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Infectious Disease Solutions, P.C v. Synamed

March 30, 2012

INFECTIOUS DISEASE SOLUTIONS, P.C., PLAINTIFF,
v.
SYNAMED, LLC, SYNABILLING, INC., BACK KIM, M.D., AND BACK KIM, M.D., P.C., DEFENDANTS.



The opinion of the court was delivered by: Dora L. Irizarry, United States District Judge:

OPINION AND ORDER

On December 28, 2007, Plaintiff Infectious Disease Solutions, P.C. ("Plaintiff" or "IDS") commenced this diversity action against defendants Synamed, LLC ("Synamed") and Synabilling, Inc. ("Synabilling"). On September 18, 2009, Plaintiff served a second amended complaint ("2d Am. Compl.") on the above referenced defendants and included additional defendants Back Kim, M.D. ("Kim") and Back Kim, M.D., P.C. ("Kim P.C.," collectively with Kim, Synamed and Synabilling, "Defendants"). On September 23, 2010, Defendants moved for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons set forth below, Defendants' motion is granted in its entirety.

BACKGROUND

Plaintiff is a medical practice which specializes in care for patients with high risk infectious diseases.*fn1 (Plaintiff's Local Rule 56.1 Statement of Facts to Which Exists [sic]a there exists a genuine issue to be tried, Plaintiff merely copied and resubmitted large portions of its c statement. However, except as where otherwise noted, Defendants do not dispute Plaintiff's 56.1 omplaint. Additionally, Plaintiff inaccurately cites its own exhibits throughout its 56.1

Genuine Issue to be Tried ("Pl. 56.1") ¶ 1; Defendants' Response to Plaintiff's Statement of Facts to Which Exists a Genuine Issue to be Tried ("Def. 56.1 Response") ¶ 1.) Synamed provides Practice Management Software ("PMS") and Electronic Medical Records Systems ("EMR," together with PMS, the "Synamed System") to physicians. (Pl.'s 56.1 ¶ 1; Declaration of Kim Back, M.D. ("Kim Decl.") ¶ 2.) PMS gives certain management capabilities to medical practices such as calendaring, scheduling, accounting and electronic billing. (Pl.'s 56.1 ¶ 2; Def. 56.1 Response ¶ 2.) The EMR is a web based portal that allows a medical practice to access its patient records stored on Synamed's computer servers. (Id.) Synabilling provides medical billing and collections services to physicians. (Pl.'s 56.1 ¶ 1; Kim Decl. ¶ 3.) Dr. Kim is the President and sole owner of Synamed and Synabilling. Synamed and Synabilling are financed by Dr. Kim's medical practice, Back Kim, M.D., P.C. (Pl.'s 56.1 ¶ 1; Def. 56.1 Response ¶ 1.)

I.The Synamed Contract

On or about August 25, 2004, Synamed contacted IDS by email offering to provide IDS with "turnkey EMR, Billing, E-prescribing, Scheduling, Task and Work Flow Management solution with lab connectivity, image center and drawing module." (Declaration of Christine Ann Zurawski, M.D. ("Zurawski Decl.") ¶ 2 & Ex. A; Def. 56.1 Response ¶ 2.) Based on this representation, IDS entered into a "Subscription Agreement (3-Year Lease)" contract with Synamed effective January 19, 2005 (the "Synamed Contract"). (Pl.'s 56.1 ¶ 2; Kim Decl. ¶ 4 & Ex. A.) The contract required Synamed to provide IDS with, inter alia, "the delivery of secure access over the internet to a customized and integrated application of [Synamed's] Electronic Medical Records ("EMR") software[.]"

(Id.)

The Synamed Contract includes a choice of law/forum clause stating the Synamed Contract is governed by the laws of the State of New York. (Kim Decl., Ex. A; Plaintiff's Response to Defendants' Statement of Undisputed Material Facts ("Pl. 56.1 Response") ¶ 3.) The clause provides:

This Agreement and performance hereunder shall be governed by and construed in accordance with the laws of the State of New York . . . [a]ny and all proceedings related to the subject matter hereof shall be maintained in the New York State Supreme Court for the County of Queens, or the United States District Court for the Eastern District of New York, which courts shall have exclusive jurisdiction for such purpose. (Kim Decl., Ex. A.) The Synamed Contract also has a "Limitation of Liability" section which provides in pertinent part:

ANY ACTION OF ANY KIND ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE WEBSITE MUST BE COMMENCED WITHIN ONE (1) YEAR OF THE DATE UPON WHICH THE CAUSE OF ACTION AROSE. . [SYNAMED] SHALL HAVE NO LABILITY TO [IDS] FOR ANY DIRECT OR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES. . "[IDS] ACKNOWLEDGES AND AGREES THAT THE FOREGOING LIMITATIONS OF LIABILITY AND REMEDIES REPRESENT BARGAINED FOR ALLOCATIONS OF RISK WHICH WERE NEGOTIATED AT ARM'S LENGTH."

(Id.) The Synamed Contract required IDS to pay Synamed a monthly subscription fee for both the EMR and PMS services. (Pl.'s 56.1 ¶ 2; Kim Decl., Ex A.) At the direction of Synamed, IDS entered into a financing agreement with a third party, HSPC, Inc. ("HSPC"), which obligated IDS to makes its monthly subscription payments directly to HSPC. (Pl.'s 56.1 ¶ 2; Def. 56.1 Response ¶ 2.) In turn, HSPC made a lump sum payment to Synamed at the outset of the Synamed Contract. (Id.) At the time, IDS believed it was making payments to Synamed through HSPC and that HSPC was merely the servicing agent for payment. (Dep. of Christine Ann Zurawski, M.D. ("Zurawski Dep.") at 89, 225, attached as Ex. A to Decl. of Adam Joffee, Esq. ("Joffee Decl."); Def. 56.1 Response ¶ 2.)

IDS began using the Synamed System in late February or early March of 2005 and IDS alleges that, from its inception, the Synamed System and services were defective. (2d Am. Compl. ¶ 29; Def. 56.1 ¶ 19.) Between April 18, 2005 and May 31, 2005, IDS sent multiple electronic correspondences to Synamed detailing problems with the Synamed System and requesting training and support. (Pl.'s 56.1 ¶ 3; Defendants' Local Rule 56.1 Statement ("Def. 56.1") ¶¶ 6-7; Kim Decl., Exs. C-F.) Eventually, Synamed denied IDS's requests for training and declined to provide IDS with additional support. (Pl.'s 56.1 ¶ 3; Def. 56.1 Response ¶ 3.)

As a result of the difficulties IDS encountered with the Synamed System, IDS's accounts receivables greatly increased and IDS suffered financial distress. (Pl.'s 56.1 ¶¶ 3, 5; Def. 56.1 Response ¶¶ 3, 5.) In March of 2006, Defendants approached IDS and offered to provide additional services to manage IDS's billing. (Pl.'s 56.1 ¶ 5; Def. 56.1 Response ¶ 5.) As part of contract negotiations, Defendants offered to provide the Synamed EMR for free to IDS during the time Synabilling managed IDS's billing and collection needs. (Pl.'s 56.1 ¶ 5; Def. 56.1 Response ¶ 5.)

II.The Synabilling Contract

On March 13, 2006, IDS entered into a six-month "Billing and Collection Services Agreement" with Synabilling (the "Synabilling Contract," together with the Synamed Contract, the "Contracts"). (Pl.'s 56.1 ¶ 6; Kim Decl. ¶ 5 & Ex. B.) The Synabilling Contract required Synabilling to provide "comprehensive collection solutions and services." (Kim Decl., Ex. B.) The Synabilling Contract further provides that "[Synabilling] will maintain records regarding its rendition of Services and the status of [IDS] accounts. On a monthly basis, [Synabilling] will provide to [IDS] its standard financial and other reports." (Id.) Additionally, the Synabilling Contract states "SynaMed will provide IDS . . . a Free EMR solution for all physicians including [certain enumerated] functionality [.] Furthermore, SynaMed shall make the IDS's monthly lease payments [to HSPC] until the end of the lease period [.]" (Id.)

In consideration for Synabilling's services, IDS made an advance payment of $20,000 to Synabilling at the outset of the Synabilling Contract to cover billing and collections from December 31, 2005 to February 26, 2006. Further, the Synabilling Contract entitled Synabilling to a percentage of all outstanding bills it collected from March 1, 2006 onward. (Pl.'s 56.1 ¶ 6; Kim Decl., Ex. B.) As part of the Synabilling Contract, IDS enabled Synabilling to have access to IDS's bank accounts from which it debited its fees. (Pl.'s 56.1 ¶ 8; Kim Decl., Ex. B.)

The Synabilling Contract is governed by the laws of the State of New York. (Def. 56.1 ¶ 9; Pl. 56.1 Response ¶ 9; Kim Decl., Ex. B.) The Synabilling Contract includes an "Indemnification and Limitation of Liability" section providing:

Any cause of action brought by [IDS] against [Synabilling] relating to this Agreement or [Synabilling's] performance hereunder must be commenced within one (1) year after the date when such cause of action accrues. (Kim Decl., Ex. B.) The "Indemnification and Limitation of Liability" section further provides that Synabilling:

SHALL NOT HAVE ANY LIABILITY TO [IDS] FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES FOR ANY ACT OR OMISSION ARISING OUT OF OR IN CONNECTION WITH THE AGREEMENT OR [SYNABILLING'S] PERFORMANCE HEREUNDER, INCLUDING WITHOUT LIMITATION, ANY THIRD PARTY CLAIMS AND ANY LOSSES, EXPENSES, OR DAMAGES INCURRED BY REASON OF LOST PROFITS OR SAVINGS.

(Id.)

Neither Synabilling nor Synamed made any lease payments to HSPC on behalf of IDS to cover the monthly cost of the EMR service during the duration of the Synabilling Contract. (Dep. of Holly Demuro ("Demuro Dep.") at 143-144, attached as Ex. B to Joffe Decl.) Moreover, Synabilling did not provide IDS with standard financial reports detailing Synabilling's collection efforts and explaining the fees charged to IDS. (Pl.'s 56.1 ¶ 6; Def. 56.1 Response ¶ 5.) Accordingly, in September of 2006, IDS terminated its agreement with Synabilling and continued attempting its own billing and collections through the Synamed PMS system. (Pl.'s 56.1 ¶ 9; Def.

56.1 Response ¶ 9.)

III.Georgia and New York Actions

On January 24, 2007, IDS commenced an action against defendants Synamed, Synabilling, and Kim in the United States District Court for the Northern District of Georgia (the "Georgia Action"). (Def. 56.1 ¶ 13; Pl. 56.1 Response ¶ 13; Declaration of Philip C. Chronakis, Esq. ("Chronakis Decl."), Ex. 1.) On August 24, 2007, the Georgia Action was dismissed, because the Contracts contain enforceable forum selections clauses making New York the exclusive forum for a cause of action. (Pl.'s 56.1 ¶ 10; Def. 56.1 ¶ 16; Chronakis Decl., Ex. 2.)

On December 28, 2007, IDS commenced the instant action alleging breach of contract, fraud, breach of the covenant of good faith and fair dealing, and violation of New York General Business Law § 349 ("GBL § 349"). (2d Am. Compl. ¶¶ 68-103.) As part of the judgment sought, IDS requests imposition of consequential and punitive damages as well as attorney's fees and costs pursuant to GBL § 349. Plaintiff also seeks to "pierce the corporate veil" and recover damages from Back Kim, M.D., in his personal capacity and/or from Back Kim, M.D., P.C. (Id.)

On September 23, 2010, Defendants moved for summary judgment on the following grounds: (1) Plaintiff's contract-based claims are time-barred; (2) Plaintiff's claims for consequential and punitive damages are precluded by the Contracts' limitation of liability provisions; (3) Plaintiff's fraud based claims should be dismissed because the alleged fraud only relates to breach of contract; and (4) Plaintiff's GBL ยง 349 claim should be dismissed because the parties' transactions were not consumer oriented. Defendants further assert that (5) the dismissal or limitations of any claims against Synamed or Synabilling warrant the same ...


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