1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-2-1998

Brokerage Concepts v. US Healthcare Inc (Part II)

Precedential or Non-Precedential:

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

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Recommended Citation

"Brokerage Concepts v. US Healthcare Inc (Part II)" (1998). 1998 Decisions. Paper 66.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/66
Volume 2 of 2 

Filed April 2, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

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

97-1013, and 97-1014 

BROKERAGE CONCEPTS, INC. 

v. 

U.S. HEALTHCARE, INC.; CORPORATE HEALTH 

ADMINISTRATORS, INC.; UNITED STATES HEALTH CARE 

SYSTEMS OF PENNSYLVANIA, INC., d/b/a THE HEALTH 

MAINTENANCE ORGANIZATION OF PENNSYLVANIA; 

RICHARD WOLFSON; SCOTT MURPHY; 

WILLIAM BROWNSTEIN 

Richard Wolfson, Scott Murphy and William Brownstein, 

Appellants in No. 96-1891 

U.S. Healthcare, Inc.; United States Health Care Systems 

of Pennsylvania, Inc., d/b/a The Health Maintenance

Organization of Pennsylvania and Corporate Health 

Administrators, Inc. 

Appellants in No. 96-1892 

U.S. Healthcare, Inc.; Corporate Health Administrators, Inc.; 

United States Health Care Systems of Pennsylvania, Inc., 

d/b/a The Health Maintenance Organization of 

Pennsylvania; Richard Wolfson; Scott Murphy; William 

Brownstein, 

Appellants in No. 96-1922 

Brokerage Concepts, Inc., 

Appellant in No. 96-1923 
U.S. Healthcare, Inc.; United States Health Care Systems of 

Pennsylvania, Inc., d/b/a The Health Maintenance 

Organization of Pennsylvania and Corporate Health 

Administrators, Inc., 

Appellants in No. 97-1013 

Richard Wolfson; Scott Murphy; and William Brownstein, 

Appellants in No. 97-1014 

On Appeal From the United States District Court 

For the Eastern District of Pennsylvania 

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

Argued: July 22, 1997 

Before: BECKER, MANSMANN, and ROSENN, 

Circuit Judges. 

(Filed April 2, 1998) 

 a. The Definition of "wrongful". 

In Enmons, the Court faced the question whether the use 

of violence in a labor strike to obtain higher wages and 

other benefits was extortion within the meaning of the 

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

its legislative history and determined that such conduct 

was not extortion. In reaching its decision, the Court 

interpreted the word wrongful, which is not defined in the 

Act, as follows: 

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

 modifies the use of each of the enumerated means of 

 obtaining property -- actual or threatened force, 

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

 served to describe the means used. For it would be 

 redundant to speak of "wrongful violence" or "wrongful 

 force" since, as the government acknowledges, any 

 violence or force to obtain property is "wrongful." 

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

 limits the statute's coverage to those instances where 

 the obtaining of the property would itself be "wrongful" 

 48 
 because the alleged extortionist has no lawful claim to 

 that property. 

Id. at 399-400 (emphasis added). 

The ability to defend against an extortion charge based 

on a lawful claim to the property obtained has been dubbed 

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

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

dealt with the use of force to obtain property, and

concluded that it was not extortion, read broadly, Enmons 

could stand for the principle that in all extortion cases, 

even "inherently" wrongful actions such as the use or 

threatened use of force or violence, do not constitute 

extortion where the defendant has a lawful claim to the 

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

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

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

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

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

The effort to limit the potential impact of Enmons has led 

to a line of cases wherein this Court and others have 

refused to extend the claim of right defense to defendants 

accused of using actual or threatened force or violence to 

obtain property outside of the labor context. For example, 

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

convicted of extortion for using threats of force and actual 

violence in seeking property which was arguably his under 

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

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

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

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

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

were predicated on Enmons and held that, contrary to 

defendant's suggestion, Enmons did not create a general 

claim of right defense in all cases involving the threatened 

or actual use of force or violence. Instead we interpreted 

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

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

use of force is expressly identified by Congress as being 

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

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

 49 
limited the reach of the claim of right defense in cases 

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

The present case does not fall within this line of cases 

limiting Enmons since it solely involves the accusation of 

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

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

economic fear in business negotiations between private 

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

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

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

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

economic loss is a driving force of our economy that plays 

an important role in many legitimate business transactions. 

This economic reality leads us to conclude that the reach of 

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

involve the use of economic fear in a transaction between 

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

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

has a lawful claim to the property obtained. 

We find support for our conclusion in the law of other 

circuits. The Second Circuit recognized the issues and 

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

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

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

stated that: 

_________________________________________________________________ 

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

(Enmons inapplicable where businessmen beat and threatened victim to 

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

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

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

v. 

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

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

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

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

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

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

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

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

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

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

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

 50 
 We recognize, of course, that fear of economic loss 

 plays a role in many business transactions that are 

 entirely legitimate; awareness of that fear and use of it 

 as leverage in bargaining, in which each side offers the 

 other property, services, or rights it legitimately owns 

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

 What the Act reaches is not mere hard bargaining but 

 the exploitation of the fear of economic loss in order to 

 obtain property to which the exploiter is not entitled. 

 (emphasis added). 

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

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

achieve the wrongful purpose of obtaining property to 

which one is not entitled). 

The First Circuit has explicitly extended the claim of right 

defense to cases involving solely the fear of economic harm. 

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

Act, the use of legitimate economic threats to obtain 

property is wrongful only if the defendant has no claim of 

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

Second Circuits is mirrored in the federal pattern jury 

instructions for the Hobbs Act. In those instructions 

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

no lawful claim or right to the money or the property 

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

are directed that this definition "should be given only in 

cases involving a fear of economic loss or in trials 

concerning the use of violence by union leadership to 

secure higher wages for the membership as opposed to 

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

Jury Practice and Instructions, Criminal, S 45.08 & notes 

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

Second Circuits is sensible, and adopt it here. 

 b. Lawful Versus Unlawful Claims to Property 

Our conclusion that the defendants are not guilty of 

extortion if they had a lawful claim to the property obtained 

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

the issue before us since the line separating lawful from 

unlawful claims to property obtained in business 

 51 
negotiations is by no means self evident. Once again, we 

start with Enmons which, although addressing extortion 

through force or violence, provides direction as to the 

distinction between lawful and unlawful claims to property. 

The Court in Enmons, having held that a Hobbs Act 

conviction could not be predicated on violence related to 

union activity that was aimed at obtaining property to 

which the alleged extortionist had a lawful claim, found 

that the defendants, union members and officials, had a 

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

other employment benefits -- that they obtained from the 

employer. The Court found that where violence is employed 

"to achieve legitimate union objectives, such as higher 

wages, in return for genuine services which the employer 

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

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

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

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

400. This scenario was distinguished from cases where 

"union officials threatened force or violence against an 

employer in order to obtain personal payoffs, and where 

unions used the proscribed means to exact `wage' payments 

in return for `imposed, unwanted, superfluous and fictitious 

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

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

thus the conduct would fall within the reach of the Hobbs 

Act. 

We find particularly illuminating the application of 

Enmons' basic teaching by the District Court for the 

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

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

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

extortion through the wrongful use of the fear of economic 

loss. In Viacom, the defendants were accused of purchasing 

substantial stock in the plaintiff company (Viacom) and 

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

stock warrants, and free advertising -- all allegedly under 

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

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

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

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

 52 
transaction, the plaintiff brought a civil RICO suit alleging, 

inter alia, that defendants had violated the Hobbs Act by 

obtaining above-market consideration for their shares from 

plaintiff with plaintiff's consent, with such consent induced 

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

On defendants' motion for summary judgment, the court 

dismissed as a matter of law the allegation that the 

challenged practice constituted extortion. See id. at 213. 

The court recognized that it was faced with a case in 

which the alleged extortion victim received something of 

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

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

threat of a corporate takeover. It then surveyed existing 

case law in which the victim received something of value in 

exchange for his property, and found that in these 

circumstances "some acts constitute extortion and others 

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

drew the following distinction between the two: 

 In a "hard bargaining" scenario the alleged victim has 

 no pre-existing right to pursue his business interests 

 free of the fear he is quelling by receiving value in 

 return for transferring property to the defendant, but 

 in an extortion scenario the alleged victim has a pre- 

 existing entitlement to pursue his business interests 

 free of the fear he is quelling by receiving value in 

 return for transferring property to the defendant. 

Id. at 213. 

Applying this framework, the court used as examples of 

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

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

property they received from the victims in exchange for 

providing the victims with influence and goodwill which 

quelled the victims fears of harm to their economic

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

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

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

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

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

unwanted, superfluous and fictitious' as the hiring of a 

second worker to do the job that another worker is already 

doing." Id. (citations omitted). 

 53 
The court then focused on those cases in which the 

victim receives something of value yet the conduct is found 

to be hard bargaining. It drew examples of this conduct 

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

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

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

 work may have a fear of not obtaining employment that 

 would constitute a fear of economic loss within the 

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

 for example, the efforts of a prospective employer to 

 bargain down the level of compensation to be paid the 

 applicant. Nor would it reach the normal activities of 

 an employment agency in dealing with the applicant 

 even if, for example the agency required payment from 

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

 or contingent fee. 

In these cases, the defendant is legally entitled to the 

property obtained from the victim since he has provided 

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

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

return for his payment to the defendant. 

A further example of hard bargaining was provided by the 

facts of Viacom itself. Since the plaintiff had received 

something of value in return for the property transferred to 

the defendants, the court looked to whether the law entitled 

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

the problems and fears caused by the threat of a takeover 

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

the law granted no such entitlement and thus that 

 any intentional exploitation of fear by defendants was 

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

 in plaintiff receiving a benefit to which it was not 

 otherwise entitled by law. Accordingly, defendants did 

 not obtain property from plaintiff to which they had no 

 lawful claim and therefore did not commit extortion. 

Id. at 213-14. 

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

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

CHA pursuant to its TPA contract. In return for this 

 54 
property, U.S. Healthcare gave Gary's access to its provider 

network -- something that is of considerable value to 

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

narrow subset of the potential universe of extortion cases: 

one involving solely the accusation of the wrongful use of 

economic fear where two private parties have engaged in a 

mutually beneficial exchange of property. While we believe 

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

supply a generalized precept, we are convinced by the logic 

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

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

the fear that it would be excluded from the provider 

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

right. 

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

Pennsylvania, unlike many other states, has not adopted 

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

all interested and minimally qualified providers into their 

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

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

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

excluded from that network if it did not switch TPA 

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

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

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

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

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

valuable consideration of inclusion in its network in return 

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

contract. We thus conclude that this case provides an 

example of hard bargaining rather than extortion.23

_________________________________________________________________ 

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

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

but 

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

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

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

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

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

Pennsylvania. 

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

power in the market for pharmaceutical customers. Under such 

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

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

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

not opine on the potential success of such a theory. 

 55 
BCI raises several arguments in opposition to this 

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

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

have a right to compete for membership in that network 

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

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

extortion charges based on public corruption in which 

government officials demanded kickbacks from contractors, 

suppliers and engineers engaged in public works projects 

for the city of Newark, New Jersey. In upholding 

defendants' extortion convictions, we determined that, while 

the contractors have no right to obtain a contract with the 

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

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

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

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

at 73 (emphasis added). 

Our holding in Addonizio is distinguishable since it is 

based on the right of private citizens to compete for 

government contracts on a level playing field. Such a right 

is solidly embedded in public policy. See also United States 

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

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

conviction of husband of Kentucky Governor charged with 

soliciting political contributions in exchange for right to 

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

that without payments they could lose the opportunity to 

compete for government contracts on a level playingfield, 

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

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

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

level playing field. 

c. Evidence of Other Unlawful Objectives 

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

the unlawful objective of obtaining property to which it had 

no lawful claim, it had three other unlawful objectives that 

convert the economic coercion at issue here into extortion.24 

_________________________________________________________________ 

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

objectives lacks support, we need not decide whether proof that 

defendants' possessed one of these objectives would be sufficient to 

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

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

 56 
They are (1) violation of Pennsylvania's insurance fraud 

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

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

procedures. Of these three objectives, the jury was only 

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

economic fear was wrongful because it had the unlawful 

objective of violating the Pennsylvania Insurance Fraud 

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

The other two theories, on which the jury was not 

instructed, are rejected summarily in the margin.26

The Pennsylvania insurance fraud statute provides that: 

 a health care provider may not compensate or give 

 anything of value to a person to recommend or secure 

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

 as a reward for having made a recommendation

 resulting in the provider's service to or employment by 

 a patient. 

_________________________________________________________________ 

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

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

of 

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

might 

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

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

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

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

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

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

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

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

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

located in Pennsylvania. 

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

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

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

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

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

exact 

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

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

fail 

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

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

regarding provider admission would be unlawful. 

 57 
18 Pa. Cons. Stat. Ann. S 4117(b)(2) (Purdon 1997). We 

disagree with BCI that the jury could reasonably have 

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

statute. By its terms the statute forbids providers from 

buying recommendations or referrals of patients, and is 

thus properly characterized as an "anti-kickback" statute 

directed at providers rather than insurers, such as HMOs. 

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

contention that U.S. Healthcare violated the statute by 

referring patients to pharmacies that agreed to give them a 

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

support an inference that U.S. Healthcare recommended 

that its members patronize any particular pharmacy in the 

network. Second, health care providers generally give HMOs 

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

exchange for admission into a network. Thus, if the

allegations in this case violated the statute, HMOs might be 

rendered illegal in Pennsylvania. The Pennsylvania General 

Assembly could not have so intended. 

2. Commercial Bribery 

The Pennsylvania commercial bribery statute states that 

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

the business of making disinterested selection, appraisal, or 

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

solicits, accepts or agrees to accept any benefit to influence 

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

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

conduct in this case to constitute commercial bribery, BCI 

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

as being in the business of making disinterested selection, 

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

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

influence that selection, appraisal or criticism. 

BCI argues that the jury had sufficient evidence before it 

from which to conclude that the defendants held 

themselves out to the public as selecting providers

disinterestedly, based solely on the quality of the provider. 

BCI points to the testimony of defendant Wolfson to the 

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

assurance procedures, and to a snippet from 

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

 58 
U.S. Healthcare's performance monitoring and quality 

assessment systems for the health care providers in its 

networks, and which states that the quality assessments 

systems "begin with the certification of providers before 

they can become eligible to care for our members." 

U.S. Healthcare responds convincingly that this evidence 

merely documents the reality that provider quality was a 

necessary, but not always sufficient, criterion for inclusion 

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

not a disinterested appraiser of health care providers; it is 

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

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

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

qualified providers into its network,27 and chooses its 

providers from the set of qualified providers, it alone 

decides whom within that set to admit largely on the basis 

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

rates. There is nothing disinterested about this process, 

and we find no evidence to support a finding that 

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

was, in fact, disinterested. 

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

U.S. Healthcare used its quality assurance machinery not 

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

CHA its TPA business. The commercial bribery statute, 

however, is not concerned with the motive underlying 

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

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

disinterested appraiser of pharmacies. Thus, while evidence 

of such coercion provides fodder for BCI's tortious

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

of an argument regarding the carefully circumscribed crime 

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

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

itself out as a disinterested appraiser of pharmacies, we 

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

defendants committed commercial bribery. 

_________________________________________________________________ 

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

 59 
3. Mail and Wire Fraud 

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

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

or interstate wires for the purpose of carrying out any 

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

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

scheme or artifice to defraud need not be fraudulent on its 

face, but must involve some sort of fraudulent 

misrepresentations or omissions reasonably calculated to 

deceive persons of ordinary prudence and comprehension." 

Id. at 1415 (internal quotations omitted). 

BCI contends that there was ample evidence for the jury 

reasonably to have found that the defendants engaged in a 

scheme to defraud Gary's concerning the nature and 

purpose of the quality assurance audit and freeze of the 

Eagleville store, and the reason for the refusal to process 

the Abington store application. BCI submits that, whereas 

the defendants led Gary's to believe that legitimate quality 

assurance concerns motivated their actions, 

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

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

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

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

failure to disclose this motivation does not create a 

cognizable "scheme to defraud" in the absence of any 

evidence that this omission was "reasonably calculated to 

deceive" Gary's. 

Here, such a conclusion is not supported by the record 

evidence, which instead supports the conclusion that 

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

motivated either by a desire to retaliate against it for 

canceling the contract with U.S. Healthcare and switching 

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

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

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

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

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

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

 60 
providers, it would make little sense to conceal this 

underlying motivation from Gary's.28 

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

evidence of defendants' heavy-handed business tactics and, 

specifically, of their misuse of the quality assurance 

machinery, while relevant to a tortious interference claim, 

cannot be made to fit within the statutory and doctrinal 

constraints of the mail and wire fraud statutes. 

4. The Travel Act 

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

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

an interstate facility with the intent to promote unlawful 

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

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

arson in violation of the laws of the State in which 

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

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

Hobbs Act and commercial bribery claims. Since we have 

determined that the jury's findings of these predicate acts 

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

Act violation. 

D. Conclusion 

Having found that the BCI did not present a sustainable 

case that defendants committed any of the alleged predicate 

acts, we must set aside the verdict that defendants violated 

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

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

_________________________________________________________________ 

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

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

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

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

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

drugs far less than the network average and inadequately documenting 

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

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

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

circumstances, have a coercive purpose and effect. 

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

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

 61 
V. TORTIOUS INTERFERENCE 

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

the jury also awarded BCI damages on the theory that 

defendants unlawfully and improperly interfered with BCI's 

existing and prospective contractual relations with Gary's. 

Defendants challenge this verdict on the ground that, as 

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

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

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

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

Defendants contend that BCI made no legally sufficient 

showing of wrongfulness, and thus that the "competitors' 

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

tortious interference claim. In the alternative, defendants 

argue that even if BCI presented a jury question on tortious 

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

the jury charge. 

Pennsylvania recognizes both interference with existing 

contractual relations and interference with prospective 

contractual relations as branches of the tort of interference 

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

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

While the two branches of tortious interference are distinct, 

they share essentially the same elements. In order to 

prevail on a claim for intentional interference with 

contractual or prospective contractual relations, a plaintiff 

must prove: 

 (1) the existence of a contractual, or prospective 

 contractual relation between itself and a third party; 

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

 specifically intended to harm the existing relation, or to 

 prevent the prospective relation from occurring; 

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

 part of the defendant; 

_________________________________________________________________ 

the statutory analysis applied to securities cases by the Supreme Court 

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

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

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

claims, that argument need not be reached. 

 62 
 (4) the occasioning of actual legal damage as a re sult 

 of the defendants' conduct; and 

 (5) for prospective contracts, a reasonable likeli hood 

 that the relationship would have occurred but for the 

 interference of the defendant 

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

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

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

474 (Pa. 1960). 

The defendants assert that BCI failed to present sufficient 

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

the absence of privilege or justification on the part of the 

defendants. In support of this contention the defendants 

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

which sets forth the competitors' privilege. That section 

provides: 

S 768. Competition as Proper or Improper Interference. 

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

 enter into a prospective contractual relation with 

 another who is his competitor or not to continue an 

 existing contract terminable at will does not interfere 

 improperly with the other's relation if 

 (a) the relation concerns a matter involved in the 

 competition between the actor and the other and 

 (b) the actor does not employ wrongful means and 

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

 restraint of trade and 

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

 interest in competing with the other. 

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

 business of a third person does not prevent his causing 

 a breach of an existing contract with the other from 

 being an improper interference if the contract is not 

 terminable at will. 

Section 768 has been recognized by Pennsylvania courts, 

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

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

 63 
616 F.2d 528, 543-44 (3d Cir. 1980), which are guided by 

the Restatement of Torts in the area of tortious 

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

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

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

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

whether defendants can even seek the protection of S 768. 

BCI contends that, since it had an existing contract with 

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

defendants' status as competitors could not make the 

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

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

will, and thus that the Restatement would characterize it as 

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

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

closely analogous to interference with prospective 

contractual relations."), thereby bringing defendants' 

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

classification of at will contracts in tortious interference 

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

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

applies to alleged interference with either prospective 

contractual relations or existing contracts terminable at 

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

was terminable at will.30 

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

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

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

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

of advancing their interests through their competition with 

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

arguing that defendants' conduct constituted an unlawful 

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

contention is foreclosed by our reversal of BCI's antitrust 

claim and BCI's failure to show how defendants conduct 

violated any other federal or state statutory or common law 

_________________________________________________________________ 

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

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

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

terminable at will upon proper notice. 

 64 
anti-competitive prohibition. Thus, the question is whether 

defendants' actions were privileged business competition, 

which turns on whether they employed "wrongful means" of 

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

See S 768(1)(b). 

The Pennsylvania Supreme Court has yet to provide a

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

Restatement for guidance. In defining what kind of means 

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

 If the actor employs wrongful means, he is not justified 

 under the rule stated in this Section. The predatory 

 means discussed in S 767, Comment c, physical 

 violence, fraud, civil suits and criminal prosecutions, 

 are all wrongful in the situation covered by this 

 Section. 

Other courts, relying partly on this language, have

interpreted the wrongful means element of S 768 to require 

independently actionable conduct on the part of the

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

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

Under this standard, wrongful means are those that are 

themselves capable of forming the basis of liability for the 

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

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

that the Pennsylvania Supreme Court would adopt this 

construction of wrongful means, and that we must 

therefore set aside the tortious interference verdict as a 

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

which the defendants' conduct could be independently 

actionable other than the antitrust and RICO theories 

which we have found to be legally untenable. 

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

us to determine whether Pennsylvania would limit wrongful 

means to those that are independently actionable because 

the allegations of wrongful means in this case differ in one 

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

in DP-Tek the defendant was accused of using wrongful 

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

here BCI has alleged that the defendants employed 

economic pressure in what we have deemed the market for 

 65 
pharmacy customers (where BCI was not a competitor) in 

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

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

specifically deemed wrongful by the portion of comment e 

which directly follows that quoted above. It reads:

 The rule stated in this Section rests on the belief that 

 competition is a necessary or desirable incident of free 

 enterprise. Superiority of power in the matters relating 

 to competition is believed to flow from superiority in 

 efficiency and service. If the actor succeeds in diverting 

 business from his competitor by virtue of superiority in 

 matters relating to their competition, he serves the 

 purposes for which competition is encouraged. If, 

 however, he diverts the competitor's business by 

 exerting a superior power in affairs unrelated to their 

 competition there is no reason to suppose that his 

 success is either due to or will result in superior 

 efficiency or service and thus promote the interest that 

 is the reason for encouraging competition. For this 

 reason economic pressure on the third person in matters 

 unrelated to the business in which the actor and the 

 other compete is treated as an improper interference. 

S 768, cmt. e. (emphasis added) 

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

even if the Pennsylvania Supreme Court were to require 

independently actionable means, it would not apply that 

requirement in cases, such as this one, where the 

defendant exerted "economic pressure" or "a superior 

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

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

that an exception to the independently actionable conduct 

requirement may exist "where a plaintiff proffers evidence 

that the defendant exerted `a superior power in affairs 

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

defendants contend that Pennsylvania, while it has adopted 

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

since we see no reason why Pennsylvania would subscribe 

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

of the comments explaining that section. 

BCI proffered ample evidence from which a jury could 

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

 66 
TPA business by threatening Gary's with withdrawal of its 

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

also adduced evidence of heavy-handed tactics by 

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

was discussed in the RICO section, a reasonable jury could 

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

machinery not only to assure quality, but also to generate 

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

we found that this coercive misuse of the quality assurance 

apparatus was not cognizable as commercial bribery or 

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

comment e, to constitute wrongful means under 

Pennsylvania tortious interference law. 

Defendants seek to avoid the clear application of 

comment e to their actions by arguing that since both 

comment e and federal tying/coercive reciprocal dealing 

jurisprudence are concerned with the extension of economic 

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

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

show that the defendants possessed sufficient market 

power to violate the Sherman Act should preclude BCI, as 

a matter of law, from recovering on its tortious interference 

claim. Put differently, defendants assert that they could not 

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

pharmaceutical customers since they did not have 

appreciable market power, under federal law, in that 

market. We disagree both with the defendants' reading of 

comment e and with the premise that state tortious 

interference law and federal antitrust law should be read in 

pari materia. 

Defendants' argument that the federal market power 

requirement must be grafted onto comment e is predicated 

on their suggestion that without such a requirement, 

comment e would render all reciprocal dealing/tying

arrangements tortious -- even those that are procompetitive. (Our reference to pro-competitive tying 

arrangements is to those that do not violate the Sherman 

Act.) Defendants submit that such a result would be

contrary to the public policy of Pennsylvania as evidenced 

by the Commonwealth's failure to pass an Any Willing 

Provider law. According to the defendants, this failure 

 67 
indicates that Pennsylvania favors selective contracting 

between HMOs and providers, and thereby approves of the 

conduct at issue here. 

We decline to read an affirmative policy statement into a 

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

speculative. But even if defendants are correct that 

Pennsylvania has a policy of allowing HMOs to decide 

whom to admit into their networks, it would stretch this 

policy beyond its logical constraints to find in it tacit 

approval of the use of threatened exclusion from a 

pharmacy network to foreclose competition on the merits in 

an unrelated market. 

Furthermore, we do not agree with defendants' reading of 

comment e. Rather, we read the language requiring the 

plaintiff to show that the defendant employed "economic 

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

as requiring evidence that the defendant used its economic 

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

the competitive market. In order to show coercive pressure, 

the plaintiff must prove that the defendant exercised some 

market power in the unrelated market -- lest the third 

party simply ignore its demands. However, we see no

reason why economic coercion cannot be generated by

market power that, while not sufficient to violate the 

Sherman Act, is nonetheless not insignificant, which is the 

case here.31 

_________________________________________________________________ 

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

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

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

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

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

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

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

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

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

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

despite this instruction, the jury must have improperly used the 

testimony as substantive evidence of coercion, because there was no 

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

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

circumstantial evidence from which a jury could have reasonably inferred 

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

view of the evidence on remand. 

 68 
Viewing the preceding discussion in a broader context, 

defendants' contention that comment e should be read to 

include a federal market power requirement ignores the 

different purposes and scopes of inquiry of the two bodies 

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

gatekeeping role that the market power requirement plays 

in federal tying jurisprudence and the quite different 

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

protecting competition rather than individual competitors, 

and outlaws only those tying/reciprocal dealing 

arrangements that substantially foreclose competition in 

the tied product market. The market power requirement of 

the per se antitrust jurisprudence serves this goal since it 

is presumed that where the defendant exercises appreciable 

market power in the tying product market it can leverage 

that power to substantially foreclose competition in the tied 

product market. 

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

inapposite to state tortious interference law which does not 

predicate liability on a showing that the defendant's 

conduct had broad anti-competitive effects. Unlike federal 

antitrust law, state tortious interference law is designed to 

protect competitors not competition. In this regard, it bases 

liability for competitors, in part, on the means of

competition employed and their effect on a single 

competitive interaction. This inquiry neither requires, nor is 

served by, a showing that the defendant exercised 

appreciable market power. 

In the end, we take a fundamentally different view of 

BCI's tortious interference claim from that espoused by the 

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

defendants' argument is that BCI should not be able to 

repackage a failed antitrust claim as tortious interference. 

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

it has taken conduct that constituted tortious interference 

with contractual relations and attempted to turn it into 

violations of federal antitrust and racketeering laws. While 

these attempts have been derailed on this appeal, that 

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

Despite our determination that BCI adduced sufficient 

evidence at trial to allow a reasonable jury tofind that 

 69 
defendants employed wrongful means and thus acted 

outside the scope of the competitors' privilege, we must 

reverse the judgment and remand the case for a new trial 

because of errors in the relevant jury charge. The district 

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

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

 competitor by using economic power in matters that 

 are unrelated to the business in which the competitors 

 compete. Thus taking away a competitor's business by 

 applying economic pressure in an area that is 

 unrelated to the field in which the parties compete 

 constitutes wrongful means. 

 Wrongful means also include any unlawful conduct in 

 violation of specific statutory provisions or of 

 established public policy. 

 To determine whether a defendant's interference was 

 wrongful, you should consider the following factors: 

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

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

 which the actor's conduct interferes; fourth, the 

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

 social interests in protecting the freedom of action of 

 the actor and the contractual interests of the other; 

 sixth, the proximity or remoteness of the actor's 

 conduct to the interference and, seventh, the relations 

 between the parties. 

As set out in the proceeding discussion, the first 

paragraph of this instruction, which is derived from 

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

jury could have determined that the defendants' conduct 

was wrongful. However, the second paragraph, while an 

accurate statement of the law, necessitates a retrial 

because it invited the jury to import the errors in the 

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

tortious interference analysis. Indeed, based on the 

prominent position that BCI's antitrust claim occupied at 

trial, such infection almost certainly occurred. Faced with 

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

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

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

 70 
___, 1998 WL 100551, *9 (3d Cir. Mar. 10, 1998) ("Where a 

jury has returned a general verdict and one theory of 

liability is not sustained by the evidence or legally sound, 

the verdict cannot stand because the court cannot 

determine whether the jury based its verdict on an 

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

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

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

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

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

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

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

BCI argues that remand is not required since defendants' 

waived any objection to the jury charge. Their argument 

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

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

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

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

waiver since we see no basis on which defendants could 

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

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

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

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

antitrust verdicts would contaminate the tortious 

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

appeal that the tortious interference instructions became 

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

_________________________________________________________________ 

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

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

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

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

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

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

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

interference liability posed to the jury was 

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

 evidence that the following defendants intentionally interfered 

with 

 the plaintiff's existing or prospective contractual relations. 

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

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

Wilburn and Avins governs. 

 71 
the harsh consequence of waiver on the defendants. This 

conclusion is buttressed by the fact that defendants did 

object at trial to the jury instructions regarding the alleged 

antitrust violation. 

BCI also contends that since the case was submitted to 

the jury on special interrogatories, defendants' failure to 

proffer any interrogatories requiring the jury to specify the 

basis on which they found defendants conduct to be 

wrongful resulted in a waiver by defendants of any right 

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

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

special verdicts in the federal courts. Specifically, plaintiff 

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

when submitting special interrogatories to the jury, "the 

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

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

of the issue so omitted unless before the jury retires he 

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

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

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

necessary to sustain a judgment even though the jury did 

not specifically answer an interrogatory concerning that 

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

_________________________________________________________________ 

33. Rule 49(a) provides: 

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

a 

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

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

written 

 questions susceptible of categorical or other brief answer or may 

 submit written forms of the several special findings which might 

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

 such other method of submitting the issues and requiring the 

 written findings thereon as it deems most appropriate. The court 

 shall give to the jury such explanation and instruction concerning 

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

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

omits 

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

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

 unless before the jury retires the party demands its submission to 

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

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

have 

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

 72 
257-58 (5th Cir. 1993), we do not read this rule, by its 

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

defendants' objection is not based on the fact that the 

wrongfulness issue was not submitted to the jury, but 

rather that the court gave a definition of wrongful that has 

been rendered erroneous by our decision on this appeal. 

Nor would such an application be in keeping with the 

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

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

Watkins, this ability 

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

 general verdict is to continue to be employed. 

 Otherwise there would always be the danger that the 

 special verdict would be set aside because the jury had 

 failed to make a particular finding whereas a general 

 verdict could not be challenged on this ground. 

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

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

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

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

constrained to remand for a new trial based on errors in 

the charge. Thus, the need to preserve symmetry between 

the treatment of general and special verdicts would not be 

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

waiver predicated on Rule 49(a). 

VI. CONCLUSION 

For the foregoing reasons, the judgment of the district 

court will be reversed and the case remanded with 

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

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

on BCI's claim for tortious interference with contractual 

relations.34 

_________________________________________________________________ 

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

behavior was outrageous enough to warrant an award of punitive 

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

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

cases of outrageous behavior, where defendant's egregious conduct 

 73 
The parties shall bear their own costs. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

_________________________________________________________________ 

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

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

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

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

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

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

intimate no view on that subject. 

 74