___________

No. 94-3380/3496

___________

United HealthCare *

Corporation, A *

Minnesota Corporation, *

*

Appellee/Cross-Appellant, *

*

v. *

*

American Trade Insurance *

Company, Ltd.; American *

Atlantic Insurance Company, *

Ltd.; Mitzi Alden King, *

individually, *

*

Defendants, *

* Appeal from the United States

Edmund Hugh Benton, * District Court for the District

individually, * of Minnesota.

*

Appellant/Cross-Appellee, *

*

Paragon Enterprises, Inc., *

an Arizona Corporation, *

*

Defendant, *

*

BFT Management, Inc., *

an Oklahoma Corporation, *

*

Appellant/Cross-Appellee, *

*

Alan Teale, *

*

Defendant. *

___________

 Submitted: January 11, 1996

 Filed: July 2, 1996

___________

Before BOWMAN, BEAM, and MURPHY, Circuit Judges.

___________

BEAM, Circuit Judge.
 The Act defines a risk retention group as any corporation or 1

limited liability association chartered or licensed as a liability

insurance company under the laws of a state "whose primary activity

consists of assuming and spreading all, or any portion, of the

liability exposure of its group members." 15 U.S.C.

§ 3901(a)(4)(A)-(C). A purchase group includes a group domiciled

in any state which "has as one of its purposes the purchase of

liability insurance on a group basis." 15 U.S.C. § 3901(a)(5)(A).

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Edmund Benton (Benton) appeals from the district court's entry of

judgment on a jury verdict awarding United HealthCare Corporation (UHC)

damages for Benton's violation of the Racketeer Influenced and Corrupt

Organizations Act, 18 U.S.C. § 1962(c) (RICO). Benton argues that UHC was

not a real party in interest to the litigation, and that the district court

erred in denying his motion for judgment as a matter of law. Benton also

challenges several of the district court's evidentiary rulings and its

refusal to submit Benton's proposed special verdict form to the jury. UHC,

in turn, cross appeals the district court's denial of its petition for

attorney's fees and costs. We affirm the judgment on the verdict, but

reverse and remand for a determination of costs and attorney's fees.

I. BACKGROUND

In the 1980s, Congress responded to a perceived crisis in certain

insurance markets by passing the Liability Risk Retention Act, 15 U.S.C.

§§ 3901-06 (Act). The Act loosened previous restrictions on the ability

of non-traditional insurers to provide liability insurance through "risk

retention groups" and "purchase groups." Under the Act and its subsequent 1

amendments, risk retention groups and purchase groups are exempt from state

laws prohibiting their operation or regulating their membership. 15 U.S.C.

§§ 3902 & 3903.

UHC is the parent company of United HealthCare Management Corporation

(United HealthCare Management), a management company
 United HealthCare Management operated several HMOs in which

2

it had either a full or partial ownership interest. It also

managed HMOs in which it had no financial interest. 

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which owns and manages a number of Health Maintenance Organizations (HMOs)

across the United States. According to its management agreements, United 2

HealthCare Management is responsible for obtaining liability insurance

coverage for these HMOs. In 1987, United HealthCare Management sought this

coverage from Healing Arts National Association (HANA), a purchase group

formed to take advantage of the exemptions provided by the Act. Over the

next two years, UHC, through its subsidiary, paid nearly $300,000 in

premiums to the HANA program to obtain insurance coverage on behalf of the

HMOs it owned or managed. 

During the period at issue in this case, HANA insureds were to be

covered by master insurance policies provided by either Diversified

Insurers Corporation (Diversified) or Victoria Insurance Company

(Victoria). After purchasing insurance through HANA for two years,

however, UHC discovered that the insurance premiums it had paid had never

in fact reached these insurance companies and that the policies purporting

to provide insurance coverage were worthless. UHC instigated this lawsuit,

naming over 40 individuals and entities as defendants. Originally, UHC

focused its litigation efforts on the recovery of costs associated with

defending lawsuits brought against one of its HMOs, Physician's Health Plan

of Arizona, which was to be insured through the HANA program. By the time

of trial, however, UHC had abandoned this course of action and elected,

instead, to seek reimbursement of insurance premiums. Most of the

defendants either defaulted or settled with UHC, leaving only defendant

Benton and one of Benton's corporations, BFT Management, in the litigation

at the time of trial.
-4-

 At trial, UHC traced the premiums it paid to HANA through various

entities, including several owned by Benton. The premiums were initially

sent to IMACO, an insurance brokerage company. That company would deduct

its commission and forward the remaining premium to Robis International,

a re-insurance intermediary. Robis would subtract its commission and wire

the premium balance to Comtell, a defendant corporation which began its

association with HANA in 1986. Benton was Comtell's vice president and a

signator on Comtell's bank accounts. Benton also owned approximately

twenty-five percent of Comtell through one of his corporations. 

Comtell provided "administrative services" to HANA, and thus was

responsible for securing insurance coverage for the HANA members,

forwarding premiums to the participating insurers, and issuing insurance

certificates. By 1987, however, two other companies, SUMI, Inc. and

Purchase Group Management (PGM), were established to assume some of

Comtell's responsibilities. Both of these companies were owned and

controlled by Benton. With the establishment of these entities, Comtell

was no longer responsible for forwarding premiums to the insurance

companies. Instead, Comtell transmitted the premiums it received to PGM

to forward on to the insurers. 

Despite this arrangement, the evidence demonstrated that neither

Victoria nor Diversified received premiums from either Comtell or PGM.

Financial records and bank statements showed that after the premiums

reached Comtell and PGM, approximately $600,000 went into brokerage

accounts controlled by Benton, several hundred thousand dollars worth of

checks were made out to "cash" and individual defendants, including Benton,

and over one million dollars of premium monies disappeared and remain

untraceable. 

After UHC completed its case, Benton and BFT Management moved for

judgment as a matter of law. The court granted the motion as to all counts

except UHC's RICO claims, brought under 18 U.S.C.
-5-

§ 1962(a)-(d). Benton and BFT Management then presented their defense,

claiming that Benton was merely a computer consultant to Comtell and

challenging UHC's basic premise that, because none of the premiums reached

Victoria and Diversified, UHC's HMOs were never, in fact, insured. After

presentation of their defense, Benton and BFT Management renewed their

requests for judgment as a matter of law. The district court granted BFT's

motion and dismissed it from the case, and granted Benton's motion as to

all of UHC's claims except its claim under 18 U.S.C. § 1962(c). The court

allowed this claim to go to the jury, and the jury returned a verdict for

UHC in the amount of $188,426.80. The court trebled the damage award as

required by 18 U.S.C. § 1964(c) and entered judgment in the amount of

$565,280.40. 

After trial, the district court considered Benton's renewed motion

for judgment as a matter of law and UHC's petition for attorney's fees and

costs. The district court denied Benton's motion and UHC's request for

fees and costs, and both parties appeal. 

On appeal, Benton contends that UHC was not a proper party to bring

this lawsuit. Benton further argues that judgment as a matter of law

should have been granted because UHC failed to establish the elements

required to prove a RICO violation under 18 U.S.C. § 1962(c). Finally,

Benton contends that the district court abused its discretion in making

several of its trial rulings, including: 1) its exclusion of evidence

pertaining to the lawsuits brought against Physician's Health Plan of

Arizona; 2) its admission of testimony by Charles Huff, investigator for

the Georgia Department of Insurance; 3) its admission of testimony by

accounting expert Arthur Cobb; 4) its admission of testimony by David

Gates, UHC's insurance expert; 5) its admission of assignments of claims

executed by HMOs managed by United HealthCare Management; 6) its admission

of Comtell's computer records; and 7) its refusal to present Benton's

proposed special verdict form to
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the jury. UHC cross appeals the district court's decision denying

attorney's fees and costs, arguing that an award of reasonable fees and

costs is mandatory under RICO.

II. DISCUSSION

A. Real Party in Interest

We first address the threshold issue of whether UHC is a real party

in interest in this matter. Rule 17(a) of the Federal Rules of Civil

Procedure provides that "[e]very action shall be prosecuted in the name of

the real party in interest." This rule requires that the party who brings

an action actually possess, under the substantive law, the right sought to

be enforced. See Iowa Public Service Co. v. Medicine Bow Coal Co., 556 F.2d

400, 404 (8th Cir. 1977). Such a requirement is in place "to protect the

defendant against a subsequent action by the party actually entitled to

recover, and to insure generally that the judgment will have its proper

effect as res judicata." Fed. R. Civ. P. 17(a), Advisory Committee Note.

Benton argues that UHC is not the real party in interest but is

actually asserting claims on behalf of third parties, namely, its

subsidiary and the HMOs which its subsidiary owned or managed. Benton

further argues that the assignments of claims obtained by UHC from the nonparty HMOs were barred by the statute of limitations and worked unfair

surprise upon Benton, who had assumed that UHC would only be seeking to

recover the costs of defending lawsuits brought against Physician's Health

Plan of Arizona. UHC argues, in response, that Benton's objection to UHC

on real party in interest grounds was untimely and was, therefore, waived.

UHC further contends that it has standing as a parent corporation to assert

claims of its subsidiaries, and that the assignments of claims are valid.
 Benton asserts that he raised the Rule 17(a) defense in

3

connection with his Motions for Judgment on the Pleadings and

Summary Judgment. We have combed the record, however, and have

been unable to locate a reference to this defense until Benton

filed a motion in limine on this issue for the pre-trial

conference.

 Having decided that Benton waived his real party in interest 4

defense, we need not address UHC's argument that a parent

corporation may assert the claims of its subsidiaries or decide

the effect of the assignments on UHC's real party in interest

status.

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We agree with UHC that Benton waived his real party in interest

defense by failing to raise it in a timely fashion. Because the

requirements in Rule 17(a) are for the benefit of the defendant, we have

held that an objection on real party in interest grounds "`should be raised

with `reasonable promptness' in the trial court proceedings. If not raised

in a timely or seasonable fashion, the general rule is that the objection

is deemed waived.'" Sun Refining & Marketing Co. v. Goldstein Oil Co., 801

F.2d 343, 345 (8th Cir. 1986) (quoting Chicago & Northwestern Transp. Co.

v. Negus-Sweenie, Inc., 549 F.2d 47, 50 (8th Cir. 1977)) (internal

citations omitted); see also Audio-Visual Mktg. Corp. v. Omni Corp., 545

F.2d 715 (10th Cir. 1976); Whelan v. Abell, 953 F.2d 663 (D.C. Cir. 1992).

In this case, Benton was on notice at least as early as August 1992--nearly

two years prior to trial--that UHC might seek reimbursement for the

premiums it paid on behalf of the HMOs owned or managed by its subsidiary.

Nevertheless, Benton made no objection on real party in interest grounds

until the pre-trial conference held only one week before trial. Nor has 3

Benton convincingly demonstrated that he could face double liability from

UHC's subsidiary or HMOs. Under these circumstances, we conclude that

Benton's objection pursuant to Rule 17(a) comes too late and is therefore

waived. See Hefley v. Jones, 687 F.2d 1383 (10th Cir. 1982) (real party 4

in interest defense raised sixteen days prior to trial deemed waived);

Whelen, 953 F.2d at 671 (Rule 17(a) defense on the first day of trial

deemed waived). Having decided
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that UHC may assert its claim against Benton, we proceed to Benton's

arguments on the merits.

B. RICO Violation

Benton asserts that UHC failed to present adequate evidence of each

of RICO's required elements, and therefore the district court should have

granted Benton's motion for judgment as a matter of law. When reviewing

a district court's ruling on a motion for judgment as a matter of law, we

consider de novo "whether there is sufficient evidence to support a jury

verdict." White v. Pence, 961 F.2d 776, 779 (8th Cir. 1992). In so doing,

we must "`(1) resolve direct factual conflicts in favor of the nonmovant,

(2) assume as true all facts supporting the nonmovant which the evidence

tends to prove, (3) give the nonmovant the benefit of all reasonable

inferences, and (4) deny the motion if the evidence so viewed would allow

reasonable jurors to differ as to the conclusions that could be drawn.'"

Ryko Mfg. Co. v. Eden Servs., 823 F.2d 1215, 1221 (8th Cir. 1987), cert.

denied, 484 U.S. 1026 (1988) (quoting McCabe's Furniture v. La-Z-Boy Chair

Co., 798 F.2d 323, 327 (8th Cir. 1986)).

UHC's surviving RICO claim was predicated on 18 U.S.C. § 1962(c),

which states:

It shall be unlawful for any person employed by or associated

with any enterprise engaged in, or the activities of which

affect, interstate or foreign commerce, to conduct or

participate, directly or indirectly, in the conduct of such

enterprise's affairs through a pattern of racketeering activity

or collection of unlawful debt.

In order to demonstrate a violation of this section, therefore, a plaintiff

must establish (1) the existence of an enterprise; (2) defendant's

association with the enterprise; (3) defendant's participation in predicate

acts of racketeering; and (4)
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defendant's actions constitute a pattern of racketeering activity. See,

e.g., Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985). In addition,

the plaintiff must demonstrate that "he has been injured in his business

or property by the conduct constituting the violation," id., a requirement

equivalent to a showing of proximate causation and damages. We address

each element in turn. 

1. Enterprise

Benton argues that UHC failed to establish the existence of an

"enterprise." Under RICO, an "enterprise" includes "any individual,

partnership, corporation, association, or other legal entity, and any union

or group of individuals associated in fact although not a legal entity."

18 U.S.C. § 1961(4). The enterprise must be distinct from the person named

as the RICO defendant. See Atlas Pile Driving Co. v. DiCon Fin. Co., 886

F.2d 986, 995 (8th Cir. 1989). Moreover, the enterprise must be distinct

from the alleged pattern of racketeering activity. Id. In other words,

as the Supreme Court explained in United States v. Turkette, 452 U.S. 576,

583 (1981), an enterprise is not established merely by proof of a series

of racketeering acts. Instead, an enterprise must exhibit three

characteristics: "(1) a common or shared purpose; (2) some continuity of

structure and personnel; and (3) an ascertainable structure distinct from

that inherent in a pattern of racketeering." Atlas Pile, 886 F.2d at 995.

UHC's evidence met these standards. UHC demonstrated that HANA and

its affiliated "service" companies, including Comtell, PGM, and SUMI, Inc.,

operated as a continuing business unit. This association of corporations

exhibited continuity in both structure and personnel in its insurance sales

and marketing activities. Despite Benton's involvement in many of the

corporations which comprised the enterprise, the enterprise and Benton were

not identical. See id. (defendant's membership in the enterprise does not

eliminate distinction between the enterprise and the culpable
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person). Further, the record shows that the enterprise engaged in some

legitimate functions and maintained a discrete existence beyond that

necessary to perform acts of mail and wire fraud. Thus, the enterprise was

sufficiently distinct from the predicate acts of racketeering activity to

meet the requirements set forth in Turkette and Atlas Pile. Accordingly,

UHC adduced sufficient evidence for a jury to determine that an

"enterprise" existed for purposes of its RICO claim. 

2. Association with and Participation in the Conduct

 of the Enterprise's Affairs

A RICO defendant must "conduct or participate, directly or

indirectly, in the conduct of such enterprise's affairs." 18 U.S.C.

§ 1962(c). Here, UHC presented ample evidence of Benton's participation

in the enterprise. Several witnesses attested to Benton's involvement in

Comtell, PGM, and SUMI, Inc. Benton himself admitted he was a computer

consultant to Comtell and received payments from that entity through his

corporation, BFT Management. Therefore, UHC has satisfied this element.

3. Racketeering Activity

To prevail under RICO, UHC was also required to demonstrate, at a

minimum, two predicate offenses listed in 18 U.S.C. § 1961(1)(B); Atlas

Pile, 886 F.2d at 990. In this case, UHC alleged predicate offenses of

mail fraud and wire fraud. Mail and wire fraud are established through

proof of: "(1) a scheme to defraud; (2) intent to defraud; (3) reasonable

foreseeability that the mails (or wires) would be used; and (4) use of the

mails (or wires) in furtherance of the scheme." Murr Plumbing, Inc. v.
 Benton contends that UHC was required to demonstrate its

5

detrimental reliance upon a misrepresentation or omission made by

Benton. This contention lacks merit, as it is well settled that

such a showing is not required to prove mail or wire fraud. Atlas

Pile, 886 F.2d at 990-91 & n.4; Murr Plumbing, 48 F.3d at 1069.

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Scherer Bros. Fin. Servs. Co., 48 F.3d 1066, 1069 n.6 (8th Cir. 1995).

Each of these elements was satisfied in this case.5

We have held that a scheme to defraud requires "some degree of

planning by the perpetrator." United States v. McNeive, 536 F.2d 1245,

1247 (8th Cir. 1976). Here, such a plan is evidenced by an examination of

the money trail, which consistently made its way to various corporations

and accounts controlled by Benton rather than to the intended insurance

companies. From Benton's systematic siphoning of premium funds, a jury

could reasonably find that Benton had the intent to defraud UHC and other

HANA members. Thus, UHC established the first and second elements of mail

and wire fraud.

With respect to the third element, we conclude that it was

foreseeable that the mails and wires would be used in carrying out the

intended scheme. There can be little doubt that Benton understood a

scheme to defraud UHC would require at least the appearance of a legitimate

insurance purchase group with supporting services. Cultivating this

appearance would require the wire transfer of premium funds and the mailing

of premium checks and insurance certificates. Therefore, it was almost

certain that the mails and wires would be used in carrying out the scheme

to defraud.

Finally, UHC provided sufficient evidence to satisfy the fourth

element, actual use of the mails and wires in furtherance of the scheme.

 Several witnesses at trial described both mail and wire transfers of

premiums. For example, Mark Robis, the insurance intermediary who

introduced IMACO to the HANA program, made
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repeated references to wire transfers from his office to Comtell. Mitzi

King, co-founder of Comtell, testified that after premiums were received

by Comtell, insurance certificates purporting to verify insurance coverage

were mailed by Comtell to the HANA insureds. UHC's accounting expert

Arthur Cobb also testified, based on his analysis of check registers and

other bank documents, that premium funds were wire-transferred into

accounts controlled by Benton. Although Benton contends these mailings

were not fraudulent and were not a part of his scheme to defraud but were

merely "incidental" to the operation of Comtell, this argument is to no

avail. We have held that even a routine mailing (or wire use), or one sent

for a legitimate business purpose may satisfy the "actual use" requirement

"so long as it assists . . . in carrying out the fraud." United States v.

Leyden, 842 F.2d 1026, 1028 (8th Cir. 1988). Therefore, we conclude that

UHC presented sufficient evidence to establish the predicate acts of

racketeering.

4. Pattern of Racketeering Activity

Although UHC clearly presented sufficient evidence to sustain the

jury's finding of predicate offenses, RICO's language specifically requires

that a plaintiff establish a "pattern" of racketeering activity. This

language "implies `that while two acts are necessary, they may not be

sufficient'" to constitute a pattern of racketeering activity. H.J. Inc.

v. Northwestern Bell Tel., 492 U.S. 229, 237 (1989) (quoting Sedima, 473

U.S. at 496 n.14). Instead, to prove a pattern of racketeering activity,

a plaintiff must show that "the racketeering predicates are related, and

that they amount to or pose a threat of continued criminal activity." Id.

at 239 (emphasis original). The Court has stated that the "relatedness"

element of this test embraces "`criminal acts that have the same or similar

purposes, results, participants, victims or methods of commission, or

otherwise are interrelated by distinguishing characteristics and are not

isolated events.'" Id. at 240 (quoting 18 U.S.C. § 3575(e)).

"Continuity," the Court has
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held, is essentially a temporal concept, and may refer "either to a closed

period of repeated conduct, or to past conduct that by its nature projects

into the future with a threat of repetition." Id. at 241.

Applying these principles to the evidence in the record, we find that

UHC has adequately shown that Benton's racketeering activities manifested

both relatedness and continuity. The record indicates that Benton's

racketeering activities in the enterprise were undertaken for the common

purpose of defrauding HANA insureds, and that these activities were

accomplished by a common method-- the systematic diversion of incoming

premium moneys. Each of the acts deprived HANA insureds of the coverage

they believed they were purchasing. These activities were undertaken

regularly during Benton's lengthy association with HANA and therefore

clearly demonstrate "continuity." Accordingly, UHC's evidence was

sufficient for the jury to determine that Benton's predicate acts

constituted a "pattern" of racketeering activity under RICO. 

5. Causation and Damages

Section 1964(c) of the RICO Act provides that "[a]ny person injured

in his business or property by reason of a violation of section 1962" may

sue for threefold the damages sustained. In Holmes v. Securities Investor

Protection Corp., 503 U.S. 258 (1992), the Supreme Court "construed the `by

reason of' language to incorporate the traditional requirements of

proximate . . . causation." Bieter Co. v. Blomquist, 987 F.2d 1319, 1325

(8th Cir.), cert. denied, 114 S. Ct. 81 (1993). In the RICO context,

proximate causation requires "some direct relation between the injury

asserted and the injurious conduct alleged." Holmes, 503 U.S. at 268.

Once such a relationship is established, our cases allow a range of

damages, subject to the limitations which typically apply in ordinary tort

cases. See Bieter, 987 F.2d at 1329.
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Benton does not dispute these general principles. Instead, he argues

that because insurance certificates and policies were in fact issued to the

HMOs which applied for coverage through the HANA program, UHC received all

of the insurance coverage for which it paid and therefore suffered no

damages. Benton further contends that, even assuming damages were

sustained, UHC cannot point to any act or omission on his part which caused

that damage.

Benton's arguments are without merit. The record clearly

demonstrates that UHC paid hundreds of thousands of dollars in insurance

premiums on behalf of the HMOs it owned and managed. Due to the fraudulent

acts of Benton, these premiums did not reach Victoria and Diversified, and

therefore risks were never properly underwritten. Comtell's subsequent

mailing of insurance certificates confirming the purported insurance

coverage did not alter the fact that coverage was nonexistent. Thus, UHC

failed to receive the benefit of its bargain, and has, as a result,

sustained substantial financial damage. See Bennett v. Berg, 685 F.2d 1053

(8th Cir. 1982) (retirement community residents sustained damages when

"Entrance Endowments" entitling a resident to occupy an apartment for life

were reduced to ten percent of their intended value due to defendants'

conversion of payments), aff'd on rehearing, 710 F.2d 1361 (8th Cir.), and

cert. denied, 464 U.S. 1008 (1983). The jury's damage award reflects the

amount of premiums paid by UHC on behalf of its HMOs, and is fully

supported by the record. We therefore find that UHC presented sufficient

evidence from which a reasonable jury could find that UHC had demonstrated

the elements of causation and damages. Having determined that UHC

demonstrated each element required to establish a violation of 18 U.S.C.

§ 1962(c), we conclude that the district court correctly denied Benton's

posttrial motion for judgment as a matter of law.

C. Evidentiary Rulings and the Special Verdict Form
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Benton also challenges several of the district court's evidentiary

rulings and his decision to reject Benton's proposed special verdict form.

We note at the outset that Benton brought only a motion for judgment as a

matter of law under Rule 50 of the Federal Rules of Civil Procedure. He

did not bring an alternative motion for new trial pursuant to Rule 59 of

the Federal Rules. Generally, parties filing motions for judgment as a

matter of law are limited to arguing that there is no legally sufficient

evidentiary basis supporting the jury's verdict. See Fed. R. Civ. P.

50(a)(1). Having decided that Benton's motion for judgment as a matter of

law was properly denied, and given Benton's failure to file an alternative

motion for a new trial, we are skeptical, at best, that we can grant a new

trial based on evidentiary or jury instruction error. See Goldsmith v.

Diamond Shamrock Corp., 767 F.2d 411, 414-15 (8th Cir. 1985) (when court

believes the moving party is not entitled to judgment notwithstanding the

verdict, it lacks power to grant a new trial unless it acts on the basis

of a motion of a party pursuant to Rule 59(b) of the Federal Rules of Civil

Procedure). Nevertheless, even if we do consider Benton's evidentiary and

jury instruction arguments properly before this court, we note that a

district court has wide discretion with respect to these issues, and its

decision "will not be disturbed unless there is a clear and prejudicial

abuse of discretion." Maddox v. Patterson, 905 F.2d 1178, 1179 (8th Cir.

1990); Bissett v. Burlington N. R.R. Co., 969 F.2d 727, 729 (8th Cir.

1992). Benton has failed to demonstrate that the district court abused its

discretion in its trial rulings.

1. Arizona Litigation

Benton argues that the district court erred in excluding all evidence

pertaining to lawsuits brought against Physician's Health Plan of Arizona.

These lawsuits, brought by various members of Physician's Health Plan,

became the subject of a protracted coverage dispute between UHC and

Diversified, the insurer which,
 Indeed, the district court ruled that UHC could claim damages 6

only for those HMOs which it owned through its subsidiary. With

one exception, the court disallowed claims for premiums paid on

behalf of HMOs which were managed, but not owned, by United

HealthCare Management.

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through HANA, was to provide insurance to the HMO. They also prompted

UHC's investigation into the activities of HANA and its affiliated service

companies. Because UHC's complaint in the instant case initially sought

to recover the costs of defending these lawsuits, Benton argues that the

details of the litigation were relevant to the issues at trial and that

exclusion of this evidence prejudiced his defense.

We disagree. Although UHC originally filed suit against Benton and

his co-defendants to recover the costs of defending the Arizona litigation,

it eventually decided not to pursue these damages and at trial sought only

to recover the premiums it had paid to the HANA program. After UHC

6

changed its strategy, the substance of the Arizona lawsuits were no longer

facts in issue. Because Rule 401 of the Federal Rules of Evidence limits

relevant evidence to that which makes the existence of a fact in issue more

or less probable, the Arizona lawsuits were not relevant. The district

court properly excluded this evidence.

2. Other Evidence

Benton also asserts that the district court erred in admitting: 1)

records downloaded from Comtell's computer; 2) forms indicating that HMOs

managed but not owned by United HealthCare Management had assigned their

claims against Benton to UHC; 3) testimony of Charles Huff, insurance

investigator for the Georgia Department of Insurance and receiver for

Victoria Insurance Company; 4) testimony of Arthur Cobb, UHC's accounting

expert; and 5) testimony of David Gates, an expert on the Liability Risk

Retention Act. Benton argues that this evidence was unduly
 It is not entirely clear from Benton's brief whether he is

7

also appealing the admission of Comtell's computer records on

hearsay grounds. It is nevertheless apparent that Benton believed

these records were not properly authenticated at trial. We find,

however, that although UHC's authentication of the data was

unconventional and would not be adequate in all cases, UHC

presented sufficient evidence to show that the records were an

exception to the rule against hearsay. See Fed. R. Evid. 803(6).

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prejudicial and therefore was admitted in violation of Rule 403 of the

Federal Rules of Evidence, which provides that relevant evidence may be

excluded "if its probative value is substantially outweighed by the danger

of unfair prejudice, confusion of the issues, or misleading the jury, or

by considerations of undue delay, waste of time, or needless presentation

of cumulative evidence." We have considered each of Benton's contentions 7

and find them to be without merit. This evidence provided crucial insight

into the workings of Benton's scheme. Although the evidence was not

favorable to Benton, none of it presented a danger of unfair prejudice

which outweighed its probative value in demonstrating the elements of UHC's

RICO claim. Thus, the district court did not err in admitting this

evidence at trial.

3. Special Verdict Form

In his last challenge to the district court's trial rulings, Benton

argues that the court erred in refusing to submit his proposed special

verdict form to the jury and in submitting, instead, its own special

verdict form. We review the denial of a request for a special verdict form

for an abuse of discretion. E. I. DuPont de Nemours v. Berkley & Co., 620

F.2d 1247, 1271 (8th Cir. 1980). 

As the district court correctly noted, Benton's jury form was rather

long (seven pages) and somewhat argumentative. The instructions ultimately

presented to the jury, on the other hand, concisely stated the applicable

law. Benton urges us to find that
 The court submitted the following special verdict form to the 8

jury:

1. Do you find from a preponderance of the evidence that the

defendant violated Section 1962(c) of the RICO statute, as that

offense has been defined for you?

Yes: _________ No: __________

Answer question 2 only if you have answered "Yes" to question 1.

2. Do you find by a preponderance of the evidence that any

damage to United HealthCare was proximately caused by the

defendant's violation of the RICO statute?

Yes: _________ No: ___________

Question 3 relates to the appropriate measure of damages. Answer

this question only if you have answered "Yes" to question 2.

3. What sum, if any, if paid now in cash, do you find from a

preponderance of the evidence would fairly and reasonably

compensate the plaintiff, United HealthCare, for the damages it

sustained which were proximately caused by Edmund Benton's

violation of RICO?

$ _________________.

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the district court's special verdict form, which presented three questions

of ultimate fact, allowed the jury to circumvent its duty of sifting

through the other instructions to understand the complexities of RICO.8

We find nothing in the court's instructions, however, which would tend to

encourage such a result. Nor has Benton produced evidence, short of

speculation, that the jury did not carefully deliberate before reaching its

verdict. We therefore uphold the district court's refusal to submit

Benton's special verdict form. 

D. UHC's Cross Appeal

Following the trial of this case, UHC petitioned the court for

attorney's fees and costs pursuant to section 1964(c) of RICO. In support

of this application, UHC submitted a memorandum of law in
 The twelve Hensley factors include: 9

(1) the time and labor required; (2) the novelty and

difficulty of the questions; (3) the skill requisite to

perform the legal service properly; (4) the preclusion of

employment by the attorney due to acceptance of the case;

(5) the customary fee; (6) whether the fee is fixed or

contingent; (7) time limitations imposed by the client or

the circumstances; (8) the amount involved and the

results obtained; (9) the experience, reputation, and

ability of the attorneys; (10) the "undesirability" of

the case; (11) the nature and length of the professional

relationship with the client; and (12) awards in similar

cases.

461 U.S. at 430 n.3.

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which it argued that fees and costs are mandated by RICO. UHC's memorandum

further addressed each of the factors the Supreme Court has indicated are

relevant to fee determinations in the federal civil rights context when a

plaintiff prevails on less than all of his or her claims. See Hensley v.

Eckerhart, 461 U.S. 424 (1983). Finally, UHC submitted affidavits from

9

two of the attorneys who worked on the case describing: 1) the work which

had been done; 2) the names and billable rates of the attorneys who had

participated in the case; 3) how the tasks performed in the case were

necessary to its successful resolution; 4) the total time billed; and 5)

the total amounts of fees and costs requested. UHC submitted none of its

actual billing records, but did offer to provide for the court's in camera

review itemized billing statements detailing the time spent and costs

incurred in the case.

The district court denied UHC's petition without a hearing. In its

order, the court noted the length of the litigation and its inclusion of

multiple defendants and claims. It then found that UHC's submission failed

to adequately delineate the time and effort spent on claims against the

other defendants in the case, many of whom were voluntarily or

involuntarily dismissed. The court determined that, given the deficiencies

in UHC's fee application, it was not able to calculate a reasonable fee.
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Although the question of when to award attorney's fees and costs in

a RICO action has never before been squarely before us, we have had

occasion in other circumstances to examine similar fee-shifting statutes.

As we noted in these instances, we will generally not overturn a district

court's decision on attorney's fees and costs absent an abuse of

discretion. Walitalo v. Iacocca, 968 F.2d 741, 747 (8th Cir. 1992). "If

the district court has used improper standards or procedures in determining

fees, however, we will reverse." Id.

UHC argues that the district court's outright denial of attorney's

fees and costs conflicts with RICO's statutory language and purpose, and

therefore constitutes reversible error. We agree. Section 1964(c)

provides that "[a]ny person injured in his business or property by reason

of a violation of section 1962 . . . shall recover threefold the damages

he sustains and the cost of the suit, including a reasonable attorney's

fee." (emphasis added). This language indicates that an award of

reasonable attorney's fees and costs under RICO is mandatory, and several

courts of appeals have so held. See, e.g., Stochastic Decisions, Inc. v.

DiDomenico, 995 F.2d 1158, 1167 (2d Cir.), cert. denied, 114 S. Ct. 385

(1993); Quick v. Peoples Bank of Cullman County, 993 F.2d 793, 799 (11th

Cir. 1993); FMC Corp. v. Varonos, 892 F.2d 1308, 1315 (7th Cir. 1990).

Indeed, the Supreme Court has implicitly acknowledged the mandatory nature

of the fee award, stating in H.J., Inc. that "a person found in a private

civil action to have violated RICO is liable for treble damages, costs, and

attorney's fees." 492 U.S. at 233. Such an interpretation is consistent

with Congress' intent in enacting the civil portion of the RICO statute "to

enlist the aid of civil claimants in deterring racketeering." Alcorn

County, Mississippi v. U.S. Interstate Supplies, Inc., 731 F.2d 1160, 1165

(5th Cir. 1984). Thus, by failing to award both fees and costs to UHC for

its efforts in prosecuting this suit, the district court acted contrary to

both the plain language and the purpose of RICO.
 We note, for example, that there is some disagreement among 10

the courts regarding the extent to which the Hensley factors should

apply in cases involving mandatory, rather than permissive, feeshifting statutes. See, e.g., Stochastic Decisions, 995 F.2d at

1168 ("Hensley analysis `is of limited applicability' to statutes

that mandate an award of attorney fees") (quoting United States

Football League v. National Football League, 887 F.2d 408, 412 (2d

Cir. 1989)); Northeast Women's Center v. McMonagle, 889 F.2d 466,

470 (3d Cir. 1989) (applying Hensley approach when RICO plaintiff

prevailed on only some of its claims), cert. denied, 494 U.S. 1068

(1990). Although UHC's submission assumes that the Hensley factors

apply in this context, neither party has briefed the issue and we

decline to announce universal standards for RICO fee awards without

a more fully-developed record.

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Accordingly, we find that the district court abused its discretion in

denying UHC's petition for costs and attorney's fees.

In concluding that the district court abused its discretion on this

issue, we do not suggest that the district court must make a fee and cost

award based on UHC's present submission. It remains the fee applicant's

burden to establish entitlement to a particular award by presenting

adequate documentation of its efforts in the litigation. See Hensley, 461

U.S. at 437. In this case, it is apparent that the district court could

benefit from additional summaries from UHC addressing the deficiencies the

district court discussed in its order denying fees. Moreover, the district

court may wish to accept briefs on the standards which should guide its

discretion in determining what constitutes a "reasonable" fee award under

RICO. We therefore hold only that the district court abused its

10

discretion in denying UHC's petition in its entirety, and remand to the

district court so it may, with assistance from the litigants, make a

determination of reasonable fees and costs.

III. CONCLUSION

For the foregoing reasons, the district court's judgment on the

verdict is affirmed. We reverse the district court's denial of
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attorney's fees and costs, and remand for further proceedings in accordance

with this opinion.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.