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

333 F.Supp.3d 1133

ACCOUNTABLE HEALTH SOLUTIONS, LLC and Hooper Holmes, Inc., Plaintiffs/Counterclaim Defendants,

v.WELLNESS CORPORATE SOLUTIONS, LLC, Defendant/Counterclaim Plaintiff.

Case No. 16-2494-DDC

United States District Court, D. Kansas.

Signed August 1, 2018

Douglas M. Weems, Nathan A. Orr, Patrick Jerome McAndrews, Spencer Fane LLP, Kansas City, MO, for Plaintiffs/Counterclaim Defendants.

Christopher Hurst Logan, David M. Tyrrell, Scott Kremer Logan, Logan Logan & Watson, LC, Prairie Village, KS, Jeffrey M. Schwaber, Judith G. Cornwell, Stein Sperling Bennett DeJong Driscoll, PC, Rockville, MD, for Defendant/Counterclaim Plaintiff.

MEMORANDUM OF DECISION

Daniel D. Crabtree, United States District JudgeIn recent years, a variety of factors have generated a new market for something called wellness services. In simple form, the market theorized that a healthier workforce would produce lower health insurance costs for business owners and operators. And employees would benefit, in turn, because their share of health insurance costs would reduce.

In one form of a typical wellness program, the employer selects a wellness provider. This provider offers employees the chance to participate in on-site biometric screenings. These screenings provide each participating employee with individualized data about that employee's current health profile. The wellness provider also supplies participating employees with information and programs designed to improve—or, at least, maintain—their health.

In the case currently before the court, two wellness companies contracted so that one of them—defendant Wellness Corporate Solutions, LLC—would perform on-site biometric screenings for plaintiff Accountable Health Solutions, LLC. Accountable Health then would coordinate and operate wellness plans with employers and the employees.

Things got more complicated in 2015. Plaintiff Hooper Holmes, Inc. bought Accountable Health and the relationship with Wellness soured. A few months after Hooper Holmes acquired Accountable Health, they fell behind on the payments owed to Wellness for services it had rendered. Payment against the outstanding invoices continued to linger into 2016. And in May 2016, Wellness contracted to provide wellness services directly to one of plaintiffs' largest clients. When Accountable Health and Hooper Holmes learned about this contract, they objected to it and stopped paying down the debt they owed Wellness. They also filed this lawsuit.

In their Complaint, plaintiffs Accountable Health and Hooper Holmes asserted claims for breach of contract, breach of the implied covenant of fair dealing and good faith, tortious interference with contract, and tortious interference with prospective business expectancies or relationships. See Doc. 1. Generally, they alleged that Wellness was liable under those theories because it had entered into a contract directly with plaintiffs' former client. Accountable Health and Hooper Holmes also brought a declaratory judgment claim. This claim asked the court to declare that they did not have to pay the amounts they owed to defendant Wellness on the outstanding invoices. Id. at 10. Wellness answered and asserted a Counterclaim, alleging that Accountable Health and Hooper Holmes had breached the parties' contract by failing to pay the overdue invoices. Doc. 35. On Wellness's motions for summary judgment, the court granted summary judgment in Wellness's favor against Accountable Health and Hooper Holmes's claims for breach of an implied covenant, tortious interference with contract, tortious interference with prospective business expectancy, and the declaratory judgment. See Doc. 140. This left, for trial, the Complaint's breach of contract claim and the claim for breach of contract asserted in Wellness's Counterclaim.

The court conducted a bench trial in February 2018. Having reflected on the evidence and the arguments, the court now is ready to rule on the claims made by both parties. The court finds for plaintiffs Accountable Health and Hooper Holmes on their breach of contract claims and awards them $2.00 in nominal damages. And the court finds for Wellness on its breach of contract Counterclaim, awarding it $235,156.58 plus $111,069.52 in interest. The court does not award Wellness its attorneys' fees. The court explains the rationale for these holdings after making its findings of fact.

Findings of Fact

I. Legal Standard

"In an action tried on the facts without a jury ..., the court must find the facts specially and state its conclusions of law separately." Fed. R. Civ. P. 52(a). While this rule "does not require inordinately detailed findings," the court must provide enough detail to " ‘indicate the factual basis for the ultimate conclusion.’ " Colo. Flying Acad., Inc. v. United States , 724 F.2d 871, 878 (10th Cir. 1984) (quoting Kelley v. Everglades Drainage Dist. , 319 U.S. 415, 422, 63 S.Ct. 1141, 87 L.Ed. 1485 (1943) ); see also OCI Wyo., L.P. v. PacifiCorp , 479 F.3d 1199, 1204–05 (10th Cir. 2007) (holding that a district court failed its duty under Rule 52(a) by failing to set out the facts supporting its verdict). With this standard in mind, the court makes the following findings of fact.

II. Facts

The story that brings these disputes to court involves two parallel series of events. So the court cannot present the relevant facts in a strictly linear way. Instead, the court first addresses who the parties are and how they came to know one another. The court then discusses the facts attendant to Wellness's demands for payment. And last, the court recounts the facts that led Hooper Holmes and Accountable Health's customer to leave them for Wellness.

Background

The parties first encountered one another in 2014 when plaintiff Accountable Health Solutions bought a company known as Principal Wellness. Accountable Health and Principal Wellness both had provided wellness services to employers. For instance, Accountable Health contracted with employers to provide their employees with health coaching, a website portal for employees to track their health status, and on-site biometric screenings, among other things. The on-site biometric screenings were performed at the employer's office, usually during the spring and summer months. These screenings provided employees with Lipid profiles, blood pressure readings, and data about their height, weight, glucose, and Body Mass Index. Employees who could not attend on-site screenings received a primary care physician ("PCP") form that their doctor could complete. The PCP form asked the doctor for the same information provided by on-site screeners.

Originally, Principal Wellness had performed the on-site screenings for its clients. But when Accountable Health bought it in 2014, Accountable Health delegated this work to defendant Wellness Corporate Solutions under the terms of a contract known as the Master Services Agreement ("MSA"). This MSA took effect on February 15, 2014, and ran for a term of 36 months. See Pls.' Ex. 25 ("the MSA") ¶ 8. Generally, the MSA required Wellness to provide on-site screening services to Accountable Health's clients. In return, Accountable Health promised to pay Wellness for those services. Id. ¶¶ 1, 7. For instance, under the MSA, Wellness charged $39.50 per participant for each finger prick screening. Id. Ex. B § F. For each PCP form an employee completed under the MSA, Wellness charged $7.50. Id. And the MSA specified that Wellness would charge $50 to process at-home test kits and $15 if an employee ordered such a kit but never had it processed. Id. Other services governed by the MSA included cheek swab tests, reports about an employee's overall health, and venipuncture tests. Id. The MSA also contained provisions that governed the work needed to prepare the screening sites. Id.

When Wellness performed services under the MSA, it incurred the costs attendant to the screenings and later, it billed Accountable Health. These expenses included things like charges for the screeners' time, purchasing supplies they needed, and travel expenses. Once Accountable Health received Wellness's bill, the MSA gave it 14 days to dispute the bill and 45 days to pay it. Id. ¶ 7. If Accountable Health failed to pay any undisputed bill within 45 days, the MSA permitted Wellness to charge interest "on past due accounts" at a rate of 1.5% per month. Id. The duty to pay Wellness's statements did not depend on Accountable Health receiving payment from its clients. Id.

Five other provisions of the MSA matter to this dispute.

First , the MSA allows a party to recover attorneys' fees in certain situations. Specifically, the MSA provides:

Each Party agrees to indemnify, defend, and hold harmless the other Party ... from and against any and all third party claims, demands, damages or any other financial demands (including, without limitation, attorneys' fees and expenses) arising from or related to the indemnifying Party's breach of this agreement.

MSA ¶ 10. Second , the MSA provides that neither party would be liable to the other "for loss of profits, loss of business, or special, indirect, incidental, exemplary, consequential, or punitive damages arising from the performance or nonperformance of this agreement, or any acts or omissions associated therewith."Id. ¶ 11. Third , the MSA prohibits Wellness from competing with Accountable Health. Specifically, it says that Wellness cannot "encourage any [client of Accountable Health], either directly or indirectly, to terminate its relationship with [Accountable Health]" or "solicit or market [Wellness's] Services [directly] to [a client] of [Accountable Health] in any way to compete with [Accountable Health]." Id. ¶ 23(i). Also, the MSA provides that Wellness cannot "use any confidential information, intellectual property, or any other data or information provided by [Accountable Health], or gained pursuant to [the MSA], to compete in any way with [Accountable Health]...." Id. ¶ 23(ii). Fourth , the MSA...