United States District Court, S.D. New York
APEX EMPLOYEE WELLNESS SERVICES, INC., as assignee of Summit Health, Inc., Plaintiff,
APS HEALTHCARE BETHESDA, INC., Defendant.
OPINION AND ORDER
Edgardo Ramos, U.S.D.J.
Employee Wellness Services, Inc. (“Plaintiff” or
“Apex”), as the assignee of Summit Health, Inc.
(“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 (“Compl.”). Trial in this matter
concluded on August 1, 2014, with a jury verdict awarding
Plaintiff $1, 522, 176. Doc. 111. Judgment in this amount was
entered on August 4, 2014. Doc. 112.
moves the Court for an order awarding Plaintiff: (1)
prejudgment interest based on the jury verdict; (2)
litigation expenses, including attorneys' fees; (3)
interest on the litigation expenses; and (4) post-judgment
interest pursuant to 28 U.S.C. § 1961(a). Doc. 113.
Defendant moves for “relief from final judgment
pursuant to Federal Rules of Civil Procedure 59(e) and
60(b)(2) and (3), ” including for a new trial to the
extent necessary. Doc. 126.
following facts are undisputed except where otherwise noted
and are taken from the parties' previous summary judgment
submissions. Although the parties did not reiterate the
majority of the background facts in the instant briefing, the
Court includes the factual background as it is relevant to
the Court's decision.
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 at the
relevant time was Richard Pennington, and its chief operating
officer was 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.
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. Complaint (“Compl.”) (Doc.
1) ¶ 4; Answer (Doc. 7) ¶ 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.
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.
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. The Agreement was 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. 1, 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 11. 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.
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 was the subject of the litigation, and was heavily
contested on summary judgment and at trial. 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.
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, 170:23-171:6;
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.
accuracy of the Watson estimates, as that issue pertained to
the minimum fee provision, arose in a January 18, 2011
internal Summit email exchange between Finch and Moczul.
Decl. of Howard S. Wolfson (MSJ) Ex. P, at SUM 10973-74.
Penington was copied on the emails. Id. In the
process of deciding that Summit would absorb the cost of
providing additional privacy screens, Finch pointed out that
“the clinic minimums are attractive (40 and
90%).” Id. Moczul responded as follows:
I will go ahead and order another 30 [privacy screens]. That
will be awesome to get 90%. We may have to talk about a
gameplan of ensuring that the APS crew we talk to each week
is aware of this because I wouldn't want them to be
surprised with that first invoice. Just to give you an idea,
the average estimate over the first two weeks has been 320
and our average screen/clinic is more like 70.
Id. Ex. P at SUM 10973. At his deposition, Moczul
testified that he did not recall having any follow-up
discussions about the issues raised in these emails, nor did
he recall informing Watson that the estimates would be used
for billing purposes. Id. Ex. D, at 33:7-12,
211:19-212:3. Penington and Finch similarly could not recall
subsequent discussions concerning Moczul's email. Decl.
of Howard S. Wolfson (Amend) Ex. M, at 207:5-208:23;
id. Ex. T, at 296:10-17. Moczul prepared an initial
invoice for January 2011 in February of that year, but he
informed Penington and Finch that he would hold off on
sending it until the Agreement was signed. Decl. of Howard S.
Wolfson (MSJ) Ex. R, S.
early 2011, still prior to the execution of the Agreement,
there were a number of performance issues with the online
appointment system, including a glitch that allowed a limited
number of participants to see other participants'
appointments. Decl. of Richard Penington (MSJ) ¶¶
13-14. To remedy the privacy issue, the system had to be shut
down for over two weeks in March. Id. ¶ 14. On
March 8, Vaccaro alerted Penington to additional complaints
about Summit's performance. Id. ¶ 15. These
complaints included issues with the level of staffing being
provided, allegations that staff members were inadequately
trained, and reports of equipment malfunctions. Id.
Also around that time, Summit realized that screening
results, which included confidential patient information,
were being provided to APS without a Business Associate
Agreement (“BAA”) in place, exposing Summit to
potential HIPPA liability. Id. ¶ 16; Decl. of
Douglas C. Finch (MSJ) ¶¶ 6, 31-32. Rather than
executing a stand-alone BAA, the parties had included the
document as Exhibit C to the Agreement, which at that point
still remained unsigned. Decl. of Douglas C. Finch (MSJ)
¶ 31; see Agreement at 21-30. Summit therefore
suspended the electronic data feed that was transmitting the
results to APS. Decl. of Douglas C. Finch (MSJ) ¶ 32;
Decl. of Richard Penington (MSJ) ¶ 16. APS asked Summit
to sign a standalone BAA at that point, but Finch informed
APS on March 10 that Summit would only sign the BAA “in
conjunction with a signed contract.” Decl. of Douglas
C. Finch (MSJ) ¶ 33; id. Ex. 11. This appears
to have accelerated any remaining negotiations, and the
Agreement was signed five days later. Finch and McDonough
were the signatories for their respective companies.
Agreement at 8.
and Glazer met in White Plains on March 17, 2011, two days
after the Agreement was signed. Decl. of Douglas C. Finch
(MSJ) ¶ 40. It was during this conversation that the
minimum fee issue came to the fore, with Finch informing
Glazer that the Watson estimates resulted in large minimum
fees for January and February. Id. ¶ 41; Decl.
of Jeff E. Butler (MSJ) Ex. 26, at 113:6-116:2. Glazer
emailed Finch on March 18, copying Shulman and Hines. Decl.
of Douglas C. Finch (MSJ) Ex. 16. In the email, Glazer noted
that the Tennessee staff had not been aware of the minimum
fee provision because the Agreement “had never been
completed in during [sic] those early months.”
Id. He then referenced the staffing issues at the
clinics, along with weather-related reductions in expected
turnout, before writing:
Given all of these circumstances, we would expect that as a
partner in this contract you would be billing us in January
for the screenings with a minimum of 40 as a standard. We
would not expect you to invoke the section of the contract
that talks about 90% of projections.
I have instructed the local TN team to review their
projections immediately and revise the way they calculate
these and to inform you today on new estimates for each site
so that you can have an accurate estimate of how you should
staff these screenings.
Id. Hines sent Finch a follow-up email later that
day, copying Glazer and Shulman (the “Hines
email”). The Hines email read:
We just reviewed David Glazer's email regarding the
methodology for determining screener staffing. It appears
that you have been basing your staffing on the number of
folks that are signing up (and the number of slots) on your
registration sheet. You sent a staffing sheet to [Watson]
this month for his review and approval. We would suggest that
you continue that method of review (relying on sign-ups on
the registration sheets) along with the monthly review with
[Glazer] is correct in his assessment that we all shot high
back in December. We realized during January that the sites
were not being fully utilized. We adjusted as did you,
considering the amount of staff you have been sending to each
site since mid January. Once the screenings were well under
way, it was clear that neither one of us was using December
“estimates”. Although it is sometimes difficult
to predict how many folks may be necessary (an example being
this morning's backups), we believe that using the
sign-up sheets as a guide is the best way to determine how
many screeners you need. It looks like you have been doing
that all along anyway. If you are still using any of the
estimates, you should, effective immediately, stop and
continue to utilize the sign up sheets (along with
[Watson]'s review) as your guide.
Id. Ex. 17.
program progressed, Summit continued to request participation
estimates from Watson and his team, indicating that
additional clinics could not be added to APEX without that
data. See Decl. of Howard S. Wolfson (MSJ) Ex. PP.
Watson thus began providing uniform estimates of either 75
or, if the clinic was being held in a large city, 100. Decl.
of Troy Watson (MSJ) ¶ 21; see Decl. of Jeff
Butler (MSJ) Ex. 21, at APS 9186.
sent APS its first invoice, covering the screenings performed
in January, on March 30, 2011. Pl.'s 56.1 Stmt. ¶
24; Def.'s 56.1 Stmt. ¶ 24. In the cover email
accompanying that invoice, Finch described some
“accommodations” that Summit made in light of
APS's concerns. Decl. of Douglas C. Finch (MSJ) Ex. 24.
The “accommodations” included an
“Alternative Minimum Calculation” whereby minimum
fees were calculated based on an estimate of actual screening
capacity rather than on the Watson estimates. Id.
The February invoice was similarly discounted based on the
“Alternative Minimum Calculation.” Id.
¶ 48; see Decl. of John McDonough (MSJ) Ex. F.
APS ultimately received six invoices, one for each month of
the program. Decl. of Douglas C. Finch (MSJ) Ex. 18-23.
filed the instant action for breach of contract on December
30, 2011, alleging that APS owed Plaintiff $2, 248, 520.88 in
damages attributable to the unpaid balance of the invoices.
Compl. ¶¶ 35-36. Defendant filed an Answer on March
1, 2012, asserting eight affirmative defenses. Doc. 7. The
parties engaged in extensive discovery from April 2012 to
January 2013. See Doc. 130 at 2. During this period,
the parties took a total of 13 depositions, including the
deposition of Douglas Finch. Id. (citing Doc. 131,
Butler Decl. Ex. 2).
moved for summary judgment on March 15, 2013, asserting that
there were no material issues of fact regarding whether APS
breached the HSA by refusing to pay the full amount of the
invoices submitted by Summit. Doc. 38. On January 24, 2014,
the Court granted in part and denied in part Plaintiff's
motion, holding that Plaintiff was entitled to summary
judgment with respect to the first 150 screening clinics.
Doc. 61 (the “January 24, 2014 Opinion.”). With
respect to the remaining clinics, the Court denied summary
judgment based on ambiguity in the contract because there
were “lingering questions of fact as to whether APS
breached the contract, and, if so, the extent of the damages
to which Summit is entitled.” Id. at 34.
Specifically, the Court held there were triable issues of
material fact remaining with respect to two questions: (1)
whether Section (g)(4) of the Agreement precludes Summit from
charging minimum fees subsequent to the first 150 clinics;
and (2) what “Customer projection, ” if any, APS
provided for clinics held after March 18, 2011. Id.
The Court rejected all of APS's affirmative defenses,
including those based on equitable estoppel and the implied
covenant of good faith and fair dealing. Id. at 28,
remaining issues were resolved in a jury trial that took
place from July 28 to August 1, 2014. The jury found that
Plaintiff was entitled to bill APS for standard minimum fees
after the 150th clinic and awarded judgment for
the total amount of minimum fees owed by APS to Summit in the
amount of $1, 522, 176. Doc. 111. The jury also found that
Summit did not prove by a preponderance of the evidence that
it was entitled to use the estimates provided by Troy Watson
and his team for purposes of calculating minimum fees for
clinics held after March 18, 2011. Id. Judgment in
this amount was entered against Defendant on August 4, 2014.
JURISDICTION TO CONSIDER THE INSTANT MOTIONS
Plaintiff's Motion for Attorneys' Fees was pending,
Defendant filed a Notice of Appeal on August 27, 2014. Doc.
125. Defendant then filed its Motion for Relief from Final
Judgment with this Court on September 2, 2014. Doc.
The appeal is currently pending in the Second Circuit Court
of Appeals. See Doc. 150. The Court must consider
the jurisdictional implications of that appeal before
adjudicating the pending motions.
filing of a notice of appeal is an event of jurisdictional
significance--it confers jurisdiction on the court of appeals
and divests the district court of its control over those
aspects of the case involved in the appeal.” Griggs
v. Provident Consumer Discount Co., 459 U.S. 56, 58
(1982). However, the filing of an appeal “only
divest[s] the district court of jurisdiction respecting the
questions raised and decided in the order that is on
appeal.” N.Y. State Nat'l Org. for Women v.
Terry, 886 F.2d 1339, 1350 (2d Cir. 1989).
as to Plaintiff's Motion for Attorneys' Fees,
Nontaxable Expenses, and Interest, “notwithstanding a
pending appeal, a district court retains residual
jurisdiction over collateral matters, including claims for
attorneys' fees.” Tancredi v. Metro, Life Ins.
Co., 378 F.3d 220, 225 (2d Cir. 2004); see also
White v. N.H. Dep't of Emp't Sec., 455 U.S. 445,
452 n.14 (1982) (discussing “collateral character of
[attorney's fee] issue[s]”). Accordingly, ...