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Indecs Corp. v. Claim Doc, LLC

United States District Court, D. New Jersey

March 21, 2017

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.")[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. (PI. Mot. 1) For the reasons explained below, Plaintiffs' motion is DENIED.

         I. BACKGROUND

         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. ¶¶ 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 bills, "[2] if the "Plan Document" so provided. (Compl. ¶ 22)

         The Agreement provided for its termination by either party with 60 days' notice, and further provided:

As of the date of termination of this Agreement ... all rights and obligations of the Parties shall terminate, except that [Claim Doc] 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. ¶¶ 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 participant in the Plan, " and it defines a "Referred Appeal" as "any appeal of a denied Health Benefit Claim under the Plan." (Id. ¶¶ 31-32)

         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. ¶¶ 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. ¶¶ 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. ¶¶ 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[3] to defray the cost of conducting the post-termination balance bill defense on its own. (Id. ¶¶ 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. ¶ 47)

         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" (PI. 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 defense."[4] [Id. at 6)


         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 ...

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