View Point Med. Sys., LLC v. Athena Health, Inc.

• Decision Date: 28 March 2014
• Docket Number: Civil Action No. ELH–13–1314.
• Citation: 9 F.Supp.3d 588
• Parties: VIEW POINT MEDICAL SYSTEMS, LLC, Plaintiff, v. ATHENA HEALTH, INC., Defendant.
• Court: U.S. District Court — District of Maryland

9 F.Supp.3d 588

VIEW POINT MEDICAL SYSTEMS, LLC, Plaintiff

v.ATHENA HEALTH, INC., Defendant.

Civil Action No. ELH–13–1314.

United States District Court, D. Maryland.

Signed March 28, 2014.

Paul M. D. Amore, Wais & Vogelstein, LLC, Stephen L. Snyder, Snyder Slutkin and Snyder, Baltimore, MD, Plaintiff.

Alex Jonathan Brown, Edward P. Parent, Silverman Thompson Slutkin and

White LLC, Baltimore, MD, Ethan Z. Davis, Peter E. Ball, Sally and Fitch LLP, Boston, MA, for Defendant.

MEMORANDUM OPINION

ELLEN LIPTON HOLLANDER, District Judge.

View Point Medical Systems, LLC (“View Point”), plaintiff, brought suit against athenahealth, Inc. (“Athena”), defendant, alleging six claims: fraud in the inducement (Count I); breach of contract (Count II); two claims of intentional breach of the implied covenant of good faith and fair dealing (Counts III and IV); tortious interference with prospective advantage (Count V); and “Tort Arising From Breach of Contract—Actual Malice” (Count VI). See First Amended Complaint (ECF 20, “Amended Complaint” or “Am. Compl.”).¹ Plaintiff seeks compensatory damages, punitive damages, attorneys' fees, interest, and costs.

Defendant has filed a motion to dismiss (ECF 21), to which it has attached a legal memorandum (ECF 21–1, “Mem.”) (collectively, the “Motion” or “Mot.”) and several exhibits. Plaintiff opposes defendant's Motion (ECF 25, “Opposition” or “Opp.”), and defendant has replied (ECF 28, “Reply”). No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I will grant the Motion in part and deny it in part.

I. Factual Background²

View Point, located in Baltimore City, is in the business of healthcare information technology, software development, and sales. Am. Compl. ¶ 3. It is owned by Jonathan Radding, who has experience working with physicians and other healthcare providers to implement such technology. Id. ¶ 4. Athena is a publicly traded corporation “that specializes in providing cloud-based practice management services to medical practices.” Id. ¶ 8.

Athena uses individuals or entities, known as “Lead Identifiers,” to help “identify medical practices, including physician offices, hospitals and health systems” that might be interested in purchasing Athena's products and services. Am. Compl. ¶ 9. Lead Identifiers obtain relevant information about a medical practice, such as its size and contact information, and provide the information to Athena, which may assign a member of its sales force to approach the practice. Id. ¶ 11. Athena, which had its own sales force, was “responsible for all sales efforts once leads were generated.” Id. ¶ 12. Lead Identifiers are contractors of Athena (not employees) and are paid a commission only if Athena subsequently enters into a contract with a medical practice that a Lead Identifier has located. Id. ¶¶ 10, 13.

In August 2009, Radding discussed with Athena's Laurie Saltonstall the possibility of View Point becoming a Lead Identifier for Athena. Am. Compl. ¶ 14. At all relevant times, Saltonstall worked in Athena's Business Development department. Id.³ Plaintiff maintains that Saltonstall “induced View Point to become a Lead Identifier for Athena under the false promise that Athena would pay substantial commissions on leads generated.” Id. ¶ 16. View Point, “[r]elying on Ms. Saltonstall's false representations as to Athena's intent to pay commissions on leads generated,” entered into an Agreement for Lead Identification (the “Agreement”) with Athena on August 18, 2009. Id. ¶ 17.

The Agreement contains the terms of View Point's role as a Lead Identifier. Am. Compl. ¶ 17.⁴ It provides for a one-year term, with automatic renewal for one year unless the parties expressly decline to renew the contract. Id.; Agreement ¶ 8. Paragraph 1 provides, in part: “This Agreement contains the entire agreement between [the parties] concerning sales leads identified by [View Point] for Athena. Any changes to this Agreement must be made in writing by mutual agreement of both Parties.” An integration clause states: “This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof, and supersedes all prior agreements and understandings, whether explicit or implicit, which have been entered into before the execution hereof.” Agreement ¶ 18.

Notably, View Point “is not required under this Agreement to provide leads to Athena; and, Athena is not required to pursue any leads provided by [View Point].” Agreement ¶ 13. And, the Agreement is “not exclusive”; “either party can enter similar arrangements with any other parties at their sole discretion.” Agreement ¶ 1.

The Agreement sets forth the process by which View Point could communicate possible leads to Athena, and details how those leads could become “Qualified Leads.” In particular, ¶ 2 states:

Athena is interested in identifying as potential sales leads, physician practices to which it may sell its [administrative office workflow and billing services] (the “Services”). While this Agreement is in effect, if Lead Identifier [i.e., View Point] locates a practice that it believes would be interested in the Services, Lead Identifier may (at its sole discretion) send a letter or e-mail to the undersigned representative of Athena with the practice name, general location, size and type of business. If Athena is interested in the assistance of Lead Identifier in identifying and getting contact information regarding that practice, it will notify Lead Identifier in writing or by e-mail at the address below and will request in that letter or message specific information on contact names, information on the practice's interest in receiving information on the Services and other basic information that it reasonably needs to qualify the practice for its sales effort. When Lead Identifier provides the information requested, the practice will be deemed a “Qualified Lead” of Athena.

See also Am. Compl. ¶¶ 17–20. Further, the Agreement provides that, “[i]f Athena signs a contract for provision of Services with a Qualified Lead within one year after the Qualified Lead is first qualified,” then View Point is entitled to receive a commission. Agreement ¶ 3; see Am. Compl. ¶ 21. The parties refer to this period, defined in the Agreement as a one-year period, as the “lead-protection time.”

Schedule A to the Agreement establishes that any commission owed to View Point is calculated based on “the number of billing providers” of the Qualified Lead. Am. Compl. ¶ 22. More precisely, Schedule A states, in relevant part:

Compensation shall equal (a) the number of Billing Providers (as defined in the contract between Athena and the Qualified Lead*) that are registered by the Qualified Lead on Athena's system for Services at the time that the Qualified Lead first goes live on that system multiplied by (b) $1000.00.

The Agreement lacks any notification process regarding the creation or status of a Qualified Lead. As noted, it provides that once a Lead Identifier supplies certain information in response to a request by Athena, the lead will be “deemed” a Qualified Lead. Agreement ¶ 2. However, the Agreement does not require Athena to notify the relevant Lead Identifier once it believes a Qualified Lead has been created, nor does it indicate how notice is to be provided. Moreover, the Agreement does not specify how a Lead Identifier is to confirm the status of its leads with Athena.

After the Agreement was executed, View Point worked to identify medical practices that might be interested in purchasing Athena's services. Am. Compl. ¶ 24. On February 8, 2010, Radding sent an email to Saltonstall with the subject “New Lead,” in which Radding provided general background information on the healthcare provider Health Management Associates (“HMA”), including its size, location, and type of business. Id. ¶ 26. HMA is large provider, with 70 hospitals located in 15 states and a total medical staff of more than 11,000 physicians. Id. It thus appears that, in the event Athena entered into a contract with HMA and all of HMA's physicians were registered on Athena's system, a qualifying Lead Identifier could be entitled to a total commission in excess of $11,000,000. See Agreement, Schedule A.

Also on February 8, 2010, Radding sent an email to Jennifer Ortyl at HMA in an effort to schedule a meeting between HMA and Athena. Am. Compl. ¶ 27. Attached to defendant's motion is a copy of that email, which indicates that Radding copied Saltonstall on the message. ECF 21–4. Ortyl responded to Radding that same day and told him that Athena's Geoff Payson had already contacted HMA two months earlier and that HMA had not been interested in Athena's services at that time. Am. Compl. ¶ 27. Radding then sent an email to Saltonstall, advising that HMA had indicated it was not interested in Athena's services, and asking if he should follow up within six to twelve months. Id. ¶ 28. Saltonstall responded by email, also on February 8, stating: “ ‘Please put on your radar for 12 months out.’ ” Radding replied: “ ‘Will do. Thanks for getting back to me. I will do my best to get [an] introduction.’ ” Id. ¶ 29 (quoting email messages).

On May 18, 2010, Saltonstall sent Radding an email in which she asked him to provide a “complete list/spreadsheet of the various organizations and practices that he had been working with or trying to speak with to get Athena an introduction.” Am. Compl. ¶ 30. Radding provided a spreadsheet entitled “Leads” that included HMA, among other organizations. He also included the date of his initial contact, as well as his contacts at HMA and contact information. Id. ¶ 31.

In May 2010, Radding also sought to modify the Agreement, to compensate View Point on a salaried basis and to extend the Agreement's one-year lead-protection time to two years. Id. ¶ 32. In an email message dated May 24, 2010, Saltonstall told Radding that Athena declined to provide a salary but would agree to the lead time extension for...