the sole 

exception that we remand the award of expert witness fees for 

further findings. 

-69-

Appellate Case: 87-1823 Document: 01019729997 Date Filed: 03/29/1990 Page: 69