___________ 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 def ines 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 a ctivity consists of assuming and spreading all, or any portion, of th e liabil ityexposure 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 o f liability insurance on a group basis." 15 U.S.C. § 3901(a)(5)(A).
-2- Edmund Benton (Benton) appeals from the district court's entry o f judgme nt on a jury verdict awarding United HealthCare Corporation (UHC ) damage s for Benton's violation of the Racketeer Influenced and Corrup t 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 cour t erred in denying his motion for judgment as a matter of law. Benton also challe nges several of the district court's evidentiary rulings and it s refusal to submit Benton's proposed special verdict form to the jury. UHC , in tu rn, cross appeals the district court's denial of its petition fo r attorney's fees and costs. We affirm the judgment on the verdict, bu t reverse and remand for a determination of costs and attorney's fees.

I. BACKGROUND

In th e 1980s, Congress responded to a perceived crisis in certai n 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 it s subsequent 1 amendments, risk retention groups and purchase groups are exempt from stat e laws prohibiting their operation or regulating t heir membership. 15 U.S.C. §§ 3902 & 3903.
UHC is the parent company of United HealthCare Management Corpo ration (United HealthCare Management), a management company

### United HealthCare Management operated several HMOs in whic h 2 

### it had either a full or partial ownership interest. It als o managed HMOs in which it had no financial interest.
-3- which owns and manages a number of Health Mainte nance Organizations (HMOs) across the United States. Accordin g to its management agreements, United 2 Heal thCare Management is responsible for obtaining liability insuranc e coverage for these HMOs. In 1987, United HealthCare Management sought thi s coverage from Healing Arts National Association (HANA), a purchase group formed to take advant age of the exemptions provided by the Act. Over the next two years, UHC, through its subsidiary, paid nearly $300,000 i n premiums to the HANA program to obtain insurance coverage on behalf of the HMOs it owned or managed.
During th e period at issue in this case, HANA insureds were to b e
cover ed by master insurance policies provided by either Diversifie d Insurers Corporation (Diversified) or Victoria Insurance Compan y (Victo ria). After purchasing insurance through HANA for two years , however, UHC discover ed that the insurance premiums it had paid had never in fact reached these insurance companies and th at the policies purporting to provide insurance coverage were worthless. UHC instigated this lawsuit , nam ing over 40 individuals and entities as defendants. Originally, UH C foc used its litigation efforts on the recovery of costs associated wit h defending lawsuits brought against one of its HMOs, Physician's Health Pla n 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 th e defend ants either defaulted or settled with UHC, leaving only defendan t Benton and one of Benton's corporations, BFT Man agement, in the litigation at the time of trial.

### -4- At tr ial, UHC traced the premiums it paid to HANA through variou s entities, including s everal owned by Benton. The premiums were initially sent to IMACO, an ins urance brokerage company. That company would deduct its commission and forward the remaining premium to Robis International, a re-insurance intermediary. Robis would subtra ct its commission and wire the premium balance to Comtell, a defendant corporation which began it s association with HANA in 1986. Benton was Comtell's vice president and a signat or on Comtell's bank accounts. Benton also owned approximatel y twenty-five percent of Comtell through one of his corporations.

Comtell provided "administrative services" to HANA, and thus wa s
res ponsible for securing insurance coverage for the HANA members , forwarding premiums to the participating insurers, and issuing insurance cert ificates. By 1987, however, two other companies, SUMI, Inc. an d Purcha se Group Management (PGM), were established to assume some o f Comtel l's responsibilities. Both of these companies were owned an d controlled by Benton. With the establishment of these entities, Comtell
was no longer responsible for forwarding premiums to the insuranc e companies. Instead, Comtell transmitted the premiums it received to PGM to forward on to the insurers.

De spite this arrangement, the evidence demonstrated that neithe r Victor ia nor Diversified received premiums from either Comtell or PGM

. Financ ial records and bank statements showed that after the premium s reach ed Comtell and PGM, approximately $600,000 went into brokerag e accounts controlled by Benton, several hundred thousand dollars worth of checks were made out to "cash" and individual defendants, including Benton , and ove r one million dollars of premium monies disappeared and remai n untraceable.

After UHC completed its case, Benton and BFT Management moved fo r judgment as a matter of law. The court granted the motion as to all count s except UHC's RICO claims, brought under 18 U.S.C.

### -5-

§ 1 962(a)-(d). Benton and BFT Management then presented their defense , clai ming that Benton was merely a computer consultant to Comtell an d challenging UHC's basic premise that, because no ne of the premiums reached Victoria and Diversif ied, UHC's HMOs were never, in fact, insured. After presen tation of their defense, Benton and BFT Management renewed thei r 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 req uired by 18 U.S.C. § 1964(c) and entered judgment in the amount o f $565,280.40.

Af ter trial, the district court considered Benton's renewed motio n for judgment as a matter of law and UHC's petiti on for attorney's fees and costs. The district court denied Benton's motion and UHC's request fo r fees and costs, and both parties appeal.

On appeal , Benton contends that UHC was not a proper party to bring thi s lawsuit. Benton further argues that judgment as a matter of la w should have been granted because UHC failed to establish the element s required to prove a RICO violation under 18 U.S.C. § 1962(c). Finally , Ben ton contends that the district court abused its discretion in makin g several of its trial rulings, including: 1) its exclusion of evidenc e pertai ning to the lawsuits brought against Physician's Health Plan o f Arizona; 2) its admission of testimony by Charles Huff, investigator for the Geo rgia Department of Insurance; 3) its admission of testimony b y account ing expert Arthur Cobb; 4) its admission of testimony by Davi d Gates, UHC's insurance expert; 5) its admission of assignments of claims executed by HMOs managed by United HealthCare Ma nagement; 6) its admission of Comt ell's computer records; and 7) its refusal to present Benton' s proposed special verdict form to

### -6-

the jury . UHC cross appeals the district court's decision denyin g attorney's fees and costs, arguing that an award of reasonable fees an d 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 intere st in this matter. Rule 17(a) of the Federal Rules of Civi l 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 substantiv e law, the right sought to be enforced. See Iowa Public Service Co. v. Medicine Bow Coal Co. , 556 F.2 d 400, 404 (8th Cir. 19 77). Such a requirement is in place "to protect the def endant against a subsequent action by the party actually entitled t o recover, and to insure generally that the judgment will have its prope r effect as res judicat a." Fed. R. Civ. P. 17(a), Advisory Committee Note.

Ben ton argues that UHC is not the real party in interest but i s actual lyasserting claims on behalf of third parties, namely, it s subsi diaryand the HMOs which its subsidiary owned or managed. Bento n further argues that the assignments of claims obtained by UHC from the non

party HMOs were barred by the statute of limitations and worked unfai r surprise upon Benton, who had assumed that UHC would only be seeking t o 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 a nd was, therefore, waived. UHC further contends that it has standing as a parent corporation to asser t claims of its subsidi aries, and that the assignments of claims are valid.

### Benton asserts that he raised the Rule 17(a) defense i n 3 

### con nection with his Motions for Judgment on the Pleadings an d Summary Judgment. We have combed the record, however, and hav e been unable to locate a reference to this defense until Bento n filed a motion in limine on this issue for the pre-tria l conference. Having deci ded that Benton waived his real party in interest 4 

### defens e, we need not address UHC's argument that a paren t corporation may assert the claims of its subsidiaries or decid e the effect of the assignments on UHC's real party in interes t status.
-7- We agree with UHC that Benton waived his real party in interes t defens e by failing to raise it in a timely fashion. Because th e 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 raise d with `reasonable promptness' in the trial court proceedings. If not raise d in a timely or season able 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 Ci r. 1986) (quoting Chicago & Northwestern Transp. Co.

v. Negus -Sweenie, Inc., 549 F.2d 47, 50 (8th Cir. 1977)) (interna l 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--nearl y two years prior to trial--that UHC might seek reimbursement for th e 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 d emonstrated that he could face double liability from UHC's subsidiary or HMOs. Under these circumstances, we conclude tha t Benton's objection pu rsuant 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 , 9 53 F.2d at 671 (Rule 17(a) defense on the first day of tria l deemed waived). Having decided

### -8-

that UHC may assert its claim against Benton, we proceed to Benton' s arguments on the merits.

B. RICO Violation

Benton as serts that UHC failed to present adequate evidence of each of RICO's required el ements, and therefore the district court should have granted Benton's motion for judgment as a matter of law. When reviewing a district court's ru ling 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 tend s to prove, (3) give the nonmovant the benefit of all reasonabl e inferences, and (4) d eny 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 F urniture 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 wit hany enterprise engaged in, or the activities of whic h af fect, interstate or foreign commerce, to conduct o r participate, directly or indirectly, in the conduct of suc h enterprise's affairs through a pattern of racketeer ing activity or collection of unlawful debt.

In order to demonstrate a violation of this section, therefore, a plaintif f must e stablish (1) the existence of an enterprise; (2) defendant' s association with the enterprise; (3) defendant's participation in predicat e acts of racketeering; and (4)

### -9-

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 viol ation," id. , a requirement equivalent to a showing of proximate causation and damages. We addres s each element in turn.

1. Enterprise

Benton argues that UHC failed to establish the existence of a n "e nterprise." Under RICO, an "enterprise" includes "any individual , partnership, corporation, association, or other legal entity, and any unio n
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 name d as the RICO defendant

. See Atlas Pile Driving Co. v. DiCon Fin. Co. , 886 F.2d 986, 995 (8th Ci r. 1989). Moreover, the enterprise must be distinct fromthe 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 rac keteering acts. Instead, an enterprise must exhibit thre e characteristics: "(1 ) a common or shared purpose; (2) some continuity of structure and personn el; and (3) an ascertainable structure distinct from that inherent in a pattern of racketeering." At las Pile , 886 F.2d at 995.

UHC's evi dence met these standards. UHC demonstrated that HANA and its affiliated "service" companies, including Comtell, PGM, and SUMI, Inc. , operated as a continu ing business unit. This association of corporations exhibited continuity in both structure and personnel in its insurance sale s and marketing activities. Despite Benton's involvement in many of th e corporations which comprised the enterprise, the enterprise and Benton wer e not identical. See id. (defendant's membership in the enterprise does not eliminate distinction between the enterprise and the culpable

### -10-

person). Further, the record shows that the enterprise engaged in som e le gitimate functions and maintained a discrete existence beyond tha t necessary to perform acts of mail and wire fraud. Thus, the enterprise wa s sufficiently distinct from the predicate acts of racketeering activity to meet the requirements set forth in Turkette and Atlas Pile . Accordingly, UHC adduc ed sufficient evidence for a jury to determine that a n "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 o r indire ctly, 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. S everal witnesses attested to Benton's involvement in Comtell, PGM, and SUMI, Inc. Benton himself admitted he was a compute r 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 min imum, two predicate offenses listed in 18 U.S.C. § 1961(1)(B); Atla s Pile , 8 86 F.2d at 990. In this case, UHC alleged predicate offenses o f mail frau d and wire fraud. Mail and wire fraud are established throug h proof of: "(1) a sche me to defraud; (2) intent to defraud; (3) reasonable foreseeability that the mails (or wires) would b e used; and (4) use of the mails (or wires) in furtherance of the scheme." Murr Plumbing, Inc. v.

### Bent on contends that UHC was required to demonstrate it s 5 

### detrimental reliance upon a misrepresentation or omission made by Benton. This contention lacks merit, as it is well settled tha t such a showing is not requiredto prove mail or wire fraud. Atlas Pile , 886 F.2d at 990-91 & n.4; Murr Plumbing , 48 F.3d at 1069.
-11- 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 ha ve held that a scheme to defraud requires "some degree o f planning by the perpetrator." United States v. McNeive , 536 F.2d 1245 , 1247 (8th Cir. 1976). Here, such a plan is evid enced 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 insuranc e
com panies. From Benton's systematic siphoning of premium funds, a jur y could reasonably findthat Benton had the intent to defraud UHC and other HANA members. Thus, UHC established the first and second elements of mai l and wire fraud.

With respect to the third element, we conclude that it wa s foreseeable that the mails and wires would be used in carrying out th e int ended scheme. There can be little doubt that Benton understood a scheme to defraud UHC would require at least the appearance of a legitimat e in surance purchase group with supporting services. Cultivating thi s appearance would require the wire transfer of premium funds and the mailin g of premium checks and insurance certificates. Therefore, it was almos t certain that the mail s and wires would be used in carrying out the scheme to defraud.

Fin ally, UHC provided sufficient evidence to satisfy the fourt h element, actual use of the mails and wires in furtherance of the scheme. Several w itnesses at trial described both mail and wire transfers o f premiu ms. For example, Mark Robis, the insurance intermediary wh o introduced IMACO to the HANA program, made

### -12-

rep eated references to wire transfers from his office to Comtell. Mitz i King, co-founder of Comtell, testified that after premiums were received by Comtell, insurance certificates purporting to verify insurance coverage
were maile d by Comtell to the HANA insureds. UHC's accounting exper t Arthur Cobb also testified, based on his analysis of check registers and other bank documents, that premium funds were wire-transferred int o accounts controlled by Benton. Although Benton contends these mailings were not fraudulent a nd were not a part of his scheme to defraud but were merely"incidental" to the operation of Comtell, this argument is to n o avail. We have held that even a routine mailing (or wire use), or one sen t for a legitimate business purpose may satisfy th e "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 pr esented sufficient evidence to establish the predicate acts o f racketeering.

4. Pattern of Racketeering Activity

Altho ughUHC clearly presented sufficient evidence to sustain th e jury's finding of predicate offenses, RICO's language specifically require s that a plaintiff establish a "pattern" of racketeering activity. Thi s language " implies `that while two acts are necessary, they may not b e sufficient'" to const itute 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). I nstead, to prove a pattern of racketeering activity,

a plaintiff must show that "the racketeering predicates are related, and that they amount to o r 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 simila r purpose s, results, participants, victims or methods of commission, o r otherwise are interrelated by distinguishing characteristics and are not iso lated events.'" Id. at 240 (quoting 18 U.S.C. § 3575(e))

. "Continuity," the Court has

### -13-

held, is essentially a temporal concept, and may refer "either to a closed period of repeated conduct, or to past conduct t hat 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 fin d that UHC has adequately sh own that Benton's racketeering activities manifested both r elatedness and continuity. The record indicates that Benton' s racketeering activities in the enterprise were undertaken for the common purpos e of defrauding HANA insureds, and that these activities wer e accomp lished by a common method-- the systematic diversion of incomin g premiummoneys. Each of the acts deprived HANA insureds of the coverage they b elieved they were purchasing. These activities were undertake n regular lyduring Benton's lengthy association with HANA and therefor e clearlydemonstrate "continuity." Accordingly, UHC's evidence wa s suffic ient for the jury to determine that Benton's predicate act s constituted a "pattern" of racketeering activity under RICO.

5. Causation and Damages

Section 1 964(c) of the RICO Act provides that "[a]ny person injured in his business or pr operty by reason of a violation of section 1962" may sue for threefold the damages sustained. In Hol mes v. Securities Investor Protection Corp. , 503 U.S. 258 (1992), the Supreme Court "construed the `by
reason of' language to incorporate the traditional requirements o f proximate . . . causa tion." Bieter Co. v. Blomquist , 987 F.2d 1319, 1325 (8th Cir. ), cert. denied , 114 S. Ct. 81 (1993). In the RICO context , proxima te causation requires "some direct relation between the injur y
asser ted and the injurious conduct alleged." Holmes , 503 U.S. at 268

. Once such a relationship is established, our cases allow a range o f damages, subject to the limitations which typica lly apply in ordinary tort
cases. See Bieter , 987 F.2d at 1329.

### -14- Benton does not dispute these general principles. Instead, he argues that because insurance certificates and policies were in fact issued to th e HMOs which applied for coverage through the HANA program, UHC received all of the ins urance coverage for which it paid and therefore suffered n o damage s. Benton further contends that, even assuming damages wer e sustained, UHC cannot point to any act or omission on his part which cause d that damage.

Bento n's arguments are without merit. The record clearl y demonstrates that UHC paid hundreds of thousands of dollars in insurance premiums on behalf of the HMOs it owned and managed. Due to the fraudulen t acts of Benton, these premiums did not reach Vic toria and Diversified, and therefore risks were never properly underwritten. Comtell's subsequen t
ma iling of insurance certificates confirming the purported insuranc e coverage did not alte r 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 105 3 (8th Cir. 1982) (retirement community residents sustained damages whe n "Entrance Endowments" entitling a resident to oc cupy 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 pr emiums paid by UHC on behalf of its HMOs, and is full y supported by the reco rd. We therefore find that UHC presented sufficient evidence from which a reasonable jury could findthat UHC had demonstrated the elem ents of causation and damages. Having determined that UH C 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

### -15- Be nton also challenges several of the district court's evidentiar y rulings and his decision to reject Benton's prop osed 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 evidentiar ybasis supporting the jury's verdict. See Fed. R. Civ. P

. 50(a)(1). Having decided that Benton's motion f or judgment as a matter of law was properly denied, and given Benton's fail ure to file an alternative motion for a new trial, we are skeptical, at bes t, 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 p arty 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 Civi l Procedure). Nevertheless, even if we do conside r Benton's evidentiary and jury in struction 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 prejudicia l abuse of discretion." Maddox v. Patterson , 905 F.2d 1178, 1179 (8th Cir. 199 0); 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 it s discretion in its trial rulings.

1. Arizona Litigation
Benton argues that the district court erred in excluding all ev idence 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 an d 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. Wit h one ex ception, the court disallowed claims for premiums paid o n behalf of HMOs which were managed, but not owned, by Unite d HealthCare Management.
-16- throughHANA, was to provide insurance to the HMO. They also prompte d 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 o f the litigation were relevant to the issues at trial and tha t exclusion of this evidence prejudiced his defense.
We disagr ee. 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 damage s and at trial sought only to recov er the premiums it had paid to the HANA program. After UH C 6 changed its strategy, the substance of the Arizo na lawsuits were no longer facts in issue. Beca use Rule 401 of the Federal Rules of Evidence limits relevant evidence to that which makes the existence of a fact in issue mor e
or less probable, the Arizona lawsuits were not relevant. The distric t court properly excluded this evidence.

2. Other Evidence

Benton a lso asserts that the district court erred in admitting: 1 ) records downloaded fr om 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, insuranc e invest igator for the Georgia Department of Insurance and receiver fo r Victoria Insurance Co mpany; 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 i s 7 

### also appealing the admission of Comtell's computer records o n hearsay grounds. It is nevert heless apparent that Benton believed these records were not properly authenticated at trial. We find, howe ver, that although UHC's authentication of the data wa s unc onventional and would not be adequate in all cases, UH C presented sufficient evidence to show that the records were a n exception to the rule against hearsay. See Fed. R. Evid. 803(6).
-17- preju dicial and therefore was admitted in violation of Rule 403 of th e Fed eral Rules of Evidence, which provides that relevant evidence may b e excluded "if its probative value is substantiall y 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 c onsidered each of Benton's contentions 7 and find them to be without merit. This evidenc e provided crucial insight into the workings of Benton's scheme. Although the evidence was no t favor able to Benton, none of it presented a danger of unfair prejudic e which outweighed its probative value in demonstrating the elements of UHC' s RICO clai m. Thus, the district court did not err in admitting thi s evidence at trial.

3. Special Verdict Form

In his la st challenge to the district court's trial rulings, Benton argue s that the court erred in refusing to submit his proposed specia l verd ict form to the jury and in submitting, instead, its own specia l verdict form. We review the denial of a request for a special verdict for m for an abuse of discretion. E. I. DuPont de Nem ours v. Berkley & Co. , 620 F.2d 1247, 1271 (8th Cir. 1980).
As the district court correctly note d, Benton's jury form was rather long (seven pages) and somewhat argumentative. The instructions ultimatel y 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 prepond erance of the evidence that the defend ant violated Section 1962(c) of the RICO statute, as tha t offense has been defined for you?

Yes: _________ No: __________
Answer q uestion 2 only if you have answered "Yes" to question 1

.

2. Do you find by a preponderance of the evidence that an y damage to United HealthCare was proximately caused by th e 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 pr eponderance of the evidence would fairly and reasonabl y comp ensate the plaintiff, United HealthCare, for the damages i t sustained which were proximately caused by Edmund Benton' s violation of RICO?

$ _________________.
-18- the district court's special verdict form, which presented three questions of u ltimate fact, allowed the jury to circumvent its duty of siftin g through the other instructions to understand the complexities of RICO. 8 We find nothing in th e court's instructions, however, which would tend to
enco urage such a result. Nor has Benton produced evidence, short o f speculation, that the jury did not carefully deliberate before reaching it s verd ict. We therefore uphold the district court's refusal to submi t Benton's special verdict form.

D. UHC's Cross Appeal

Follow ing the trial of this case, UHC petitioned the court fo r attorney's fees and costs pursuant to section 19 64(c) of RICO. In support of this application, UHC submitted a memorandum of law in

### The twelve Hensleyfactors include: 9 

### (1) the time and labor required; (2) the novelty an d difficulty of the questions; (3) the skill requisite to perform

the legal service properly; (4) the preclusion o f employment by the attorney due to acceptance of the case ; (5) the customary fee; (6) whether the fee is fixed o r contingent; (7) time limitations imposed by the client o r the circumstances; (8) the amount involved and th e results obtained; (9) the experience, reputation, an d ab ilityof the attorneys; (10) the "undesirability" o f 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.
-19- which it argued that fees and costs are mandated by RICO. UHC's memorandum further addressed eac h of the factors the Supreme Court has indicated are relevant to fee deter minations in the federal civil rights context when a plaintiff prevails onless than all of his or her claims. See Hensley v. Eckerha rt , 461 U.S. 424 (1983). Finally, UHC submitted affidavits fro m 9 two of the attorneys who worked on the case describing: 1) the work which had bee n done; 2) the names and billable rates of the attorneys who ha d par ticipated in the case; 3) how the tasks performed in the case wer e necessaryto 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 cost s incurred in the case.

The distr ict 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 faile d to adequately delineate the time and effort spent on claims against th e other defendants in the case, many of whom were voluntarily o r involuntarily dismissed. The court determined that, given the deficiencie s in UHC's fee application, it was not able to calculate a reasonable fee.

### -20- Although the question of when to award attorney's fees and costs in
a RICO ac tion has never before been squarely before us, we have ha d occasion in other cir cumstances to examine similar fee-shifting statutes. As we noted in these instances, we will generally not overturn a district
co urt's decision on attorney's fees and costs absent an abuse o f discretion. Walitalo v. Iacocca , 968 F.2d 741, 747 (8th Cir. 1992). "If the district court has used improper standards or procedures in determinin g 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 theref ore 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 o f 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. DiDomenic o , 995 F.2d 1158, 1167 (2d Cir.), cert. denied , 114 S. Ct. 38 5 (1993); Quick v. Peoples Bank of Cullman County , 993 F.2d 793, 799 (11th Cir. 19 93); FMC Corp. v. Varonos , 892 F.2d 1308, 1315 (7th Cir. 1990)

. Indeed, the Supreme Court has implicitly acknowl edged the mandatory nature of the fee award, sta ting in H.J., Inc. that "a person found in a private civil action to have violated RICO is liable for treble damages, costs, an d attorney's fees." 49 2 U.S. at 233. Such an interpretation is consistent with Congress' intent in enacting the civil portion of the RICO statute "t o enlist the aid of civil claimants in deterring racketeering." Alcor n 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 distri ct court acted contrary to both the plain language and the purpose of RICO.

### We note, for example, that there is some disagreement among 1 0 

### the courts regarding the extent to which the Hensley factors should apply in cases involving mandatory, rather than permissive, fee

shi fting statutes. See , e.g. , Stochastic Decisions , 995 F.2d a t 1168 (" Hensleyanalysis `is of limited applicability' to statutes that m andate an award of attorney fees") (quoting United State s Football League v. National Fo otball League , 887 F.2d 408, 412 (2d Cir. 1989)); Northeast Women's Center v. McMonagle , 889 F.2d 466, 470 (3d Cir. 1989) (applying Hensleyapproach 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.
-21- Accordi ngly, we find that the district court abused its discretion i n denying UHC's petition for costs and attorney's fees.

In conclu ding that the district court abused its discretion on this issue, we do not sugg est 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 presentin g adequate documentation of its efforts in the lit igation. See Hensley , 461 U.S. at 437. In this case, it is apparent that the district court could benefit from additional summaries from UHC addre ssing the deficiencies the district court discussed in its order denying fees. Moreover, the distric t court may wish to accept briefs on the standards which should guide it s discretion in determi ning what constitutes a "reasonable" fee award under RIC O. We therefore hold only that the district court abused it s

10 discretion in denying UHC's petition in its entirety, and remand to th e dist rict 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 th e verdict is affirmed. We reverse the district court's denial of

### -22-

attorney's fees and costs, and remand for further proceedings in accordanc e with this opinion.

A true copy.

Attest:

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