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Crooksville Family Clinic, Inc. v. Quest Diagnostics, Inc.

United States District Court, S.D. Ohio, Eastern Division

December 10, 2019

QUEST DIAGNOSTICS, INC., et al., Defendants.

          Kimberly A. Jolson Magistrate Judge



         This matter is before the Court upon Defendants Quest Diagnostics, Inc., MedPlus, Inc., and David Mills' collective Motion for Summary Judgment (ECF No. 38), Plaintiff Crooksville Family Clinic, Inc.'s Brief in Opposition to Defendants' Motion for Summary Judgment (ECF No. 42), and Defendants' Reply Memorandum in Support of their Motion for Summary Judgment (ECF No. 43). For the reasons that follow, the Court GRANTS IN PART and DENIES IN PART Defendants' Motion.

         I. FACTS

         From 1987 until 2012, Plaintiff Crooksville Family Clinic, Inc. (“Plaintiff” or “Clinic”) was a rural family clinic in Crooksville, Ohio. (Mumma Depo., 19, ECF No. 31). Dr. Paul Mumma, D.O., was Plaintiff's president and primary practitioner during that time. (Id. at 19-21). Because Plaintiff was designated as a rural health clinic through the federal government, it received reimbursement based on an enhanced fee schedule from Medicare and Medicaid for treatment of patients. (Id. at 41). This required different billing processes and rules than the general Medicare and Medicaid programs. (Id.). In 2011, rural healthcare claims constituted 60 to 70 percent of Plaintiff's primary care practice. (Id.).

         Defendant Quest Diagnostics, Inc. (“Quest”) marketed and sold two interfaced products under the “Care360” label: (1) the electronic health records (“EHR”) product, developed and supported by MedPlus, Inc.; and (2) the practice management system (“PMS”), developed and supported by Kareo. (Mills Depo., 22, 26-27, ECF No. 36). At the time of the lawsuit, Defendant MedPlus, Inc. was a wholly-owned subsidiary of Quest. (Id. at 14). Quest was a reseller of Kareo's PMS service. (Id. at 38). The EHR product maintained and imported patient data records, while the PMS service allowed for scheduling, billing, and sending claims to payors. (Id. at 16, 22, 27). For purposes of this Opinion, the Court will refer to both products collectively as the “Care360 Program” unless otherwise noted.

         In early 2011, David Mills, a technology account executive with Quest, met with Cheryl Crowder, Administrative Director for the Physicians Group of Southeast Ohio (“PGSEO”), [1] to discuss the Care 360 Program. (Crowder Depo., 55, ECF No. 33). Upon learning that PGSEO was not interested in purchasing a billing system as a single entity, Mr. Mills inquired about whether Plaintiff might be interested in the Care360 Program. (Id. at 57). Dr. Mumma was part of the PGSEO and Ms. Crowder had been handling the private insurance billing for Plaintiff since 2001. (Id. at 16). According to Ms. Crowder, “I told them that that was not the office that they wanted to start with. It's not - - it's not a very current office, as far as technology. . . . I know their office manager was older and didn't have the technical knowledge that some of our younger office managers did, and I didn't feel that that was a good place for them to start.” (Id. at 57-58).

         Nevertheless, shortly thereafter, Mr. Mills met with Barbara Anders, Plaintiff's administrator and officer manager, to talk about the Care360 Program. (Anders Depo., 43, ECF No. 35). For nearly 25 years, Ms. Anders managed the cash flow, managed personnel, ordered supplies, and oversaw billing for Plaintiff. (Mumma Depo., 27-28; Anders Depo., 11). Dr. Mumma described Ms. Anders as handling “the business side of things” for the Clinic. (Mumma Depo., 65).

         According to Ms. Anders, she stressed several times in her initial discussions with Mr. Mills that Plaintiff was a rural health clinic, so any billing program they used had to be able to bill for rural healthcare claims. (Anders Depo., 44, 55). When asked by Ms. Anders if the Care360 Program's billing tool could handle rural healthcare billing, Mr. Mills reached out to Kareo via e-mail. (Mills Depo., 50- 51). Matt Kelly, an account executive with Kareo, responded to Mr. Mills on June 6, 2011 as follows:

We do have many different types of clients submitting UB04[2] claims today but I am not away [sic] of any Rural health clinics that are doing this today. I checked with our support team and they have sent me the following response.
If Kareo is not yet supporting your specialty, there are 2 options for you:
1. If you're willing to partner with us as we develop support for your type or specialty of institutional billing, please contact our support team . . . . They will work with you to help you submit institutional claims. Please note that as a BETA customer, there may be additional fields the Kareo engineering department has to design to assist you, thus the process could take some time. Each specialty is different in terms of timelines, thus we don't have a definitive ETA, but these types of features usually take between 4-8 weeks to develop. The first step is to talk to customer service; they will assist you with next steps.

(Pl. Ex. 2, ECF No. 36).

         After receiving this e-mail from Kareo, Mr. Mills relayed to Ms. Anders that rural healthcare billing “wouldn't be an issue, that they could support that.” (Mills Depo., 52-53). Mr. Mills did not disclose the specific contents of the e-mail to anyone at the Clinic. (Id. at 121). According to Mr. Mills, Ms. Anders participated in a Kareo webinar shortly thereafter and Kareo responded similarly regarding her question about Care360's rural healthcare billing capability. (Id. at 52, 64-65). While Ms. Anders acknowledged in her deposition that she probably asked about rural healthcare billing during a Kareo webinar, she recalled that being after the contract was signed. (Anders Depo., 108-13).

         Sometime in the summer of 2011, Mr. Mills presented the Care360 Program to Plaintiff's staff. (Pease Depo., 23, ECF No. 32). According to Ms. Anders, she again explained to Mr. Mills during this presentation “at least four or five times” that Plaintiff was a rural health clinic and the Care360 Program would have to be able to perform rural healthcare billing, that “was the main factor [they] had to have with [the] product.” (Anders Depo., 47-48). Mr. Mills responded each time that “there would be no problem.” (Anders Depo., 48; Mills Depo., 52). Ginger Pease, Plaintiff's assistant office manager, reiterated the same question during the demonstration and Mr. Mills' response was the same. (Pease Depo., 18-19). Mr. Mills had no experience with rural healthcare billing up to that point. (Mills Depo., 57).

         Reflectively, Dr. Mumma believed Mr. Mills' affirmations about the Care360 Program's billing capabilities were false due to Mr. Mills being “possibly misinformed.” (Mumma Depo., 73). However, he did note that Mr. Mills “expressed no reservation.” (Id.). Similarly, Ms. Anders testified that she did not think Mr. Mills believed his assurances to be false. (Anders Depo., 93). Rather, she thought “David believed it could handle it.” (Id. at 93, 131). Ms. Pease also did not think Mr. Mills made any intentionally false statements, she just thought he did not know much about rural healthcare billing. (Pease Depo., 75-76).

         On August 31, 2011, Plaintiff executed the Care360 License and Services Agreement (“Care360 Agreement”). Ms. Anders signed the Care360 Agreement as the representative of Plaintiff after both herself and Dr. Mumma had an opportunity to review it. (Mumma Depo., 99; Anders Depo., 88, 92). Ms. Anders and Dr. Mumma testified that they did not recall Mr. Mills stating that they could not negotiate the terms of the Agreement before signing it. (Mumma Depo., 100; Anders Depo., 92-93). There is no dispute that Mr. Mills was paid a commission or bonus for each sale of the Care360 Program. (Mills Depo., 63).

         Under the terms of the Care360 Agreement, Plaintiff contracted to license and pay for the Care360 Program and related services. (See generally Care360 Agreement, Defs. Ex. 2, ECF No. 31). The Agreement was broken into two subparts: (1) the EHR License and Services Agreement (p. 1-15); and (2) the PMS Customer Subscription Agreement (p. 15-17). (Id.). Relevant to this litigation, within the PMS Customer Subscription portion of the Care360 Agreement is an “Exclusion of Damages and Limitation of Liability” clause, which states:


(Id. ¶ 6, p. 16). The Agreement also provided, “This Agreement constitutes the entire agreement between the parties with respect to the PMS Services, and supersedes all prior or contemporaneous negotiations or agreements, whether oral or written, related to this subject matter.” (Id. ¶ 9, p. 17). According to Dr. Mumma, there were no other written or oral agreements between Plaintiff and Quest pertaining to billing services. (Mumma Depo., 93-94).

         The Care360 Program was installed in October 2011. (Mills Depo., 89-90; Anders Depo., 71; Pease Depo., 57). Almost immediately, Plaintiff began experiencing problems with billing and claims processing. (Mumma Depo., 82). Specifically, Plaintiff was unable to bill and collect any reimbursement from Medicare and Medicaid for rural healthcare services rendered to its patients. (Mumma Depo., 81-82; Pease Depo., 57-58). Over the course of the next several months, Ms. Anders talked to Kareo's customer support approximately two to three times a day. (Anders Depo., 98). On several occasions, Ms. Anders was told that the problem was being corrected or that the Care360 Program was being modified to fit Plaintiff's need. (Id. at 132). However, there were also occasions where she was a told that what she was asking for could not be done. (Id. at 132-33).

         Mr. Mills went out to the Clinic on several occasions to assist with trouble-shooting. (Mumma Depo., 82; Mills Depo., 83; Anders Depo., 53). During those visits, Mr. Mills assured Ms. Anders that the problems with rural healthcare claims were being addressed and remedied. (Anders Depo., 53). According to Dr. Mumma, Mr. Mills worked diligently to try to fix the issues. (Mumma Depo., 74). However, as months went on, Ms. Anders recalled, “you got to where you weren't really believing what [Mr. Mills] was saying because he had told you many times that they were going to fix this; that it was going to be corrected. And it wasn't happening.” (Anders Depo., 54). Ms. Anders believed Mr. Mills was doing all he could to help but the root of the issue was not his problem to correct or fix. (Id.).

         During this time, Mr. Mills was in constant contact with Kareo to make sure they were working with Plaintiff. (Mills Depo., 69). However, Mr. Mills did not directly relay any specific information he received from Kareo to Plaintiff. (Id. at 138, 142). For example, he did not forward on any e-mails between himself and Kareo's support staff about the Care360 Program's ability to support rural healthcare billing. (Id. at 143-45). According to Mr. Mills, “[t]here were a few times that he was given the impression that things were smoothing out and beginning to work, but then it always seemed like there was a subsequent issue.” (Id. at 69). There was a constant back and forth with Kareo about whether the billing issue could or could not be fixed. (Id. at 147). Mr. Mills acknowledged that his lack of knowledge of rural healthcare billing may have contributed to him feeling somewhat misled by Kareo during his initial correspondence with Kareo. (Id. at 146).

         Ultimately, Plaintiff was never able to use the Care360 Program to effectively bill and collect for its rural healthcare services. (Mumma Depo., 164). In an attempt to stay afloat with the cash flow problems that resulted, Dr. Mumma opened personal lines of credit and borrowed funds. (Id. at 45). In February 2012, Mr. Mills reached out to Quest's sales director, John Rea, to let him know about the billing issue and the financial problems faced by Plaintiff. (Mills Depo., 95-96; Pl. Exs. 8-9, ECF No. 36). Quest subsequently waived three months of Plaintiff's fees. (Mumma Depo., 92).

         On April 1, 2012, Ms. Crowder took over all billing for Plaintiff through PGSEO. (Id. at 35). In May 2012, Plaintiff terminated the Care360 Agreement and Defendants ceased providing services to Plaintiff. (Id. at 140). Because Dr. Mumma was not paid for Medicare or Medicaid rural healthcare claims from approximately November 2011 through the middle of 2012, there was limited cash flow for Plaintiff to meet payroll and continue to operate. (Id. at 39-40). Consequently, in September 2012, Dr. Mumma sold his practice to Genesis Medical Group and became an employee therein.[3] (Id. at 29-30).

         On October 28, 2016, Plaintiff filed a complaint in the Perry County Court of Common Pleas alleging claims for (1) breach of contract; (2) fraud in the inducement; (3) fraud/negligent and/or intentional misrepresentation; (4) breach of verbal/implied contract; and (5) unconscionable exculpatory clause. (ECF Nos. 3, 8). On December 6, 2016, Defendants removed the case to this Court pursuant to 28 U.S.C. §§ 1332, 1441. (ECF No. 7). Defendants filed a joint Answer on December 13, 2016. (ECF No. 10).

         On January 31, 2018, Defendants moved for summary judgment on all of Plaintiff's claims. (ECF No. 38). Plaintiff filed its Brief in Opposition on February 21, 2018. (ECF No. 42). Defendants filed their Reply on March 7, 2018. (ECF No. 43). Within their Reply Brief, Defendants also request the Court strike three affidavits attached to Plaintiff's Brief in Opposition. Defendants' Motion for Summary Judgment is now ripe for review.


         Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The movant has the burden of establishing there are no genuine issues of material fact, which may be achieved by demonstrating the nonmoving party lacks evidence to support an essential element of its claim. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Barnhart v. Pickrel, Schaeffer & Ebeling Co., 12 F.3d 1382, 1388-89 (6th Cir. 1993). The burden then shifts to the nonmoving party to “‘set forth specific facts showing that there is a genuine issue for trial.'” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (quoting Fed.R.Civ.P. 56). When evaluating a motion for summary judgment, the evidence must be viewed in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).

         A genuine issue exists if the nonmoving party can present “significant probative evidence” to show that “there is [more than] some metaphysical doubt as to the material facts.” Moore v. Philip Morris Cos., 8 F.3d 335, 339-40 (6th Cir. 1993). In other words, “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (concluding that summary judgment is appropriate when the evidence could not lead the trier of fact to find for the non-moving party).

         III. ANALYSIS

         A. Request to Strike Affidavits

         In filing their Brief in Opposition, Plaintiffs attached affidavits of Dr. Mumma, Ms. Anders, and Ms. Pease. (ECF Nos., 42-1, 42-2, 42-6). The affidavits are based on each individual's review of Mr. Mills' June 6, 2011 e-mail correspondence with Matt Kelly (Pl. Ex. 2, ECF No. 36), which was not previously made available to them prior to or during their depositions for this litigation. In their Reply, Defendants argue that the affidavits should be stricken or given no weight since they contradict prior deposition testimony, contain legal conclusions, and are based on a lack of personal knowledge.

         Pursuant to Fed.R.Civ.P. 56(c)(4), affidavits “must be made on personal knowledge, [and] set out facts that would be admissible in evidence.” Personal knowledge is not “conclusory assertions, ” Reed v. Procter & Gamble Mfg. Co., 556 Fed.Appx. 421, 427 (6th Cir. 2014), or “argumentative interpretations of statements of fact.” Briggs v. Potter, 463 F.3d 507, 512 (6th Cir. 2014). “It is [also] well settled that courts should disregard conclusions of law (or ‘ultimate fact') found in affidavits submitted for summary judgment.” Harrah's Entertainment, Inc. v. Ace American Ins. Co., 100 Fed.Appx. 387, 394 (6th Cir. 2004) (internal quotations omitted). Likewise, “after a motion for summary judgment has been made, a party may not file an affidavit that contradicts his earlier sworn testimony . . . unless the party opposing summary judgment provides a persuasive justification for the contradiction.” France v. Lucas, 836 F.3d 612, 622 (6th Cir. 2016) (internal quotations and citation omitted). “If, on the other hand, there is no direct contradiction, then the district court should not strike or disregard that affidavit unless the court determines that the affidavit constitutes an attempt to create a sham fact issue.” Aerel, S.R.L. v. PCC Airfoils, LLC, 448 F.3d 899, 908 (6th Cir. 2006) (internal quotations omitted). An affidavit that fails to satisfy these requirements is subject to a motion to strike and will not be considered by the Court upon ruling on a motion for summary judgment. Reddy v. Good Samaritan Hosp. & Health Ctr., 137 F.Supp.2d 948, 954 (S.D. Ohio 2000). However, because “the Court should use ‘a scalpel, not a butcher knife[, ]' . . . it is appropriate for the Court to strike [only] portions of affidavits that do not satisfy the requirements.” Giles v. Univ. of Toledo, 241 F.R.D. 466, 470 (N.D. Ohio 2007) (quoting Perez v. Volvo Car Corp., 247 F.3d 303, 315-16 (1st Cir. 2001)).

         After a thorough review, the Court finds that the contested affidavits should be stricken in part and admitted in part as outlined below. Accordingly, the Court only considered the affidavits pursuant to the following rulings in deciding Defendants' Motion for Summary Judgment.

         1. Dr. Paul Mumma Affidavit

         Defendants do not contest paragraphs 1-8, 12, and 13 of Dr. Mumma's affidavit (ECF No. 42-1) and the Court finds that these paragraphs are legally sufficient. Accordingly, these paragraphs are admitted.

         In paragraph 9, Dr. Mumma states, “I believed that Kareo was a part of Defendants.” By contrast, in his deposition he stated, “I don't understand the business relationship between Quest and Kareo.” (Mumma Depo., 63). That portion of the affidavit is stricken as contradictory without justification. Later in that same paragraph, Dr. Mumma states “Kareo's involvement occurred after the contract was signed for purchase of the Care360 Program and we went live with the software.” Defendants argue that this contradicts Dr. Mumma's earlier testimony where he stated multiple times that he did know whether any Clinic employees talked to anyone other than Mr. Mills before the software went live. (Id. at 78-80). The ...

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