CSAHA/UHHS-Canton, Inc. v. Aultman Health Found.

[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