Enable Healthcare, Inc. v. Cleveland Quality Healthnet, LLC

Filing 28

Memorandum of Opinion and Order: Plaintiff's Motion for Preliminary Injunction (Doc. 5 ) is denied. Judge Patricia A. Gaughan on 11/7/16. (LC,S)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

Enable Healthcare, Inc.,
Plaintiff,
vs.
Cleveland Quality Healthnet, LLC,
Defendant.

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CASE NO. 1:16 CV 2395
JUDGE PATRICIA A. GAUGHAN

Memorandum of Opinion and Order

INTRODUCTION
This matter is before the Court upon Plaintiff’s Motion for Preliminary Injunction (Doc.
5). This lawsuit arises from a Consulting Agreement entered into by the parties on February 20,
2014. Plaintiff Enable Healthcare, Inc. asserts that it has fulfilled its obligations under the
agreement and is entitled to payment from defendant Cleveland Quality Healthnet, LLC for its
services. The Court has diversity jurisdiction over this lawsuit. For the reasons that follow,
plaintiff’s motion is DENIED.
FACTS
Except as otherwise noted, the facts are taken from plaintiff’s Verified Complaint.
Although defendant filed an Answer disputing plaintiff’s allegations, it has largely assumed the

truth of the allegations for purposes of plaintiff’s motion for preliminary injunction. Aside from
one email, defendant has not submitted any evidence in support of its opposition to the motion.
Plaintiff met with a group of doctors in May of 2013 to address the concept of
Accountable Care Organizations (“ACOs.”). (Compl. ¶ 5-10). ACOs provide a way for primary
care physicians to form an association that service at least “5000 Medicare Lives” in a given
year. (Id. ¶ 12). The ACO may then apply to participate in the Medicare Shared Savings Program
(“MSSP”) with the Centers for Medicare and Medicaid Services (“CMS”). CMS provides
information to the ACO on funds spent during the last three years by CMS on the 5000 lives. (Id.
¶ 14). The ACO then works toward containing future costs. If the group of doctors achieve a
specified savings threshold on the last three-year average, the savings realized by CMS is split
evenly between CMS and the ACO (“Shared Savings”). (Id.).1
Plaintiff met with the doctors to explain the concept of an ACO. Defendant engaged
plaintiff to assist in the formation of the ACO, complete the application process, and guide the
newly formed ACO to file the necessary Letter of Intent online with CMS. (Id. ¶ 15). In June
2013, plaintiff formed a project team to assist in the application process and organization of
defendant as an ACO and to assist in the preparation of the Participation Agreement to be signed
by the various participating physicians. (Id. ¶ 15). Plaintiff then met with the complete group of
doctors in Ohio to explain the concept, advantages, and mechanics of the ACO process. (Id. ¶
16). The lead group of Doctors Mukunda, Natesan, and Balaji provided a list of doctors who
would be recruited to join defendant. (Id. ¶ 17).
Defendant agreed to pay $20,000 upon successful completion of the application process.

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The doctors continue to be paid their regular fee for services. (Id. ¶ 22).
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Plaintiff claims that it accepted the relatively small upfront fee because if the group obtained
approval as an ACO, plaintiff would be the exclusive provider of technology and consulting
services for the ACO. As a consultant, it would help the group identify gaps in care which the
group could then address, thereby reducing health risks and, in turn, reducing future costs. (Id. ¶¶
19-21).
For the remainder of 2013, plaintiff worked on organizing the group, educating them, and
applying for ACO approval. The application was submitted on July 31, 2013. The ACO was
approved on October 30, 2013, and plaintiff continued to provide organizational, financial, and
technological advice to defendant’s executives so that the collection and analysis of data could
begin in 2014. (Id. ¶¶ 24-39).
CMS identified defendant as a qualified ACO in its directory starting January 1, 2014.
(Id. ¶ 40). On February 20, 2014, plaintiff and defendant entered into the Consulting Agreement
at issue in this case. Plaintiff agreed on a fee of $370,000 per year for providing the technology
platform and a support team, plus 12% of profits if defendant qualified for Shared Savings with
CMS. (Consulting Agreement, Ex. B). Following the agreement, plaintiff worked with defendant
to plan the next steps, provide educational materials, and identify strategies to achieve
defendant’s cost-savings goals. (Id. ¶ 45). Plaintiff conducted conference calls, prepared data
analysis, and educated staff members. (Id. ¶ 47).
By April of 2014, plaintiff began data extraction and analysis. Plaintiff performs this
analysis through its proprietary platform, the ACO Advantage Platform. (Id. ¶ 51). The platform
provides detailed analytics regarding patient utilization, as well as gaps in care. (Id.). A portal
was available to the ACO management so that it could access the performance of participating

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providers. Individual doctors could also access and monitor their own performance. (Id. ¶ 52).
Throughout this process, plaintiff printed brochures for each of the participating practices,
forwarded individual practice assessment questionnaires to all of the practices with follow-up
evaluation, trained defendant’s management and individual physicians on plaintiff’s platform,
visited participating practices for assessment and evaluation, built a website to coordinate
exposure and information, and conducted marketing efforts to increase the presence of
defendant’s participating doctors. (Id. ¶¶ 53-58).
In June of 2014, plaintiff began developing relationships between defendant and various
nursing home facilities. It added nurses to its payroll to conduct annual wellness visits for
patients in an effort to identify and eliminate gaps in care. During July and August of 2014,
plaintiff developed additional strategies for cost savings. Plaintiff also identified a survey vendor
to conduct the year-end survey for defendant that is required by CMS. (Id. ¶¶ 61-63).
In the first part of 2015, plaintiff worked with defendant to complete the Group Practice
Reporting Option to report defendant’s performance for 2014. (Id. ¶ 65). The results showed a
savings of 1.27%, short of the 3.56% savings required for defendant to receive Shared Savings
from CMS.
Toward the end of 2015, plaintiff arranged with a consultant to conduct the 2015 survey.
Plaintiff worked with defendant to finalize the data abstraction and loading of data onto the ACO
Advantage Platform for use by defendant. (Id. ¶ 71). In January of 2016, plaintiff contacted
defendant about the Group Practice Reporting Option. Defendant’s management team wanted
individual doctors to pay for the reporting function, but the physicians refused to do so. (Id. ¶
74). The Consulting Agreement excludes Group Practice Reporting as a separate function that

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would have required a separate additional payment if performed by plaintiff. (Id. ¶ 75). Plaintiff,
however, continued to work with the consultant to conduct the year-end survey for the 2015
performance year reporting. (Id. ¶ 76).
In February 2016, plaintiff reminded defendant of the reporting requirement. On
February 9, 2016, plaintiff and Dr. Mukunda discussed the deadlines for reporting and the
outstanding accounts payable due plaintiff for the annual wellness services that it had rendered
on behalf of the individual practices. The outstanding accounts payable issue was not resolved at
this meeting.(Id. ¶¶ 77-79).
In late February, Dr. Mukunda asked plaintiff to conduct the reporting; however, the
parties could not reach an agreement and plaintiff ultimately did not perform the reporting for
the 2015 performance year. Plaintiff has confirmed that the reporting was completed in a timely
fashion by defendant or another entity. (Id. ¶ 81).
Plaintiff made numerous attempts to communicate with defendant about the ACO’s
performance for 2015. While plaintiff was unsuccessful in its efforts with defendant, CMS
publishes ACOs’ performance results on its website. According to the website, defendant
achieved a 6.58% savings in 2015, which qualifies it for Shared Savings with CMS. Plaintiff has
unsuccessfully attempted to contact defendant to confirm that, once it receives its share of the
Shared Savings (which was to be sometime in September or October, 2016), it will pay plaintiff
for the services it has performed in accordance with the Consulting Agreement. (Id. ¶ 91).
As a result, plaintiff filed the instant lawsuit, bringing claims for anticipatory
repudiation/breach of contract and unjust enrichment. It seeks a declaratory judgment, book
account, accounting, constructive trust, and compensatory damages. Plaintiff alleges that it is

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owed a total of $1,110,567.68 under the Consulting Agreement. Now pending before the Court is
plaintiff’s motion for a preliminary injunction, which asks the Court to order that defendant not
disburse any funds received from CMS until it has first met its payment obligations to plaintiff
under the Consulting Agreement and that defendant specifically perform the Consulting
Agreement, including its payment obligations to plaintiff.
In its Answer, defendant disputes plaintiff’s allegations and has filed a counterclaim
against plaintiff, alleging that plaintiff did not perform as required under the agreement and that
plaintiff unilaterally terminated the agreement, leaving defendant to fulfill its reporting
requirements to CMS without assistance. The only evidence it submits in opposition to plaintiff’s
motion for preliminary injunction is an email exchange regarding the Group Reporting for
performance year 2015. Defendant cites to an email dated February 23, 2016, from one of
plaintiff’s representatives as evidence that plaintiff did not fulfill its obligations under the
Consulting Agreement. The email states: “Kiran had emailed stating we need time till Friday to
analyze your data. We cannot commit until we review your data and understand the depth of
work that will be involved to report to CMS. So if you can’t wait until Friday to complete our
review to finalize the cost and you need to move on, we understand that as well.” (Def.’s Br. In
Opp., Ex. 1).
LAW AND ANALYSIS
A preliminary injunction is an “extraordinary remedy.” Overstreet v. Lexington-Fayette
Urban Cty. Gov’t, 305 F.3d 566, 573 (6th Cir. 2002). A district court may only grant the
injunction if plaintiff proves that the circumstances “clearly demand it.” Id. In exercising its
discretion to grant a preliminary injunction, the court is to consider four factors:

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1) Whether the plaintiff has shown a strong or substantial likelihood or
probability of success on the merits;
2) Whether the plaintiff has shown irreparable injury;
3) Whether the issuance of a preliminary injunction would cause substantial harm
to others;
4) Whether the public interest would be served by issuing a preliminary
injunction.
Mason Cty. Med. Ass’n v. Knebel, 563 F.2d 256, 261 (6th Cir. 1977). In determining whether an
injunction is appropriate, the court should make specific findings as to the four factors, “unless
fewer are dispositive of the issue.” Performance Unlimited, Inc. Questar Publishers, Inc., 52
F.3d 1373, 1381 (6th Cir. 1995). In general, the preliminary injunction factors create a flexible
balancing test. Friendship Materials, Inc. v. Michigan Brick, Inc., 679 F.2d 100, 102. The Sixth
Circuit, however, has “never held that a preliminary injunction may be granted without any
showing that the plaintiff would suffer irreparable injury without such relief.” Id. at 102-03
(quoting Sampson v. Murray, 415 U.S. 61, 88, 94 S. Ct. 937, 952 (1974) (“[T]he basis of
injunctive relief in the federal courts has always been irreparable harm and inadequacy of legal
remedies.”)); see also S. Milk Sales, Inc. v. Martin, 924 F.2d 98, 103 (6th Cir. 1991) (affirming
denial of preliminary injunction where movant failed to show irreparable injury); Economou v.
Physicians Weight Loss Centers of Am., 756 F. Supp. 1024, 1030–31 (N.D. Ohio 1991) (noting
that “a plaintiff must always demonstrate some irreparable injury before a preliminary injunction
may issue”) (quotations omitted)).
Here, the Court need only address the irreparable harm factor because plaintiff has failed
to show that it will suffer any irreparable injury if the Court denies its motion. In order to be
made whole, plaintiff seeks only monetary damages that it has calculated to the penny:
$1,110,567.68. The law, however, is well established that harm that is compensable by monetary

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damages is not irreparable. Basicomputer Corp. v. Scott, 973 F.2d 507, 511 (6th Cir. 1992) (“The
defendants correctly point out that a plaintiff’s harm is not irreparable if it is fully compensable
by money damages.”); Overstreet v. Lexington-Fayette Urban Cty. Gov’t, 305 F.3d 566, 578 (6th
Cir. 2002) (“A plaintiff’s harm from the denial of a preliminary injunction is irreparable if it is
not fully compensable by monetary damages.”).
Essentially, plaintiff argues that it will suffer irreparable injury because, in the event that
it ultimately prevails on summary judgment or at trial, it will be difficult to collect the money
that it is owed:
[The money] can easily disappear into and out of [defendant’s] account quickly
and [plaintiff] would be left chasing around needlessly to recover its portion of
the payment. [Defendant] was an entity created for the purpose of amalgamating a
number of individual medical practices. If distributions are made to those
practices and there is nothing left in [defendant’s] accounts, there are no assets to
satisfy the obligations. [Plaintiff] will then be left with nothing but more litigation
and attenuated claims against [defendant’s] members ... who would certainly
claim corporate insulation.
(Pl.’s Br. at 10). Plaintiff cites no case that would support a finding of irreparable harm under
these circumstances. To the contrary, difficulty in obtaining a money judgment because a
defendant may dissipate its assets prior to the conclusion of a case is generally insufficient to
constitute irreparable harm. The Supreme Court in Grupo Mexicano de Desarrollo S.A. v. All.
Bond Fund, Inc., held that the district court in that case “had no authority to issue a preliminary
injunction preventing petitioners from disposing of their assets pending adjudication of
respondents’ contract claim for money damages.” 527 U.S. 308, 333 (1999). This was true
despite the district court’s finding that “it was ‘almost certain’ that respondents would succeed
on the merits of their claim.” Id. at 312. The dissent in Grupo had argued–similar to plaintiff
here–that “the grand aims of equity” include the power to grant relief whenever legal remedies
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are not “practical and efficient.” Id. at 342 (Ginsburg, J., dissenting). The majority, however,
explicitly rejected “[t]his expansive view of equity.” Id. at 321. Indeed, if a party were permitted
to obtain an injunction under the circumstances here, then “it is difficult to see why a plaintiff in
any action for a personal judgment in tort or contract may not also apply...for a so-called
injunction sequestrating his opponent’s assets pending recovery and satisfaction of a judgment....
No relief of this character has been thought justified in the long history of equity jurisprudence.”
De Beers Consol. Mines v. United States, 325 U.S. 212, 222-23, 65 S. Ct. 1130, 1135 (1945).
Moreover, under Federal Rule of Civil Procedure 64(a), “throughout an action, every
remedy is available that, under the law of the state where the court is located, provides for
seizing a person or property to secure satisfaction of the potential judgment.” Ohio has a
prejudgment attachment statute, Ohio Rev. Code § 2715.05. Plaintiff recognizes that the statute
is a “valid avenue for relief,” but argues that injunctive relief is preferable in this case because of
“the cumbersome nature of Ohio’s prejudgment attachment law.” (Pl.’s Reply Br. at 7). It argues
that it would be more efficient for this Court to enter an injunction freezing that portion of
defendant’s Shared Savings subject to plaintiff’s claims than it would be to “send the Sheriff of
Cuyahoga County to Defendant’s office to look for the CMS bonus check.” (Id.) The Sixth
Circuit, however, has held that “a preliminary injunction may not be granted unless there are
valid findings that the legal remedy provided by the state’s attachment statutes under Rule 64 is
inadequate.” EBSCO Indus., Inc. v. Lilly, 840 F.2d 333, 336 (6th Cir. 1988). While an injunction
may be more efficient, plaintiff has not shown that Ohio’s prejudgment attachment statute is

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inadequate.2
Thus, plaintiff is not entitled to a preliminary injunction.
CONCLUSION
For the foregoing reasons, plaintiff’s Motion for Preliminary Injunction (Doc. 5) is
denied.
IT IS SO ORDERED.

/s/ Patricia A. Gaughan
PATRICIA A. GAUGHAN
United States District Judge
Dated: 11/7/16

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In fact, on October 31, 2016, plaintiff filed a motion for attachment of property.
(Doc. 22). That motion is currently pending before the Court.
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