United States District Court, S.D. Indiana, Indianapolis Division
ORDER ON DEFENDANTS' MOTION TO DISMISS
J. McKINNEY, JUDGE.
matter is before the Court on Defendants', Conifer Health
Solutions, LLC and Conifer Revenue Cycle Solutions, LLC
(collectively “Conifer's”), Motion to
Dismiss. Dkt. 26. Pursuant to Federal Rule of Civil Procedure
12(b)(6) (“Rule 12(b)(6)”), Conifer moves to
dismiss three counts of Plaintiff's, Reid Hospital &
Health Care Services, Inc. (“Reid's”),
Amended Complaint. Dkt. 8. For the reasons set forth below,
Conifer's Motion to Dismiss is GRANTED.
an Indiana not-for-profit corporation that operates a
hospital in Wayne County, Indiana. Dkt. 8, ¶ 1. Reid
manages a 233-bed regional referral center and is in the
business of providing healthcare and hospital services. Dkt.
8, ¶ 2.
provides comprehensive revenue cycle management and
collection services to hospitals and other healthcare
providers. Dkt. 8, ¶ 9. Conifer holds itself out as the
number one hospital revenue cycle management and collection
outsourcing vendor. Dkt. 8, ¶ 10.
April 28, 2011, Reid outsourced its entire revenue cycle
management to Dell Marketing, LP (“Dell”),
pursuant to a 77-page Master Agreement for Revenue Cycle
Outsourcing (the “Agreement”). Dkt. 8, ¶
Section 18.10 of the Agreement provides that it “shall
be governed according to the laws of Indiana without giving
effect to any rule or conflicts of law.” Dkt. 8, ¶
November 5, 2012, Conifer assumed all of Dell's duties
and obligations under the Agreement, which made it
responsible for Reid's entire revenue cycle management.
Dkt. 8, ¶¶ 23, 24. Specifically, Conifer was
responsible for the following: prequalifying patients, case
management services, accurate coding, medical records, timely
billing for Reid's services, timely responding to
requests for additional information from third party payors
(i.e. insurers, Medicaid, and Medicare), timely appealing and
pursuing denials, and, ultimately, collecting all sums due
Reid for its services. Dkt. 8, ¶ 26.
12.4 of the Agreement states that Conifer “[w]arrants
that the service shall be performed in a manner consistent
with best practices of providers of the types of services
specified in this Agreement.” Dkt. 8, ¶ 27. In
Section 1.1 of the Agreement, Conifer represented that it
“has the skill, personnel, knowledge and management
expertise to provide the services in compliance with all
applicable laws and payor contracts.” Dkt. 8, ¶
10.1(B) of the Agreement states: “Incentive
Fees. Commencing with the Second Contract Year of the
Term … Conifer will deliver an invoice to Reid for the
incentive fees, if any, earned by Conifer during the prior
Measurement Period. … Reid will pay each such invoice
in accordance with Section 10.5.” Dkt. 8, ¶ 32.
The Agreement also specified “that except with the
express written consent of Reid, all Base Service functions
shall be performed at a facility that is located within a 20
mile radius of the address of Reid's offices stated in
the opening paragraph of this Agreement.” (hereinafter
“Locality Clause”). Dkt. 8, ¶ 33.
14.1(B) of the Agreement is titled “Limitation of
Liability” and states, in relevant part:
“Limitation on Types of Damages. Except with
respect to claims resulting from the willful misconduct of
[Conifer], its employees and agents, breach by [Conifer], its
employees or agents of its confidentiality obligations under
Section 11.2 or (iii) claims from [Conifer's]
indemnification obligations and Section 20 of
Schedule E, but with respect to all other
claims, actions and causes of action arising out of, under or
in connection with this Agreement (except for Reid's
obligations to make payments under this Agreement),
regardless of the form of action, whether in contract or tort
(including negligence, strict liability or otherwise) and
whether or not such damages are foreseen, neither Party will
be liable for, any amounts for indirect, incident[al],
special, consequential (including without limitation, loss
profits, lost revenue, or damages for the loss of data) or
punitive damages of the other Party or any third parties.
¶ 35 (some modification in original; some by the Court).
14.1(C) of the Agreement further provides, in relevant part:
Limitation on Direct Damages. Except with respect to
Reid's payment obligations under this Agreement and with
respect to claims, actions or causes of action arising from
(1) [sic] [Conifer's] indemnification obligations set
forth in Article 13, (ii) the willful misconduct or
Gross Negligence of [Conifer], its employees and agents,
(iii) a breach by [Conifer], its employees or agents of its
obligation of confidentiality Section 11.2, or (iv)
claims from [Conifer's] indemnification obligations set
forth in Section 20 of Schedule E,
but with respect to all other claims, actions and causes of
action arising out of, under or in connection with this
Agreement, regardless of the form of action, whether in
contract or tort (including negligence, strict liability or
otherwise) and whether or not such damages are foreseen,
neither party's liability will exceed the total amount
actually paid or payable to [Conifer] by Reid for Services
provided under this Agreement (excluding amounts paid as
reimbursement of expenses or taxes) during the 12 month
period immediately preceding the date on which the claim,
action, or cause of action arose.
¶ 36 (modification in original).
August 2012, shortly before Conifer assumed responsibility
under the Agreement from Dell, Dell submitted a survey to its
employees working on the Reid project, which revealed
staffing shortages at Reid in the revenue cycle management
operations managed by Dell. Dkt. 8, ¶¶ 40-41. The
results of the survey were known by Conifer at the time it
assumed Dell's responsibilities under the Agreement. Dkt.
8, ¶ 43. The director of Dell's ...