Summit Health, Inc. v. APS Healthcare Bethesda, Inc.

993 F. Supp. 2d 379, 2014 WL 288050, 2014 U.S. Dist. LEXIS 9577
District Court, S.D. New York·Decided January 24, 2014·No. No. 11-cv-9718 (ER)(LMS)·Published·Cited by 43 cases

Opinion

OPINION AND ORDER

RAMOS, District Judge.

Summit Health, Inc. (“Plaintiff’ or “Summit”) brought this breach of contract action against APS Healthcare Bethesda, Inc. (“Defendant” or “APS”), alleging that APS failed to pay the full amount due under their service contract. Doc. 1. Sum[384] mit alleges that APS has wrongfully withheld payment of almost two-and-a-quarter million dollars’ worth of minimum fees. See Compl. ¶¶ 35-36. The underlying controversy revolves around the meaning of the phrase “Customer projection,” which appears in one of the contract’s minimum fee provisions. APS disputes Summit’s reading of the contract and points out that, if awarded, the minimum fees alone would more than double the amount Summit earned for services actually performed. See Def.’s Mem. of Law in Supp. (Amend) at 31.1

Plaintiff moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Doc. 38. In addition to opposing the summary judgment motion, Defendant has filed a motion for leave to file an amended answer and counterclaim, pursuant to Federal Rules of Civil Procedure 15 and 16. Doc. 42.

For the reasons discussed below, Plaintiffs motion for summary judgment is GRANTED IN PART and DENIED IN PART, and Defendant’s motion for leave to file an amended answer and counterclaim is DENIED.

I. Factual Background

The following facts are undisputed except where otherwise noted.

Summit is a Michigan corporation that develops healthcare programs for businesses and health plans. Compl. ¶ 3. Its programs offer preventative care services, including health screenings, at employees’ and plan members’ worksites. Id. Its chief executive officer is Richard Pennington, and its chief operating officer is Douglas Finch. Decl. of Richard Penington (MSJ) ¶ 1; Decl. of Douglas C. Finch (MSJ) ¶ 1. Jason Moczul, the national account manager assigned to the program at issue in this case, was APS’s primary contact at Summit with respect to operational matters. Decl. of Jason Moczul (MSJ) ¶¶ 1-2.

APS, an Iowa corporation with its principal place of business in White Plains, New York, administers state and local government health plans and provides healthcare services to government employees. Compl. ¶ 4; Answer ¶ 4. During the time period at issue in this case, its president and chief operating officer was Jerome Vaccaro, its chief financial officer was John McDonough, and the in-house attorney who served as the “point man” in negotiations with Summit was Paul Dominianni. Decl. of Jeff E. Butler (MSJ) Ex. 27, at 6:5-6, 71:18-72:14; id. Ex. 29, at 19:12-15. David Glazer, a senior vice president in White Plains who was responsible for operations in the eastern United States, oversaw a team of employees based in Tennessee. Id. Ex. 26, at 6:21-7:2, 12:7-12; id. Ex. 27, at 10:13-15, 11:3-5. That team included an executive director, Jim Shulman, who reported to Glazer; a director of operations, Bob Hines, who reported to Shulman; and a clinical supervisor, Troy Watson, who reported to Hines. Id. Ex. 26, at 11:20-12:12.

Summit and APS were parties to the Summit Health Services Agreement (the “Agreement”), which was effective as of January 1, 2011. Pl.’s 56.1 Stmt. ¶ 3; Def.’s 56.1 Stmt. ¶ 3.2 The Agreement was [385] a subcontract. APS was also party to a general contract with the State of Tennessee, wherein APS agreed to provide health care services to state employees who had enrolled in the state’s “ParTNers for Health” program. Pl.’s 56.1 Stmt. ¶ 12; Def.’s 56.1 Stmt. ¶ 12. This contract paid APS a fixed fee per screening performed, and it exposed APS to liquidated damages based on various performance metrics, including maintenance of a fully operational website. Decl. of Jeff E. Butler (MSJ) Ex. I, at APS 14994, 15009-15012.

Under the Agreement, Summit agreed to provide staffing and supplies for health screening clinics at Tennessee worksites during the first six months of 2011. Pl.’s 56.1 Stmt. ¶ 4; Def.’s 56.1 Stmt. ¶ 4. Summit’s contractual duties included registering participants, scheduling appointments, and setting up the clinics. Agreement at II.3 Participating state employees could sign up online or by phone in advance of each clinic. Id. Summit maintained an online appointment system that state employees could use for this purpose. Pl.’s 56.1 Stmt. ¶ 15; Def.’s 56.1 Stmt. ¶ 15. In addition, Summit was required to accept “walk-in appointments” to the extent it could accommodate them and subject to an agreed-upon policy. Agreement at 11.

The pricing terms were set forth in Exhibit B to the Agreement. Id. at 3, 17-20. The terms included a $37 fee for each screening Summit performed. Id. at 17. That price was the product of negotiations between the parties. See Decl. of Richard Penington (MSJ) ¶ 10. Exhibit B also included various fees, including a “standard minimum” for “health screening clinics” that was described as follows: “40 screenings, or 90% of Customer projection, whichever is greater.” Agreement at 17. This per-clinic minimum fee provision is the subject of the present dispute. The provision appeared in all drafts of Exhibit B that the parties exchanged. Pl.’s 56.1 Stmt. ¶ 8; Def.’s 56.1 Stmt. ¶ 8.

On December 21, 2010, Dominianni sent Finch an email in which he referenced the parties’ earlier agreement to reduce the per-screening rate to $37 and informed Finch that all other provisions of Exhibit B were “acceptable to APS.” Decl. of Douglas C. Finch (MSJ) Ex. 5. Summit began performing under the Agreement in January 2011, although the Agreement was not actually signed until March 15, 2011. Pl.’s 56.1 Stmt. ¶¶ 20, 23; Def.’s 56.1 Stmt. ¶¶ 20, 23.

At Summit’s request, Watson and his team began providing Summit with clinic-by-clinic participation estimates (the “Watson estimates”). See Decl. of Troy Watson (MSJ) ¶¶ 5,10; id. Ex. C. Glazer testified at his deposition that he knew the Watson estimates were being provided but that he believed they would be used solely for staffing (and not for billing) purposes. Decl. of Jeff Butler (MSJ) Ex. 26, at 114:19-116:2, 117:2-117:6. Watson testified that he typically tried to provide an estimate at least two weeks prior to a given clinic. Id. Ex. 30, at 115:20-116:10. He expected that Summit would staff and supply the clinics based on those estimates. Id. Ex. 30, at 78:25-79:4, 169:7-9. Both he and Glazer provided deposition testimony indicating that Watson’s figures represented good-faith estimates of expected clinic participation. Decl. of Jeff Butler (MSJ) Ex. 26, at 130:23-131:15, [386]*386170:23-171:6; id. Ex. 30, at 76:9-15. However, Watson repeatedly indicated to Summit that the numbers he was providing were “guesses.” See, e.g., Decl. of Troy Watson (MSJ) Ex. E-F.

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Summit Health, Inc. v. APS Healthcare Bethesda, Inc., 993 F. Supp. 2d 379, 2014 WL 288050, 2014 U.S. Dist. LEXIS 9577 (S.D.N.Y. 2014).

993 F. Supp. 2d 379 (Summit Health, Inc. v. APS Healthcare Bethesda, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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