Enable Healthcare, Inc. v. Cleveland Quality Healthnet, LLC
Memorandum Opinion and Order: Defendant's Motion for Summary Judgment (Doc. 57 ) and Defendant's Motion to Strike the Affidavit of Anthony Subbiah (Doc. 60 ) are GRANTED IN PART AND DENIED IN PART, as set forth herein. CQH's request to seal the attachments to Subbiah's affidavit (Doc. 59 -1, which contain the full account number for CQH's PNC Bank account, is granted without objection. Judge Patricia A. Gaughan on 7/20/17. (LC,S)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
Enable Healthcare, Inc.,
Cleveland Quality Healthnet, LLC,
CASE NO. 1:16 CV 2395
JUDGE PATRICIA A. GAUGHAN
Memorandum of Opinion and Order
This matter is before the Court upon Defendant’s Motion for Summary Judgment (Doc.
57) and Defendant’s Motion to Strike the Affidavit of Anthony Subbiah (Doc. 60). This lawsuit
arises from a Consulting Agreement entered into by the parties on February 20, 2014. Plaintiff
Enable Healthcare, Inc. (“EHI”) asserts that it has fulfilled its obligations under the Agreement
and is entitled to payment from Defendant Cleveland Quality Healthnet, LLC (“CQH”) for its
services. The Court has diversity jurisdiction over this lawsuit. For the reasons that follow, both
of Defendant’s motions are GRANTED IN PART AND DENIED IN PART.
Medicare Shared Savings Programs were created as part of the Affordable Care Act.
Accountable Care Organizations (“ACOs”) may apply to participate in the program with the
Centers for Medicare and Medicaid Services (“CMS”). The purpose of an ACO is for a group of
doctors with a patient base of at least 5,000 Medicare patients to better manage the care of its
patients. The goal is that the ACO will achieve a reduction in healthcare costs over time. CMS
provides information to the ACO on funds that CMS spent on the patients during the previous
three years. In each calendar year, if the ACO is able to reduce spending by a certain target, the
savings is shared between CMS and the ACO.
In the spring of 2013, when ACOs were still a relatively new concept, Dr. Venkat Bala, a
consultant to EHI, met with Dr. Corattur Natesan to discuss the concept of an ACO. Dr. Bala had
never consulted regarding an ACO prior to this time. Dr. Natesan then met with Drs. Beejadi
Mukunda and Hari Balaji to discuss the formation of an ACO. The doctors secured sufficient
interest and formed CQH.
In the beginning of the parties’ relationship, EHI agreed to lead the doctors through the
qualification process with the understanding that EHI would provide the technology and
guidance through at least the initial phases of the ACO’s existence. The parties agree that CQH
paid EHI $20,000 for its assistance in establishing the ACO and preparing the application to
become an ACO and $40,000 for its implementation services. This part of the parties’
relationship is not in dispute. CQH submitted its application on July 31, 2013, and CMS
approved CQH as an ACO on October 30, 2013.
EHI and CQH then negotiated the Consulting Agreement that is at issue in this case. The
parties signed the Agreement on February 20, 2014. Under the Agreement, CQH was to pay EHI
$370,000 per year for providing the technology platform and consulting resources, plus 12% of
profits if CQH qualified for Shared Savings with CMS. In negotiating the Agreement, the CQH
doctors were concerned about funds to operate the ACO and make further payments to EHI. The
parties agreed on a funding mechanism for these payments, which they called “Operating
Resources.”1 The plan was that the Operating Resources funds would come from contributions
by various vendors identified by EHI who were willing to contribute cash, services, personnel or
other resources to the ACO. CQH could terminate the Agreement if EHI failed to secure
Operating Resources to CQH’s “reasonable satisfaction.” (Consulting Agreement § 6.1(a)). CQH
had discretion to accept or reject vendors identified by EHI, (id. § 1.2), but “agree[d] to
cooperate with [EHI] in [its] efforts to secure Operating Resources,” (id. § 6.1(a)). The
Operating Resources funds were to be the source of EHI’s payments for its technology and
Compensation and reimbursement for the Consultant Resources set forth in
Exhibit C, Use of Technology ACO Advantage Platform, Consulting Services and
all other services and products to be provided under the terms of this Agreement
...shall be paid to the Consultant from the ACO’s Operating Resources in
installments generally on a monthly basis, or as otherwise agreed by the Parties....
“Operating Resources” is a defined term in the Agreement:
At the option of the ACO, if the funding sources for funds and/or services
(which services may include, but shall not [sic] limited to, agreements or
arrangements, permissible under applicable laws, with skilled nursing
facilities, hospitals, home health agencies, infusion programs, hospices,
labs, and/or other vendors) required for the Operating Budget set forth and
described in Exhibit C, attached hereto and incorporated herein, (the
Consulting Agreement § 6.1.
However, notwithstanding anything contained herein to the contrary, all payments
are subject to the availability of funds generated through the Operating Resources.
(Id., Exhibit B, §C); (see also id., Ex. C) (“Except as otherwise provided in this Agreement, all
ACO costs shall be paid from funds obtained through the Operating Resources.”).
EHI identified various vendors as potential sources of funds for the Operating Resources,
including Companion DX ($150,000 per year), an imaging testing company ($125,000 per year),
Visiting Nurses (two Rns on a full-time basis plus $150,000 per year), a sleep center vendor
($75,000 per year), Cleveland Diagnostic Laboratories ($100,000 per year), various specialists
($10,000 per year), and LabCorp. and Quest Laboratories ($75,000 per year). (Subbiah Aff. ¶
50). CQH, however, did not reach any agreements. Dr. Mukunda claims that this was because
CQH’s executive committee had ethical and clinical concerns about the vendors, (Mukunda Dep.
at 85), but Dr. Bala testified that no one at CQH ever explained why the vendors were rejected,
(Bala Dep. at 109). Eventually, EHI “slow[ed] up” in bringing vendors to CQH because CQH
was not responsive to EHI’s efforts:
Q: Was there any agreement at some point in time to stop bringing vendors for
A: We did our best and then we were waiting for CQH to respond. Since they
didn’t respond, we had to slow up because we cannot take people and then get the
same treatment because there was not a reciprocation.
(Id. at 108). Ultimately, no Operating Resources were ever received. (Subbiah Dep. at 162-63).
CQH, however, did not exercise its option to terminate the Agreement.
CQH also claims that EHI did not provide a workable platform and training to the CQH
physicians. As support, it cites the testimony of Dr. Mukunda, who testified that CQH failed to
qualify for a bonus in 2014 because EHI did not perform as promised:
A: From what was presented to us all along was that there is this amazing
technology platform which is going to help us get real-time data, stratify the
patients being in high risk where they are able to avoid unnecessary expenses,
take better care of the patients, and save money for the ACO and, also, for CMS.
That never happened.
(Mukunda Dep. at 101). CQH notes that the doctors only attempted to login on the platform
1,200 times whereas EHI would have expected about 72,000 logins. According to EHI, however,
the technology platform it created was workable and was able to stratify the levels of patient risk
depending upon severity. (Subbiah Aff. ¶ 34). EHI asserts that the platform “was used to monitor
patient care and assist in follow-up of dietary needs, medical needs and other aspects of the
patient care plan that the doctor or practice had set out for a particular patient.” (Id.). EHI also
“loaded all of the patient health records onto the technology platform so that the information
could be categorized, tracked, monitored and used by the practices.” (Id., ¶ 39). Cost and quality
metrics were measurable on the platform because it allowed users to determine how money was
spent in categories such as date, patient, or procedure. (Id., ¶ 42). EHI also states that it provided
training to the CQH doctors and that it was available for training at any time:
A: Because we provided training. We provided avenues for the doctors to train. I
provided multiple e-mails of logins and passwords where the doctors could call
me and set up times to train. I went to their offices to train.
(Samuelraj Dep. at 32, 51).
Finally, CQH claims that, as part of the Consulting Agreement, it expected EHI to
provide CMS mandated reporting services, including the group practice reporting option
(“GPRO”). Drs. Natesan and Mukunda, though, admit that GPRO is not listed in the Agreement
as one of EHI’s obligations. (Natesan Dep. at 108); (Mukunda Dep. at 95). For the 2014
reporting year, EHI sent a separate contract to CQH with additional charges for its assistance
with the GPRO. CQH paid for these services. CQH achieved some savings in 2014 but fell short
of its Shared Savings goal, so it did not receive a bonus from CMS. In February of 2016, the
parties discussed the GPRO reporting for the 2015 reporting year. They could not come to an
agreement about payment for these services, and CQH ultimately hired another contractor to
assist with the GPRO reporting. CQH achieved its Shared Savings goal for the reporting year
2015 and received nearly $3,000,000 in Shared Savings from CMS.
EHI thereafter filed this lawsuit, claiming that it is entitled to be paid $370,000 for 20142015, $370,000 for 2015-2016, and 12% of CQH’s Earned Shared Savings. EHI brings seven
claims for relief. Count One is a claim for declaratory judgment; Count Two is a claim for
anticipatory repudiation/breach of contract; Claim Three is a claim for unjust enrichment; Count
Four is a claim for a book account; Count Five is a claim for an accounting; Count Six is a claim
for a constructive trust; and Count Seven is a claim for injunctive relief. Now pending before the
Court are CQH’s motion for summary judgment and its motion to strike. EHI opposes both
MOTION TO STRIKE
CQH moves to strike the affidavit of Anthony Subbiah, EHI’s president. CQH argues that
Subbiah’s affidavit should be stricken in total because it contains arguments, conclusory
statements, and hearsay and “more resembles an adversarial memorandum than a bona fide
affidavit.” (Def.’s Mot. to Strike at 8).
Affidavits used to support or oppose a summary judgment motion “must be made on
personal knowledge, set out facts that would be admissible in evidence, and show that the affiant
or declarant is competent to testify on the matters stated.” Fed. R. Civ. P. 56(c)(4). An affidavit
that does not satisfy these requirements is subject to a motion to strike. Giles v. Univ. of Toledo,
241 F.R.D. 466, 469 (N.D. Ohio 2007). In resolving a motion to strike, the Court should use “a
scalpel, not a butcher knife.” Id. (quoting Perez v. Volvo Car Corp., 247 F.3d 303, 315-16 (1st
Cir. 2001). Thus, a court may distinguish between the compliant and non-compliant portions of
the affidavit and strike only those portions that do not comply with Rule 56(c)(4). Ondo v. City
of Cleveland, 795 F.3d 597, 605 (6th Cir. 2015).
While CQH argues that Subbiah’s entire affidavit should be struck, it only specifically
addresses certain paragraphs. Because the majority of the affidavit is based on facts of which
Subbiah would have personal knowledge, the Court will address only those paragraphs that CQH
has explicitly addressed in its motion. The Court hereby strikes the following paragraphs of
Subbiah’s affidavit: 6-9, 19-22, 31, 52, 54, 59, 60, 63, 64, and 68-75. These paragraphs contain
conclusory and argumentative statements and lack specific facts showing that they are based on
Subbiah’s personal knowledge. The Court will not strike paragraphs 32, 36, 37, or 67. CQH
argues that paragraphs 32, 36, and 37 contain Subbiah’s opinion on the meaning of certain
provisions in the Consulting Agreement even though he did not participate in the negotiations. In
each of these paragraphs, however, Subbiah includes specific facts regarding the services that
EHI provided to CQH during the term of the parties’ relationship. (See, e.g., Subbiah Aff. ¶ 32)
(“In doing so, EHI worked with the doctors and practices to provide letters to patients explaining
the involvement of the practice in the ACO, tutorials for the doctors and staff and telephone
scripts for use by staff members when handling questions from the patients that had received the
letters.”). Paragraph 67 (“Nevertheless, CQH never tried to cancel the contract as per the
termination provisions of the Consulting Agreement.”) is a statement of fact of which Subbiah
would have personal knowledge.
For these reasons, Defendant’s Motion to Strike is granted in part and denied in part.
CQH’s request to seal the attachments to Subbiah’s affidavit, which contain the full account
number for CQH’s PNC Bank account, is granted without objection.
SUMMARY JUDGMENT STANDARD
Rule 56(a) of the Federal Rules of Civil Procedure, as amended on December 1, 2010,
provides in relevant part that:
A party may move for summary judgment, identifying each claim or defense—or
the part of each claim or defense—on which summary judgment is sought. The
court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter
Fed. R. Civ. P. 56(a).
Rule 56(e) provides in relevant part that “[i]f a party fails to properly support an assertion
of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the
court may ... consider the fact undisputed for purposes of the motion ... [and] grant summary
judgment if the motion and supporting materials—including the facts considered
undisputed-show that the movant is entitled to it.” Fed. R. Civ. P. 56(e).
Although Congress amended the summary judgment rule, the “standard for granting
summary judgment remain unchanged” and the amendment “will not affect continuing
development of the decisional law construing and applying” the standard. See Fed. R. Civ. P.
56, Committee Notes at 31.
Accordingly, summary judgment is appropriate when no genuine issues of material fact
exist and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986) (citing Fed. R. Civ. P. 56(c)); see also LaPointe v. UAW, Local
600, 8 F.3d 376, 378 (6th Cir. 1993). The burden of showing the absence of any such genuine
issues of material facts rests with the moving party:
[A] party seeking summary judgment always bears the initial responsibility of
informing the district court of the basis for its motion, and identifying those
portions of “the pleadings, depositions, answers to interrogatories, and admissions
on file, together with affidavits,” if any, which it believes demonstrates the
absence of a genuine issue of material fact.
Celotex, 477 U.S. at 323 (citing Fed. R. Civ. P. 56(c)). A fact is “material only if its resolution
will affect the outcome of the lawsuit.” Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986).
Once the moving party has satisfied its burden of proof, the burden then shifts to the
nonmoving party. The court must afford all reasonable inferences and construe the evidence in
the light most favorable to the nonmoving party. Cox v. Kentucky Dep’t. of Transp., 53 F.3d
146, 150 (6th Cir. 1995) (citation omitted); see also United States v. Hodges X-Ray, Inc., 759
F.2d 557, 562 (6th Cir. 1985). However, the nonmoving party may not simply rely on its
pleading, but must “produce evidence that results in a conflict of material fact to be solved by a
jury.” Cox, 53 F.3d at 150.
Summary judgment should be granted if a party who bears the burden of proof at trial
does not establish an essential element of his case. Tolton v. American Biodyne, Inc., 48 F.3d
937, 941 (6th Cir. 1995) (citing Celotex, 477 U.S. at 322). Accordingly, “the mere existence of a
scintilla of evidence in support of plaintiff’s position will be insufficient; there must be evidence
on which the jury could reasonably find for the plaintiff.” Copeland v. Machulis, 57 F.3d 476,
479 (6th Cir. 1995) (quoting Anderson, 477 U.S. at 52 (1986)). Moreover, if the evidence is
“merely colorable” and not “significantly probative,” the court may decide the legal issue and
grant summary judgment. Anderson, 477 U.S. at 249-50 (citation omitted).
LAW AND ANALYSIS
A. Breach of Contract
Ohio law governs the Consulting Agreement. Under Ohio law, “[a] breach of contract
occurs when a party demonstrates the existence of a binding contract or agreement; the nonbreaching party performed its contractual obligations; the other party failed to fulfill its
contractual obligations without legal excuse; and the non-breaching party suffered damages as a
result of the breach.” Spectrum Benefit Options, Inc. v. Med. Mut. of Ohio, 174 Ohio App.3d 29,
880 N.E.2d 926, 934 (2007). A non-breaching party is excused from performance by the
counter-party’s material breach. Freeman Indus. Prods. v. Armor Metal Group, 193 Ohio App.
3d 438, 952 N.E.2d 543, 552 (2011). The materiality of a particular breach is ordinarily a
question for the jury but can be decided as a matter of law when the evidence of the breach is
clear, uncontradicted, and indisputable. Transportation Ins. Co. v. Busy Beaver Bldg. Centers,
Inc., 969 F. Supp. 2d 875, 889-90 (S.D. Ohio 2013). Courts consider the following factors in
determining if a breach is material:
(1) The extent to which the injured party will be deprived of the benefit which he
(2) The extent to which the injured party can be adequately compensated for the
part of that benefit of which he will be deprived;
(3) The extent to which the party failing to perform or to offer to perform will
(4) The likelihood that the party failing to perform or to offer to perform will cure
his failure, taking account of all the circumstances including any reasonable assurances;
(5) The extent to which the behavior of the party failing to perform or to offer to
perform comports with standards of good faith and fair dealing.
Id. (quoting Rest.2d of Contracts § 241). “[W]here a party has partially but not substantially
performed his promise contained in an entire contract, and the failure to perform the balance of
the contract is not excused, no recovery can be made upon the contract or upon quantum meruit.”
W. Wagner & G. Wagner Co., L.P.A. v. Block, 107 App. 3d 603, 608, 669 N.E.2d 272, 276
(1995) (quotations omitted).
CQH argues that it is entitled to summary judgment on EHI’s breach of contract claim for
four reasons. The Court will address each in turn.
1. Operating Resources
CQH first argues that it does not owe EHI any compensation for use of the technology
platform and a support team because EHI’s payment for its technology, data analyst, and clinical
analyst services was conditioned upon receipt of Operating Resources from third parties.
Because CQH never received any Operating Resources funds, it claims that it does not owe
anything to EHI for these services.
A court’s role is to give effect to the intent of the parties to an agreement, and courts
generally presume that the intent of the parties to a contract resides in the language they chose to
employ in the agreement. Shifrin v. Forest City Enters., Inc., 64 Ohio St. 3d 635, 638, 597
N.E.2d 499, 501 (1992); Westfield Ins. Co. v. Galatis, 100 Ohio St. 3d 216, 219–20, 797 N.E.2d
1256, 1261–62 (2003). When the language in a contract is unambiguous, courts will not create a
new contract by finding an intent not expressed in the clear language employed by the parties.
Shifrin, 64 Ohio St. 3d at 638. According to CQH, the language in the Consulting Agreement
unambiguously provides that, if EHI did not secure Operating Resources, it is not entitled to any
EHI argues that the reason there were no Operating Resources funds is that CQH
breached its duty of good faith and fair dealing by repeatedly rejecting the vendors that EHI
identified as funding sources. Implicit in every contract is a duty of good faith and fair dealing.
Third Fed. S. & L. Assn. of Cleveland v. Formanik, 64 N.E.3d 1034, 1048–49 (Ohio Ct. App.
2016). “‘Good faith performance or enforcement of a contract emphasizes faithfulness to an
agreed common purpose and consistency with the justified expectations of the other
party.’...[B]ad faith may consist of inaction, or may be the ‘abuse of a power to specify terms,
[or] interference with or failure to cooperate in the other party’s performance.’” Littlejohn v.
Parrish, 163 Ohio App. 3d 456, 463, 839 N.E.2d 49, 54 (2005) (quoting Restatement of the Law
2d, Contracts, § 205, Comments a and d (1981)). Whether parties have acted in good faith and
have dealt fairly and reasonably with each other or have breached that obligation and acted in
bad faith is a question of fact. Id. at 464, 839 N.E.2d at 55. In addition to this implicit
obligation, the Consulting Agreement imposed on CQH an explicit obligation “to cooperate with
[EHI] in [its] efforts to secure Operating Resources.” (Consulting Agreement § 6.1(a)).
In its reply brief, CQH does not respond to EHI’s argument that CQH breached the duty
of good faith and fair dealing and merely repeats its position that it owes no money because it
never received any Operating Resources funds. The Court finds that there is a material question
of fact as to whether the lack of Operating Resources was due to EHI’s failure to meet its
obligation under the Consulting Agreement to secure such resources or CQH’s interference with
or failure to cooperate in EHI’s efforts to meet its obligation. EHI identified various vendors that
had the potential to be substantial sources of funds for the Operating Resources, but CQH
rejected all of them. While Dr. Mukunda claims that CQH rejected the vendors because its
executive committee had ethical and clinical concerns about them, Dr. Bala testified that CQH
never gave a reason for the rejections. In addition, the Court notes that CQH never exercised its
right to terminate the Agreement if EHI failed to secure Operating Resources to CQH’s
reasonable satisfaction. For these reasons, CQH is not entitled to summary judgment on the basis
that there were no Operating Resources funds.
CQH also claims that EHI materially breached the Consulting Agreement because EHI
(1) failed to secure a funding source for CQH, (2) failed to provide training, (3) failed to provide
a technology platform that worked, (4) failed to provide items and information that would have
improved patient outcome, and (5) failed to provide processing and communication with CMS to
accumulate and aggregate claims data. The Court finds that there are material questions of fact
on each of these points.
As discussed above, there is a question of fact as to whether EHI’s failure to secure a
funding source for CQH was because of CQH’s breach of its duty of good faith and fair dealing
or because EHI did not meet its obligation to secure the funding.
With respect to training, EHI has submitted evidence that it did provide training to the
doctors. Carter Samuelraj, EHI’s business development executive, testified that he provided
multiple emails with logins and passwords to the doctors, that he went to the doctors’ offices to
train them, and that the doctors could call and set up times to train whenever they wanted.
(Samuelraj Dep. 32, 51); (see also Subbiah Dep. at 120-21) (“I know we sent a project manager
from here and a project assistant, plus Carter was there. They visited each and every practice to
train the staff and to train the doctors as well, but the doctors always do not have the time.”).
Similarly, EHI has provided evidence from which a reasonable jury could conclude that it
substantially performed its obligation to create the technology platform for the ACO. Anthony
Subbiah, EHI’s president, identified a number of key services that the platform was able to
perform, including stratifying patient risk, monitoring and tracking patient care, and measuring
cost and quality metrics. (See Subbiah Aff. ¶¶ 34, 39-46). While CQH argues that the technology
platform was never able to integrate the practice groups’ existing electronic medical record
(“EMR”) vendor software as promised, Subbiah testified that this was because the practice
groups’ EMR vendors “were asking for too much money” and “not cooperative and the practice
managers and the doctors were not involved in talking to the EMR vendor to do the interface.”
(Subbiah Dep. at 111, 114). Moreover, Subbiah testified that the doctors lost minimal
functionality of the platform without the EMR integration and that the platform was still viable
and valuable to CQH. (Id. at 119, 120) (“Q: Did they lose functionality because of the inability
of their EMRs to communicate or interface with your platform? A: I can answer it this way: Yes,
they would lose a little bit of efficiency, probably minus two percent.”). Finally, the fact that the
doctors only logged in 1,200 times when EHI would have expected 72,000 logins does not prove
that the platform did not work. Rather, it is evidence that the platform was accessible.
Aside from the technology platform, CQH does not identify what items EHI failed to
provide that would have improved patient outcome. Thus, this is not a basis for summary
Lastly, CQH argues that EHI breached the Agreement by failing to perform the GPRO
reporting. CQH maintains that EHI was obligated to do the reporting because the Agreement
states that EHI was to perform “CMS Claims Data Management and Processing.” (Agreement,
Ex.A, § C). The Agreement lists a number of services that EHI was to provide under this
category,2 but as EHI points out and Drs. Natesan and Mukunda admitted, the Agreement does
not identify “GPRO reporting” as one of these services. (Id.); (Natesan Dep. at 108); (Mukunda
Dep. at 95 (“Q: [I]s GPRO reporting listed as a separate expense or a service that is going to be
offered? A: GPRO is not listed by name. Q: Right. For that matter, is PQRS reporting listed by
name? A: No.”). Because the Agreement does not unambiguously state that GPRO reporting is
one of the functions that EHI was obligated to perform, the Court may look to extrinsic evidence
to decipher the intent of the parties. Shifrin, 64 Ohio St. 3d at 638 (noting that courts may resort
to extrinsic evidence to give effect to the parties’ intentions if the language of a contract is
unclear or ambiguous). EHI has produced evidence from which a reasonable juror could
conclude that the parties did not intend for GPRO reporting to be a part of the contract.
Specifically, for calendar year 2014, EHI sent CQH an additional contract for the reporting
services, (see Mukunda Dep. at 96-99), which CQH agreed to and states that it paid (Def.’s Br. at
7). (Mukunda Dep. at 96-97) (“Q: And you were told that there was a separate charge for that, so
you were presented a reporting addendum, which was a separate contract for your perusal–. A:
Yes. Q:–for the reporting year 2014....Q: And you okayed that for them to go ahead and do the
GPRO reporting for that year? A: Yes.”).
Next, CQH claims that EHI’s breach of contract claim fails because it abandoned the
contract. “Where one party effectively abandons a contract, the other party may accede to the
The Agreements lists “i. Establish Communication with CMS; ii. Accumulate and
Aggregate Claims Data with each monthly data release from CMS (data
warehousing); iii. Prepare Files for Consultant’s Data Analytics Platform” as the
functions EHI was to perform as part of its claims data management and
abandonment and, in effect, the contract is dissolved by the mutual assent of both parties. In such
a case, the parties are restored to their original positions and neither party may sue for breach of
the contract, nor compel specific performance.” Coburn v. Auto-Owners Ins. Co., 189 Ohio App.
3d 322, 333 (2010). According to CQH, EHI abandoned the contract by not bringing any other
providers to CQH for its consideration, not providing any training, and not performing the
GPRO reporting for 2015. For the reasons discussed above, there are questions of fact on each of
these issues. As for bringing vendors to CQH, EHI provided evidence that it stopped doing so
because CQH continually rejected all of the vendors that EHI identified without giving any
reason for doing so. As for training, EHI provided evidence that it was willing to train the
doctors on the technology platform and attempted to do so, but they did not take advantage of the
training. As for the GPRO reporting, the Consulting Agreement does not unambiguously require
EHI to perform the reporting, and EHI has submitted extrinsic evidence from which a reasonable
jury could conclude that the parties did not intend for it to be a part of the contract.3
4. Fraudulent inducement
Finally, CQH argues that it is entitled to summary judgment on EHI’s breach of contract
claim because EHI procured the Agreement through fraudulent inducement. “Under Ohio law, a
contract procured by fraudulent inducement may be rescinded.” Micrel, Inc. v. TRW, Inc., 486
F.3d 866, 873 (6th Cir. 2007). To prove fraud or fraudulent inducement, a plaintiff must establish
“(1) a false representation concerning a fact or, in the face of a duty to disclose, concealment of a
fact, material to the transaction; (2) knowledge of the falsity of the representation or utter
EHI has withdrawn its claim for $87,500 for use of the platform in 2016. (Compl.
¶ 87); (Subbiah Dep. at 171) (“Mr. Clemente: December of 2015 the ACO was
not updated and there would not be a claim for the $12,500 a month after that.”).
disregard for its truthfulness; (3) intent to induce reliance on the representation; (4) justifiable
reliance upon the representation under circumstances manifesting a right to rely; and (5) injury
proximately caused by the reliance.” Id. (quoting Lepera v. Fuson, 83 Ohio App. 3d 17, 613
N.E.2d 1060, 1063 (1992)). Fraudulent inducement must be proven by clear and convincing
evidence. Simon Prop. Grp., L.P. v. Kill, 2010 WL 1266835, at *5 (Ohio Ct. App. April 5,
In support of its position, CQH cites Subbiah’s testimony, who stated that he
probably did not tell CQH that EHI had never provided ACO services before:
Q: At the time that you were soliciting CQH or the members, the doctors that
would become the members of CQH, did you tell them that you did not consult
for any other organization for ACO services?
A: No. No, we would not.
Q: Did you tell them that this was your introduction into ACO consulting
A: No. It’s not consulting services. It is the platform and the product and the
services that we offer.
Q: Well let me ask you this: Did you tell them at the time you were negotiating
with them about providing ACO services, whether it’s platform or something else,
did you tell them that you had never done it before?
A: Specifically, I don’t remember. I wouldn’t do it if I was selling to someone.
Q: Why not?
A: Because unless and until that question comes up from the client, from the
prospect, why would I expose myself?
Q: And what do you mean by that?
A: I think I am very clear and I hope you understand. A prospect is a prospect and
you want to impress the prospect.
Q: If you told them that you had never done it before, you would be concerned
that they may not hire you?
A: Absolutely, yes.
(Subbiah Dep. at 62-63). According to Dr. Mukunda, EHI held itself out as a consultant
“knowledgeable in the formation, implementation, and operation of an ACO under the ACA”
and “represented itself as having experience and knowledge in forming and consulting with
ACOs.” (Mukunda Aff. ¶¶ 5, 10). He states that neither he nor the other members of CQH were
aware that EHI had never consulted for an ACO before and that they would not have entered into
the Agreement with EHI if it had disclosed that it had never consulted for, or assisted in the
formations of, an ACO. (Id. ¶¶ 12-13).
CQH has not shown by clear and convincing evidence that it is entitled to judgment as a
matter of law on its fraudulent inducement affirmative defense. Subbiah testified that EHI did
not have a “proven track record” at the time the parties negotiated the Consulting Agreement
because ACOs had only been in existence for two years. Notably, none of the CQH doctors
asked what EHI’s track record was, which Subbiah believed was because they knew that ACOs
were new and that EHI did not have experience with them. (Subbiah Dep. at 63-64). Despite
EHI’s lack of experience, however, Subbiah testified that he and a number of EHI’s other
employees attended various seminars and conferences and spoke with industry experts before
negotiating the Consulting Agreement. (Id. at 60-65) (“And you should know by now, Mr.
Starkey, that the amount of documents that we had sent to them, the 500 plus documents that we
had sent to them, all those things are a proof of our knowledge and experience that we had
gained over the period.”). Based on this evidence, a reasonable jury could conclude that EHI did
not procure the Agreement through fraudulent inducement.
B. Unjust Enrichment
CQH is entitled to summary judgment on EHI’s unjust enrichment claim. “Unjust
enrichment is an equitable doctrine to justify a quasi-contractual remedy that operates in the
absence of an express contract or a contract implied in fact to prevent a party from retaining
money or benefits that in justice and equity belong to another.” Wuliger v. Manufacturers Life
Ins. Co., 567 F.3d 787, 799 (6th Cir. 2009) (quotations omitted). Thus, a party to an express
agreement may not recover under a theory of unjust enrichment when the agreement covers the
same subject. Id. (citing Lehmkuhl v. ECR Corp., No. 06 CA 039, 2008 WL 5104747, at *5 (Dec.
2, 2008)). Because EHI’s claim is based on an express contract, it cannot also bring an unjust
C. EHI’s remaining claims
EHI does not respond to CQH’s arguments regarding its claims for a book account, an
accounting, or a constructive trust. A party waives opposition to a motion if the party fails to
respond to arguments raised in the motion. See Schull v. CitiMortgage, Inc., No. 11-15643, 2012
WL 4498498, at *4 (E.D. Mich. Sept. 28, 2012) (citing Scott v. State of Tenn., 1989 WL 72470,
at *2 (6th Cir. Jul. 3, 1989). CQH is entitled to summary judgment on these claims for the
reasons stated in its motion for summary judgment and its reply brief.
EHI agrees that the Court’s earlier decision denying its request for injunctive relief is law
of the case. CQH is entitled to summary judgment on this claim.
For the foregoing reasons, Defendant’s Motion for Summary Judgment (Doc. 57) and
Defendant’s Motion to Strike the Affidavit of Anthony Subbiah (Doc. 60) are GRANTED IN
PART AND DENIED IN PART, as set forth herein. CQH’s request to seal the attachments to
Subbiah’s affidavit (Doc. 59-1, which contain the full account number for CQH’s PNC Bank
account, is granted without objection.
IT IS SO ORDERED.
/s/ Patricia A. Gaughan
PATRICIA A. GAUGHAN
United States District Court
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?