MVP Health Plan, Inc. v. Optuminsight, Inc.

• Decision Date: 29 October 2014
• Docket Number: 1:13-CV-1578 (LEK/CFH)
• Parties: MVP HEALTH PLAN, INC., Plaintiff, v. OPTUMINSIGHT, INC., Defendant.
• Court: U.S. District Court — Northern District of New York

MVP HEALTH PLAN, INC., Plaintiff, v. OPTUMINSIGHT, INC., Defendant.

1:13-CV-1578 (LEK/CFH)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

October 29, 2014

MEMORANDUM-DECISION and ORDER

I. INTRODUCTION

Plaintiff MVP Health Plan, Inc. ("MVP" or "Plaintiff") alleges various claims arising out of a contractual relationship with Defendant OptumInsight, Inc. ("Optum" or "Defendant"). Dkt. No. 1 ("Complaint"). Presently before the Court is Defendant's Motion to dismiss certain claims as duplicative pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. Nos. 15 ("Motion"); 15-2 ("Defendant's Memorandum"). For the following reasons, the Motion is granted.

II. BACKGROUND¹

Plaintiff is a not-for-profit health care plan provider, offering employer group, individual, Medicare Advantage, and Medicaid health care plans. Compl. ¶¶ 2, 12. Defendant provides analytics, technology, actuarial, and consulting services to businesses in the healthcare industry. Id. ¶ 4.

For its Medicare health care plans, Plaintiff submits bids annually to the Center for Medicare and Medicaid Services ("CMS"). Id. ¶ 14. To prepare its bids, Plaintiff entered into annual agreements with Defendant for services between 2006 and 2012. Id. ¶¶ 17, 21. Plaintiff provided Defendant with "benefit cost-sharing information," which Defendant utilized to create a bid pricing tool worksheet ("BPTW"). Id. ¶¶ 18-19, 24. Plaintiff then incorporated the BPTW into its final bid to CMS. Id. If Plaintiff's bids were accepted, it was required to provide health care coverage withii the pricing parameters set forth in the bids. Id. ¶ 15.

In 2012, as in previous years, the parties entered into an agreement (the "2012 Agreement") to provide actuarial services related to 2013 Medicare bids. Id. ¶ 22. In June 2012, Defendant submitted its work product to Plaintiff, who then submitted bids to CMS. Id. ¶¶ 27-31. Plaintiff fully performed its obligations under the 2012 Agreement by providing Defendant with all necessar information to produce the BPTW, as well as paying all of Defendant's invoices. Id. ¶¶ 33-34. However, "Optum carelessly and in violation of the standard of care required of competent actuaries, and in violation of the 2012 Agreement, failed to correctly apply and utilize MVP's cost-sharing information to calculate formulas that it utilized in its BPT worksheet." Id. ¶ 26. Specifically, Defendant failed to carry the cost-sharing assumptions forward from 2012 to 2013, as it had in prior years, which resulted in inaccurate Medicare bids. Id. ¶¶ 42-47. Due to the inaccurate bids, which Plaintiff was obligated to fulfill, Plaintiff sustained significant monetary losses. Id. ¶¶ 49-52.

In the Complaint, Plaintiff alleges the following claims: (1) breach of contract; (2) negligence; (3) gross negligence; (4) negligent misrepresentation; (5) unjust enrichment; (6) quantum meruit; and (7) return of moneys paid under the 2012 Agreement. Compl. ¶¶ 53-101.Plaintiff seeks monetary damages. See id. Defendant moves to dismiss counts two through four (the "tort claims") and five and six (the "quasi-contract claims") as duplicative of the breach of contract claim. See generally Mot.

III. LEGAL STANDARD

To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also FED. R. CIV. P. 12(b)(6). A court must accept as true the factual allegations contained in a complaint and draw all inferences in favor of a plaintiff. See Allaire Corp. v. Okumus, 433 F.3d 248, 249-50 (2d Cir. 2006). A complaint may be dismissed pursuant to Rule 12(b)(6) only where it appears that there are not "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Plausibility requires "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [the alleged misconduct]." Id. at 556. The plausibility standard "asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). "[T]he pleading standard Rule 8 announces does not require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. (citing Twombly, 550 U.S. at 555). Where a court is unable to infer more than the mere possibility of the alleged misconduct based on the pleaded facts, the pleader has not demonstrated that she is entitled to relief and the action is subject to dismissal. See id. at 678-79.

IV. DISCUSSION

A. Tort Claims

Defendant argues that Plaintiff's tort claims should be dismissed as duplicative of its breach of contract claim because the underlying facts and the damages sought in each are virtually identical. Def.'s Mem. at 2-5.²

"Generally, a tort cause of action that is based upon the same facts underlying a contract claim will be dismissed as a mere duplication of the contract cause of action particularly where . . . both seek identical damages." Envirocon, Inc. v. Alcoa, Inc., No. 06-CV-0549, 2006 WL 2460640, at *3 (N.D.N.Y. Aug. 23, 2006) (quoting Reade v. SL Green Operating P'ship, LP, 817 N.Y.S.2d 230, 231 (App. Div. 2006)). However, a breach of contract will give rise to a tort claim where a legal duty independent of the contract itself has been violated. Bayerische Landesbank, New York Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42, 58 (2d Cir. 2012) (citing Clark-Fitzpatrick v. Long Island R.R. Co., 516 N.E.2d 190, 193-94 (N.Y. 1987)). Such "legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent on the contract." Clark-Fitzpatrick, 516 N.E.2d at 193-94. If, however, the basis of a party's claim is a breach of solely contractual obligations, such that the plaintiff is merely seeking to obtain the benefit of the contractual bargain through an action in tort, the claim is precluded as duplicative. See New York Univ. v. Cont'l Ins. Co., 662 N.E.2d 763, 770 (N.Y. 1995).

An independent duty sufficient to support a tort claim alongside breach of contract has been found where: (1) the defendant is engaged in an occupation subject to professional malpractice claims, or (2) the nature of the damages sought implicates a larger public interest. See Hydro Investors, Inc. v. Trafalgar Power, Inc., 227 F. 3d 8, 18 (2d Cir. 2000); Avazpour Networking Servs., Inc. v. Falconstor Software, Inc., 937 F. Supp. 2d 355, 362-64 (E.D.N.Y. 2013). Defendant argues that it has no independent or special duty to Plaintiff—their relationship is defined exclusively by the contract. Def.'s Mem. at 5. Plaintiff responds that Defendant's role as an actuary imposes a separate and independent professional duty. Dkt. No. 16 ("Plaintiff's Memorandum") at 9.

1. Professional Malpractice

New York law provides that "[b]ecause an actuary is not required to be licensed, is not regulated, and is not subject to a State-created disciplinary system, an actuary is not a 'professional' for purposes of a malpractice cause of action." Health Acquisition Corp. v. Program Risk Mgmt., Inc., 964 N.Y.S.2d 554, 557 (App. Div. 2013) (citing Castle Oil Corp. v Thompson Pension Empl. Plans, 750 N.Y.S.2d 629, 631 (App. Div. 2002)); see also Chase Scientific Research v. NIA Group, 749 N.E.2d 161, 166-67 (N.Y. 2001). However, an actuary who owes a fiduciary duty—one who exercises "superiority and influence on the other"—can be held liable for the negligent performance of its services. AG Capital Funding Partners, L.P. v. State St. Bank & Trust Co., 896 N.E.2d 61, 68 (N.Y. 2008).

Plaintiff does not allege that Defendant owed it a fiduciary duty. See generally Compl. Rather, Plaintiff alleges that Defendant "owed [it] a special duty, independent from its contractual obligations and duties under the 2012 Agreement." See id. ¶¶ 64, 69 (emphasis added). However,Plaintiff does not argue that a "special" duty gives rise to an independent duty sufficient to bring a tort claim alongside breach of contract. See generally Pl.'s Mem. Instead, Plaintiff cites to a number of cases where actuaries were subject to simultaneous tort and breach of contract claims. See id. at 9. However, those cases are inapplicable to the instant case.

Plaintiff first relies on a set of cases brought against actuaries pursuant to the Employee Retirement Income Security Act ("ERISA"), where the courts noted that the defendant actuaries may be subject to tort liability alongside breach of contract where the defendants served as fiduciaries. Pl.'s Mem. at 9; see also I.B.E.W. Local No. 241 Pension Plan v. First Allmerica Fin. Life Ins. Co., 354 F. Supp. 2d 203, 207 (N.D.N.Y. 2005); Toussaint v. James, No. 01 Civ. 1004, 2003 WL 21738974, at *22 (S.D.N.Y. July 25, 2003); Gerosa v. Savasta, 189 F. Supp. 2d 137, 151 (S.D.N.Y. 2002). However, those cases are not irrelevant for two important reasons. First, Plaintiff has not alleged that Defendant owed Plaintiff a fiduciary duty. Second, those cases all arose out of the context of ERISA, where the defendant actuaries were charged with employee benefit plan administration governed by federal regulations. See, e.g., Gerosa, 189 F. Supp. 2d at 141 (noting that "[a]n actuary is not normally a fiduciary" but "can be considered a fiduciary only if he exercises authority or control or discretion over the plan, or renders investment advice concerning plan assets [under 29 C.F.R. § 2509.75-5]"). No such relationship exists here, as Plaintiff has not alleged that Defendant exercised any level of "authority or control or discretion." These cases involving fiduciary duties under ERISA are therefore inapplicable to this case.

Next, Plaintiff relies on two state decisions, which acknowledge that, while actuaries are not...