Accountable Health Solutions, LLC v. Wellness Corporate Solutions, LLC

333 F. Supp. 3d 1133
CourtDistrict Court, D. Kansas
DecidedAugust 1, 2018
DocketCase No. 16-2494-DDC
StatusPublished
Cited by4 cases

This text of 333 F. Supp. 3d 1133 (Accountable Health Solutions, LLC v. Wellness Corporate Solutions, LLC) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Accountable Health Solutions, LLC v. Wellness Corporate Solutions, LLC, 333 F. Supp. 3d 1133 (D. Kan. 2018).

Opinion

[A]ll oral, written, electronic[,] or documentary information disclosed prior to or after execution of this Agreement, either furnished or made available (a) by [Accountable Health] or its Agents ... to [Wellness]; or (b) by [Wellness] or its Agents to [Accountable Health], in connection with the [business opportunity presented by the MSA], including, but not limited to, marketing philosophy, techniques, and objectives; advertising and promotional copy; competitive advantages and disadvantages; financial results; technological developments; loan evaluation programs; customer lists; account information, profiles, demographics and Non-Public Personal Information ...; credit scoring criteria, formulas and programs; research and development efforts;
*1142any investor, financial, commercial, technical or scientific information ... and any and all other business information....

Id. ¶ 2. And last , both the MSA and NDA provide that Delaware law governs all disputes involving these contracts. MSA ¶ 13; NSA ¶ 11.

In May 2015, plaintiff Hooper Holmes, Inc.-a New York corporation with its principal place of business in Kansas-bought Accountable Health and it became a wholly owned subsidiary. Hooper Holmes already competing in the biometric screening business, was looking to expand into the wellness coaching market. Even though it already was providing on-site screenings, Hooper Holmes agreed to continue honoring the MSA and use Wellness as an on-site screener. The MSA thus became binding on it and Accountable Health-the plaintiffs here.

Before turning to the events that led the parties' dispute to their current disagreements, the court pauses to explain the naming convention used by the rest of this Order. Parties on both sides of the caption have asserted claims against the other, so simply calling the parties "plaintiffs" and "defendant" isn't always helpful. So, the court has decided to refer to the parties by their short form names-plaintiff Hooper Holmes, Inc. is simply "Hooper Holmes" and defendant Wellness Corporate Solutions is simply "Wellness." Because Accountable Health is a wholly owned subsidiary of Hooper Holmes, the court typically does not distinguish between Hooper Holmes and Accountable Health unless, in a particular context, that distinction matters to the analysis.

Payment Issues

In May 2015, when Hooper Holmes bought Accountable Health, Accountable Health had accumulated an $8,000 debt to Wellness. By July 2015, that debt had ballooned to more than $600,000-and $300,000 of that balance was overdue by July 31, 2015. Hooper Holmes's debt increased so dramatically in such a short period because most of the screenings services occurred in the spring and summer months. At the same time, Hooper Holmes was waiting for its clients to pay it for the screenings and so, they lacked the cash to pay Wellness as promised.

On July 31, 2015, Wellness emailed Hooper Holmes about the debt and Hooper Holmes offered to pay $64,000. Wellness accepted this partial payment but also demanded full payment of the entire outstanding debt. Hooper Holmes acknowledged Wellness's request and replied that its CFO was aware of the issue and looking for solutions. In September-after hearing nothing from Hooper Holmes since August-Wellness asked again for full payment. Hooper Holmes repeatedly promised that full payment would come but, when prompted by Wellness, merely offered partial payments. In mid-October, with Hooper Holmes's debt amounting to some $575,000-$114,000 of which was overdue-Wellness's CEO Fiona Gathright personally emailed Arielle Band about the unpaid debt. Ms. Band was one of Hooper Holmes's Vice Presidents. Ms. Band responded that Steven Balthazor-Hooper Holmes's new CFO-would respond shortly to Wellness's inquiry and present a plan to pay the outstanding debt.

But after a few more weeks of silence, on October 31, 2015, Wellness's CFO, Jeffrey Taylor, directly contacted Mr. Balthazor about the outstanding debt. The next day, Mr. Balthazor responded with a plan to pay down the full debt. Mr. Balthazor offered to pay $10,000 each week until Hooper Holmes's cash flow had improved. Once that improvement occurred, Hooper Holmes would increase its weekly payments to pay the remainder of the debt as quickly as possible. Mr. Taylor acknowledged *1143Mr. Balthazor's proposal but he explicitly invoked Wellness's contractual right to recover interest on all overdue amounts.1 Later, Mr. Balthazor offered to make a $50,000 good faith payment. Hooper Holmes never made that payment, however. On November 15, 2015, Hooper Holmes began paying $10,000 each week and in February 2016, Hooper Holmes increased its weekly payments to $20,000.

While Wellness was trying to persuade Hooper Holmes to pay its outstanding bills, it continued sending invoices to Hooper Holmes for its services, including screenings and PCP forms. It appears that some employees who had missed Wellness's health screenings mistakenly sent the PCP forms to Wellness instead of sending them to Hooper Holmes. Ms. Gathright testified that Wellness debated whether to forward the forms because Wellness was unsure: (1) whether the MSA was still binding; and (2) whether the MSA-assuming it was still binding-required Wellness to forward the PCP forms. Trial Tr. 181:14-21. Ultimately, Wellness elected to send the forms to Hooper Holmes and bill it $7.50 for each one-the price set by the MSA for this service.

On June 6, 2016, Hooper Holmes made a $20,000 payment to Wellness. It was Hooper Holmes's last payment. But Wellness continued billing Hooper Holmes for PCP forms that employees of Hooper Holmes's clients sent through September 6, 2016. Hooper Holmes's unpaid balance topped out at $235,167.63 on September 6, 2016.2 At trial, Wellness produced an aging summary of the remaining outstanding balance. Def.'s Ex. 411. The outstanding bills and the interest accrued on them are described in detail in Appendix A.

On June 9, 2016-three days after Hooper Holmes sent its final $20,000 payment-Hooper Holmes informed Wellness that it would make no more payments against its outstanding debt. It explained that Hooper Holmes had made this decision because it recently had learned that one of its long-time customers, Building Materials Corporation of America, doing business as GAF ("GAF"), had decided not to renew its contract and, instead, begin contracting directly with Wellness for GAF's wellness services.

GAF

GAF is one of the largest roofing material producers in the country. It was also one of Hooper Holmes's largest clients. In 2012, GAF signed a two-year contract with Principal Wellness-one of Hooper Holmes's predecessors-to provide wellness services. This contract provided that it would renew automatically each year after the initial two-year term ended. The contract included wellness coaching, on-site biometric screenings, and an online portal where GAF employees could track their health status. At first, Principal Wellness performed the screenings. After Accountable Health bought Principal Wellness *1144in 2014, Wellness performed GAF's screenings under the MSA. It did so in 2014 and 2015. To prepare for these screenings, Hooper Holmes provided Wellness with a company overview of GAF. See Pls.' Ex. 42.

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Bluebook (online)
333 F. Supp. 3d 1133, Counsel Stack Legal Research, https://law.counselstack.com/opinion/accountable-health-solutions-llc-v-wellness-corporate-solutions-llc-ksd-2018.