Blue Cross of Greater Philadelphia (Blue Cross) (defendant) was a provider of traditional health-insurance coverage. U.S. Healthcare, Inc. (U.S. Healthcare) (plaintiff) was a health-maintenance organization (HMO) that offered both health insurance and healthcare in one combined service. In the mid-1980s, HMOs were growing in popularity. Blue Cross attempted to compete with HMOs by introducing the “Personal Choice” (PPO) program. Blue Cross ran print advertisements that said that HMO doctors were financially motivated to “handle as many patients as possible without referring to a specialist.” Another Blue Cross commercial showed a distraught woman saying, “The hospital my HMO sent me to just wasn’t enough. It’s my fault.” U.S. Healthcare ran advertisements in response, claiming that Blue Cross’s Personal Choice program offered only a limited set of hospitals. One U.S. Healthcare advertisement depicted a weeping family gathered around an empty hospital bed with a Personal Choice brochure on the pillow. U.S. Healthcare filed suit, and, at trial, the district court held that the First Amendment required the parties to show actual malice. The parties cross-appealed.