INDECS CORP. et al v. CLAIM DOC, LLC

Filing 25

OPINION. Signed by Judge Kevin McNulty on 3/21/17. (sr, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Civ. No. 16-442 1 (KM) (JBC)

INDECS CORP. and WIREROPE
WORKS, INC.

OPINION

Plaintiffs,
V.

CLAIM DOC, LLC
Defendant.

KEVIN MCNULTY U.S.D.J.:

INDECS Corp. (“INDECS”) and Wirerope Works, Inc. (“Wirerope”) bring
this action against Claim Doc, LLC (“Claim Doc”). Plaintiffs’ claims arise from
the termination of an agreement to provide certain services related to
Wirerope’s employee health benefit plan. On July 20, 2016, Plaintiffs filed a
complaint in this Court seeking damages and declaratory relief relating to
Claim Doc’s alleged breach of contract, breach of fiduciary duty, and duty to
indemnify Plaintiffs. (ECF no. 1, cited as “Compl.”)’

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Record items cited repeatedly will be abbreviated as follows:
“P1. Mot.”

Memorandum in Support of Application for Emergency Relief and
Preliminary Injunction (ECF no. 7-3)

=

“Def. Opp.”

“P1. Reply”

=

=

Defendant Claim Doc’s Memorandum of Law in Opposition to
Plaintiffs Application for Emergency Relief and Preliminary
Injunction (ECF no. 14)
Reply Memorandum in Support of Application for Emergency
Relief and Preliminary Injunction (ECF no. 15)
1

Now before the Court is Plaintiffs’ motion for emergency relief and
preliminary injunction pursuant to Fed. R. Civ. P. 65 and Local Civ. Rule 65.1.
(P1. Mot. 1) For the reasons explained below, Plaintiffs’ motion is DENIED.

BACKGROUND

I.

According to the Complaint, INDECS is a business that manages and
administers health benefit plan claims for its customers. (Compl.

¶

16) In doing

so, INDECS contracts out some of these services to other vendors. (Id.

¶

17) On

June 1, 2015, INDECS and Claim Doc entered into an Agreement, under which
“Claim Doc was to provide claims review services to customers of INDECS.” (Id.

¶J

15—16) Paragraph 1(e) of the agreement required Claim Doc to “handle

appeals filed by providers or members of audit determinations in accordance
with the Plan’s appeal provisions and arrange for and provide at no cost to the
Plan or patient a legal defense against non-patient responsibility in balance
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bills,” if the “Plan Document” so provided. (Compl.

¶

22)

The Agreement provided for its termination by either party with 60 days’
notice, and further provided:
all rights and
As of the date of termination of this Agreement.
obligations of the Parties shall terminate, except that [Claim Dod
shall continue to perform its obligations under this Agreement with
respect to [1] any Referred Health Benefit Claim or [2] Appeal of a
Health Benefit Claim.
.

(Id.

¶J

.

29—30) The Agreement does not expressly define “Referred Health

Benefit Claim” or “Appeal of a Health Benefit Claim.” (Id.

¶

33) The Agreement

does, however, define “Health Benefit Claim” as “a claim for benefits filed by a

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As explained by Claim Doc:
A balance bill reflects a patient’s responsibility to pay the difference
between the amount a health care provider charged and the amount that
the plan paid that provider. The remaining balance equals the amount of
money the auditor determined was not payable under the allowable claim
limit.

(Def.

Opp.

6)
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participant in the Plan,” and it defines a “Referred Appeal” as “any appeal of a
denied Health Benefit Claim under the Plan.” (Id.

¶J

3 1—32)

Also on June 1, 2015, Plaintiffs and Claim Doc entered into a Joinder
Agreement, which incorporated the prior Agreement, and under which
“Wirerope elected to use Claim Doc’s claims review services for its health
benefit plan, as a customer of INDECS.” (Id.

¶J

36—37, 39) “Wirerope’s Plan

Document provided for the handling of appeals as set forth in paragraph 1(e) of
the Agreement such that Claim Doc was obligated to provide a legal defense for
balance bills to the Plan or patient.” (Id.

¶

24)

Nearly one year later, on May 10, 2016, Wirerope gave notice that it
would terminate its relationship with Claim Doc on May 31, 2016. (Id.

¶

43)

The following day, May 11, 2016, Claim Doc notified INDECS that it would
terminate the Agreement. (Id.

¶

44) Claim Doc also notified Wirerope that it

would no longer provide services, include balance bill defense, after July 2,
2016. (Id.

¶J

45—46)

Plaintiffs allege that “INDECS requested detailed information on
outstanding claims from Claim Doc, including information concerning the
status of balance billing,” but “Claim Doc did not timely respond.” (Id.

¶J

48—

49) Further, in a letter dated May 27, 2016, “Claim Doc again asserted that it
would not defend balance bills post-termination.” (Id.

¶

50) As a result of Claim

Doc’s refusal to provide post-termination balance bill defense—which Plaintiffs
allege is a breach of Claim Doc’s obligations “under paragraphs 1 and 10 of the
Agreement”—INDECS has withheld funds owed to Claim Doc to defray the cost
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of conducting the post-termination balance bill defense on its own. (Id.

¶J

53,

56) According to Plaintiffs, “[n]umerous balance bill issues exist concerning
claims under Wirerope’s health benefit plan that Claim Doc originally handled.”
(Id.

¶

55) Plaintiffs also allege that “Claim Doc has provided post-termination

legal defense of balance bills in the past.” (Id.

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¶

47)

The parties dispute the precise amount owed.
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On August 30, 2016, Plaintiffs moved this Court for emergency relief and
a preliminary injunction “requiring Claim Doc to turn over the necessary
documents and information to conduct the defense of the plan members” (P1.
Mot. 2), or, in an alternative formulation, “requiring Claim Doc to turn over its
member records for all Wirerope Plan members who require balance billing
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defense.” (Id. at 6)
II.

PRELIMINARY INJUNCTION STANDARD
A preliminary injunction is an “extraordinary remedy.

.

.

that should not

be granted unless the movant, by a clear showing, carries the burden of
persuasion.” Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S. Ct. 1865 (1997).
“A plaintiff seeking a preliminary injunction must establish

[1] that he is likely

to succeed on the merits, [2] that he is likely to suffer irreparable harm in the
absence of preliminary relief, [3] that the balance of equities tips in his favor,
and [4] that an injunction is in the public interest.” Winter v. Natural Res. Def
Council, Inc., 555 U.S. 7, 20, 129 S. Ct. 365 (2008) (numbering added); accord
American Express Travel Related Servs., Inc. v. Sidamon-Eristoff 669 F.3d 359,
366 (3d Cir. 2012); Liberty Lincoln—Mercury, Inc. v. Ford Motor Co., 562 F.3d
553, 556 (3d Cir. 2009).
Although all four factors guide the Court’s inquiry, a court will not grant
injunctive relief, “regardless of what the equities seem to require,” unless the
plaintiff successfully demonstrates the first and second factors. Hoxworth v.
Blinder, Robinson & Co., 903 F.2d 186, 197 (3d Cir. 1990) (stating that “we
cannot sustain a preliminary injunction ordered by the district court where
either or both of these prerequisites are absent.”) (emphasis added); accord
Adams v. Freedom Forge Corp., 204 F.3d 475, 484 (3d Cir. 2000). Thus, a
plaintiff’s failure to show irreparable harm or a likelihood of success on the
merits is, by itself, sufficient to deny an injunction. See Morton v. Beyer, 822

Plaintiffs’ motion contains yet a third formulation that appears to be a middle
ground, requesting “an injunction requiring Claim Doc to turn over the Wirerope Plan
member records required for balance billing defense.” (P1. Mot. 11)
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F.2d 364, 371 (3d. Cir. 1987) “[A] failure to show a likelihood of success or a
failure to demonstrate irreparable injury must necessarily result in the denial
of a preliminary injunction.”).

III.

DISCUSSION

At this stage in the litigation, Plaintiffs have failed to carry their burden
to persuade the Court that any of the four preliminary injunction factors have
been satisfied. Plaintiffs’ motion fails on many grounds, but it will suffice here
to list just two: (1) Plaintiffs cannot show irreparable harm; and (2) Plaintiffs do
not describe their requested relief with the required specificity or in reasonable
detail. I therefore do not address whether Plaintiffs have demonstrated a
likelihood of success on the merits.
A. Irreparable Harm

Plaintiffs suggest two vectors through which they will suffer irreparable
harm if a preliminary injunction is denied. First, Plaintiffs contend that
INDECS’s goodwill and reputation will “certainly” suffer if the vendor it hired to
replace Claim Doc cannot properly defend Plan members’ balance bills.
Plaintiffs provide no factual support for this assertion other than a conclusory
statement in the affidavit of INDECS’s CEO Michael Shine (“Shine”). (Shine Aff.

¶ 13, ECF no. 7-5) (“INDECS will suffer reputational harm and loss of customer
goodwill if it is not able to provide an adequate defense of outstanding balance
bills for Wirerope plan members through the new vendor.”) More is required to
persuade the court. See Am. Halal Live Poultry, LLC v. City of Perth Amboy, No.
2:16-0326 (WJM), 2016 WL 2625027, at *3 (D.N.J. May 9, 2016) (“Plaintiffs’

conclusory ‘blanket statement’ that failure to issue a preliminary injunction
will cause irreparable harm to their reputation and good will is insufficient” to
demonstrate irreparable and imminent injury.).
Second, Plaintiffs assert that they “will be unable to ascertain all of the
facts necessary to conduct a balance bill defense for Plan members unless
Claim Doc provides the necessary information,” which “could result” in injury
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to Plan members in the form of credit reporting issues or reputational harm.
(P1. Mot. 9) (emphasis added) As above, Plaintiffs’ only support is Shine’s
conclusory statement. (Shine Aff.

¶ 14, ECF no. 7-5) (“Wirerope plan members

may suffer harm to their credit and reputation if the balance bills are not
defended.”) (emphasis added) That is a speculative, conclusory statement about
harm that may result to plan members. Many events that could or may occur
are nevertheless not likely to occur. Plaintiffs bear the burden to establish that
irreparable harm is likely, and they have plainly failed to do so.
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B. Requisite Specificity and Reasonable Detail
Under Rule 65, “[e]very order granting an injunction

.

.

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must: (A) state

the reasons why it was issued; (B) state its terms specifically; and (C) describe
in reasonable detail—and not by referring to the complaint or other
document—the act or acts restrained or required.” Fed. R. Civ. P. 65(d)(1). The
Third Circuit has held on multiple occasions that “district courts granting
injunctions pursuant to this rule should craft remedies ‘no broader than
necessary to provide full relief to the aggrieved plaintiff.” Belitskus v.
Pizzingrilli, 343 F.3d 632, 649—50 (3d Cir. 2003) (quoting McLendon v. Cont’l
Can Co., 908 F.2d 1171, 1182 (3d Cir. 1990)). “As the Supreme Court has
explained, the policy behind this principle is ‘to prevent uncertainty and

I also note that I am not persuaded that the harm Plaintiffs face cannot be later
remedied with monetary damages. Harm that can be monetarily redressed is not
irreparable. Campbell Soup Co. v. ConAgra, Inc., 977 F.2d 86, 9 1—92 (3d Cir. 1992)
(“The ‘requisite feared injury or harm must be irreparable—not merely serious or
substantial,’ and it ‘must be of a peculiar nature, so that compensation in money
cannot atone for it. “‘) (internal citation omitted) Plaintiffs’ contention that damages will
not suffice rests on the assumption that Plaintiffs cannot provide adequate balance bill
defense to Wirerope plan members if Claim Doc does not provide “necessary
information.” (See P1. Mot. 9) However, Plaintiffs fail to explain what type of
information is necessary, why it is necessary, or why only Claim Doc is in possession
of the information. Without any persuasive evidence that Claim Doc is in sole
possession of truly necessary information, it appears that the only harm Plaintiffs may
incur is the expense of providing the balance bill defense that Claim Doc will not. The
ultimate harm to the plan members is incomplete reimbursement of charges. That
harm is monetary and can be redressed by damages should Plaintiffs prevail upon the
merits.
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confusion on the part of those faced with injunctive orders, and to avoid the
possible founding of a contempt citation on a decree too vague to be
understood.” Leonard v. Mackereth, 2014 WL 512456, at *10 (E.D. Pa. Feb. 10,
2014) (quoting Schmidt v. Lessard, 414 U.S. 473, 476, 94 S. Ct. 713 (1974)).
In this case, even if I did find—which I do not—that Plaintiffs otherwise
qualified for preliminary injunctive relief, I could not grant the requested relief.
To grant Plaintiffs’ motion would result in an injunction so vague and
uncertain as to run afoul of the specificity and reasonable detail requirements
of Rule 65. Plaintiffs themselves appear uncertain of the scope of relief that
they seek, as reflected in alternative formulations requesting an injunction
“requiring Claim Doc to turn over”: (1) “the necessary documents and
information to conduct the defense of the plan members,” (P1. Mot. 2); (2) “its
member records for all Wirerope Plan members who require balance billing
defense,” (Id. at 6); or (3) “the Wirerope Plan member records required for
balance billing defense,” (Id. at 11). These alternatives leave unclear whether
the truly necessary documents consist of all or only some documents
pertaining to the plan members who require balance bill defense.
Further, even had Plaintiffs stuck with a single formulation, Plaintiffs
have use the vague terms “member records,” “required,” and “necessary”
without any further definition. Therefore, any order issued using these vague
terms would very likely be overbroad, difficult for Claim Doc to comply with,
and difficult for this Court to enforce. I will not issue an order for preliminary
injunctive relief that fails to comply with Rule 65(d), such as the order that
Plaintiffs request here.

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IV.

CONCLUSION
For the foregoing reasons, Plaintiffs’ motion for emergency relief and

preliminary injunction (ECF no. 7) is DENIED.
An appropriate Order follows.

Dated: March 21, 2017

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