Federal Appeals Court Upholds $1.8 Million Verdict Against Aetna U.S. Healthcare in Suit Brought by BCI.

Business Editors

PHILADELPHIA--(BUSINESS WIRE)--Dec. 12, 2000

The U.S. Court of Appeals for the Third Circuit has affirmed a $1,855,000 federal jury award for Brokerage Concepts, Inc. in its suit against Aetna U.S. Healthcare, its HMO of Pennsylvania subsidiary and former USHC executive Richard Wolfson.

BCI was a fledgling third party insurance administrator in 1995, when the King of Prussia, Pa.-based company first filed the suite which alleged that the healthcare giant tortiously interfered with its contracts by using pressure tactics and its vast economic clout to steal away a client. Its lawyers (Richard E. Bazelon and A. Richard Feldman of Bazelon Less & Feldman, a Philadelphia-based complex commercial litigation firm) told the jury that BCI had landed a contract to administer self-insurance for the 90-employee pharmacy chain I Got It At Gary's. But "David" lost the business to the substantially larger "Goliath", they said, when USHC retaliated by threatening to cut the pharmacy chain off from the constant flow of customers with USHC prescription plans.

Evidence showed that USHC put a freeze on giving any new plan members to Gary's while it investigated its high percentage of non-generic drug sales. It also delayed approval to take plan members to a new Gary's and allegedly told the chain's owner, Gary Wolf, that "we like doing business with people who do business with us."

BCI argued that Gary's ultimately switched back to a USHC-related company, but had suffered financially during the retaliation. In May 1996, Wolf sold the chain to Drug Emporium.

In the first trial, a federal jury awarded BCI a total of $1.2 million, but that verdict was overturned when the Third Circuit found it was based on flawed antitrust theories. The jury handed down larger verdicts in the remanded trial, held in early 1999, against those it held responsible for interfering with BCI's existing and prospective contractual relations.

"It is unfortunate for the shareholders of Aetna U.S. Healthcare that so much of their money was wasted, defending a suit that could have been settled six years ago with a simple letter of apology," noted Arnold M. Katz, BCI founder and president. "We were a small company, but thought we owed it to our clients, the industry and ourselves to stand firm and protest U.S. Healthcare's bullying business tactics."

BCI is now the largest privately held third party administrator and group brokerage operation in the country. The company services clients nationwide, and supports agents, brokers and financial planners from offices in Massachusetts, New Jersey, Maryland, Virginia, Florida and Pennsylvania.

"My colleagues and I are pleased that the Court of Appeals has unanimously ruled in BCI's favor on each and every challenge raised in this case," Katz added. "We are thrilled that justice has finally been served, and that a persistent David - refusing to allow itself to be snuffed out -- has earned a hard-fought victory over a heavy-handed Goliath."