Kenney Orthopedic, LLC v. United States

103 Fed. Cl. 455, 2012 U.S. Claims LEXIS 83, 2012 WL 666565
CourtUnited States Court of Federal Claims
DecidedFebruary 29, 2012
DocketNo. 11-502C
StatusPublished
Cited by4 cases

This text of 103 Fed. Cl. 455 (Kenney Orthopedic, LLC v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kenney Orthopedic, LLC v. United States, 103 Fed. Cl. 455, 2012 U.S. Claims LEXIS 83, 2012 WL 666565 (uscfc 2012).

Opinion

MEMORANDUM OPINION AND ORDER

BRADEN, Judge.

I. RELEVANT FACTUAL BACKGROUND.1

Kenney Orthopedic, LLC (“Kenney Orthopedic”) provides prosthetic and orthotic devices and services. Compl. ¶¶ 2-3. On August 15, 2006, Kenney Orthopedic entered into Contract No. V249-P-0011 (the “August 15, 2006 Contract”) with the Department of Veterans Affairs (“VA”), to supply prosthetic and orthotic devices and services to the VA Medical Center in Lexington, Kentucky. See Kenney II, 88 Fed.Cl. at 691; see also Compl., Ex. A at 1.

Thereafter, a dispute arose between Ken-ney Orthopedic and the VA regarding the August 15, 2006 Contract. See Kenney I, 83 Fed.Cl. at 36 — 41; Kenney II, 88 Fed.Cl. at 691-95. The VA asserted that Kenney Orthopedic’s performance did not comply with the specifications of the August 15, 2006 Contract. See Kenney II, 88 Fed.Cl. at 691-95. Kenney Orthopedic maintained that the VA’s view was unsupported, requested that an independent party investigate the situation, demanded an acknowledgment of the VA’s efforts to defame it, and alleged that the VA violated the August 15, 2006 Contract. Id. at 693-95. On October 23, 2007, the VA terminated the August 15, 2006 Contract for cause, pursuant to FAR 52.212-4(m), because Kenney Orthopedic had failed to respond to an August 29, 2007 “cure notice.” Id. at 695.

On January 2, 2008, Kenney Orthopedic filed suit in the United States Court of Federal Claims alleging one breach of contract claim and three tort claims. See Kenney I, 83 Fed.Cl. at 41; see also Compl, Ex. A at 1. On August 7, 2008, the three tort claims were dismissed for lack of jurisdiction and the breach of contract claim was dismissed, without prejudice, because Plaintiffs had not yet satisfied the Contract Disputes Act’s jurisdictional prerequisite that Kenney Orthopedic submit a certified claim to the Contracting Officer (“CO”) before bringing suit in the United States Court of Federal Claims. See Kenney I, 83 Fed.Cl. at 46. On August 28, 2008, Kenney Orthopedic filed a suit in Kentucky state court, based on the same underlying dispute, against four VA employees, including Ms. Peggy Allawat. Compl., Ex. A at 1. That ease was removed to the United States District Court for the Eastern District of Kentucky on October 1, 2008, and the United States was substituted as a defendant for all of the VA employees, except Ms. Allawat, on October 14, 2009. Compl., Ex. A at 1-2; see also Compl. ¶ 3.

[458]*458On January 16, 2009, Kenney Orthopedic filed a second Complaint in the United States Court of Federal Claims, this time alleging claims for breach of contract and breach of the implied covenant of good faith and fair dealing. See Kenney II, 88 Fed.Cl. at 696. On August 17, 2009, the court issued a Memorandum Opinion and Order determining that: Kenney Orthopedic’s claims were not barred by the statute of limitations; the court had jurisdiction over Kenney Orthopedic’s breach of the implied covenant of good faith and fair dealing claim; and the January 16, 2009 Complaint stated a claim for which relief could be granted. Id. at 701-02, 704-OS.

To resolve these lawsuits, the United States and Kenney Orthopedic engaged in settlement negotiations resulting in a May 31, 2011 Settlement Agreement. See Compl., Ex. A (“Settlement Agreement”). Pursuant to the terms of the Settlement Agreement, Kenney Orthopedic agreed to dismiss all outstanding claims against the Government, including any political subdivisions, officers, agents, or employees. Compl., Ex. A at 3-4. In exchange, Kenney Orthopedic received a $200,000 monetary payment, together with other guarantees set forth in an Addendum to the Settlement Agreement. Compl, Ex. A at 2, 13-14 (“Addendum”). Thereunder, the VA agreed to: (1) add Kenney Orthopedic to “its list of contract vendors for pros-thetics at the Lexington VA Medical Center,” within 10 days of execution of the Settlement Agreement or on June 1, 2011, whichever was later; (2) treat Kenney Orthopedic “in the same fashion as other similarly situated offerors in the solicitation for any future contract;” and (3) “designate a Contracting Officers’ [sic] Technical Representative (COTR), other than [Ms.] Peggy Allawat, [as the VA contact] for future interaction with [Kenney Orthopedic].” Compl., Ex. A at 13.

On June 3, 2011, Kenney I and Kenney II were dismissed, with prejudice, following the parties’ execution of the Settlement Agreement. See Stipulation of Dismissal, Kenney Orthopedic, LLC v. United States, No. 09-38C (Fed.Cl. June 3, 2011), ECF No. 86.

On June 16, 2011, a VA staff meeting was held that was attended by Ms. Allawat, Mr. Rick Sprinkles, an Orthotist, and Mr. Kurt A. Keeton, a Certified Orthotist. See Compl. Exs. B (affidavit of Mr. Sprinkles), C (affidavit of Mr. Keeton). These affidavits attest that, at the June 16, 2011 meeting, Ms. Alla-wat stated that “only prosthetic patients who [had] an existing history of cai’e” with Ken-ney Orthopedic could use its services. Compl, Ex. B; see also Compl, Ex. C. In addition, Ms. Allawat expressed her view that the next VA solicitation for bids should be stated in a manner that would be unfavorable to Kenney Orthopedic and favorable to two other vendors. Compl, Exs. B-C. Ms. Allawat, however, also made clear that only a new list of vendors, that included Kenney Orthopedic, should be used in the clinic. Compl, Exs. B-C.

On July 11, 2011, Ms. Dawn Greene-Low-ry, the VTSN 9 Prosthetic Manager for the VA, sent a memorandum to the Lexington, Kentucky Prosthetic Staff directing them to treat Kenney Orthopedic “as if it were a prosthetics contract provider for the near future” and advising the VA staff not to tell patients that only patients with a prior relationship with Kenney Orthopedic could use its services. Compl, Ex. D. This Memorandum also designated Mr. Jason Hurt as the contact person for any future issues involving Kenney Orthopedic. Compl, Ex. D.

II. PROCEDURAL HISTORY.

On August 5, 2011, Kenney Orthopedic filed a third Complaint in the United States Court of Federal Claims alleging that the Government breached the Settlement Agreement by: “intentionally diverting patients from Kenney,” restricting VA patients from being able to obtain Kenney Orthopedic’s services and failing to add Kenney Orthopedic to the VA’s list of contract vendors, within the required time frame. Compl. ¶¶ 10-11, 15 (allegations regarding failure to add Kenney Orthopedic to list of contract vendors); see also Compl. ¶¶ 26-32 (“breach of contract claim”). In addition, the August 5, 2011 Complaint alleges that the VA breached the implied covenant of good faith and fair dealing intentionally by diverting VA patients away from Kenney Orthopedic and interfering with Kenney Orthopedic’s ability [459]*459to provide the services. Compl. ¶¶ 33-43 (“good faith and fair dealing claim”).

The August 5, 2011 Complaint also alleges that the Government: made misrepresentations to Plaintiffs “with regard to certain actions on the part of the United States, and certain protections that would be afforded Plaintiffs;” “never intended to comply with the terms ... in the Settlement Agreement;” and “misrepresented facts and withheld vital information from the Plaintiffs.” Compl. ¶ 43, 46, 50.

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Bluebook (online)
103 Fed. Cl. 455, 2012 U.S. Claims LEXIS 83, 2012 WL 666565, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kenney-orthopedic-llc-v-united-states-uscfc-2012.