Haughton v. Cognisight, LLC

953 F. Supp. 2d 478, 2013 WL 3487696, 2013 U.S. Dist. LEXIS 97678
CourtDistrict Court, W.D. New York
DecidedJuly 12, 2013
DocketNo. 13-CV-6010L
StatusPublished
Cited by2 cases

This text of 953 F. Supp. 2d 478 (Haughton v. Cognisight, LLC) is published on Counsel Stack Legal Research, covering District Court, W.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Haughton v. Cognisight, LLC, 953 F. Supp. 2d 478, 2013 WL 3487696, 2013 U.S. Dist. LEXIS 97678 (W.D.N.Y. 2013).

Opinion

DECISION AND ORDER

DAVID G. LARIMER, District Judge.

This case arises out of an arrangement — whether it was a “contract” or not is one of the principal issues in this case— between plaintiff John Haughton and de[481]*481fendants, Greater Rochester Independent Practice Association (“GRIPA”), and Cognisight, LLC. Defendants have moved to dismiss the complaint for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

BACKGROUND

The facts alleged in the complaint, which for the purposes of deciding defendants’ motion are accepted as true, are as follows. GRIPA is a for-profit joint venture of hospitals and physicians, with a principal place of business in.Monroe County, New York. Cognisight is a wholly-owned subsidiary of .GRIPA.

Plaintiff, a physician residing in Maryland, is a “nationally recognized health care quality and technology expert .... ” Complaint ¶ 7. In 2006, GRIPA asked Dr. Haughton to assist it in developing certain services that GRIPA wanted to offer to third parties, relating to reimbursement for Medicare-covered services. Dr. Haughton agreed, and began providing such services to GRIPA.

Apparently the parties never entered into a formal, written contract governing plaintiffs services or what he was to receive in return. That was a decision they probably now regret. - In March 2007, however, GRIPA’s president, Greg Coughlin, did outline some of those matters in a written business plan (“Business Plan”) for a new company, Cognisight, which was intended “to provide Medicare Advantage Plans (MAPs) with the opportunity to receive the most appropriate reimbursement from Medicare for each of its MA members.” Dkt. # 17-1 at 3. In that plan, which Coughlin presented to GRIPA’s board of directors, Coughlin stated in part that GRIPA was “collaborating with John Haughton M.D., a nationally recognized health care quality and technology expert,” whose expertise would assist GRIPA and Cognisight in connection with Cognisight’s provision of Medicare-related services to its customers. Dkt. # 11-1 at 2.1 The plan also referred to Haughton as a “partner,” Dkt. # 17-1 at 5, and to Cognisight’s “partnership” with him. Id. at 2, 4.

In the Business Plan, under the heading “Financial Plan,” Coughlin outlined Cognisight’s projected revenues and expensés over the next three years. He also stated, “With the assumption of profit sharing of 23% (15% to employees and eight percent to John Haughton), payouts will range between $1.5 million and $10.3 million Dkt. # 11-1 at 4. Notably, under “Forecast Assumptions,” Coughlin said that “John Haughton receives eight percent of profits after all other expenses.” Dkt. # 11-1 at 6.

The parties’ relationship proceeded smoothly, at first. Dr. Haughton did provide various services to Cognisight, for which he received payments of $250,000 in 2007, $153,000 in 2008, and $478,000 in 2009. Complaint ¶¶ 19-22. Plaintiff alleges that he was informed by Cognisight that the 2008 and 2009 payments represented 8% of Cognisight’s net profits for those calendar years. Complaint ¶¶ 21, 23.

In late 2010, the first signs of trouble appeared, Cognisight’s president and executive vice president were terminated, and additional employee terminations followed. Complaint ¶ 26. Dr. Haughton continued to provide services to Cognisight, however, and in early 2011, Cogni[482]*482sight’s new management team told him that his 2010 compensation would be calculated following the completion of an internal audit. Complaint ¶ 30.

As months passed and no payment was forthcoming, Haughton became increasingly concerned, particularly since Cognisight’s overall fortunes had taken a downturn. In response to Haughton’s inquiries, Cognisight’s new president, Joseph Vasile, sent Haughton a letter, dated September 22, 2011,2 which stated in part, “[W]e want to understand our current relationship with you and the likelihood for an on-going relationship.” Stating that Cognisight “recognize[d] that [Haughton] ... ha[d] made the following contributions to the company in the past few years,” Vasile went on to list a number of services that Haughton had provided to Cognisight, such as helping to develop and refine Cognisight’s business model and software, meeting with clients, and other related services.

After reciting the payments that Cognisight had made to Haughton in the three preceding years, Vasile then stated, under the heading, “Evaluation of Association During 2010,” that in 2000, Haughton had attended meetings and a conference, participated in phone discussions with Cognisight staff, and had been listed as “Consulting Medical Director” on some client contracts. “Accordingly,” Vasile wrote, “we would like to pay a fee of $25,000 for your work in the year 2010.” He did not explain how he or anyone else had arrived at that figure. Vasile also stated that Cognisight wanted Haughton to continue to “provide services in an expert role,” with his compensation to be based on client growth and revenue. Vasile expressed his hope that the parties could “achieve a mutually beneficial arrangement .... ”

Apparently Haughton did not accept the $25,000 payment that was offered him, nor did the parties’ relationship continue. There is no indication that either side formally terminated their relationship, but it appears that Haughton did not provide any services for Cognisight after he received Vasile’s “Dear John” letter.

Plaintiff then brought this action in New York State Supreme Court in December 2012. Defendants removed the action to this Court in January 2013, based on this Court’s diversity jurisdiction under 28 U.S.C. § 1332(a)(1).

The complaint asserts nine causes of action: (1) for breach of contract, based on defendants’ failure to pay plaintiff 8% of Cognisight’s net profits for 2010; (2) for breach of contract, based on defendants’ failure to pay plaintiff 8% of Cognisight’s net profits for 2011, or at least a pro rata portion of those profits; (3) for breach of contract, based on defendants’ failure to pay plaintiff 8% of Cognisight’s net profits of Cognisight that accrued after the termination of plaintiffs relationship with defendants, but related to services provided before that termination; (4) for breach of fiduciary duty; (5) for unjust enrichment; (6) for an accounting of the profits that Cognisight earned with respect to 2007, 2008, and 2009; (7) for damages based on theories of promissory estoppel and detrimental reliance; (8) for 8% of the value of Cognisight’s business as of the date of the termination of plaintiffs relationship with Cognisight; and (9) as an alternative to [483]*483the eighth cause of action, for a declaration by the Court that plaintiff is entitled to 8% of the value of Cognisight upon its sale.

DISCUSSION

I. General Principles

In deciding a motion to dismiss a complaint for failure to state a claim upon which relief can be granted, the court must accept all well-pleaded, factual allegations in the complaint as true and draw all inferences in favor of the plaintiff. GE Investors v. General Elec. Co., 447 Fed.Appx. 229, 230 (2d Cir.2011) (citing Bell Atl. Corp. v. Twombly,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Garza v. Citigroup Inc.
192 F. Supp. 3d 508 (D. Delaware, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
953 F. Supp. 2d 478, 2013 WL 3487696, 2013 U.S. Dist. LEXIS 97678, Counsel Stack Legal Research, https://law.counselstack.com/opinion/haughton-v-cognisight-llc-nywd-2013.