Advanced Risk Managers, LLC v. Equinox Management Group, Inc.

Background

Advanced Risk Managers, LLC (ARM) sued Equinox Management Group, Inc. for breach of a consulting-services agreement. ARM reviewed hospital bills connected to reinsurance claims. The agreement provided two possible fee provisions for post-payment claims review: $195 per hour when the service was for internal claims reference only and no claim reduction would be applied, and 28% of net claims-reduction savings when the review was used to facilitate post-payment adjudication, settlement, or resolution.

ARM submitted hourly invoices for its work, and Equinox paid those invoices in full. ARM later sought information about settlements involving Humana and Geisinger claims so it could determine whether additional fees were due under the percentage provision. Equinox did not provide the requested information. ARM alleged that its work created savings and that Equinox owed it fees based on 28% of those savings.

ARM had also sued RenRe in an earlier related proceeding. ARM and RenRe settled that case in October 2018, and Equinox signed the release even though it was not a party to that lawsuit. The release covered claims related to the dispute and other claims against RenRe and Equinox that existed through the release’s effective date. Equinox argued that the release barred ARM’s claims in this case.

Legal standard

Summary judgment is appropriate only when there is no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment under the law. The court must view the evidence favorably to the nonmoving party and may not weigh conflicting evidence or decide witness credibility.

Rulings

The court held that the agreement unambiguously allowed payment under only one of the two fee provisions. The word “only” in the hourly-fee provision meant that the hourly fee applied when the review was for internal claims reference only and no claims reduction would be applied. If the work was instead used to facilitate post-payment adjudication, settlement, or resolution, the percentage provision applied. ARM therefore could not collect both fees for the same work.

The court nevertheless declined to grant Equinox summary judgment on the broader breach-of-contract claim. The agreement did not address what would happen if ARM initially billed and received the hourly fee because it believed the work was for internal reference, but later learned that the work had been used for claim resolution. The court found that a reasonable jury could determine that ARM was entitled to payment under the percentage provision, reduced by amounts already paid under the hourly provision.

The court denied summary judgment based on the release as to the Humana-related claims. The parties had not adequately analyzed when those claims accrued, including when Equinox’s alleged breach and ARM’s resulting harm occurred. The court also denied summary judgment as to the Geisinger-related claims on the release theory because the Geisinger settlement occurred after the release’s effective date and a reasonable jury could find that those claims had not accrued when the release was signed.

The court denied summary judgment on Equinox’s argument that ARM performed certain Geisinger work under the separate RenRe agreement rather than the ARM-Equinox agreement. Conflicting evidence, including testimony by ARM’s president and evidence concerning who assigned the work and received invoices, created a genuine factual dispute that the court could not resolve on summary judgment.

The court also denied summary judgment on Equinox’s argument that ARM could not recover because no post-release savings resulted from ARM’s work. The agreement did not state that payment depended on ARM’s work actually causing savings. Instead, the stated condition was that ARM’s review be used to facilitate post-payment adjudication, settlement, or resolution, and Equinox had not shown that ARM’s work was not used for those purposes.

Finally, the court denied summary judgment on ARM’s claims for anticipatory breach of contract and breach of the implied covenant of good faith and fair dealing. Equinox’s briefing treated those claims as dependent on its breach-of-contract arguments, which did not justify judgment for Equinox. The court’s overall disposition was: “the motion for summary judgment is denied.”