Ocean v. Blue Cross 11

3/10/22, 5:37 PM Ocean State Physicians Health Plan v. Blue Cross, 692 F. Supp. 52 (D.R.I.
1988) :: Justia
Ocean State Physicians Health Plan v.

Blue Cross, 692 F. Supp. 52 (D.R.I.
1988)
US District Court for the District of Rhode Island

- 692 F. Supp. 52 (D.R.I.
1988)
July 27, 1988
692 F. Supp. 52 (1988)
OCEAN STATE PHYSICIANS HEALTH PLAN, INC., et al., Plaintiffs,
v.
BLUE CROSS & BLUE SHIELD OF RHODE ISLAND, Defendant.
Civ. A. No. 86-0598-B.
United States District Court, D. Rhode Island.
July 27, 1988.
*53 *54 Thomas A. Lynch, Lynch and Greenfield, Providence, R.I., William G. Kopit, Mark
E. Lutes, Stuart Gerson, Epstein, Becker, Borsody & Green, P.C., Washington, D.C., for
plaintiffs.
Patrick Quinlan, Quinn, Shectman & Teverow, Julius C. Michaelson, Providence, R.I., for
plaintiff-intervenors.
Steven E. Snow, James Purcell, Partridge, Snow & Hahn, Providence, R.I., for defendant.
https://law.justia.com/cases/federal/district-courts/FSupp/692/52/2357945/ 1/32
3/10/22, 5:37 PM Ocean State Physicians Health Plan v. Blue Cross, 692 F. Supp. 52 (D.R.I. 1988) :: Justia
OPINION

FRANCIS J. BOYLE, Chief Judge.

STATEMENT OF FACTS
Defendant, Blue Cross & Blue Shield of Rhode Island, has been charged by Plaintiffs with
restraint of trade and monopolization in violation of both federal and state law. After trial,
a jury awarded Plaintiffs compensatory damages in the total amount of $2,693,437 and
punitive damages in the amount of $250,000 for wrongful interference with contractual
relationships, and found that Blue Cross & Blue Shield of Rhode Island was guilty of
monopolization but awarded it no damages. Now pending are the Defendant's motion for
judgment notwithstanding the verdict on the antitrust and tortious interference with
contractual relationships claims. In the alternative, the Defendant seeks a new trial only on
the interference with contractual relationships claims and not on the antitrust claims.
Plaintiffs seek injunctive relief and an additur on the antitrust claims. In addition, the
Defendant filed a counterclaim against the Plaintiff-Intervenors, the Physicians and
Surgeons Association of Rhode Island, Inc. and thirteen individual members of the class, to
prevent the Plaintiff-Intervenors from collectively negotiating fees with Blue Cross.[1]
Plaintiffs claimed that the Defendant violated Sections One and Two of the Sherman
Antitrust Act, 15 U.S.C. §§ 1, 2 (Supp. 1986), violated the analogous Rhode Island Antitrust
Statutes, R.I.Gen.Laws § 6-36-1 to 26 (Supp.1985), and breached the common law duty not
to wrongfully interfere *55 with contractual relationships. The Plaintiff Ocean State
Physicians Health Plan, Inc. and the Plaintiff class of physicians sought monetary damages
against the Defendant due to Blue Cross's business programs which for short hand purpose
of reference are called prudent buyer, adverse selection, and HealthMate. Plaintiffs claimed
that those programs were unlawful. Plaintiffs sought a permanent injunction prohibiting
Defendant from using its prudent buyer and HealthMate programs.
THE PARTIES
The Plaintiffs, Ocean State Physicians Health Plan, Inc. (Ocean State) and Anthony J.
Kazlauskas and Jeffrey C. Winters, on behalf of the class of physicians, commenced suit
against the Defendant Blue Cross & Blue Shield in September 1986. The class of physicians
was defined by a court order dated April 2, 1987 to include "all physicians who contract
with Ocean State to provide physicians services and who are also reimbursed by Blue Cross
& Blue Shield of Rhode Island for the provision of physician services to defendant's
subscribers." The Defendant, Blue Cross & Blue Shield of Rhode Island, is a nonprofit
hospital and medical services corporation which provides insurance for hospital and
medical expenses.
Ocean State is a health maintenance organization (HMO) with headquarters in Warwick,

Rhode Island. As an independent practice association type HMO, Ocean State contracts
with physicians to provide medical care to its subscribers; Ocean State then pays its
contracted physicians on a fee for service basis. Initially, subscribers paid little or no
additional cost other than the premium paid to the HMO. The physicians' practice
remained independent from the HMO.
In 1980, Ocean State submitted its license application to the Rhode Island Department of
Health. It began operation by offering hospital and physicians costs coverage to employee
groups of twenty-five or more. Originally, Medserco, a St. Louis based company managed
Ocean State. Presently, United HealthCare, a Minnesota based company, manages Ocean
State and is its single principal shareholder owning 20% of the stock. The remaining 80%
of shares are held by some of the physicians who provide services to Ocean State
subscribers. New Ocean State participating physicians pay up to $1,000 to contract with
Ocean State to provide health services to Ocean State subscribers.
Ocean State is a federally qualified HMO. It determines its rates based on a community
rating method. 42 U.S.C. Section 300e-1(8) provides that an HMO may choose to group by
individual or family but within the chosen group, rates are to be equal subject to
adjustment factors, such as age and sex. State law permits Blue Cross & Blue Shield to base
its premiums for employer groups on the prior actual experiences of each particular
insured group.
FACTUAL BACKGROUNDPROCEDURAL
In April 1987, the Court granted Plaintiffs Winters' and Kazlauskas' motion for class
certification after the Defendant failed to object. The class, as noted, included all physicians
who contract with Ocean State and who are also reimbursed by Blue Cross & Blue Shield. It
was estimated that 900 physicians were certified as members of the class.
Although in their original complaint Plaintiffs did not request a jury trial, they
subsequently demanded a jury trial. At the conclusion of Plaintiffs' case, the Court granted
the Defendant's motion for a directed verdict on all claims under Section One of the
Sherman Act against Ocean State and the class of physicians. The Court also granted Blue
Cross & Blue Shield's motion for a directed verdict against the Plaintiff-Intervenors. At the
conclusion of the case, the jury returned a verdict finding Blue Cross & Blue Shield liable to
both Ocean State and the class of physicians on the Section Two antitrust claims. The jury,
however, awarded no damages. On the claim of tortious interference with contractual
relationships, the jury found Blue Cross & Blue Shield liable *56 to Ocean State and
awarded compensatory damages of $947,000 and punitive damages of $250,000. The jury
also found Blue Cross & Blue Shield liable to the class of physicians on the interference
with contractual relationships claim and awarded $1,746,437 in compensatory damages.
Pending before the Court are both equitable and legal claims. Plaintiffs move for a
permanent injunction against prudent buyer and HealthMate. In addition, they seek an
additur to the class of physicians on the antitrust claim. Defendant moves for a judgment
notwithstanding the verdict on the antitrust claims and intentional interference with
contractual relationships claims. In the alternative, the Defendant seeks a new trial on the
claims of interference with contractual relationships.
FACTUAL BACKGROUND
For many years Blue Cross of Rhode Island and Blue Shield of Rhode Island were the
unchallenged leading health care financing organizations in Rhode Island. Blue Cross of
Rhode Island was incorporated in the 1930's as a non-profit hospital service corporation
that provided insurance coverage for hospital services. Blue Shield of Rhode Island was
incorporated later and limited its insurance coverage to payment of physician charges. Blue
Cross of Rhode Island and Blue Shield maintained separate Boards of Directors, reserves,
and auditing of financial statements.
Under an administrative services agreement, however, Blue Cross provided management

and staff for Blue Shield. Usually Blue Cross and Blue Shield policies were marketed
together as a package to employers. Occasionally, an employer could purchase Blue Cross
coverage alone, but employees were not permitted to purchase only Blue Shield coverage.
Neither Blue Cross nor Blue Shield were marketed with other health insurance.
In 1971, Rhode Island Group Health Association (RIGHA) a group model Health
Maintenance Organization (HMO) entered the Rhode Island health care financing market.
A group model HMO employs physicians to serve the medical needs of its subscribers.
Services are usually provided at a fixed location and this was initially true of RIGHA.
RIGHA had little impact on Blue Cross & Blue Shield's share of the market. RIGHA entered
into an agreement with Blue Cross & Blue Shield whereby RIGHA would purchase hospital
services through Blue Cross. Thus, RIGHA enjoyed Blue Cross & Blue Shield hospital
discounts; while Blue Cross & Blue Shield benefited because they then claimed, RIGHA
subscribers within their membership and thereby increased their claimed size of the
market. As a result, Blue Cross was further able to negotiate favorable agreements for the
cost of hospital care.
In addition, RIGHA entered into a joint marketing agreement with Blue Cross & Blue
Shield to coordinate marketing activities. Both agreements were terminated in March 1982,
after a newspaper article disclosed the arrangement. There was testimony, however, that
the sharing of hospital and physician discounts continued through May 1986.
In 1980 at the time Ocean State applied to the Rhode Island Department of Health for
licensing as an HMO, Blue Cross & Blue Shield continued to dominate the health care
financing market. Blue Cross & Blue Shield controlled a very large percentage of the
market. Competition from other health care financing insurers was virtually non-existent.
RIGHA was then the only licensed HMO in Rhode Island and its market share was
minimal.
Although Blue Cross & Blue Shield researched the financial background of Medserco,
Ocean State's original management company, and considered using that information to
discredit Ocean State's regulatory application, it did not do so. Blue Cross and Blue Shield
took an active interest in Ocean State's licensing procedure, but did not oppose the
application. Subsequently Ocean State's application was approved.
At about the same time Blue Cross and Blue Shield were negotiating a merger. In 1982,
after two years of negotiations the two companies merged to form one corporation, Blue
Cross & Blue Shield of Rhode *57 Island, [hereinafter Blue Cross & Blue Shield] which
provided both hospital and physician insurance coverage. One Board of Directors and one
Chief Executive Officer managed the new corporation.
In addition, the General Assembly of the State of Rhode Island enacted the Health
Maintenance Organization Act of 1983, R.I. Gen.Laws §§ 27-41-1 et seq. (Supp.1986), which
was modeled after the federal HMO Act, 42 U.S.C. § 300e-9 (Supp.1986). Rhode Island is
unique in the large percentage of employees covered by employer provided health plans.
The State Act incorporates a dual choice provision which requires employers to offer a
licensed qualified HMO as an employee choice for health insurance if an HMO provides
services in the area where the employee resides. Blue Cross & Blue Shield challenged this
dual choice provision as inconsistent with provisions of the federal Employee Retirement
Income Security Act (ERISA). See 29 U.S. C. §§ 1001-1461 (Supp.1987). In Blue Cross of
R.I. v. Cannon, 589 F. Supp. 1483 (D.R.I.1984), the suit was dismissed because it was not
ripe; however, it was noted that the employer's obligation to provide an HMO alternative is
subject to the condition precedent of a request by an eligible HMO to be included in the
health insurance offering.
As of the Spring 1986, Blue Cross & Blue Shield was faced with a serious competitive
problem. While Blue Cross & Blue Shield lost approximately 30,000 of its 543,015
enrollees; Ocean State's enrollment exceeded the most optimistic expectations and had
grown to 70,000. Blue Cross & Blue Shield's loss of enrollment was attributed to its
increased premium rates and to its lack of an HMO plan which would provide more
coverage than traditional Blue Cross & Blue Shield.
Rates had to be increased because Blue Cross & Blue Shield was experiencing financial
difficulties. Its cash reserves had dropped below the State law requirement, which requires
Blue Cross & Blue Shield to maintain an available cash supply sufficient to pay all operating
expenses and claims for not less than a 1½ month period. See R.I.Gen.Laws § 27-19-6
(Supp.1986). Payments of claims exceeded Blue Cross & Blue Shield's estimates and the
amount of revenue generated through premiums was not sufficient to cover Blue Cross &
Blue Shield's anticipated costs. Blue Cross & Blue Shield had to raise its premium rates.
The increased rates further contributed to its loss of enrollment which further required
higher rates to cover the losses due to enrollees dropping out.
Although Blue Cross & Blue Shield dominated the health care financing industry, the loss
of enrollment created concern. There was conflicting testimony at trial about Blue Cross &
Blue Shield's market share.
Plaintiffs claimed that Blue Cross & Blue Shield controlled 80% of the market. Defendant
did not dispute that it was the largest health care cost insurer in Rhode Island, but would
not agree that it controlled 80% of the market. Ocean State claimed that 656,650 persons
in Rhode Island were eligible to procure private health coverage and that 543,015 persons
selected Blue Cross & Blue Shield coverage. Therefore, according to Plaintiffs' calculations
Blue Cross & Blue Shield's enrollment share was 82.7%.
Defendant downwardly adjusted this estimate of its market share by making three
adjustments to the market share calculation. First, the estimated number of members
covered under a family contract was reduced from 3.4 persons to 2.8 persons, which
resulted in a 17.64% reduction of Blue Cross & Blue Shield's enrollment share. Next,
duplicate coverage was factored into the calculation. The Defendant had assumed that 12%
of Blue Cross & Blue Shield's enrollees had duplicate coverage with another Blue Cross &
Blue Shield plan and that 8% of Blue Cross & Blue Shield's enrollees had duplicate coverage
with another company. Thus, adjustments to the market reduced Blue Cross & Blue
Shield's market share to 62.8%. Finally, Blue Cross & Blue Shield assumed the Rhode
Island employment base was 10% greater than reflected in the Rhode Island population
count because more workers *58 came into the State to work than left the State to work. So
Blue Cross & Blue Shield estimated that the total population eligible to select Blue Cross &
Blue Shield coverage was 722,315 persons (the Rhode Island population 656,650 + the
non-state resident workers 65,665). With the foregoing adjustments, Blue Cross & Blue
Shield's market share was 57.1%. The Defendant, although it disputed the Ocean State
estimate of Blue Cross & Blue Shield's market share, agreed that it had a substantial share
of the market. This was an admission of the obvious. Blue Cross & Blue Shield is clearly the
major provider of private health care cost payment in Rhode Island and thus it is the major
factor in the competitive market. It clearly had market power. The issue here is whether or
not it exercised that power unlawfully.
Both Blue Cross & Blue Shield and Ocean State were experiencing financial problems at
about the same time during the Spring and Summer of 1986. Blue Cross & Blue Shield was
facing enrollment losses and increased premiums; while Ocean State's operating costs were
exceeding its income. Both Ocean State and Blue Cross & Blue Shield had to make changes
and adopt new programs. Blue Cross & Blue Shield responded with the prudent buyer
policy, adverse selection, and HealthMate. Ocean State went through a major
reorganization, increased the amount of payment subscribers were required to pay for
services rendered, and created a program called Speciality Incentive Pools (SIPS).
In May 1986, the Blue Cross & Blue Shield's Board of Directors approved a three prong
approach to deal with Blue Cross & Blue Shield's loss of enrollment and financial
difficulties. The plan included (1) implementing the "prudent buyer policy," (2) instituting
"adverse selection rating factors" and (3) marketing of a new product, which was ultimately
called "HealthMate." Blue Cross & Blue Shield submitted a series of riders to the classic
hospital and medical service plans to the Department of Business Regulations, (DBR),
State of Rhode Island for its approval. The DBR approved the new HealthMate product,
which was known as the "Z Plan," "Maps Plus," and "Plan 100 Plus." HealthMate provided
15% more coverage than standard Blue Cross & Blue Shield. It included hospital and
medical service plans plus other coverage such as office visits, prescription drugs, student
rates, and "good health" benefits. Under HealthMate, subscribers must use participating
physicians otherwise the plan would not pay for physician services. In addition, all Blue
Cross & Blue Shield participating physicians are required to provide services under
HealthMate and to accept the HealthMate payment as payment in full if they wished to
remain Blue Cross & Blue Shield participating physicians.
HealthMate was first offered to employees of the State of Rhode Island in July, 1986. This
is the largest single group of employees covered by an employer health plan in Rhode
Island, and no doubt, that fact prompted the creation of HealthMate. The Department of
Administration, the State agency which awarded contracts for health coverage, extended its
open enrollment season for selecting a health plan so that HealthMate could be offered.
Later, HealthMate was offered to other experience rated groups. HealthMate was never
offered alone as a health insurance plan, but was only marketed as an alternative to
traditional Blue Cross & Blue Shield if a competing HMO was also being considered as a
health insurance option. Today, HealthMate is offered to all employer groups with more
than 50 employees.
HealthMate was marketed with financial incentives for employers. If the employer paid the
full cost of its employees' health insurance, HealthMate was offered at the same rates as
traditional Blue Cross & Blue Shield. If employees were required to contribute to their
coverage, then HealthMate was offered at 5% below the cost of traditional Blue Cross &
Blue Shield. Ocean State claimed that between June 1986 and August 1987, it lost profits of
$58,550 because of the head to head marketing and low cost of HealthMate. In addition,
Ocean State estimated a $59,041 future loss of profits through June 1988.
*59 To support the tiered pricing for HealthMate and traditional Blue Cross & Blue Shield
coverage, Blue Cross & Blue Shield approved an adverse selection policy on June 1, 1986.
Blue Cross & Blue Shield implemented the adverse selection policy without approval from
the Department of Business Regulation (DBR). In October 1986, DBR ordered Blue Cross
to cease using the adverse selection policy until it obtained DBR approval. On November
12, 1986, the DBR approved the adverse selection factors and Blue Cross resumed use of
the adverse selection policy.
Blue Cross & Blue Shield was concerned that it would be adversely selected by subscribers
if other health plans were offered. "Adverse selection" is jargon which means exactly the
opposite of what it says. It has nothing to do with selection of Blue Cross. It is the opposite,
the selection of a competitor by a Blue Cross subscriber. It means that Blue Cross & Blue
Shield was concerned that it would lose its best (least expensive) members. It was
concerned that it would lose a large percentage of its younger/healthier subscribers to a
different company with a more comprehensive preventive health plan and be left with an
older, less healthy population, causing its claims costs per subscriber to increase. Thus to
reflect this possible increase in cost per subscriber, adverse selection factors were applied.
Under the adverse selection policy, employers were offered three different rates for Blue
Cross & Blue Shield indemnity coverage. Employers would be charged the lowest rate if the
the employer only offered traditional Blue Cross & Blue Shield coverage. If the employer
offered traditional Blue Cross & Blue Shield, a competing HMO and HealthMate, then the
rate for traditional Blue Cross & Blue Shield would be at a middle level. If an employer
offered traditional Blue Cross & Blue Shield and a competing HMO but refused to offer
HealthMate, then the highest rate for traditional Blue Cross & Blue Shield coverage would
be charged.
Adverse selection rate differentials were determined based on a formula which Blue Cross
& Blue Shield designed. The formula incorporated two estimates. The first estimate was
called the health factor, which concluded that HMO enrollees, on the average, would be
22% healthier (22% less expensive) than the aggregate membership of the employed group.
The second estimate in the adverse selection calculation was Blue Cross & Blue Shield's
estimate of the number of subscribers that might enroll in competitive health plans. The
estimate was not based on Blue Cross & Blue Shield's prior experience of subscribers
switching health coverage but on Blue Cross & Blue Shield's projection. Ocean State
contended that Blue Cross & Blue Shield overestimated the number of subscribers who
would be lost to competing HMOs, causing the adverse selection calculation to be higher
than what was necessary to ensure that its premiums reflected its costs.
In February 1987, the Department of Business Regulations (DBR) released a study of the
number of Blue Cross & Blue Shield enrollees that switched to HMOs. It found that fewer
enrollees dropped traditional Blue Cross & Blue Shield coverage and replaced it with HMO
coverage than Blue Cross & Blue Shield had projected. Many employers complained to
DBR about the substantial increase in their premiums, partly due to the adverse selection
factors, and they threatened to discontinue Blue Cross & Blue Shield coverage. In February
1987, Blue Cross & Blue Shield decided to base its calculation of losses to competing HMOs
upon actual lost enrollment. Thus, the second estimate factor in the adverse selection
calculation was adjusted as of February 1987.
Ocean State asserted that the overestimate of loss of subscribers to competing HMO
artificially increased price differential which discouraged employers from offering a
competing HMO, such as Ocean State. Furthermore, Ocean State claimed that the rate
differentials were designed to discourage employers from offering competing health
insurance options, or alternatively to force employers to offer HealthMate *60 if a
competing health plan was an option.
Meanwhile, the financial circumstances of Ocean State were also under stress. As a new
HMO, Ocean State decided in 1983 that it would withhold 20% of the physicians' fee until
the end of the year at which time if Ocean State's operational expenses were in the black
then the withholding would be paid to the physicians. This was seen as an incentive to its
contracted physicians to keep health care costs low. In 1984 Ocean State returned the
withhold to physicians. In 1985, however, Ocean State retained the withhold because cost
of operating exceeded Ocean State's estimates. This action occurred in 1986.
Ocean State memberships had risen astronomically, but the rate of increase began to level
off. In the spring and summer of 1986, it began to experience financial concerns not
different from those of Blue Cross & Blue Shield. Ocean State initiated a drastic
management change on July 1, 1986, and designed new incentives for physicians to
maintain costs. Not coincidentally, these initiatives were roughly coincident with Blue
Cross's trilogy of programs, HealthMate, adverse selection and prudent buyer.
In an effort to control expenses and hopefully to provide a dividend to its physician

members, Ocean State implemented the Speciality Incentive Pools (SIPs) as of November 1,
1986. Speciality Incentive Pools is another instance of jargon. It simply means that the
physician would be paid his or her full charge rather than only 80% of the charge, if there
was enough money left in the pool at the end of the year to do so. Ocean State divided
participating physicians into specialty categories. Each specialty was allotted a certain sum
of money as its operating budget. Physicians were paid 80% of their charges. If expenses
for the specialty category did not exceed estimated operational cost, then the remaining
funds in the specialty category would be divided among physicians in that group. Each
specialty group had a very good reason to provide services at the lowest cost; thus, the
name Speciality Incentive Pools. The 1986 operational cost exceeded Ocean State's
estimates. Therefore, nothing additional was paid to participating physicians through the
Speciality Incentive Pools.
Blue Cross & Blue Shield expressed concern that physicians were giving greater discounts
to Ocean State than to Blue Cross & Blue Shield. In response to the March 25, 1986,
decision of Ocean State to retain the 1985 withholdings, Blue Cross & Blue Shield
announced the prudent buyer policy on June 6, 1986. The policy, however, did not become
effective until November 1, 1986.
Prudent buyer is more jargon. What it means is that Blue Cross & Blue Shield would not
pay more to a physician than what the physician was willing to accept for performing the
same services for another health care cost provider, including Ocean State. Thus, if
physicians were accepting 80% of their charges as payment in full from Ocean State, then
Blue Cross would also pay only 80% of physicians charges, as payment in full. Plaintiffs
asserted that the prudent buyer policy was fashioned after Blue Cross & Blue Shield's
hospital participation policy. Under that policy Blue Cross & Blue Shield participating
hospitals who offered competitors discounts, which were comparable or better than the
approximate 13% discount provided Blue Cross & Blue Shield, were threatened with
termination of their status as participating providers. The hospital participation policy had
been successfully implemented and permitted Blue Cross to buy hospital services at the
lowest rate.
Under the prudent buyer policy, Blue Cross & Blue Shield would not pay more for
physician services than the lowest payment the physician accepted for such services. At
trial Blue Cross & Blue Shield contended that it was only trying to get the best price for its
subscribers. Blue Cross & Blue Shield required physicians to document that the fees the
physicians charged Blue Cross & Blue Shield were the lowest that the physicians charged
for that particular service. If a physician failed to document by September 15, 1986 that he
or *61 she was not charging Blue Cross & Blue Shield more than he or she was charging its
competitors, then Blue Cross & Blue Shield reduced its reimbursement to the physician by
20%. There was evidence that Blue Cross & Blue Shield understood the ramifications of the
prudent buyer policy. A handwritten note by a Blue Cross & Blue Shield management
employee stated that "not one guy in the state isn't going to know the implication of signing
with Ocean State." Plaintiffs made much of this observation.
Plaintiffs contended that approximately one-third of Ocean State's participating physicians

resigned from Ocean State as a result of the prudent buyer policy. Testimony was, however,
that physicians resigned for many reasons. Some physicians claimed they resigned because
they were concerned about the effect of the prudent buyer policy upon their Blue Cross &
Blue Shield patients. Others claimed that they could not afford to have their Blue Cross &
Blue Shield payments cut by 20%. It is clear that some physicians resigned from Ocean
State because of the prudent buyer policy, but is also abundantly clear that the actual
number was far less than that contended by Ocean State.
Because about 350 of its 1200 participating physicians resigned, Ocean State claimed that
it had to pay for the services of more non-participating physicians in order to provide
physician services to its members at a level comparable to the level which existed before the
physicians resigned. Although the physicians resignations represented a cross section of
specialties, Ocean State contended that certain specialties were harder hit, such as cardiac
surgery. Thus, Ocean State had to buy more services from non-participating physicians,
which was more expensive. As a result, Ocean State contended that it incurred greater cost
for providing physician services to subscribers. Therefore, Ocean State claimed that due to
the prudent buyer policy, it had to pay an additional $946,260 to non-participating
physicians between January 1987 and March 1987.
In addition, Ocean State contended that the reduction of participating physicians caused a
reduction in subscribers. There was testimony that some subscribers dropped Ocean State
when their personal physicians resigned from Ocean State. Ocean State would not pay the
physician for services rendered to the patient and the patient would have to pay the
physician without reimbursement from Ocean State. Ocean State claimed it lost $597,016
in profits on enrolled members who dropped Ocean State between November 1986 and
August 1987.
Ocean State presented evidence that under the prudent buyer policy, Blue Cross & Blue
Shield withheld more than $1,900,000 from Ocean State's 1200 participating physicians.
The certified class, however, included an estimated 900 physicians. During the time
between implementation of the prudent buyer policy and the class certification, more than
300 physicians resigned from Ocean State. Those physicians who had prudent buyer
withholds but were not participating physicians of Ocean State in April 1987 did not meet
the definition of the class certification. The certified class of physicians claimed Blue Cross
& Blue Shield withheld $1,425,000 from it.
Blue Cross & Blue Shield acknowledged that under the prudent buyer policy between
January 1, 1987 and May 30, 1987 it withheld $2,058,769.58. During this period, providers
requested $682,351.36 in refunds. Blue Cross & Blue Shield estimated that the refund
payments would be $136,470.27 per month. Blue Cross & Blue Shield estimated that it
would withhold $2,838,199.34 between November 1, 1986 and June 30, 1987. The refund
estimates for this eight month period were $1,091,762.17. Thus, Blue Cross & Blue Shield's
projected prudent buyer savings during this eight month period would be $1,746,437.17.
Blue Cross & Blue Shield contended that the prudent buyer policy, adverse selection policy,
and the marketing of HealthMate were exercises of good business judgment. Blue Cross &
Blue Shield asserted that Ocean State's financial loss were due to both its being a young
HMO and mismanagement. *62 There was testimony that all young HMOs lose money in
the initial years. Between June and July 1986, Ocean State attempted to reduce financial
losses by switching its underwriters to United HealthCare, reducing the management fee,
replacing its Chief Executive Officer, and instituting co-payments for office visits. There
was conflicting testimony whether those changes were sufficient to put Ocean State in the
black. Blue Cross & Blue Shield contended that between June 30, 1986 and September 30,
1986, Ocean State had profits of $227,123. It contended that by the end of 1986, Ocean
State's profits were $698,348. Thus, Blue Cross & Blue Shield claimed that adverse
selection, HealthMate, and the prudent buyer policy did not cause Ocean State to lose
money. Ocean State, however, asserted that those figures were deceptive and did not
accurately reflect the impact of Blue Cross & Blue Shield's actions.
Ocean State claimed that it incurred a $809,158 loss involving hospital discounts between
January 1984 through May 1986; a $597,016 loss of profits on enrolled members who
terminated their coverage with Ocean State between November 1986 and August 1987; a
$117,591 loss of potential profits on possible state employee enrollees who did not contract
with Ocean State due to the State of Rhode Island's contract with Blue Cross which offered
HealthMate, between June 1986 and June 1988. Ocean State asserted that it lost $173,013
from expected profits which failed to materialize because of Blue Cross's actions. Thus,
Ocean State claimed it lost a total of $1,696,798 due to Blue Cross's anticompetitive
actions. The physicians class claimed it lost $946,760 between January 1987 and March
1987 due to Ocean State's payments to non-participating physicians and $1,900,000 due to
the prudent buyer policy. They claimed a total loss of $2,846,260. The jury verdicts,
however, awarded $947,000 to Ocean State and $1,746,437 to the Plaintiff class of
physicians.
The jury's verdicts in this action are at variance with the proof. On the third try, after the
jury had been returned to the jury room twice for reconsideration of its verdict, the jury
returned a verdict for Plaintiffs on its Section 2 Sherman Act claims, but failed to award
any damages. The jury awarded damages against Blue Cross & Blue Shield on the claims of
intentional interference with advantageous relationships on behalf of Ocean State in the
amount of $947,000 compensatory damages and $250,000 punitive damages and for the
class of physicians in the amount of $1,746,437 in compensatory damages.
The jury deliberated two days before returning a verdict finding Blue Cross & Blue Shield
"Guilty" on both counts, the Section 2 Sherman Act violation and the common law tort of
interference with advantageous relations. Initially, the jury awarded each Plaintiff, Ocean
State and the class physicians, compensatory damages of $2,693,437 (not coincidentally
$1,746,437 + 947,000) and punitive damages of $250,000. Ocean State and the class of
physicians suffered different injuries and damages. It was thus highly unlikely that each
Plaintiffs' award for damages would be exactly the same. Recognizing that more than mere
coincidence could be a factor, the Court explained the purpose of each verdict form and
that the jury must award damages separately for each Plaintiff and for each claim based on
the evidence.
After further deliberation, the jury returned the second set of verdict forms. It again found
Blue Cross & Blue Shield "Guilty" as to both the antitrust claims and the interference with
contractual relationships claims brought by both Ocean State and the class of Physicians.
On the verdict form for Ocean State v. Blue Cross & Blue Shield, the jury listed
compensatory damages of $947,000 and punitive damages of $250,000. On the verdict
form for the class of physicians, the jury listed compensatory damages of $1,746,437.
Neither of the second set of verdict forms stated whether the award was for damages on the
antitrust claim or for interference with contractual relationships claim or both. The jury
was then instructed that the verdict must clearly state the specific claims upon which it
awarded damages.
*63 After further deliberation, the jury returned its third set of verdict forms. The total
amount of the damage awards equaled the same amount as the second verdict forms. The
verdict form for Ocean State v. Blue Cross & Blue Shield stated that as to the Section 2 of
Sherman Act claim, Blue Cross & Blue Shield was guilty but awarded no damages. As to the
interference with contractual relationships, the jury found Blue Cross & Blue Shield guilty
and awarded Ocean State compensatory damages of $947,000 and punitive damages of
$250,000. On the verdict form for the Class of Physicians v. Blue Cross & Blue Shield, the
jury found Blue Cross & Blue Shield guilty of the Section 2 of the Sherman Act claim, but
awarded no damages. On the interference with contractual relationships claim, the jury
found Blue Cross & Blue Shield guilty and awarded the class of physicians compensatory
damages of $1,746,437.
The Defendant contends that the compensation award to Ocean State is based on the
Plaintiffs' Exhibit 776 (for identification) prepared by one of Plaintiffs' damages expert and
used by her as a basis for her testimony. In this the Defendant is clearly correct. Exhibit 776
is a three column simulated spreadsheet. The headings for the columns were lost profits,
(Ocean State) lost hospital discounts, (Ocean State) and lost payments for the physicians'
class. Under the heading lost payment to the physicians' class was a subsection entitled
payments by OSPHP to non-participating physicians 1/873/87. This section reported
$946,260 payments Ocean State made to non-participating physicians between January
1987 and March 1987. Plaintiffs' evidence is that $946,260 represents payments by Ocean
State to "Non-Participating Physicians 1/873/87 $946,260." The jury simply rounded to
the next nearest thousand the $946,260 payment to non-participating physicians to arrive
at the $947,000 and erroneously awarded it to Ocean State.
The payment Ocean State made to non-participating physicians between January and
March 1987, was not a loss to Ocean State. This much the Plaintiffs must concede because
they themselves claim this loss for the class of physicians. This money would have been
returned to participating physicians. Ocean State budgeted the $946,260 to the Speciality
Incentive Pools (SIPS's). Ocean State was required to pay the $946,260 to either the
physicians in the SIPS pools if the Speciality Incentive Pools' costs were less than the
amount budgeted or if the Speciality Incentive Pools' costs exceeded Ocean State's
estimates, then the $946,260 would have been used to reduce the Speciality Incentive
Pools' excess costs. Either way, Ocean State itself could not have lost money because of
payments to physicians who were not Ocean State participating physicians. The losses due
to Ocean State's payments to non-participating physicians was suffered by Ocean State
participating physicians. They would have received the $946,260, if Ocean State had not
had to pay that amount to non-participating physicians.
The Defendant also contends that the compensatory damages award to the certified class of
physicians is based on another Plaintiffs' Exhibit, Plaintiffs' Exhibit 563. Exhibit 563 was
an in house Blue Cross & Blue Shield document dated June 30, 1987 and entitled projected
prudent buyer savings. Blue Cross & Blue Shield estimated that the prudent buyer policy
would save a net amount of $1,746,437.17 over an eight month period. It appears that the
jury rounded the $1,746,437.17 by omitting the 17 cents and based its awarded to the class
of physicians on the amount of money Blue Cross & Blue Shield intended to save with the
prudent buyer policy.
Exhibit 563 is Plaintiffs' evidence of the amount of money Blue Cross & Blue Shield
expected to save due to the prudent buyer policy. It, however, does not indicate the
damages the certified class of physicians incurred as a result of Blue Cross & Blue Shield's
interference with their contractual relationships. The class was composed of physicians
who were under contract to Ocean State and were also reimbursed by Blue Cross & Blue
Shield. The withheld payments were payments Blue Cross & Blue Shield did not make to
Blue Cross & *64 Blue Shield physicians. Ocean State contracted physicians therefore had
no right to receive the withheld payments, except if they also participated in Blue Cross &
Blue Shield and their payments had been reduced by Blue Cross & Blue Shield. Since Blue
Cross & Blue Shield had many more participating physicians than Ocean State, there is no
basis to conclude, as the jury did, that the withheld payments belonged to Ocean State
physicians who were reimbursed by Blue Cross & Blue Shield. It is inappropriate to
conclude that the certified class of physicians must have incurred losses equal to Blue Cross
& Blue Shield's prudent buyer savings.
DISCUSSION

Standard of Review
In actions which blend claims for both legal relief in terms of monetary damages and
equitable relief by way of injunction, a jury shall first determine the issue of damages.
Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S. Ct. 948, 3 L. Ed. 2d 988 (1959);
Dairy Queen, Inc. v. Wood, 369 U.S. 469, 479, 82 S. Ct. 894, 900, 8 L. Ed. 2d 44 (1962);
Wallace Motor Sales v. American Motor Sales Corp., 780 F.2d 1049, 1066 (1st Cir. 1985).
The effect of a jury's determination as in this instance is significant. Here the jury returned
a verdict that the Defendant Blue Cross & Blue Shield was guilty of violating Section 2 of
the Sherman Act (15 U.S.C. § 2). The jury declined, after three attempts, to assess monetary
damages. Generally speaking, it has been held that since the legal issues are to be heard
first in an action under Section 2 of the Sherman Act (15 U.S.C. § 2), findings by the jury in
the damages action, also involved in the application for equitable relief, are binding upon
the trial court in its later consideration of the facts involved in equitable relief applications.
Florists' Nationwide Tel. Del. Net. v. Florists' Tel. Del. Assn, 371 F.2d 263, 271 (7th Cir.)
cert. denied, 387 U.S. 909, 87 S. Ct. 1686, 18. L.Ed.2d 627 (1967); Calnetics Corp. v.
Volkswagen of America, Inc., 532 F.2d 674, 690 (9th Cir.), cert. denied, 429 U.S. 940, 97
S. Ct. 355, 50 L. Ed. 2d 309 (1976).
Indeed, the parties in this action, although in disagreement on almost every issue, seem to
be in agreement on this aspect, to the effect that this Court is bound by the jury's
determination of the factual issues. Thus, Plaintiffs are able to assert that the jury has
concluded that Defendant's business practices of the prudent buyer policy, selective
marketing of Healthmate, and its adverse selection policy were anti-competitive and illicit
activity contrary to the purpose of the Sherman Act to provide competition, and, that these
determinations bind this Court. Of course, Blue Cross & Blue Shield argues that since no
damages were awarded, Plaintiffs have failed to prove injury, and therefore, the Sherman
Act counts fail. However, before the Court determines to what extent it is bound by the
findings of the jury, it will first determine if the jury verdict is supported by the evidence at
all.
The standard of review in setting aside a jury verdict is narrow. In determining the motion
for judgment notwithstanding the verdict, the Court must evaluate the evidence in the light
most favorable to Plaintiffs. Rios v. Empresas Lineas Maritimas Argentinas, 575 F.2d 986,
989 (1st Cir.1978). But the plaintiffs are not entitled to unreasonable inferences based on
speculation and conjecture. See Carlson v. American Safety Equip. Corp., 528 F.2d 384
(1st Cir.1976); Schneider v. Chrysler Motors Corp., 401 F.2d 549, 555 (8th Cir.1968). A
motion for judgment notwithstanding the verdict should be granted "... when as a matter of
law, no conclusion but one can be drawn." CVD, Inc. v. Raytheon Co., 769 F.2d 842, 849
(1st Cir. 1985) (citing United States v. Articles of Drug Consisting of the Following, 745
F.2d 105, 113 (1st Cir.1984), cert. denied sub nom., 470 U.S. 1004, 105 S. Ct. 1358, 84 L. Ed.
2d 379 (1985)), cert. denied, 475 U.S. 1016, 106 S. Ct. 1198, 89 L. Ed. 2d 312 (1986).
Therefore a motion for judgment notwithstanding the verdict should be denied if after
reviewing the evidence in the light most favorable to the plaintiffs and drawing *65 all
reasonable inferences in their favor, there is sufficient evidence to support the verdict.
Engine Specialties, Inc. v. Bombardier Ltd., 605 F.2d 1, 9 (1st Cir.1979), cert. denied, 446
U.S. 983, 100 S. Ct. 2964, 64 L. Ed. 2d 839 (1980); CVD, Inc., 769 F.2d at 849. A jury
verdict supported by the evidence may not be set aside simply because the judge would
have reached a different result. See Coffran v. Hitchcock Clinic, Inc., 683 F.2d 5, 6 (1st
Cir.), cert. denied, 459 U.S. 1087, 103 S. Ct. 571, 74 L. Ed. 2d 933 (1982).
The standard of review for granting a new trial is not as stringent as for granting a
judgment notwithstanding the verdict. But the trial judge may not set aside a verdict simply
because he or she would have reached a different verdict. Borras v. Sea-Land Serv., Inc.,
586 F.2d 881, 887 (1st Cir.1978). In granting a motion for a new trial the judge must find
that "the verdict is against the clear weight of the evidence, or is based upon evidence
which is false, or will result in a clear miscarriage of justice." Milone v. Moceri Family, Inc.,
847 F.2d 35, 37 (1st Cir.1988); see CVD, Inc., 769 F.2d at 848 (citing Coffran 683 F.2d at
6).
The Court will first determine whether there is sufficient evidence to support the jury
verdict on the antitrust claims and the claims for the interference with contractual
relationships. Then the Court will address the applications for injunctive and declaratory
relief.
ANTITRUST CLAIMS
With respect to the Defendant's motion for judgment n.o.v. on the antitrust claims, it
asserts two legal theories. First, the Defendant contended that the jury's findings of "no
damages" for the antitrust claims indicated that no injury resulted to Plaintiffs' business or
property as a result of antitrust violations. Thus, it contends no liability arose for a private
damage action under the Clayton Act, Section 4. 15 U.S.C. § 15 (Supp.1988). Noting that the
Plaintiffs suffered no injuries as a result of the Defendant's conduct, Defendant concludes
that Plaintiffs failed to prove all elements of an antitrust violation and requested the Court
to enter judgment in its favor on the Sherman Act Section 2 claims.
Defendant's argument warrants some attention as a ground for granting Defendant's

motion for judgment notwithstanding the verdict on the antitrust claims. Plaintiffs filed
this action seeking treble damages under Section Fifteen of the Sherman Act, 15 U.S.C. § 15.
(Supp. 1988). It is a remedial provision of the Sherman Act. See Brunswick Corp. v. Pueblo
Bowl-O-Mat, Inc., 429 U.S. 477, 485, 97 S. Ct. 690, 695, 50 L. Ed. 2d 701 (1977). It
frequently has been called the private attorney general provision of the antitrust laws
because a private Plaintiff rather than the government may maintain an action for an
alleged antitrust violation. See, e.g., Hawaii v. Standard Oil Co., 405 U.S. 251, 262, 92 S.
Ct. 885, 891, 31 L. Ed. 2d 184 (1972); Zenith Radio Corp. v. Hazeltine Research, Inc., 395
U.S. 100, 131, 89 S. Ct. 1562, 1580, 23 L. Ed. 2d 129 (1969); United States v. Borden
Co., 347 U.S. 514, 518, 74 S. Ct. 703, 706, 98 L. Ed. 903 (1954). Section Fifteen of the
Sherman Act, more commonly known as Section Four of the Clayton Act, provides that a
Plaintiff can recover threefold the damages he sustains and the cost of the suit, including
attorney's fees if the Plaintiff shows an injury in his business or property by reason of
anything forbidden in the antitrust laws. See 15 U.S.C. § 15 (Supp.1988). So for Plaintiffs to
prevail on their antitrust claims, they must prove "... a violation [of the antitrust laws] and
additionally show to a reasonable degree of certainty that there has been injury to them by
reason of the violation." See International Travel Arrangers, Inc. v. Western Airlines, Inc.,
623 F.2d 1255, 1270 (8th Cir.), cert. denied, 449 U.S. 1063, 101 S. Ct. 787, 66 L. Ed. 2d 605
(1980). To establish an antitrust violation, Plaintiffs must show that Blue Cross & Blue
Shield engaged in monopolization acts in violation of Section Two of the Sherman Act.
Section Two of the Sherman Act defines the criminal violation of monopolization and its
penalties. 15 U.S.C. § 2 (Supp. 1988). But the mere existence of a violation *66 cannot
support a private action under Section Four of the Clayton Act. See Gray v. Shell Oil Co.,
469 F.2d 742, 749 (9th Cir.1972), cert. denied, 412 U.S. 943, 93 S. Ct. 2773, 37 L. Ed. 2d
403 (1973). Plaintiffs must show that they suffered an injury to business or property as a
result of the antitrust violation. See Hawaii, 405 U.S. at 262, 92 S. Ct. at 891. What
constitutes an injury to business or property is less than clear. The words "business or
property" refer to commercial interest. See id. at 264, 92 S. Ct. at 892. However, injury to
business or property is defined in terms of a tautology. Since Section 4 of the Clayton Act
provides a money damages remedy, it must be an injury which the jury is able to quantify
in dollars. It is the kind of injury that the antitrust laws were designed to prevent, namely
damage as a result of anti-competitive conduct. See Brunswick Corp., 429 U.S. at 489, 97
S. Ct. at 697. Plaintiffs do not have to prove that the antitrust violation was the sole cause of
the injury. See Zenith Radio Corp., 395 U.S. at 114, 89 S. Ct. at 1571. But the Plaintiffs must
show a causal relationship between the injury and the violation. See id. at 114 n. 9, 89 S. Ct.
at 1571-72 n. 9. Furthermore, the Plaintiffs must prove some indication of the amount of
damages. See, e.g., Construction Aggregate Transport, Inc. v. Fla. Rock Indus., 710 F.2d
752, 782 (11th Cir.1983); Larry R. George Sales Co. v. Cool Attic Corp., 587 F.2d 266, 270
(5th Cir.1979); Terrell v. Household Goods Carriers' Bureau, 494 F.2d 16, 20 (5th Cir.),
cert. denied, 419 U.S. 987, 95 S. Ct. 246, 42 L. Ed. 2d 260 (1974). Thus, "[t]o be `liable'
under the antitrust laws ... means that one has to violate the antitrust laws and that
violation has resulted in an injury to the business or property of the plaintiff, i.e., there was
fact of damage." Response of Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307, 1320
(5th Cir.1976).
The jury's award of no damages on the antitrust claims indicates that they found that the
Plaintiffs were not damaged by an antitrust violation. The Court of Appeals for the District
of Columbia confronted a similar situation. See Association of Western Rys. v. Riss & Co.,
299 F.2d 133, 134-35 (D.C.Cir.) cert. denied, 370 U.S. 916, 82 S. Ct. 1555, 8 L. Ed. 2d 498
(1962). There the jury returned a verdict against the Defendant but did not award any
damages. See id. The Court of Appeals concluded that the verdict plainly meant that the
Defendants conspired but that the conspiracy did not damage the Plaintiff. See id. at 135.
As a result, the court held that Plaintiff had not proved its claim because it failed to show
damages. See id.
In this matter, the jury's determination of no damages means exactly that. The Court must
conclude that Plaintiffs failed to sustain their burden of showing damages to their business
or property as a result of an antitrust violation. With this conclusion in mind, the result is
preordained. Thus, Plaintiffs have not proved their treble damage antitrust claims and the
Defendant is entitled to a judgment notwithstanding the verdict on those claims.
Defendant's second theory is that it is entitled to entry of judgment in its favor as a matter
of law on the remaining antitrust claims. Blue Cross argues that there was insufficient
evidence to establish antitrust violations because of the prudent buyer policy, selective
marketing of HealthMate, and adverse selection policies. Therefore, the Defendant reasons
that the Court is required to enter judgment in its favor as a matter of law. A more in depth
analysis of prudent buyer, adverse selection, and the selective marketing of HealthMate is
needed before conclusions may be drawn on whether they separately or collectively violate
antitrust laws.
First, Blue Cross contends that the McCarron-Ferguson Act, 15 U.S.C. §§ 1011-1015,
exempted adverse selection and the selective marketing of HealthMate from the antitrust
laws. The Defendant claims that adverse selection and HealthMate constituted the business
of insurance regulated by state law; therefore, those programs were exempt under the
Sherman Act. On the other hand, Plaintiffs claim health service corporations are not in the
business of insurance so they are not eligible for the McCarron-Ferguson exemption *67 to
the antitrust laws. There is substantial support for the Plaintiffs' contention. See Group Life
& Health Ins. Co. v. Royal Drug, 440 U.S. 205, 99 S. Ct. 1067, 59 L. Ed. 2d 261 (1979).
There is respectable authority to the contrary. See Health Care Equalization Comm. v.
Iowa Medical Soc'y, 851 F.2d 1020 (8th Cir.1988). However, as it is made clear hereafter
there is no need to presently resolve this conflict.
The question is whether or not the prudent buyer policy, adverse selection and the selective
marketing of HealthMate violate antitrust laws. Plaintiffs must prove the following
elements by a preponderance of the evidence:
First, that the Defendant had monopoly power in a relevant market;
Second, that the Defendant willfully acquired or maintained that power through
restrictive or exclusionary conduct;
Third, that Defendant's activities occurred in or affected interstate commerce;

and
Fourth, that Plaintiff was injured in its business or property because of

Defendant's restrictive or exclusionary conduct.
See, e.g., United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S. Ct. 1698, 1704, 16 L.
Ed. 2d 778 (1966); Forro Precision, Inc. v. Intern. Business Mach. Corp., 673 F.2d 1045,
1058 (9th Cir.1982); Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 272-76 (2d
Cir.1979), cert. denied, 444 U.S. 1093, 100 S. Ct. 1061, 62 L. Ed. 2d 783 (1980).
The terms "monopoly power" and "market power" are generally used interchangeably. P.
Areeda & D. Turner, Antitrust Law, § 529 at 388 (1978). "Monopoly power" is the power to
control prices or exclude competition in a relevant market. United States v. E.I. du Pont de
Nemours & Co., 351 U.S. 377, 391, 76 S. Ct. 994, 1005, 100 L. Ed. 1264 (1956). The relevant
market is the "area of effective competition" where the defendant operates. Standard Oil
Co. v. United States, 337 U.S. 293, 299 n. 5, 69 S. Ct. 1051, 1055 n. 5, 93 L. Ed. 1371 (1949).
Relevant market is identified by the product and its interchangeability plus the geographic
area. See Brown Shoe Co. v. United States, 370 U.S. 294, 336-37, 82 S. Ct. 1502, 1530, 8 L.
Ed. 2d 510 (1962); United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 399, 76 S.
Ct. 994, 1009, 100 L. Ed. 1264 (1956). Usually the trier of fact defines the relevant market.
See International Boxing Club, Inc. v. United States, 358 U.S. 242, 245, 79 S. Ct. 245, 247,
3 L. Ed. 2d 270 (1959).
Blue Cross contended that as between the class of physicians and Blue Cross they are not in
the same relevant market. Physicians were not sellers of health insurance and therefore in
reality are not head to head competitors of Blue Cross. Without a relevant market existing
between Blue Cross and the class of physicians, Blue Cross claimed it could not engage in
anticompetitive acts which could harm the class. The only effect if at all on the class due to
Blue Cross's actions, it contends is indirect. In addition, Blue Cross hypothesized that even
if it possessed 100% share of the health care financing market, the physician class would
not have any antitrust claim because it derives only a small portion of its income from Blue
Cross insureds. Noting that physicians are paid from many sources including Medicare,
Medicaid, commercial insurance carries, self-insured employers, and patients directly, Blue
Cross claims that there was no evidence that Blue Cross represented any more than 30% of
the dollar purchases of physician services. Thus, it contends, it could not possess monopoly
power and could not have engaged in anticompetitive conduct.
Defendants are confusing relevant market with standing to sue. It is not a requirement to
an antitrust suit that plaintiff and defendant be in the same relevant market. See Blue
Shield of Va. v. McCready, 457 U.S. 465, 478-81, 102 S. Ct. 2540, 2547-49, 73 L. Ed. 2d 149
(1982). Plaintiff, however, must meet the standing requirement that it allege that it
suffered an injury to its business or property as a result of the Defendant's conduct. See 15
U.S.C. § 15 (1982). The First Circuit requires that the person injured by the alleged antitrust
violation *68 be within a target area, which draws a line and excludes persons whose
injuries are too remote. See Engine Specialties, Inc. v. Bombardier Ltd., 605 F.2d 1, 17-19
(1st Cir.1979)
The class of physicians have asserted an injury to their business or property as a result of
the alleged antitrust violation, i.e. the loss of reimbursement from the SIP's pool because of
payments to non-participating physicians. Their alleged injury is within the target area.
Thus, the class of physicians have standing to sue even though they may not be participants
in the same relevant market as Blue Cross & Blue Shield.
Blue Cross & Blue Shield acquired its market share before Ocean State's creation. The
undisputed evidence is that Blue Cross & Blue Shield was for years essentially the sole
private health care cost insurer in the State of Rhode Island. Not only did Blue Cross & Blue
Shield have a better "mousetrap," it had the only "mousetrap" in town. As time went on, the
industry changed with the development of health maintenance organizations. Rhode Island
Group Health Association (RIGHA) appeared in 1971. Its physicians were employed by
RIGHA and a subscriber was required to select a RIGHA physician. This plan had some
disadvantage from the point of view of the subscriber, who heretofore, had been
accustomed to free selection of his or her own physician. Ocean State was a natural
progression of the Health Maintenance format. It entered into contracts with almost half
the physicians in the State of Rhode Island, providing patients with a wider choice of their
respective physicians. It is obvious that a natural tension would develop between Blue
Cross & Blue Shield and Ocean State and that physicians would seek the continuance of
both plans in order that they could contract with both plans. It is not without significance
that it was not Blue Cross & Blue Shield customers who have complained. The Plaintiffs are
Ocean State and some physicians. The market involved is a market which provides means
to finance health care. There is no proof that competition for physician services has been
affected, or that any payment to which a physician is entitled has been lost. The claim is
that purchasers of health insurance have been corralled by Blue Cross & Blue Shield to the
competitive disadvantage of its competitors. The genesis of this complaint is the response
of Blue Cross & Blue Shield to market conditions and the circumstances extant in the
spring, summer and fall of 1986.
Both Blue Cross & Blue Shield and Ocean State were facing difficult financial conditions in
the spring of 1986. They were both losing money. The largest single contract involving the
employees of the State of Rhode Island was due for competitive bids at the end of June
1986. At that time Ocean State had not been able to return the 20% it had retained from its
contracted physicians for the calendar year 1985. Thus, Ocean State physicians, who had
also contracted with Blue Cross, charged 20% less to Ocean State than the same physicians
had charged Blue Cross for precisely the same services. In this mix, Blue Cross & Blue
Shield created its Healthmate plan, originally called "Z Plan", "MAPS Plus", and "PLAN
100 PLUS". Blue Cross & Blue Shield's market share permitted it to develop both the
prudent buyer policy, adverse selection, and HealthMate.
"The connection between market share and market power if far from clear." See P. Areeda,
supra at 328. Size alone does not violate the Sherman Act. United States v. United States
Steel Corp., 251 U.S. 417, 40 S. Ct. 293, 64 L. Ed. 343 (1920). Courts, however, must
consider the market share of the alleged monopolist as an important factor in determining
the existence of monopoly power. See, e.g., United States v. Grinnell Corp., 384 U.S. 563,
570-71, 86 S. Ct. 1698, 1704, 16 L. Ed. 2d 778 (1966); American Tobacco Co. v. United
States, 328 U.S. 781, 797, 66 S. Ct. 1125, 1133, 90 L. Ed. 1575 (1946); United States v.
Aluminum Co. of America, 148 F.2d 416, 424 (2d Cir.1945). In unregulated industries,
courts measure market power by defining the relevant product and geographic *69 market
and compute the defendant's market share. See Southern Pacific Communications v.
American Tel. & Tel., 740 F.2d 980, 1000 (D.C.Cir.1984), (citing (United States v. E.I. du
Pont de Nemours & Co., 351 U.S. 377, 391, 76 S. Ct. 994, 1005, 100 L. Ed. 1264 (1956)),
cert. denied 470 U.S. 1005, 105 S. Ct. 1359, 84 L. Ed. 2d 380 (1985). In a regulated
industry, such as health care insurance, a heavy reliance on market share statistics
probably would be an inaccurate or misleading indication of monopoly power. See
Southern Pacific Communications, 740 F.2d at 1000; MCI Communications Corp. v.
American Tel. and Tel. Co., 708 F.2d 1081, 1107 (7th Cir.), cert. denied, 464 U.S. 891, 104
S. Ct. 234, 78 L. Ed. 2d 226 (1983). Thus, the size of a regulated company's market share
should be a point of departure in determining the existence of monopoly power. Id. at 1107.
Other factors such as size of competitors, degree of barriers to entry, pricing trends and
practices and technological superiority may be considered in determining market power.
See, e.g., United States v. E.I. du Pont de Nemours & Co., 96 F.T.C. 650, 762 (1980);
International Distrib. Centers, Inc. v. Walsh Trucking Co., Inc., 812 F.2d 786 (2d
Cir.1987); Fishman v. Estate of Wirtz, 807 F.2d 520, 532-39 (7th Cir.1986). A monopoly
power analysis must focus directly on the defendant's ability to control prices or exclude
competition. MCI Communications Corp., 708 F.2d at 1107. It is essential to also keep in
mind the fact that the antitrust laws were enacted for the protection of competition, not
competitors. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488, 97 S. Ct.
690, 697, 50 L. Ed. 2d 701 (1977) (citing Brown Shoe Co. v. United States, 370 U.S. 294,
320, 82 S. Ct. 1502, 1521, 8 L. Ed. 2d 510 (1962)).
The evidence established that Blue Cross provides in Rhode Island private non-government
health care financing for a major market share. It is not contended that because of Blue
Cross & Blue Shield's dominant market position, it has charged its customers, the persons
insured by Blue Cross & Blue Shield more than they should have been charged. There is no
suggestion that Blue Cross & Blue Shield has not obtained the best economic benefit for its
subscribers. Indeed, the complaint is at bottom that because of Blue Cross & Blue Shield's
market power, it has been able to get a better deal for medical services than Ocean State
and that because of its market power, physicians have the awful choice of yielding to its fee
schedule or losing their patients who are Blue Cross & Blue Shield subscribers. At the same
time the evidence is clear that Blue Cross & Blue Shield face intense competition from
Ocean State and RIGHA. Also, insurance companies with national bases are becoming
more involved in the Rhode Island market. Large employers have become self insurers.
Thus, although Blue Cross & Blue Shield has market power, it is not without limit. There is
a competitive market. The argument goes that since so many persons are enrolled in Blue
Cross & Blue Shield in the State of Rhode Island what it does must be considered in the
context of its market power. So much is true. The question is did it use its obvious market
power in an anti-competitive manner? See, e.g., Aspen Skiing Co. v. Aspen Highlands
Skiing Corp., 472 U.S. 585, 105 S. Ct. 2847, 86 L. Ed. 2d 467 (1985); United States v.
Grinnell Corp., 384 U.S. 563, 86 S. Ct. 1698, 16 L. Ed. 2d 778 (1966); Lorain Journal Co. v.
United States, 342 U.S. 143, 72 S. Ct. 181, 96 L. Ed. 162 (1951); see also United States v.
United Shoe Mach. Corp., 110 F. Supp. 295 (D.Mass.1953), aff'd, 347 U.S. 521, 74 S. Ct.
699, 98 L. Ed. 910 (1954).
What is anti-competitive activity is not a matter that has been clearly defined. There are
some significant signposts along the way, but the route is not so clearly marked that
departures are unavoidable. It is blandly stated that "[t]he use of monopoly power,
however, lawfully acquired, to foreclose competition, to gain a competitive advantage, or to
destroy a competitor, is unlawful under the Sherman Act." 54 Am.Jur.2d § 42, at 692
(citing Home Placement Service, Inc. v. Providence Journal Co., 682 F.2d 274 (1st
Cir.1982), cert. denied, 460 U.S. 1028, 103 S. Ct. 1279, 75 *70 L.Ed.2d 500 (1983)). But
what is the anticompetitive behavior which must be condemned? Theorists have not done
much to illuminate the essential elements. Thus, Areeda talks in terms of exclusionary
conduct not competitive on the merits and not more restraint than reasonably necessary to
maintain competition. P. Areeda, supra ¶ 655(b) n. at 72-73. Courts have adopted Areeda's
definition of exclusionary conduct which includes "behavior that not only (1) tends to
impair the opportunities of rivals, but also (2) either does not further competition on the
merits or does so in an unnecessarily restrictive way." See, e.g., Aspen Skiing Co., 472 U.S.
at 605, 105 S. Ct. at 2859 (citing 3 P. Areeda & D. Turner, Antitrust Law ¶ 626b at 78
(1978)); Barry Wright Corp. v. ITT Grinnell Corp., 724 F.2d 227, 230 (1st Cir.1983) (citing
3 P. Areeda & D. Turner, Antitrust Law ¶ 626 at 83 (1978)); Instructional Sys. Dev. Corp.
v. Aetna Cas. and Sur. Co., 817 F.2d 639, 649 (10th Cir.1987) (citing 3 P. Areeda & D.
Turner, Antitrust Law ¶ 626 (1978)).
It is crucial to differentiate "between practices which tend to exclude or restrict competition

... [from practices that result from] the success of a superior product, a well-run business,
or luck, on the other [hand].", the very essence of competition. Aspen Skiing Co., 472 U.S.
at 604, 105 S. Ct. at 2858. Examples of the effect of competition on the merits are non-
exploitative pricing, higher output, improved product quality, energetic market
penetration, successful research and development, and cost-reducing innovations. See
Aspen Skiing Co., 472 U.S. 585, 105 S. Ct. 2847; United States v. Aluminum Co. of
America, 148 F.2d 416 (2d Cir.1945). Blue Cross & Blue Shield has historically been very
successful. On the other hand, Ocean State's penetration of the market has been
phenomenal. With these general principles in mind, the specific aspects of Blue Cross &
Blue Shield's adverse selection, HealthMate, and prudent buyer policies must be examined.
Adverse selection is criticized because it is claimed that the number of subscribers who it
was estimated would leave Blue Cross was too high. The obvious import of this
circumstance would be to increase the cost of Blue Cross & Blue Shield. It is a curious
argument indeed by a competitor that Blue Cross & Blue Shield was charging too much for
its product. Competitors could hardly be injured by an increase in price. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 583, 106 S. Ct. 1348, 1354, 89 L. Ed. 2d 538
(1986). What is more significant is that no one disputes that adverse selection was a fact.
Healthier persons would tend to enroll in an HMO. If they did so, then without doubt Blue
Cross & Blue Shield would be left with more expensive subscribers. The dispute posited by
Plaintiffs is that fewer subscribers would leave Blue Cross & Blue Shield than Blue Cross &
Blue Shield estimated. This is hardly the basis of an antitrust claim. Certainly, business
people have some area of reasonable and responsible legitimate judgment. This is such an
instance.
HealthMate is the result of research and development which concluded that HMO's will
have a major role in health care financing in the future. Although HealthMate is not an
HMO, it was Blue Cross's attempt to provide a health care financing plan comparable to an
HMO until Blue Cross could establish an HMO program. Antitrust laws support the
introduction of new products, such as HealthMate, because it encourages competition. See
Berkey Photo, Inc., 603 F.2d at 263. If Blue Cross & Blue Shield were foreclosed by the
Sherman Act from competing in an HMO format, the Plaintiff Ocean State would then have
the major HMO market share in Rhode Island. This use of the Sherman Act would produce
obvious anticompetitive effects.
The selective marketing of HealthMate does not negate the policy reason for encouraging
HealthMate. Offering HealthMate as an option to subscribers who are eligible for Ocean
State, is head to head competition between Ocean State and Blue Cross and that
competition benefits consumers by providing them with alternative health care financing
options. It is only because of Ocean State's decision not to *71 compete that the product is
not offered elsewhere. Ocean State seeks, therefore, to benefit from its lack of competitive
effort in areas where for reasons to its advantage it decides not to compete.
With respect to the prudent buyer program, Plaintiffs asserted that there was sufficient
evidence to show that the prudent buyer program was exclusionary. They contended that
the prudent buyer had the purpose and effect of maintaining the Defendant's monopoly
power and was not a legitimate money saving policy. Noting the testimony of Ronald
Battista, Senior Vice President of Professional Relations at Blue Cross & Blue Shield, that
prudent buyer was not designed to produce savings for Blue Cross, Ocean State concluded
that prudent buyer had an anticompetitive purpose. Relying on Blair Suellentrop's, Chief
Executive Officer of Ocean State, testimony regarding the decline in Ocean State's
enrollment and resignation of participating physicians, Ocean State concluded that the
prudent buyer policy was instituted to harm Ocean State. Indeed, it was Ocean State who
claimed that the testimony of Ronald Battista, Blair Suellentrop, and Douglas McIntosh,
Chief Executive Officer of Blue Cross & Blue Shield, established sufficient evidence to show
that the prudent buyer program was anticompetitive.
On the contrary, Mr. Battista's and Mr. McIntosh's testimony indicated that prudent buyer
was instituted to assure that Blue Cross's payments to physicians were not more than
Ocean State's payments to physicians. There was no evidence that securing comparable
fees for physician services resulted in any anticompetitive effect or impaired Ocean State's
competitive opportunities. That the policy had the effect of harming Ocean State was
inevitable, but was from the point of view of the consumer clearly understandable. The
harm that came Ocean State's way was the resignation of some of its physicians, and
claimed increased costs. This harm has to do with the market for physicians' services and
the election by physicians of a course which they considered most beneficial to their
financial point of view. As a naked proposition, it would seem silly to argue that a policy to
pay the same amount for the same services is anticompetitive, even on the part of one who
has market power. This, it would seem, is what competition should be all about.
Relying on Kartell v. Blue Shield of Mass., Defendant claimed that prudent buyer was a
legitimate defense under a "most favored nations clause" which was designed to protect
Blue Cross from paying more for the same services than competitors. 749 F.2d 922 (1st
Cir.1984), cert. denied, 471 U.S. 1029, 105 S. Ct. 2040, 85 L. Ed. 2d 322 (1985). Blue Cross
analogized the prudent buyer policy of this case with the no balance billing policy in
Kartell. See id. In Kartell, the First Circuit held that Blue Cross was a purchaser of health
services and as such had the right to require participating physicians not to balance bill
patients who are Blue Cross subscribers. Id. Blue Cross argued that as a purchaser of health
services it has a lawful right to bargain with its suppliers, the physicians, for the best
possible price terms. Blue Cross is a purchaser of health services. The more Blue Cross's
activities resemble a purchaser the less likely that they are unlawful. See id. at 925. As a
legitimate buyer, Blue Cross is entitled to use its market power to get the best price for the
services it purchases. See id. at 929. Therefore, the prudent buyer policy is clearly not
anticompetitive and does not violate the antitrust laws.
Indeed, if Plaintiffs are correct in their contention that the prudent buyer policy is
anticompetitive, it is impossible not to come to the same conclusion regarding Ocean
State's SIPS plan. There is no principle of antitrust law which would deny a business
practice to any entity with market power and permit that practice on the part of competitor
who does not have market power. To hold prudent buyer anticompetitive would have given
and would give Ocean State an unfair competitive advantage in the market, a result which
is antithetical to the purpose of the Sherman Act and economically detrimental to health
care consumers.
*72 The Defendant's motion for a judgment notwithstanding the verdict is granted on the
antitrust claims. The adverse selection programs, prudent buyer program, and the selective
marketing of HealthMate are not anticompetitive and do not violate the antitrust laws.
There can be no conclusion other than that these programs benefit consumers and
represent legitimate responses to competitive conditions.
ADDITUR
The physicians' class seeks a $1.9 million dollar additur on the antitrust claim. Relying on
the testimony of Thomas Aman and Ronald Battista, Defendant's witnesses, who both
testified that Blue Cross retained at least $1,900,000 from Ocean State participating
physicians and the physicians' class who claimed that Blue Cross retained $1,900,000 from
Ocean State participating physicians, Plaintiffs concluded that there was no valid dispute
concerning the Blue Cross withhold. Therefore, the $1,900,000 that Blue Cross withheld
may be considered as the damage for the antitrust violation. In light of the jury's verdict
and the Court's determination of the Defendant's motion for judgment notwithstanding the
verdict on the antitrust claim, Plaintiffs' motion for additur must be denied.
INTERFERENCE WITH CONTRACTUAL RELATIONSHIPS
Next, it is necessary to determine whether the prudent buyer, adverse selection, or the
selective marketing of HealthMate interfere with the contractual relationships between
Ocean State and its participating physicians. Plaintiffs claimed that Ocean State and the
class of physicians incurred damages under their contracts due to the Defendant's actions.
Ocean State argued that its advertising budget had to be increased beyond what it expected
to spend and above the average advertising expenditures for HMO of its size. Ocean State
claimed it incurred additional advertising expenses of $335,000 due to Blue Cross & Blue
Shield's actions and the subsequent negative publicity. In addition, Ocean State claimed
that it lost profits of $173,013 because prospective members did not enroll due to the
Defendant's actions. Ocean State, also, contended that it incurred unbudgeted expenses of
up to $1,053,740 to retain physicians in certain specialties. The jury did not award any of
these claimed damages to Ocean State.
The class of physicians claimed that the money Blue Cross & Blue Shield withheld caused
the class to suffer damages. In addition, plaintiffs contended that the class of physicians
lost $946,760, which represented the additional moneys Ocean State paid to non-
participating specialists. These damages were erroneously awarded to Ocean State.
Defendant claimed that it did not interfere with Ocean State's contractual relationships
with the class of physicians. It asserted that there was no evidence that any act by Blue
Cross & Blue Shield made more difficult the performance of the Ocean State contracts or
lessened their value. Blue Cross & Blue Shield, also, contended that the class' contracts
were not terminated, breached, or altered in any sense.
The Defendant argued that the jury awards on the interference with contractual
relationships were not based on evidence. Furthermore, Defendant claimed that the
$947,000 the jury awarded Ocean State represented lost payments to the physicians' class
and that Ocean State never claimed that amount as its damages. Therefore, the Defendant
contended that the evidence does not support an award of $947,000 to Ocean State.
Blue Cross & Blue Shield argued that the $1,746,437 awarded to the class of physicians
represented Blue Cross & Blue Shield's estimated savings through the prudent buyer plan
for an eight month period. It did not represent the damages to the class of physicians. The
Defendant's contentions have substantial basis. Although the class claims that the
$1,746,437 equals its damages the class ignores the fact that many physicians who are not
in the class were among those from whom full payment *73 was withheld. The Defendant
further contends that there was no evidence from which a reasonable jury could award any
damages.
The Rhode Island Supreme Court defined the basic elements of a claim for tortious
interference with contractual relationships in Smith Dev. Corp. v. Bilow Enter. Inc., 112
R.I. 203, 211, 308 A.2d 477, 482 (1973). Later cases have adopted these elements for a
claim of tortious interference with prospective contractual relationships. See, e.g., Roy v.
Woonsocket Inst. for Sav., 525 A.2d 915, 919 (R.I.1987); Mesolella v. City of Prov., 508
A.2d 661, 670 (R.I.1986); Federal Auto Body Works, Inc. v. Aetna Cas. & Sur. Co., 447
A.2d 377, 380-81 (R.I.1982). Plaintiff must prove by the preponderance of the evidence
that a contract existed, that the alleged wrongdoer knew of the contract, that the
wrongdoer's interference was intentional, and that damages resulted from it. Smith Dev.
Corp., 112 R.I. at 211, 308 A.2d at 482. The Plaintiff must show that the Defendant
intended to do harm without justification. Mesolella, 508 A.2d at 670. The Defendant has
the burden of proving sufficient justification for an interference. Smith Dev. Corp., 112 R.I.
at 211, 308 A.2d at 482.
The Plaintiffs have met their burden of proving that contracts existed between Ocean State
and Ocean State participating physicians and that Blue Cross knew of these contracts. The
Plaintiffs, however, have failed to present any evidence that Blue Cross intentionally
interfered with the contracts by implementation of the prudent buyer program, adverse
selection, and the selective marketing of HealthMate. The only evidence was that some
physicians perceived it to be to their economic advantage to terminate their relationship
with Ocean State in accord with the terms of their agreement with Ocean State because of
the prudent buyer policy. Translating this circumstance into an intentional interference by
Blue Cross & Blue Shield with a contractual relationship is quite clearly absurd. Blue Cross
& Blue Shield announced what it was willing to pay. Some physicians, not willing to give
Blue Cross & Blue Shield a discount, resigned from Ocean State as permitted by their
contract with Ocean State. There is no evidence of intentional interference with the
contracts between the class of physicians and Ocean State. Further, prudent buyer, adverse
selection, and the selective marketing of HealthMate were justified courses of action that
Blue Cross undertook as appropriate competition so that its subscribers would not be
further burdened. Absent these programs, Blue Cross would pay more to the same
physicians for their services than Ocean State. Blue Cross & Blue Shield would be subject to
additional expense because of healthier subscribers transferring to an HMO because Blue
Cross subscribers would lack a program comparable to Ocean State's coverage. It is obvious
that Blue Cross acted with justification and therefore, the prudent buyer policy, adverse
selection, the selective marketing of HealthMate were without doubt, justified responses to
competitive conditions. Defendant's motion for judgment notwithstanding the verdict on
the interference of contractual relationships must be and is granted.
Further, the jury verdict that Defendant was liable on the claim of tortious interference
with contractual relationships was against the clear weight of the evidence that Blue Cross
justifiably instituted the prudent buyer policy, adverse selection, and the selective
marketing of HealthMate. Also, the damages awarded by the jury were inappropriate. A
new trial is required to prevent injustice. Giving full respect to the jury's determination, the
Court is left with the firm conviction that a mistake has been committed in that damage
amounts have been awarded to parties who are not entitled to them. Therefore,
Defendant's motion for a new trial on the intentional interference with contractual
relationships is also granted.
INJUNCTIVE RELIEF
Plaintiffs and Defendant seek injunctive relief. Plaintiffs move to enjoin Blue Cross from
continuing the prudent buyer program *74 or implementing a similar program and to
restrain the marketing of Health-Mate. The Defendant moves to enjoin the Plaintiff-
Intervenors from engaging in the illegal practices alleged and to restrain the Physician and
Surgeons Association of Rhode Island, Inc. from negotiating or attempting to negotiate
collectively physician fees with Blue Cross.
Although Plaintiffs and Defendant seek equitable relief for different purposes, the burdens
of proof are the same for each moving party. Congress enacted Section 16 of the Clayton Act
to permit private actions for equitable relief. 15 U.S.C. § 26 (Supp.1988). Section 16 of the
Clayton Act, reads in part: "[a]ny person ... [or] corporation ... shall be entitled to sue for
injunctive relief ... against threatened loss or damage by a violation of the antitrust laws ...
under the same conditions and principles as injunctive relief against threatened conduct
that will cause loss or damage ..." 15 U.S.C. § 26. (Supp.1988). Injunctive relief is available
to private parties when the traditional equity principles are met and there is a
demonstration of a threatened injury. See, e.g., Hawaii v. Standard Oil Co., 405 U.S. 251,
260, 92 S. Ct. 885, 890, 31 L. Ed. 2d 184 (1972); Zenith Radio Corp. v. Hazeltine Research,
Inc., 395 U.S. 100, 130, 89 S. Ct. 1562, 1580, 23 L. Ed. 2d 129 (1969); Cia. Petrolera Caribe,
Inc. v. Arco Caribbean, Inc., 754 F.2d 404, 407-08 (1st Cir.1985). The traditional elements
that a moving party must show for injunctive relief are: 1) irreparable harm to the Plaintiff
if the injunction is not granted, 2) inadequacy of a legal remedy, 3) that the public interest
will not be adversely affected by granting the injunction; 4) that the harm to Plaintiff
outweighs any harm to the Defendant by granting the injunction. But in order to prevail,
Plaintiff must "demonstrate a significant threat of injury from an impending violation of
the antitrust laws." See id. 395 U.S. at 130, 89 S. Ct. at 1580. Plaintiff need only show a
threat of injury not an actual injury. See Zenith Radio Corp., 395 U.S. at 130, 89 S. Ct. at
1580; Cia. Petrolera Caribe, Inc., 754 F.2d at 407-08.
Plaintiffs have failed to show that adverse selection, the prudent buyer policy, or
HealthMate have threatened loss or damage to their business or property because of
violations of the antitrust laws for the reasons heretofore stated. Therefore, Plaintiffs'
motion for a permanent injunction against prudent buyer policy and HealthMate is denied.
With respect to the Defendant's counterclaim for injunctive relief, it is premature. There is
no evidence that the Plaintiff-Intervenors or their officers, directors, agents, or employees
engaged in any illegal practice. Furthermore, there is no evidence that the Physicians and
Surgeon Association of Rhode Island negotiated or attempted to negotiate collectively with
Blue Cross concerning physicians' fees. Thus, Defendant's motion for a permanent
injunction against the Plaintiff-Intervenors is denied.
DECLARATORY RELIEF
Plaintiffs also seek a declaratory judgment against the alleged acts which violate the
Sherman Act. Defendant seeks a declaratory judgment against the Plaintiff-Intervenors
from collectively negotiating fees to be paid by Blue Cross. The nature of the parties' claims
is equitable. In light of the Court's previous ruling on the equitable claims, the Court denies
declaratory relief to Plaintiffs and Defendant.
CONCLUSION
Defendant's motion for judgment notwithstanding the verdict is granted on both the
antitrust claims and the interference with contractual relationships claims. Defendant's
motion for a new trial is granted on the claims of intentional interference with contractual
relationships. Plaintiffs' motion for additur is denied because there is no antitrust violation.
Plaintiffs' motion for a permanent injunction against the prudent buyer program and
HealthMate is denied because Plaintiffs' failure to show a prospective injury. The
Defendant's counterclaim *75 against the Plaintiff-Intervenors is denied because it is
premature.
NOTES
[1] The Physicians and Surgeons Association of Rhode Island and nineteen individual
physicians intervened seeking injunctive relief and monetary damages against Defendant
Blue Cross, a claim dismissed at trial. The Defendant Blue Cross also claimed against the
Plaintiff-Intervenors alleging that Plaintiff-Intervenors violated Section One of the
Sherman Act by conspiring to collectively negotiate with Blue Cross and sought injunctive
and declaratory relief. There is no present threat to negotiate; therefore, the claim is denied
as premature.

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3/10/22, 5:37 PM Ocean State Physicians Health Plan v. Blue Cross, 692 F. Supp. 52 (D.R.I.

Ocean State Physicians Health Plan v.

US District Court for the District of Rhode Island

July 27, 1988

692 F. Supp. 52 (1988)

OCEAN STATE PHYSICIANS HEALTH PLAN, INC., et al., Plaintiffs,

BLUE CROSS & BLUE SHIELD OF RHODE ISLAND, Defendant.

Civ. A. No. 86-0598-B.

United States District Court, D. Rhode Island.

July 27, 1988.

FRANCIS J. BOYLE, Chief Judge.

Ocean State is a health maintenance organization (HMO) with headquarters in Warwick,

Under an administrative services agreement, however, Blue Cross provided management

In an effort to control expenses and hopefully to provide a dividend to its physician

Plaintiffs contended that approximately one-third of Ocean State's participating physicians

Defendant's argument warrants some attention as a ground for granting Defendant's

First, that the Defendant had monopoly power in a relevant market;

Third, that Defendant's activities occurred in or affected interstate commerce;

Fourth, that Plaintiff was injured in its business or property because of

It is crucial to differentiate "between practices which tend to exclude or restrict competition

INTERFERENCE WITH CONTRACTUAL RELATIONSHIPS

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