CSAHA/UHHS-Canton, Inc. v. Aultman Health Found. , 2012 Ohio 897 ( 2012 )

[Cite as CSAHA/UHHS-Canton, Inc. v. Aultman Health Found., 2012-Ohio-897.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
CSAHA/UHHS-CANTON, INC. JUDGES:
DBA MERCY MEDICAL CENTER Hon. William B. Hoffman, P.J.
Hon. Patricia A. Delaney, J.
Plaintiff-Appellee Hon. Donna J. Carr, J. (sitting by
Assignment by the Ohio Supreme
-vs- Court)
AULTMAN HEALTH FOUNDATION Case No. 2010CA00303
AULTMAN CORPORATION
AULTMAN HOSPITAL, AND
MCKINLEY LIFE INSURANCE OPINION
COMPANY
Defendants-Appellants
CHARACTER OF PROCEEDING: Appeal from the Stark County Court of
Common Pleas, Case No. 2007CV05277
JUDGMENT: AFFIRMED, IN PART; AND REVERSED,
IN PART
DATE OF JUDGMENT ENTRY: March 5, 2012
APPEARANCES:
For Plaintiff-Appellee For Defendants-Appellants
LEE E. PLAKAS ALLEN SCHULMAN, JR.
CHRISTOPHER M. HURYN BRIAN L. ZIMMERMAN
EDMOND J. MACK Schulman & Zimmerman
Tzangas, Plakas, Mannos & Raies, LTD. 236 Third St. S.W.
220 Market Avenue South, 8th Floor Canton, Ohio 44702
Canton, Ohio 44702
DANIEL R. WARREN JOHN R. GALL
SCOTT C. HOLBROOK KEITH SHUMATE
KAREN E. SWANSON HAAN PHILOMENA M. DANE
Baker & Hostetler, LLP HEATHER L. STUTZ
3200 National City Center CHRISTOPHER F. HAAS
1900 East Ninth Street Squire, Sanders & Dempsey, LLP.
Cleveland, Ohio 44114 41 South High Street
2000 Huntington Center
Columbus, Ohio 43215-6197
Stark County, Case No. 2010CA00303 2
Per Curiam
{¶1} Defendants-Appellants, Aultman Health Foundation, AultCare Corporation,
Aultman Hospital, and McKinley Life Insurance Company appeal the October 19, 2010
judgment entries entered by the Stark County Court of Common Pleas. Plaintiff-
Appellee is CSAHA/UHHS-Canton, Inc. dba Mercy Medical Center.
STATEMENT OF THE FACTS AND THE CASE
{¶2} The citizens of Stark County and surrounding area are served by two full-
service hospitals located in Canton, Ohio -- Mercy Medical Center and Aultman
Hospital. The local population is fortunate to be able to choose between these two
distinguished hospitals for their health care needs. However, not as well known to the
local population is the competition between Mercy Medical Center and Aultman Hospital
to serve the community’s health care needs. A competitive business atmosphere drives
health care choice. An individual patient’s health choice is often dictated by his or her
employer, who provides health insurance to its employees. The employer chooses the
health insurance provider. The choice of health insurance provider is typically made
upon the advice of an insurance broker. What follows is a narrative of the interplay of
insurance company, insurance broker, and customer and the competitive business of
health care services between Mercy Medical Center and Aultman Hospital.
{¶3} Aultman Health Foundation (“AHF”) is a non-profit corporation and parent
company of Aultman Hospital, AultCare Corporation, and McKinley Life Insurance
Company. Aultman Hospital is a non-profit hospital. AultCare Corporation (“AultCare”)
is a joint venture between AHF and a local group of physicians, whom have no
monetary ownership in AultCare, but serve in the governance of AultCare. AultCare is a
Stark County, Case No. 2010CA00303 3
non-profit, third-party administrator (“TPA”) licensed with the Ohio Department of
Insurance. As a TPA, AultCare does not provide insurance but rather provides
administrative services, such as reviewing and paying claims. AultCare enters into
contracts with hospitals and physicians to create a “network” through which AultCare’s
customers receive medical services at contracted prices. McKinley Life Insurance
Company (“McKinley”) is an insurance company licensed through the Ohio Department
of Insurance. McKinley provides various insurance products to employer groups and
individuals. While AultCare and McKinley are separate companies, the name
“AultCare” is used to refer to both entities. A customer with AultCare receives health
care from providers within the AultCare network and Aultman Hospital is the only “in
network” hospital.
{¶4} Mercy Medical Center (“Mercy”) is also a non-profit hospital. Mercy does
not own an insurance company; however, it does own a 20% interest in Ohio Health
Choice (“OHC”). OHC sells access to a network of hospitals and physicians, including
Mercy. Mercy also obtains patients through managed care contracts it has entered into
with almost 40 insurance companies such as Medical Mutual, Anthem, Aetna, and
United Healthcare. Mercy does not accept health insurance coverage by AultCare.
{¶5} Insurance companies and TPAs market and sell their products through
independent insurance brokers. Independent brokers are licensed by insurance
companies to sell that company’s products, often among others. The brokers act as
intermediaries between the insurance companies and businesses. Insurance contracts
typically last for one year. At that time, the employers will decide whether to renew their
insurance coverage or obtain new coverage. Brokers will contact insurers on the
Stark County, Case No. 2010CA00303 4
employer’s behalf, obtain quotes for coverage, present coverage alternatives to the
employer, and advise the employer on the various options.
{¶6} Brokers generally receive compensation through the insurance companies
for the sale of their products. All insurers pay a base commission to their broker, which
is generally calculated as a percentage of the insurance premium paid by the client.
There are other forms of compensation, such as bonuses for new business placed with
the insurer or retention bonuses for clients who renew their coverage. Brokers are not
required to disclose the compensation received from insurance companies unless the
client requests that information. Confidentiality agreements between brokers and
insurance companies are common within the industry.
{¶7} Aultman originally marketed its managed care plans through its own in-
house sales force. In 1997, Aultman changed its methods to increase its sales from
independent brokers and created the Conversion Support Program (“CSP”) to increase
AultCare membership. The CSP was a bonus program established by Aultman for a
select group of brokers. The amount of the bonus was dependent on the number of
“lives” converted to the AultCare insurance program. A broker could be paid up to $200
for every “life” the broker converted to AultCare. Aultman paid the brokers 60% of the
bonus in the first year if the broker’s client selected AultCare as their health insurance
provider and the broker would receive the remaining 40% bonus if the client renewed
with AultCare for two additional years. The brokers were required to sell a minimum
amount of business to qualify for the bonus, and had to maintain a specified retention
rate. The broker was penalized with fines of $40 per “life” if the broker failed to retain up
Stark County, Case No. 2010CA00303 5
to 97% of their AultCare lives per year. If the client did not renew with AultCare, the
broker would not receive the remaining 40% bonus.
{¶8} The brokers who participated in the CSP were required to enter into
confidentiality agreements where the broker could not inform their clients they were
receiving compensation from Aultman if the client chose AultCare as their insurance
provider. In 2004, Aultman waived the confidentiality provision.
{¶9} The launch of the CSP caused AultCare to become the major health
insurance provider in the area. Over a 13-year period, 1,739 employer groups selected
AultCare as their insurance provider for which their broker received the CSP bonus.
{¶10} On December 27, 2007, Mercy filed a Complaint against AHF, Aultman
Hospital, AultCare, and McKinley Life Insurance Company (hereinafter collectively
“Aultman”). In its Complaint, Mercy asserted seven causes of action: three anti-trust
claims, tortious interference with business relations, deceptive trade practices, unfair
competition, and civil conspiracy. The primary challenge of Mercy’s Complaint involved
the CSP. Aultman filed an Answer and Counterclaim alleging defamation, unfair
competition, and frivolous litigation.
{¶11} Mercy amended its Complaint on December 19, 2008, to add a claim
under the Ohio Corrupt Practices Act (“POCA”) statute, R.C. 2923.31, et seq. Mercy
alleged Aultman formed a criminal enterprise with the brokers involved in the CSP and
engaged in a corrupt activity involving violations of 18 U.S.C. 1954.
{¶12} Aultman filed eight motions for summary judgment and Mercy filed one
motion for summary judgment. The trial court denied all motions.
Stark County, Case No. 2010CA00303 6
{¶13} The matter proceeded to a jury trial in April 2010. After eight weeks for
trial, the case was submitted to the jury. The jury found for Mercy on only one of its
claims, finding Mercy had proved by a preponderance of the evidence that Aultman
violated the Ohio Pattern of Corrupt Activities statute. The jury found for Aultman on all
of Mercy’s other claims. The jury further found in favor of Mercy on Aultman’s unfair
competition counterclaim. The trial court granted Mercy’s motion for directed verdict on
the remainder of Aultman’s counterclaims. The jury awarded Mercy $6,148,000 in
damages. The trial court entered judgment on the verdict on June 17, 2010.
{¶14} On June 25, 2010, Mercy moved for prejudgment interest, attorney’s fees,
expert fees, and injunctive relief. Aultman filed its Motion for Judgment Notwithstanding
the Verdict and/or New Trial on July 1, 2010.
{¶15} The trial court ruled on the motions on October 19, 2010. The trial court
overruled Aultman’s Motion for Judgment Notwithstanding the Verdict and/or New Trial.
The trial court granted Mercy’s motion for attorney’s fees pursuant to POCA in the
amount of $4,000,000 and denied its motion for litigation costs, including expert fees.
Finally, the trial court granted Mercy’s motion for injunctive relief under R.C.
2923.34(B)(2), awarding the City of North Canton $75,600 and $190,800 to Stark
County Commissioners.
ASSIGNMENTS OF ERROR
{¶16} It is from these judgment entries Aultman now appeals, raising five
Assignments of Error:
{¶17} “I. THE TRIAL COURT ERRED IN FAILING TO SET ASIDE THE
VERDICT AND/OR GRANT A NEW TRIAL DUE TO NUMEROUS ERRORS IN THE
Stark County, Case No. 2010CA00303 7
PATTERN OF CORRUPT ACTIVITY (“POCA”) VERDICT. (OCT. 19, 2010
JUDGMENT ENTRY ON DEFENDANTS’ MOTION FOR JUDGMENT
NOTWITHSTANDING THE VERDICT AND/OR FOR A NEW TRIAL).
{¶18} “II. THE TRIAL COURT ERRED IN FAILING TO SET ASIDE THE
DAMAGES AWARD, WHICH IS NOT AUTHORIZED UNDER POCA. (OCT. 19, 2010
JUDGMENT ENTRY ON DEFENDANTS’ MOTION FOR JUDGMENT
NOTWITHSTANDING THE VERDICT).
{¶19} “III. THE TRIAL COURT ERRED IN FAILING TO ORDER A NEW TRIAL
DUE TO PERVASIVE, FUNDAMENTAL ERRORS IN THE TRIAL. (OCT. 19, 2010
JUDGMENT ENTRY ON DEFENDANTS’ MOTION FOR JUDGMENT
NOTWITHSTANDING THE VERDICT AND/OR FOR A NEW TRIAL).
{¶20} “IV. THE TRIAL COURT ERRED IN AWARDING AN EXCESSIVE
AMOUNT OF ATTORNEY’S FEES. (OCT. 19, 2010 JUDGMENT ENTRY ON
MERCY’S MOTION FOR ATTORNEY’S FEES).
{¶21} “V. THE TRIAL COURT ERRED IN ORDERING UNNECESSARY AND
IMPROPER INJUNCTIVE RELIEF. (OCT. 19, 2010 JUDGMENT ENTRY ON
MERCY’S MOTION FOR INJUNCTIVE RELIEF).”
I.
{¶22} In its first assignment of error, Aultman claims the trial court erred in not
setting aside the jury’s verdict on Mercy’s POCA claim, or granting it a new trial.
{¶23} Ohio Civil Rule 50 governs motions for directed verdicts, judgments
notwithstanding the verdict and new trial, and reads, in pertinent part:
{¶24} “(A) Motion for a directed verdict
Stark County, Case No. 2010CA00303 8
{¶25} “***
{¶26} “(4) When granted on the evidence. When a motion for a directed verdict
has been properly made, and the trial court, after construing the evidence most strongly
in favor of the party against whom the motion is directed, finds that upon any
determinative issue reasonable minds could come to but one conclusion upon the
evidence submitted and that conclusion is adverse to such party, the court shall sustain
the motion and direct a verdict for the moving party as to that issue.
{¶27} “(B) Motion for judgment notwithstanding the verdict
{¶28} “Whether or not a motion to direct a verdict has been made or overruled
and not later than fourteen days after entry of judgment, a party may move to have the
verdict and any judgment entered thereon set aside and to have judgment entered in
accordance with his motion; or if a verdict was not returned such party, within fourteen
days after the jury has been discharged, may move for judgment in accordance with his
motion. A motion for a new trial may be joined with this motion, or a new trial may be
prayed for in the alternative. If a verdict was returned, the court may allow the judgment
to stand or may reopen the judgment. If the judgment is reopened, the court shall either
order a new trial or direct the entry of judgment, but no judgment shall be rendered by
the court on the ground that the verdict is against the weight of the evidence. If no
verdict was returned the court may direct the entry of judgment or may order a new
trial.”
{¶29} When ruling on a motion for judgment notwithstanding the verdict, a trial
court applies the same test as in reviewing a motion for a directed verdict. Ronske v.
Heil Co., 5th Dist. No. 2006-CA-00168, 2007-Ohio-5417; See also, Pariseau v. Wedge
Stark County, Case No. 2010CA00303 9
Products, Inc., 36 Ohio St.3d 124, 127, 522 N.E.2d 511 (1988). “A motion for judgment
notwithstanding the verdict is used to determine only one issue i.e., whether the
evidence is totally insufficient to support the verdict.” Krause v. Streamo, 5th Dist. No.
2001CA00341, 2002-Ohio-4715, ¶14; see also, McLeod v. Mt. Sinai Medical Center,
166 Ohio App.3d 647, 2006-Ohio-2206, 853 N.E.2d 1235 (8th Dist.), reversed on other
grounds, 116 Ohio St.3d 139, 2007-Ohio-5587, 876 N.E.2d 1201. Neither the weight of
the evidence nor the credibility of the witnesses is a proper consideration for the court.
Posin v. A.B.C. Motor Court Hotel, Inc., 45 Ohio St.2d 271, 275, 344 N.E.2d 334 (1976).
See also, Civ.R. 50(B); and Osler v. Lorain, 28 Ohio St.3d 345, 347, 504 N.E.2d 19(1986). In other words, if there is evidence to support the nonmoving party's side so that
reasonable minds could reach different conclusions, the court may not usurp the jury's
function and the motion must be denied. Goodyear Tire & Rubber Co. v. Aetna
Casualty & Surety Co., 95 Ohio St.3d 512, 2002-Ohio-2842, 769 N.E.2d 835. Again, in
ruling on a motion for judgment notwithstanding the verdict, the court does not
determine factual issues, but only questions of law, even though it is necessary to
review and consider the evidence in deciding the motion. Goodyear at ¶4.
{¶30} Appellate review of a ruling on either a motion for directed verdict or a
motion for judgment notwithstanding the verdict is de novo. Midwest Energy
Consultants, L.L.C. v. Utility Pipeline, Ltd., 5th Dist. App. No. 2006CA00048, 2006-Ohio-
6232; Ronske v. Heil, supra; Cleveland Electric Illuminating Company v. Public Utility
Commission, 76 Ohio St.3d 521, 523, 668 N.E.2d 889 (1996), citation deleted.
{¶31} In addition, Civ.R. 59(A) states, in pertinent part:
Stark County, Case No. 2010CA00303 10
{¶32} “A new trial may be granted to all or any of the parties and on all or part of
the issues upon any of the following grounds:
{¶33} “* * *
{¶34} “(6) The judgment is not sustained by the weight of the evidence;
however, only one new trial may be granted on the weight of the evidence in the same
case;
{¶35} “(7) The judgment is contrary to law;
{¶36} “* * *;
{¶37} “(9) Error of law occurring at the trial and brought to the attention of the
trial court by the party making the application.
{¶38} “In addition to the above grounds, a new trial may also be granted in the
sound discretion of the court for good cause shown.”
{¶39} Our standard of appellate review on a motion for new trial is abuse of
discretion. Anthony v. Hunt, 5th Dist. No. 1997CA00170, 1998 WL 172942 (Feb. 9,
1998). In reviewing a decision on a motion for new trial, an appellate court must view
the evidence in a light most favorable to the trial court's decision, rather than in favor of
the nonmoving party. See Jenkins v. Krieger, 67 Ohio St.2d 314, 320, 423 N.E.2d 856(1981).
{¶40} Ohio’s POCA statute is based on the federal Racketeer Influenced and
Corrupt Organizations Act (“RICO”), and requires a plaintiff to prove the following
elements:
{¶41} “(1) That conduct of the defendant involves the commission of two or more
specifically prohibited state or federal criminal offenses;
Stark County, Case No. 2010CA00303 11
{¶42} “(2) that the prohibited criminal conduct of the defendant constitutes a
pattern of corrupt activity, and
{¶43} “(3) that the defendant has participated in the affairs of an enterprise or
has acquired and maintained an interest in or control of an enterprise.” Schlender
Enters., LP v. Reese, 3rd Dist. Nos. 2-10-16, 2-10-19, 2010-Ohio-5308, ¶31.
{¶44} Mercy relies upon 18 U.S.C. 1954, part of federal ERISA (Employee
Retirement Income Security Act) legislation, to establish Aultman’s “corrupt activity.”
An 18 U.S.C. 1954 violation has four elements:
{¶45} (1) the defendant gave a “fee, kickback, commission, gift, loan, money, or
thing of value” to
{¶46} (2) a person that provides services to an ERISA “benefit plan,” and
{¶47} (3) the payment was made “because of or with intent to…influence [ ]”, the
actions or decisions of the person providing services to the ERISA plan;
{¶48} (4) and the payment was not bona fide compensation for services
rendered.
{¶49} Aultman’s fundamental argument is payments to encourage brokers to
sell an insurer’s products (be they characterized as commissions or bonuses) do not
violate 18 U.S.C. 1954. Aultman primarily relies upon a California federal district court
opinion to support its argument. (See Sante Mineral Waters, Inc. v. Schotz, N.D. Calif.
(1991), 1991 U.S. Dist. Lexis 11347.) Aultman maintains virtually every insurance
company offers incentive compensation intended to encourage brokers to offer and sell
Stark County, Case No. 2010CA00303 12
their products1, a fact Mercy’s own expert, Frank Bitzer admitted, “generally speaking”
was standard within the industry.
{¶50} Mercy counters evidence proved the CSP payments were designed to
give its group of approximately ten selected brokers an unlawful incentive to convert
employers they serviced and influenced to switch to AultCare products. We agree such
evidence is extant in the record. The key issue becomes was there evidence upon
which the jury could find the CSP payments were not “bona fide.”
{¶51} In United States v. McCord, 33 F.3d 1434 (5th Cir. 1994), the United
States Fifth Circuit Court of Appeals explained:
{¶52} “Although § 1954 does not define ‘bona fide’, we can easily discern its
intended meaning by reading it as a whole. See, e.g., N. Singer, 2A Sutherland
Statutory Construction § 46.05, at 103 (5th ed. 1992) (‘each part or section [of a statute]
should be construed in connection with every other part or section so as to produce a
harmonious whole’; ‘it is not proper to confine interpretation to the one section to be
construed’) (footnotes omitted). Section 1954 first describes what is prohibited- inter
alia, the receipt of a thing of value ‘because of’ any actions or decisions relating to the
benefit plan. It then describes, in the exception, what is not prohibited- inter alia, the
payment or acceptance of ‘bona fide salary, compensation, or other payments ... for
services actually performed in the regular course of ... duties’.”
1
Aultman argues within this assignment of error the trial court refused to give its
requested instruction such compensation payments do not violate 18 U.S.C. 1954.
Aultman has not separately assigned as error the trial court’s failure to give the
requested instruction and therefore we disregard the same pursuant to App.R. 12(A).
See Davidson v. Motorists Mut. Ins. Co., 91 Ohio St.3d 262, 744 N.E.2d 713 (2001).
Stark County, Case No. 2010CA00303 13
{¶53} Aultman’s insurance companies were already paying the CSP brokers
standard commissions and bonuses for selling insurance. The CSP was designed to
deliver extra money to select brokers and was intended to give Aultman more influence
and control of their CSP brokers by creating an alliance. The CSP payments were
secret and confidential at their inception.
{¶54} Rick Haines, President and CEO of AultCare and McKinley Life Insurance
Company, testified regarding the penalty or clawback provision of the CSP. (Trial Tr.,
Vol. 8, at p. 40.) Haines conceded under the provision, a broker faced a monetary
penalty if he searched for and presented a superior plan to a client, and the client chose
the superior plan over AultCare. Id. at 41. Haines acknowledged the CSP was a
confidential agreement between Aultman and the select brokers with confidentiality
being a material condition of the agreement. Id. Brokers were penalized for breaches
of confidentiality.
{¶55} Aultman used charitable assets from its tax-exempt Aultman Health
Foundation to make the secret CSP payments even though the Aultman Health
Foundation does not sell insurance or administer health plans, a practice that is not
standard, but rather unique, to the industry.
{¶56} Edward Roth, Chief Executive Officer of Aultman Health Foundation,
testified the CSP was “one hundred percent funded” by the Foundation. (Trial Tr., Vol.
6, p. 197.) Roth acknowledged the Foundation is a not-for-profit, 501(C)(3), charitable
institution that neither sells insurance nor administers a managed care plan. Id. at 198.
In fact, Roth conceded the Foundation, as a charitable not-for-profit institution, is not
permitted to administer a managed care plan. Id. at 199. Roth further admitted the CSP
Stark County, Case No. 2010CA00303 14
was unique in the industry as payment to the brokers was made by someone other than
an insurance company. Id. He agreed it was not industry standard for a broker’s
compensation program to be funded by a non-insurance company. Id.
{¶57} Brokers receiving CSP payments were penalized if they failed to reach
renewal and retention rates by reducing any accrued bonus not yet paid; effectively
penalizing brokers for doing what they are supposed to do…shopping the market and
taking a group of employees to a potentially better competing carrier.
{¶58} Mercy’s expert, Burke Christiansen, a professor of insurance law at
Eastern Kentucky University, explained the duties of an independent insurance broker.
(Trial Tr., Vol. 7, p. 95.) Christiansen noted the broker’s responsibility is to act in the
best interest of his/her client, the employer, finding the employer’s business the best
group health insurance product for his/her employees. Id. Christiansen testified the
CSP did not reward brokers for doing their jobs. Id. at 120. Rather, the CSP included a
holdback provision, which provided a percentage of a broker’s additional commission
was held back, and paid only after the broker renewed the group after a year or two. Id.
at 121. If the group did not renew, the broker forfeited that percentage. Id. at 122.
Christiansen explained this gave the broker an incentive to keep the group with
AultCare. Id. Further, if a broker did not maintain a retention rate between 90% and
97%, the broker was penalized $40/life not retained. Id. at 124. Christiansen added the
standard industry retention is 70%. Id.
{¶59} Aultman initially shrouded the CSP payments in secrecy, with breach by a
broker resulting in forfeiture of all compensation received under the program, a practice
not utilized within the industry. The confidentiality agreements which prohibited the
Stark County, Case No. 2010CA00303 15
brokers from disclosing the CSP payments to their clients establish the compensation
received was not bona fide. See Moreland v. Behl, N.D. No. C-92-1238MHP, 1996 WL
193843 (April 17, 1996), quoting United States v. Schwimmer, 924 F.2d 443 (2d Cir.),
cert. denied, 502 U.S. 810 (1991); See also Nyehling v. New York Life Ins. Co., 163
F.Supp.2d 502(E.D. Pa. 2001).
{¶60} We find when construing the evidence most strongly in favor of Mercy, the
jury could determine the CSP payments were not bona fide; therefore, Mercy presented
sufficient evidence to support the jury’s verdict the numerous CSP payments to the
brokers constituted a violation of Ohio’s POCA act. We find the evidence was not
“totally insufficient” to support the verdict. Krause v. Streamo, 5th Dist. No.
2001CA00341, 2002-Ohio-4715.
{¶61} Within this same assignment of error, Aultman asserts the trial court’s jury
instructions incorrectly shifted the burden of proof as to who must prove whether the
compensation payments were “bona fide.”
{¶62} As noted in our earlier discussion regarding Aultman’s request the jury be
instructed the insurance company’s incentive compensation payments to brokers do not
violate 18 U.S.C. 1954, Aultman has not chosen to separately assign as error the trial
court’s alleged erroneous instruction (See FN 1, ¶ 50 supra.) As such we disregard it.2
{¶63} In that same vein, Aultman complains the trial court’s alleged erroneous
jury instruction regarding who had the burden to prove the CSP payments constituted
2
We note Aultman’s brief fails to reference where in the trial record it timely objected to
the instruction. Furthermore, we find Aultman’s reliance on criminal case law less than
persuasive as to the appropriateness of the trial court’s instruction which followed Ohio
Jury Instructions and Modern Federal Jury Instructions regarding 18 U.S.C. 1954.
Stark County, Case No. 2010CA00303 16
bona fide compensation was particularly prejudicial because it incorrectly excluded a
wide range of evidence relevant to that issue. Specifically, Aultman references the
exclusion of the results of the Department of Labor’s investigation of AultCare’s Form
5500 disclosures, IRS audits, and the conclusions of the Ohio Department of Insurance
regarding the CSP payments. Again, Aultman has failed to separately assign as error
the alleged erroneous exclusion of this evidence. Accordingly, we disregard it as it
pertains to the issue of alleged erroneous jury instructions which, as noted supra, was
not separately assigned as error.
{¶64} Also within its first assignment of error, Aultman attacks the sufficiency of
the evidence to support a finding Aultman participated in an “enterprise.”
{¶65} To prove a POCA claim, a plaintiff must prove an agreement to commit
the wrongful conduct and the defendant and a third person formed an ongoing
organization with a defined structure and continuity that is separate from the pattern of
wrongful conduct. Morrow v. Reminger & Reminger Co. LPA., 183 Ohio App.3d 40, 59,
2009-Ohio-2665, 915 N.E.2d 69 (10th Dist.). Without evidence the conspirators are
organized according to some internal hierarchy, have engaged in routinized activity, and
have held specific rules and responsibilities, there is not structure and therefore, no
enterprise. Sears Roebuck & Co. v. Emerson Elec. Co., N.D. Illinois No. 01 C 8119,
2003 WL 22057251 (Sept. 3, 2003).
{¶66} Aultman argues because the jury found Mercy did not establish the
existence of a conspiracy between Aultman and the CSP brokers3, the evidence was
3
See Jury interrogatory No. 5.
Stark County, Case No. 2010CA00303 17
insufficient to establish the heightened requirement to establish an enterprise under
POCA.4 We disagree.
{¶67} “Ohio courts have held than an ‘enterprise’ should be interpreted broadly
and need not be a formal, structured organization.” In re Nat’l. Century Fin. Enters.,
Inc., Invest. Litig., 604 F. Supp. 2d 1128, 1159 (S.D. Ohio 2009). This Court stated in
State v. Yates, 5th Dist. No. 2009CA0059, 2009-Ohio-6622, a POCA enterprise requires
an ongoing organization with associates that function as a continuing unit. It is not
required an “enterprise” have an existence separate and apart from the underlying
corrupt activity.
{¶68} Mercy counters the evidence at trial proved Aultman’s enterprise with its
CSP brokers in several ways. Aultman consistently referred to its association as a
“team” whose purpose was to give it more influence or control of the CSP brokers’
groups by creating an alliance. The terms of the secret CSP agreements created a
functioning organization between Aultman and its team of brokers.
{¶69} The Aultman association had regular formal gatherings – annual retreats
at resorts for which Aultman paid.
{¶70} We find there was sufficient evidence presented to support the jury’s
conclusion an “enterprise” existed under Ohio’s POCA act.
{¶71} Aultman’s final prong of its first assignment of error asserts the CSP did
not proximately cause injury to Mercy. It is clear a plaintiff bringing a claim under POCA
must prove its damages were proximately caused by the defendant’s corrupt activity.
4
We agree with Mercy, Aultman failed to properly preserve any issue regarding
inconsistent interrogatories and the verdict by not referencing where in the record it
raised the inconsistency before the jury was discharged.
Stark County, Case No. 2010CA00303 18
Lesick v. Manning, 7th Dist. No. 91-C-70, 1992 WL 380284 (Dec. 17, 1992). The key is
the directness of the relationship between the conduct and the harm, not the
foreseeability. Hemi Group, LLC v. City of New York, _U.S._, 130 S.Ct. 983, 175
L.Ed.2d 943 (2010); Chaz Concrete Co., LLC. v. Codell, E.D. Ky. No. 3:03-52.KKC,
2010 WL 1227750 (Mar. 29, 2010).
{¶72} Aultman maintains employers chose AultCare because it offered the most
benefits at the most competitive prices. Aultman maintains no evidence existed any
broker misrepresented or withheld any information regarding the costs, terms, or
benefits of any AultCare product to an employer to induce them to select AultCare, nor
was there evidence any CSP broker recommended Aultman when it was not in the best
interests of the employer to do so. As such, Aultman argues Mercy’s claim the CSP
was the reason its clients were selecting AultCare was based on speculation.
{¶73} Aultman concludes its damage causation argument by claiming Mercy
failed to show how the CSP payments caused individual employees to choose medical
services from Aultman rather than Mercy.5
{¶74} In response, Mercy notes, unlike RICO, the Ohio POCA act specifically
permits recovery for all damages directly or indirectly caused by Aultman’s CSP
payments. (Emphasis added.) R.C. 2923.34(E).
{¶75} Mercy notes Aultman made millions of dollars of secret CSP payments
over and above the ordinary commissions and bonuses it was already paying its
brokers and more than 1,700 employer groups covering 65,000 lives were converted to
AultCare under the program. The CSP brokers were bringing virtually no business to
5
In support, Aultman notes the jury’s answers to interrogatories No. 3 and 4.
Stark County, Case No. 2010CA00303 19
Aultman until the CSP was initiated. One CSP broker testified he moved 80% of his
book of business to AultCare after the CSP went into effect.
{¶76} Mercy presented evidence its share of the market of privately insured
patients dropped significantly after Aultman started the CSP and Mercy’s damage
expert testified Aultman generated over $190 million from services performed on the
converted lives, and that a significant portion of those services would have been
provided by Mercy.
{¶77} Given Ohio’s recognition of recovery for indirect injury -- which is broader
than the comparable federal RICO requirement -- we find the evidence was sufficient to
support the jury’s inference/conclusion Aultman’s pattern of corrupt activities
proximately caused damage to Mercy.
{¶78} Aultman’s first assignment of error is overruled.
II.
{¶79} The jury found in jury interrogatory no. 6 Mercy proved by a
preponderance of the evidence Aultman violated POCA by the use of the CSP. Based
on their finding, the jury awarded Mercy $6,148,000 in compensatory damages.
Aultman filed a motion for judgment notwithstanding the verdict on July 1, 2010 and
argued the trial court should reject the jury’s verdict under POCA because the statute
does not authorize an award of actual damages where a POCA violation is proven only
by the preponderance of the evidence. The trial court denied Aultman’s motion as to
the damages award on October 19, 2010. On appeal, Aultman argues in its second
assignment of error this Court should vacate the damages award. We disagree.
Stark County, Case No. 2010CA00303 20
{¶80} On March 24, 2010, Aultman submitted its proposed jury instructions. As
to the POCA cause of action, Aultman proposed the following instruction as introduction
and elements of the POCA violation. Aultman stated its authority for the instruction was
“OJI-CV 445.01, OJI-CV 455.03.” The proposed instructions read:
{¶81} “Lastly, Plaintiff is seeking to recover damages that it claims were caused
by Defendants engaging or conspiring to engage in a pattern of corrupt activity in
violation of Ohio’s Pattern of Corrupt Activity Act (‘POCA’).
{¶82} “To prevail on this claim against any Defendant, Plaintiff must prove all of
the following elements by a preponderance, or greater weight, of the evidence
respecting that Defendant:
{¶83} “(A) That the Defendant was a ‘person’ under the definition I will give you
in a moment;
{¶84} “(B) That the Defendant was employed by or associated with an
‘enterprise’ separate and apart from the Defendant;
{¶85} “(C) That the Defendant conducted or participated in, directly or indirectly,
the affairs of the enterprise through a pattern of corrupt activity; and
{¶86} “(D) That Plaintiff was damaged, directly or indirectly, as a result of the
Defendant’s conduct.
{¶87} “I will now instruct you about the specific requirements of each of those
elements.”
{¶88} The trial court instructed the jury as follows concerning Mercy’s claim
Aultman violated POCA:
Stark County, Case No. 2010CA00303 21
{¶89} “In a civil action, the burden is on both Mercy and Aultman to prove every
essential element of their claims by the preponderance of the evidence. In addition,
with respect to Mercy’s claim under the Pattern of Corrupt Activities Statute you will also
be asked whether Mercy has proven its case by clear and convincing evidence.” (Trial
Tr., Vol. 34, p. 18.)
{¶90} The trial court then instructed the jury as to the elements of a POCA
violation:
{¶91} “You must decide whether Aultman violated the Ohio Pattern of Corrupt
Activities Statute. To prevail on this claim Mercy prove all [sic] of the elements of the
four-part test.
{¶92} “In order to find for Mercy on its Ohio Pattern of Corrupt Activities cause of
action, you must find the following four elements by a preponderance of the evidence:
one, that Aultman was a person as defined by the Ohio Pattern of Corrupt Activities
Statute; two, that Aultman and the CSP brokers formed an association-in-fact
enterprise; three, Aultman conducted or participated in directly or indirectly the affairs of
the enterprise through a pattern of corrupt activity or conspired to do the same; and
four, Mercy was injured directly or indirectly as a result of Aultman Defendant’s conduct.
{¶93} “If you find that Mercy has shown each of the above four elements by a
preponderance of the evidence your verdict should be for Mercy on this cause of action.
* * *.” (Trial Tr., Vol. 34, p. 53-55.)
{¶94} The jury instructions went on to recite the standards as to damages:
{¶95} “Damages. If you find that Mercy has proven all of the elements of this
claim and that Aultman has failed to prove a viable defense to this claim, then you must
Stark County, Case No. 2010CA00303 22
further decide the amount of damages to which Mercy is entitled. Mercy’s damages can
include compensatory damages and future damages.” (Trial Tr., Vol. 34, p. 62.)
{¶96} After the trial court instructed the jury, the trial court took objections from
the parties on the jury instructions. In its objections and relevant to this appeal, Aultman
objected to the burden of proof on a POCA violation as follows:
{¶97} “In the initial instruction describing the burden of proof, the Court notes
that Mercy’s obligation under the Pattern of Corrupt Activities Statute was a clear and
convincing burden, and yet when the Court instructed specifically on the Pattern of
Corrupt Activities Statute it gave the jury an instruction by – of preponderance of the
evidence and that inconsistent instruction with regard to burden of proof prejudices the
Defendants.” (Trial Tr., Vol. 34, p. 98.)
{¶98} Mercy then raised a question regarding a proposed jury interrogatory.
(Trial Tr., Vol. 34, p. 158.) Mercy proposed a jury interrogatory where the jury would be
asked if they found Mercy proved a POCA violation and its actual damages by clear and
convincing evidence. Aultman objected to the proposed jury interrogatory, stating that
based on the current jury instructions, utilizing a preponderance of the evidence
standard of proof for a POCA violation and then including a jury interrogatory regarding
the clear and convincing standard for a POCA violation would be inconsistent and
prejudicial. (Trial Tr., Vol. 34, p. 159.) The trial court did not permit Mercy to include the
jury interrogatory. Id. at p. 163.
{¶99} Aultman argued in its motion for judgment notwithstanding the verdict and
on appeal in a civil POCA action under R.C 2923.34, there are only two remedies
available to the plaintiff: injunctive relief and/or triple the actual damages the party
Stark County, Case No. 2010CA00303 23
sustains. For each remedy, there exists a different standard of proof. Upon a showing
of a violation of preponderance of the evidence, a plaintiff is entitled to equitable and
injunctive relief under R.C. 2923.34(B). Treble damages will be awarded only upon a
showing of a violation by clear and convincing evidence. Schweisberger v. Weiner, 5th
Dist. Nos. 1994 CA 00291, 1995 CA 00367, 1995 WL 808866 (Dec. 12, 1995). R.C.
2923.34(E) provides:
{¶100} “In a civil proceeding under division (A) of this section, any person
directly or indirectly injured by conduct in violation of section 2923.32 of the Revised
Code or a conspiracy to violate that section, other than a violator of that section or a
conspirator to violate that section, in addition to relief under division (B) of this section,
shall have a cause of action for triple the actual damages the person sustained. To
recover triple damages, the plaintiff shall prove the violation or conspiracy to violate that
section and actual damages by clear and convincing evidence. Damages under this
division may include, but are not limited to, competitive injury and injury distinct from the
injury inflicted by corrupt activity.”
{¶101} Aultman argues there is no statutory support for the award of actual
damages where a POCA violation has been proven only by the preponderance of the
evidence. Because Mercy failed to prove its actual damages by clear and convincing
evidence, Aultman contends Mercy is not entitled to actual damages.
{¶102} Before considering Aultman’s legal argument, we must first determine
our standard of review. Aultman’s appellate brief is silent as to where in the trial court
proceedings Aultman objected to the utilization of the preponderance of the evidence
standard of proof for the award of only actual damages under a POCA violation.
Stark County, Case No. 2010CA00303 24
Aultman proposed a jury instruction regarding the award of compensatory damages
under a preponderance of the evidence standard of proof for a POCA violation.
Aultman did object to the jury instructions as to POCA; however, a review of the record
shows that Aultman did not specifically object to the issue raised in its JNOV motion.
Aultman objected to the trial court’s use of the clear and convincing standard and the
preponderance of the evidence standard in two parts of the instructions as conflicting,
not as an incorrect statement of the law. Finally, Aultman objected to Mercy’s proposed
jury interrogatory utilizing the clear and convincing standard of proof for Mercy’s POCA
claim. We find Aultman failed to timely object to the jury instructions and verdict form.
Aultman raised the argument regarding the preponderance of the evidence standard of
proof for actual damages for the first time in its motion for judgment notwithstanding the
verdict filed July 1, 2010.
{¶103} Civ.R. 51(A) provides, “[o]n appeal, a party may not assign as error the
giving or the failure to give any instruction unless the party objects before the jury retires
to consider its verdict, stating specifically the matter objected to and the grounds of the
objection.” It is well settled the “failure to timely advise the trial court of a possible error,
by objection or otherwise, results in a waiver of the issue for purposes of appeal.”
(Citations omitted.) Goldfuss v. Davidson, 79 Ohio St.3d 116, 679 N.E.2d 1099 (1997).
{¶104} There was no timely objection to the error raised by Aultman. It was not
until post-trial Aultman raised the argument as to the standard of proof under R.C.
2923.34. As such, we find the matter to be waived for purposes of appeal.
{¶105} While not raised in Aultman’s merit brief, Aultman’s argues in its reply
brief this Court should apply the plain error doctrine to the damages issue. “[I]n appeals
Stark County, Case No. 2010CA00303 25
of civil cases, the plain error doctrine is not favored and may be applied only in the
extremely rare case involving exceptional circumstances where error, to which no
objection was made at the trial court, seriously affects the basic fairness, integrity, or
public reputation of the judicial process, thereby challenging the legitimacy of the
underlying judicial process itself.” Goldfuss, supra.
{¶106} We are not inclined to apply the plain error doctrine because Aultman
raised the application of the doctrine in its reply brief. A reply brief is not the place for
briefing new arguments that were not raised in appellant's brief. See App.R. 16(C).
See, also, State ex rel. Colvin v. Brunner, 120 Ohio St.3d 110, 2008–Ohio–5041, 896
N.E.2d 979, ¶ 61. Accordingly, we shall not consider application of the plain error
doctrine to Aultman’s second assignment of error.
{¶107} Aultman’s second Assignment of Error is overruled.
III.
{¶108} Herein, Aultman reasserts the trial court erred in not granting its request
for a new trial. In addition to the arguments Aultman specifically raised related to
Mercy’s POCA claim, Aultman reasserts those same arguments we addressed in
Assignment of Error No. 1 and raises two additional arguments why a new trial should
have been granted.
{¶109} First, Aultman asserts the trial court erred by subjecting the four
individual Aultman defendants to collective liability. Aultman concedes the four named
defendants are part of a related corporate family but maintains they are nonetheless
separate legal entities.
Stark County, Case No. 2010CA00303 26
{¶110} A parent corporation is not liable for the acts of its subsidiaries. U.S. v.
Bestfoods, 524 U.S. 51, 61, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998). The separate legal
identities of related corporations must be respected even where directors and officers
serve in various capacities in multiple entities. Sister corporations are not liable for the
acts of each other. Minno v. Pro-Fab, Inc., 121 Ohio St.3d 464, 468, 2009-Ohio-1247,
905 N.E.2d 613 (2009).
{¶111} Aultman maintains over its “repeated objections”6 the jury was never
asked to consider which of the individual four defendants violated POCA, but rather was
allowed to return a verdict against “Aultman” collectively.
{¶112} Mercy needed to prove each defendant was a “person” participating in
the affairs of an enterprise which committed a pattern of corrupt activity. De Falco v.
Bernas, 244 F.3d 286, 306, (2nd Cir. 2001). Aultman maintains the trial court, not the
jury, made a determination they were merely alter egos of each other and “pierce[d] the
corporate veil” by subjecting each defendant to collective liability. Though not
separately assigned as error, Aultman notes the trial court repeatedly rejected the
defendants’ requested instructions, interrogatories, and verdict forms which would have
required the jury to determine whether each of the defendants separately violated
POCA. Mercy counters the four defendants referred to themselves collectively as
“Aultman” throughout the trial, acknowledging they are all part of the same corporate
family.
{¶113} The trial court stated “all of the [Aultman] entities had a hand in the
scheme that the jury ultimately found violated the POCA law.” (Oct. 19, 2010 Judgment
6
Appellant’s brief at p. 33. Aultman does not reference where in the record it made its
“repeated objections” as required by App.R. 16(A).
Stark County, Case No. 2010CA00303 27
Entry, p. 3.) The CSP was funded by defendant Aultman Health Foundation to convert
business to AultCare and McKinley Life, which in turn steered business to Aultman
Hospital who, in turn, generated substantial revenue on the “converted” lives. While the
CSP contracts stated they were between Aultman Health Foundation and the individual
selected brokers, AultCare sometimes signed the agreements. It was AultCare and the
brokers who entered into the related confidentiality agreements.
{¶114} Aultman Hospital is a wholly owned subsidiary of Aultman Health
Foundation, as is McKinley Life. Aultman Health Foundation jointly owns AultCare with
Stark Quality Care Physicians, Inc. The Aultman entities have overlapping board
members with key executives holding high-level positions in, and who make decisions
on behalf of, multiple Aultman entities. The trial court noted Aultman Health
Foundation, Aultman Hospital, and AultCare all have the same address.
{¶115} AultCare and McKinley Life CEO Rick Haines admitted the Aultman
entities acted as a single unit, with Aultman Health Foundation acting as the “banker”
and “quarterback” for Aultman Hospital, McKinley Life, and AultCare. Haines stated
Aultman generally treats its companies as a single entity - including the decision to
create the CSP. As president and CEO of AultCare and McKinley Life, Haines answers
to Aultman Health Foundation.
{¶116} Ed Roth is CEO of both Aultman Health Foundation and Aultman
Hospital. Roth testified he had ultimate responsibility for all of the operation of the entire
Aultman organization, including AultCare and McKinley Life.
{¶117} Based upon the above, we find there was sufficient evidence the four
defendants participated in unison to carry out the CSP and collectively benefited from it.
Stark County, Case No. 2010CA00303 28
We find any error from not requiring individual verdicts as to each defendant was not
prejudicial because, as the trial court observed, the Aultman defendants are so
collectively intertwined, it would be impossible for the jury to distinctly separate each
entity’s conduct. For an analogous result see Pravitsky v. Halczysak, 8th Dist. No.
82295, 2003-Ohio-7057, rejecting separate verdict forms where the defendants acted
as agents for one another in furtherance of their business interests.
{¶118} Aultman’s second argument is it is entitled to a new trial because the trial
court erred in refusing to give Aultman’s proposed interrogatories to the jury. Civ.R.
49(B) states, in pertinent part:
{¶119} “The court shall submit written interrogatories to the jury, together with
appropriate forms for a general verdict, upon request of any party prior to the
commencement of argument. Counsel shall submit the proposed interrogatories to the
court and to opposing counsel at such time. The court shall inform counsel of its
proposed action upon the requests prior to their arguments to the jury, but the
interrogatories shall be submitted to the jury in the form that the court approves. The
interrogatories may be directed to one or more determinative issues whether issues of
fact or mixed issues of fact and law.”
{¶120} The Ohio Supreme Court has held, while it is mandatory the trial court
submit to the jury properly drafted interrogatories, the court retains discretion to reject
interrogatories that are inappropriate in form or content. See Freeman v. Norfolk &
Western Ry., 69 Ohio St.3d 611, 613, 635 N.E.2d 310 (1994). A court may reject a
proposed interrogatory that is ambiguous, confusing, redundant, or otherwise legally
objectionable. Freeman, 69 Ohio St.3d at 613. The standard under which we review a
Stark County, Case No. 2010CA00303 29
trial court's decision whether to submit a proposed interrogatory is abuse of discretion.
Freeman, 69 Ohio St.3d at 614.
{¶121} From our review of Aultman’s proposed jury interrogatories and given
the trial court’s rationale for denying their inclusion as outlined in its October 19, 2010
judgment entry, the trial court did not abuse its discretion. It first appears Aultman did
not comply with the trial court’s orders to timely supplement its proposed jury
instructions and interrogatories based on pre-trial rulings. Next, the trial court denied
Aultman’s numerous proposed interrogatories due to their burdensome and confusing
nature.
{¶122} Interrogatories were presented to the jury in this case, albeit not the
interrogatories prepared by Aultman. Mercy presented eight causes of action against
Aultman and Mercy was only successful on its claim under POCA. We find neither an
abuse of discretion nor prejudice to Aultman for the trial court’s refusal to submit
Aultman’s proposed interrogatories to the jury.
{¶123} Aultman’s third assignment of error is overruled.
IV.
{¶124} In the fourth assignment of error, Aultman contends the trial court
awarded Mercy excessive attorney fees.
{¶125} “The decision of whether to award attorney fees rests in the sound
discretion of the court and will not be overturned on appeal absent an abuse that of
discretion.” Moore v. Moore, 175 Ohio App.3d 1, 2008-Ohio-255, 884 N.E.2d 1113 (6th
Dist.), ¶ 81.
Stark County, Case No. 2010CA00303 30
{¶126} Aultman acknowledges a trial court shall award attorney fees to a
prevailing plaintiff in a POCA action pursuant to R.C. 2923.34(F).7 However, Aultman
submits the attorney fees awarded by the trial court herein were excessive as Mercy
prevailed on only one of its eight claims. Mercy requested attorney fees in excess of five
million dollars. The trial court awarded Mercy four million dollars in fees. Aultman adds
Mercy had the burden of proving the fees it requested were attributable to the
successful claim and not to unrelated matters.
{¶127} In Strip Delaware, L.L.C. v. Landry's Restaurants, Inc., 191 Ohio App.3d
822, 2010-Ohio-6403, 947 N.E.2d 1233 (5th Dist.), this Court addressed the propriety of
a trial court’s reduction of the attorney fees requested by landlord where the tenant had
a partial claim of success. The trial court found the tenant was a prevailing party, albeit,
on a limited issue. Therein, we noted:
{¶128} “A prevailing party is generally the party ‘“in whose favor the decision or
verdict is rendered and judgment entered”.’ Hagemeyer v. Sadowski (1993), 86 Ohio
App.3d 563, 566, 621 N.E.2d 707, quoting Yetzer v. Henderson (June 4, 1981), 5th
Dist. No. CA–1967, 1981 WL 6293, at *2. See also Falther v. Toney, 5th Dist. No. 05
CA 32, 2005-Ohio-5954, 2005 WL 2995161.
{¶129} “The Eleventh District Court of Appeals has elaborated on this definition:
{¶130} “The prevailing party is ‘[t]he party to a suit who successfully prosecutes
the action or successfully defends against it, prevailing on the main issue, even though
7
R.C. 2923.34(F) expressly provides: “In a civil action in which the plaintiff prevails
under division (B) or (E) of this section, the plaintiff shall recover reasonable attorney
fees * * *”.
Stark County, Case No. 2010CA00303 31
not necessarily to the extent of his original contention. The one in whose favor the
decision or verdict is rendered and judgment entered. * * * This may be the party
prevailing in interest, and not necessarily the prevailing person. To be such does not
depend upon the degree of success at different stages of the suit, but whether, at the
end of the suit, or other proceeding, the party who had made a claim against the other,
has successfully maintained it.’ Lehto v. Sankey (June 29, 2001), 11th Dist. No. 99-T-
0137, 2001 WL 735898, at *7, as cited by the Ninth District Court of Appeals in Moga v.
Crawford, Summit App. No. 23965, 2008-Ohio-2155, 2008 WL 1961216.” Id. at ¶ 37-39.
{¶131} In Strip Delaware, L.L.C., we found no error in the trial court’s
determination both parties were a “prevailing party” under the definition of the term. We
further found the trial court did not abuse its discretion in equitably awarding less than
the full amount of attorney fees based thereon. Id. at ¶ 40.
{¶132} Likewise, we find no error herein in the trial court’s determination Mercy
was a prevailing party on its POCA claim. However, this does not end our analysis. As
stated, supra, Aultman contends the amount of attorney fees awarded by the trial court
were excessive as Mercy prevailed on only one of its eight claims, yet the trial court
awarded nearly 75 percent of the total fees Mercy expended during the entire course of
the proceedings.
{¶133} In Thurman v. Yellow Freight Systems, Inc., 90 F.3d 1160 (6th Cir. 1996),
the United States Court of Appeals for the Sixth Circuit addressed a similar argument.
The Thurman Court found:
{¶134} “The extent of a plaintiff's overall success must be considered in making
an award of attorney fees. Farrar v. Hobby, 506 U.S. 103, 113 S.Ct. 566, 121 L.Ed.2d
Stark County, Case No. 2010CA00303 32
494 (1992); Scales v. J.C. Bradford & Co., 925 F.2d 901, 910 (6th Cir.1991). However,
a court should not reduce attorney fees based on a simple ratio of successful claims to
claims raised. Phelan v. Bell, 8 F.3d 369, 374 (6th Cir.1993). When claims are based on
a common core of facts or are based on related legal theories, for the purpose of
calculating attorney fees they should not be treated as distinct claims, and the cost of
litigating the related claims should not be reduced.” Id. at 1169.
{¶135} The Thurman Court continued:
{¶136} “Many civil rights cases will present only a single claim. In other cases
the plaintiff's claims for relief will involve a common core of facts or will be based on
related legal theories. Much of counsel's time will be devoted generally to the litigation
as a whole, making it difficult to divide the hours expended on a claim-by-claim basis.
Such a lawsuit cannot be viewed as a series of discrete claims. Instead the district court
should focus on the significance of the overall relief obtained by the plaintiff in relation to
the hours reasonably expended on the litigation.” Id.
{¶137} In the instant action, the majority of Mercy’s claims surrounded the CSP
Program. We find the unsuccessful aspects of Mercy’s claims were “inextricably
intertwined” with its successful claim such that the claims “involve[d] a common core of
facts.” See, Hollingsworth v. Time Warner Cable, 168 Ohio App.3d 658, 684, 2006-
Ohio-4903, 861 N.E.2d 580 (1st Dist.). Accordingly, we find the trial court did not abuse
its discretion in the amount of attorney fees it awarded to Mercy.
{¶138} Aultman’s fourth assignment of error is overruled.
Stark County, Case No. 2010CA00303 33
V.
{¶139} In its fifth assignment of error, Aultman alleges the particular form of
injunctive relief ordered by the trial court was improper. Specifically, Aultman maintains
the order to pay money to Stark County and the City of North Canton, neither of which
were named as parties in the underlying lawsuit, was improper.
{¶140} The POCA statute authorizes a trial court to order injunctive relief when
a POCA violation is committed “to ensure that the violation will not continue or be
repeated” R.C. 2923.34(B). As part of its injunctive order, the trial court sua sponte
ordered Aultman to pay North Canton and Stark County $266,400 representing the
amount of CSP bonuses it paid its brokers resulting from conversion of their coverage to
AultCare.
{¶141} While R.C. 2923.34(B) directs the trial court to consider the rights of
absent parties when ordering injunctive relief, we agree with Aultman, a monetary
award against it is outside the scope of injunctive relief. We agree with Aultman to
award damages against it in favor of non-parties raises serious due process concerns.
Public entities are excluded from the definition of employee benefit plans under ERISA,
do not fall under 18 U.S.C. 1954, and therefore would not support a POCA violation
based thereon. If the CSP brokers received unethical double recovery, it would seem
litigation against them by the aggrieved governmental agencies would be the
appropriate remedy to pursue.
{¶142} Aultman’s fifth assignment of error is sustained.
Stark County, Case No. 2010CA00303 34
{¶143} The judgment of the trial court is affirmed, in part; and reversed, in part.
Hoffman, P.J.
Delaney, J. and
Carr, J. concur
s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN
s/ Patricia A. Delaney _________________
HON. PATRICIA A. DELANEY
s/ Donna J. Carr _____________________
HON. DONNA J. CARR
Stark County, Case No. 2010CA00303 35
IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
CSAHA/UHHS-CANTON, INC. :
DBA MERCY MEDICAL CENTER :
:
Plaintiff-Appellee :
:
-vs- : JUDGMENT ENTRY
:
AULTMAN HEALTH FOUNDATION :
AULTMAN CORPORATION :
AULTMAN HOSPITAL, AND :
MCKINLEY LIFE INSURANCE :
COMPANY :
:
Defendants-Appellants : Case No. 2010CA00303
For the reasons set forth in our accompanying Opinion, the judgment of the Stark
County Court of Common Pleas is reversed as to the monetary judgment in favor of the
City of North Canton and Stark County, but affirmed in all other respects. Costs to
Appellants.
s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN
s/ Patricia A. Delaney _________________
HON. PATRICIA A. DELANEY
s/ Donna J. Carr _____________________
HON. DONNA J. CARR