United States District Court, D. New Jersey
INDECS CORP. and WIREROPE WORKS, INC. Plaintiffs,
CLAIM DOC, LLC Defendant.
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.")
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.
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,
" if the "Plan Document" so
provided. (Compl. ¶ 22)
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  any Referred Health
Benefit Claim or  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)
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.
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.
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 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)
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." [Id. at
PRELIMINARY INJUNCTION STANDARD
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  that he is likely to succeed on the merits, 
that he is likely to suffer irreparable harm in the absence
of preliminary relief,  that the balance of equities tips
in his favor, and  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 ...