United States District Court, S.D. Ohio, Eastern Division
Kimberly A. Jolson Magistrate Judge
OPINION AND ORDER
D. MORRISON UNITED STATES DISTRICT JUDGE.
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.
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.).
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.
early 2011, David Mills, a technology account executive with
Quest, met with Cheryl Crowder, Administrative Director for
the Physicians Group of Southeast Ohio (“PGSEO”),
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
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).
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
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).
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
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).
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).
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).
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:
(a). Exclusion of Certain Damages. EXCEPT FOR A VIOLATION OF
OUR OR KAREO'S INTELLECTUAL PROPERTY RIGHTS OR FOR THE
INDEMNITIES BELOW, NEITHER PARTY NOR KAREO IS LIABLE FOR ANY
INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES
(b). (INCLUDING WITHOUT LIMITATION, COSTS OF DELAY, LOSS OF
DATA OR INFORMATION, AND ANY FAILURE OF DELIVERY OF THE PMS
(c). Limitation of Liability. OUR LIABILITY FOR ALL DAMAGES
RELATING TO THIS CARE360 PMS AGREEMENT (WHETHER IN CONTRACT,
TORT OR OTHERWISE) DOES NOT EXCEED THE ACTUAL AMOUNT PAID BY
YOU WITHIN THE PRECEDING 12 MONTHS UNDER THIS AGREEMENT.
(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).
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
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.).
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).
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.,
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. (Id. at 29-30).
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).
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.
STANDARD OF REVIEW
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).
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).
Request to Strike Affidavits
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.
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)).
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.
Dr. Paul Mumma Affidavit
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.
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 ...