INDECS CORP. v. CLAIM DOC, LLC

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

INDECS CORP., AND WIREROPE

Civ. No. 16-4421 (KM) (JBC)

WORKS, INC.,

Plaintiffs, OPINION

v.

CLAIM DOC, LLC,

Defendant.

KEVIN MCNULTY, U.S.D.J.:

This matter (to simplify a bit) arises out of a three-way contractual

dispute among INDECS Corp. (“INDECS”), Wirerope Works, Inc. (“Wirerope”)

and Claim Doc, LLC (“Claim Doc”). Plaintiffs INDECS and Wirerope filed their

Complaint against Defendant Claim Doc 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. (See DE 1.) Claim Doc filed

amended counterclaims against the Plaintiffs alleging breach of contract,

tortious interference, civil conspiracy, and quantum meruit/unjust

enrichment. (See DE 92.)

Pursuant to a partial settlement agreement among the parties on

December 5, 2019, Wirerope and Claim Doc settled and released all claims

between them, thus releasing Wirerope from the case. Claim Doc remained as

Defendant/Counterclaimant, and INDECS remained as Plaintiff/

Counterclaim-Defendant. (See DE 118-2 at 2 n.1.) The case was narrowed

further. INDECS and Claim Doc also agreed to resolve and release their

respective breach of contract claims against each other (Count I of the

Complaint and Counts I and II of the Amended Counterclaim). As a result, the

only remaining claims in this matter are these: INDECS’s claims of breach of

fiduciary duty and breach of the duty to indemnify (Counts II and III of the

Compl.), and Claim Doc’s tortious interference and civil conspiracy claims

(Counts IV and V of the Amended Counterclaims).

Now before the Court are INDECS’s motion for summary judgment on

Claim Doc’s remaining counterclaims (DE 118) and Claim Doc’s motion for

summary judgment on INDECS’s remaining claims. (DE 120.) For the reasons

set forth below, I will grant both sides’ motions for summary judgment and

close the file.

I. Background1

INDECS is a third-party administrator (“TPA”) whose role and

responsibility is to administer and manage insurance claims in connection with

employee health benefit plans. (See INDECS MSJ Ex. A at 20:16–18.) INDECS

is owned by Tom Knox and its president is Mike Shine. (INDECS Motion at 4)

1 For ease of reference, certain key items from the record will be abbreviated as

follows:

“Compl.” = Complaint [ECF no. 1]

“Amended Counterclaim” = Claim Doc’s Amended Counterclaims [ECF

no. 92]

“INDECS’s Motion” = Memorandum of Law in Support of INDECS’s

Motion for Summary Judgment as to All

Remaining Counterclaims [ECF no. 118-2]

“Claim Doc’s Motion” = Memorandum of Law in Support of Claim

Doc’s Motion for Summary Judgment [ECF

no. 120-1]

“INDECS MSJ Ex. ___” = Exhibits attached to the Certification of

Timothy Duffy in connection with INDECS’s

Motion [ECF nos. 118-5–118-21]

“Claim Doc Opp. Br. Ex. ___” = Exhibits attached to Claim Doc’s Opposition

Brief [ECF no. 120-2]

“Opp.” = Opposition Briefs

Claim Doc provides claims auditing services for health insurance plans

that use reference-based pricing. (See INDECS MSJ Ex. B at 14:8–18:9.) A

claim auditor challenges the amount that health care providers charge for their

services and tries to get these charges reduced to the benefit of the employee

health benefit plan. (DE 44 at 2.) Claim Doc is owned by Ben Krambeck. (See

INDECS MSJ Ex. B at 14:8–18:9.)

Wirerope, a manufacturing company, was a customer of Claim Doc. As

discussed in more detail below, Krambeck, on behalf of Claim Doc, introduced

INDECS to Wirerope in an effort to get Wirerope to retain INDECS in place of its

previous TPA. (See INDECS MSJ Ex. C at 198:12–16; INDECS MSJ Ex. D at

46:6–13.)

On June 1, 2015, INDECS and Claim Doc entered into an Agreement for

Claims Review, Audit, and Negotiation Services (the “Service Agreement”). (See

INDECS MSJ Ex. F.) Paragraph 1 of the Service Agreement explains the Scope

of Work that Claim Doc would provide INDECS as its claim auditor. The Service

Agreement had a one-year term, ending on May 31, 2016, and was to

automatically renew for additional one-year terms unless terminated by either

party. (Id. ¶ 10.) The Service Agreement also provides that either party could

terminate the Service Agreement with 60 days’ written notice. Id.

Two paragraphs of the Service Agreement between INDECS and Claim

Doc are critical to the claims regarding post-termination obligations.

The first is Paragraph 1.e:

[Claim Doc shall] 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 legal defense is not provided for in the Plan

Document, then [Claim Doc] will use commercially reasonable

efforts to negotiate and settle at its sole discretion, any balance bill

attempts with providers on behalf of the Plan and/or Patient;

(Id. ¶ 1.e)

The second is Paragraph 10:

As of the date of termination of this Agreement and the expiration

of any run out period under any applicable Stop Loss Policy, all

rights and obligations of the Parties shall terminate, except that (a)

[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 provided that the Plan Document

continues to name the TPA or the Plan Administrator as a

designated decision maker with maximum discretionary authority

with respect to such Referred Appeals; and (b) INDECS, shall pay

on behalf of and with funds provided by the Plan Sponsors, all fees

which are due and owing under this Agreement as of the date of

termination.

(Id. ¶ 10.)

The Service Agreement provides that Claim Doc “shall be acting as a

fiduciary of the Plan and shall adhere to the applicable standards of conduct . .

. set forth in 29 U.S.C. § 1104(a)(1)(A), (B) and (D).” (Id. ¶ 1.)

The Service Agreement also contains an indemnity provision:

Without in anyway limiting [Claim Doc’s] obligations under this

Agreement including it[s] responsibility for Damages under Section

3 herein, [Claim Doc] shall hold harmless, indemnify, and defend

INDECS against any and all losses, claims, expenses (including

reasonable attorneys' fees), sanctions, fines, penalties, taxes,

damages including, but not limited to, multiple, exemplary or

punitive damages, judgments or liabilities whatsoever ("Liabilities")

except to the extent such Liabilities are caused by INDECS's

breach of this Agreement or its fraud, negligence or willful

misconduct with respect to its obligations under this Agreement.

(Id. ¶ 6.)

The Service Agreement is part of a broader, three-way arrangement

among INDECS, Claim Doc, and Wirerope. Simultaneously, INDECS, Claim

Doc, and Wirerope entered into a Joinder Agreement which incorporated the

terms and conditions of the Service Agreement. (INDECS MSJ Ex. G at

CD000079.)

The Joinder Agreement, too, contains an indemnification provision:

Wirerope agrees to “indemnify, hold harmless, and defend INDECS and [Claim

Doc] against any and all Damages as that term is defined in the Services

Agreement to which INDECS or [Claim Doc] may be subject, in excess of what

[Claim Doc] is liable for under the Service Agreement.” (Id. ¶ 7 (emphasis

added).) Paragraph 1 of the Joinder Agreement provides that Wirerope as the

“Plan Sponsor” authorizes Claim Doc to be a “co-fiduciary as respects all

determinations made by [Claim Doc] for claims subject to the [] Agreement.”

(Id.) The Joinder Agreement does not mention any other entity as being a

fiduciary.

Prior to entering into the Service and Joinder Agreements, Claim Doc had

engaged an individual named David Fishbone and his business, Needham

Business Consulting (“Needham”), to provide certain services related to Claim

Doc’s business. (See INDECS MSJ Ex. T.) Neither Fishbone nor Needham is a

party to this action. During this time, Fishbone was also providing consulting

services to Tom Knox, the owner of INDECS. Fishbone testified that he had

been in a long-standing working relationship with Knox since around 2000.

(See INDECS MSJ Ex. A at 67:10; INDECS MSJ Ex. J at 20:1–22:22.) By

September 2015, however, Fishbone and Krambeck (Claim Doc’s owner), had

had a falling-out and had terminated their working relationship. Fishbone

subsequently filed a lawsuit against Krambeck and Claim Doc in the Eastern

District of Pennsylvania (the “EDPa case”). (INDECS MSJ Ex. J at 59:17–60:15;

INDECS MSJ Ex. B at 19:23–21:6; INDECS MSJ Ex. K.)

Around late 2015 or early 2016 (after Fishbone and Krambeck had ended

their relationship), Fishbone started a company called Claim Watcher. Claim

Watcher provided essentially the same claim auditing services as Claim Doc.

(See INDECS MSJ Ex. J at 60:16–61:15.) It was in January 2016 that Fishbone

and INDECS’s president, Mike Shine, began marketing Claim Watcher’s

services to potential customers, including Wirerope. (Id. at 185:18–186:1;

INDECS MSJ Ex. B at 74:4–75:25.) They were free to do so; during this time

period neither Fishbone/Claim Watcher nor INDECS had signed any type of

non-compete agreement with Claim Doc. (INDECS MSJ Ex. J at 77:5–13.)

Whatever non-compete obligation there may be did not arise until March

10, 2016. On that date, Fishbone/Needham and Krambeck/Claim Doc had a

settlement conference in the EDPa case. The parties ultimately executed a

Settlement Term Sheet which required Claim Doc to pay Needham a certain

sum of money. It also required Needham to refrain from attempting to poach

certain of Claim Doc’s current customers, including Wirerope:

[Needham shall have] no contact, directly or indirectly, with

Wirerope Works, Inc., Gardner Trucking, Inc., and Susquehanna

Hospital System for the purpose of convincing any of them to alter

or terminate their relationship with Claim Doc, for the same

duration as payments are made under this settlement term sheet.

For purposes of satisfying its obligation to have no indirect contact

with Wirerope Works, Inc. for the purpose of convincing it to alter

or terminate its relationship with Claim Doc, Needham shall

establish a “Chinese Wall”2 to isolate itself from information about

Wirerope Works, Inc.’s choices of vendors for the coming year. So

long as Needham complies with this paragraph, the mere fact that

one or more of those entities terminate or change their relationship

with Claim Doc shall not constitute or give rise to a claim of breach

of this paragraph.

(INDECS MSJ Ex. L ¶¶ 4, 6.) INDECS, however, was not involved in the EDPa

case and was not a party to the Settlement Term Sheet. (INDECS MSJ Ex. L.)

Fishbone testified that at some point he informed Shine and Knox (owner and

president of INDECS) that he, Fishbone, was obligated to refrain from soliciting

Wirerope or the other two customers listed in Paragraph 6 of the Settlement

Term Sheet. (See INDECS MSJ Ex. J at 173:7–18.) Fishbone also testified that

in order to implement the information screen, he had INDECS and Knox stop

sending him communications of any kind related to Wirerope. (Id.)

Harold Kropp, Wirerope’s CFO, testified that around the Spring of 2016,

Wirerope started considering whether to renew the Joinder Agreement with

Claim Doc for the following year. (INDECS MSJ Ex. D at 37:6–13.) Kropp stated

that Wirerope had been dissatisfied with Claim Doc’s responsiveness and

communication regarding the claim auditing process. (Id. at 37:11–39:11.)

Although Claim Doc made efforts to address Wirerope’s concerns, their services

and responsiveness did not improve. (Id. at 41:3–23.) According to Kropp, it

2 In lieu of this terminology, I will use the term “information screen.”

was at about this time that Mike Shine of INDECS proposed Claim Watcher as

an alternative to Claim Doc. (Id. at 46:1–25.) Thereafter, Kropp wrote to

Krambeck that Wirerope would not be continuing to use Claim Doc’s services.

Krambeck then sent a letter back to Kropp, dated May 11, 2016, stating that

pursuant to Paragraph 10(a) of the Service Agreement, as incorporated in the

Joinder Agreement, Krambeck’s letter would serve as written notice of

Wirerope’s intent to terminate the Service and Joinder Agreements and its

election not to renew with Claim Doc. (See INDECS MSJ Ex. M at 0001109.)

Krambeck’s letter also stated that the Service and Joinder Agreements would

terminate on July 2, 2016. Until that date, Krambeck wrote, Claim Doc would

continue to provide the following services: “(1) Balance bill defense; (2)

Response to Referred Appeals stemming from a Referred Health Benefit Claim;

and (3) Auditing services for Referred Health Benefit Claims with Dates of

Service prior to July 2, 2016.” (Id.) After July 2, 2016, Claim Doc would no

longer provide balance bill representation or continue to represent members

with pending balance bills. Claim Doc would, however, clean up certain

unfinished business: in particular, it would respond to any Referred Appeals

for claims that were audited pursuant to the Service Agreement, even if the

Appeal was served after the date of termination. (Id.)

In a letter from INDECS to Claim Doc dated June 30, 2016, INDECS

demanded on behalf of Wirerope that Claim Doc continue to defend balance

billing disputes that involved Wirerope employees. (Claim Doc Ex. K.) Shine

testified, however, that there had not been any balance billing defense costs for

the Wirerope account that needed to be paid, and Kropp could not recall any

leftover balance bills that resulted in litigation. (Claim Doc. Ex. J at 153:15–23;

Claim Doc. Ex. I at 34:17–35:13.) The parties have not presented any evidence

of litigation costs incurred due to balance bill defense for Wirerope.

Fishbone testified that he complied with the terms of the settlement

during its term—i.e., from March 10, 2016 (the date on which the settlement

conference took place) through May 11, 2016 (the date on which the Settlement

Term Sheet terminated as to Wirerope). In that period, he testified, he did not

have any communications with Shine about marketing Claim Watcher to

Wirerope. (INDECS MSJ Ex. J at 190:20–191:2.)

The parties agree that the termination of the relationship between Claim

Doc and Wirerope terminated the non-compete provisions in the Settlement

Term Sheet. At that point, nothing would have prohibited Fishbone from having

contact with Wirerope. (See INDECS MSJ Ex. L ¶ 6.) Fishbone testified that the

first time he reached out to anyone at Wirerope was after Wirerope had already

decided to renew its contract with INDECS using Claim Watcher, rather than

Claim Doc, as their claim auditor. (Id. at 116:22–117:9.) Kropp of Wirerope, in

testimony, confirmed that he did not recall having any communication with

Fishbone between January 2016 and May 2016. (INDECS MSJ Ex. P at 36:13–

37:9.)

Shine, on behalf of INDECS, acknowledged that he marketed Claim

Watcher to Wirerope in order to keep Wirerope as an INDECS customer.

(INDECS MSJ Ex. C at 147:7–148:2.) Krambeck, on behalf of Claim Doc,

testified that he did not recall any non-compete agreement with INDECS and

acknowledged that INDECS was allowed to pitch Claim Watcher to Wirerope as

a substitute for Claim Doc. (INDECS MSJ Ex. O at 32:20–25, 33:1–8, 88:10–

17.)

And that is what INDECS did. On May 6, 2016, INDECS sent Wirerope a

proposal outlining what INDECS and Claim Watcher could provide them in the

administration of their health benefit plan. (Claim Doc Ex. K.) Eventually,

Wirerope, INDECS, and Claim Watcher executed a Joinder Agreement with an

effective date of June 1, 2016. (INDECS MSJ Ex. N.)

On July 20, 2016, INDECS and Wirerope filed a Complaint in this Court

against Claim Doc, asserting breach of contract, breach of fiduciary duty, and

breach of the indemnification provision in the Agreements. (DE 1.) Claim Doc

answered the complaint, and on February 11, 2019 filed its counterclaims

against INDCES and Wirerope asserting breach of contract, tortious

interference, civil conspiracy, and quantum meruit/unjust enrichment. (DE

92.) As stated above, the parties entered into a partial settlement agreement on

December 5, 2019, which released Wirerope, leaving only INDECS and Claim

Doc in the case. INDECS and Claim Doc also settled and released their mirror-

image breach of contract claims. That left only INDECS’s claims against Claim

Doc for breach of fiduciary duty and indemnity, and Claim Doc’s claims against

INDECS for tortious interference and civil conspiracy.

INDECS and Claim Doc have each filed a motion for summary judgment

on all remaining claims asserted against the other. (DE 118, 120)

II. Legal Standard

Federal Rule of Civil Procedure 56(a) provides that summary judgment

should be granted “if the movant shows that there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law.”

See Kreschollek v. S. Stevedoring Co., 223 F.3d 202, 204 (3d Cir. 2000);

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In deciding a motion

for summary judgment, a court must construe all facts and inferences in the

light most favorable to the nonmoving party. See Boyle v. Cnty. of Allegheny

Pennsylvania, 139 F.3d 386, 393 (3d Cir. 1998) (citing Peters v. Delaware River

Port Auth. of Pa. & N.J., 16 F.3d 1346, 1349 (3d Cir. 1994)). The moving party

bears the burden of establishing that no genuine issue of material fact

remains. See Celotex, 477 U.S. at 322–23. “[W]ith respect to an issue on which

the nonmoving party bears the burden of proof . . . the burden on the moving

party may be discharged by ‘showing’ — that is, pointing out to the district

court — that there is an absence of evidence to support the nonmoving party’s

case.” Id. at 325.

Once the moving party has met that threshold burden, the non-moving

party “must do more than simply show that there is some metaphysical doubt

as to material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475

U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). The opposing party

must present actual evidence that creates a genuine issue as to a material fact

for trial. Anderson, 477 U.S. at 248; see also Fed. R. Civ. P. 56(c) (setting forth

types of evidence on which nonmoving party must rely to support its assertion

that genuine issues of material fact exist).

Unsupported allegations, subjective beliefs, or argument alone, however,

cannot forestall summary judgment. See Lujan v. Nat’l Wildlife Fed’n, 497 U.S.

871, 888, 111 L. Ed. 2d 695, 110 S. Ct. 3177 (1988) (nonmoving party may not

successfully oppose summary judgment motion by simply replacing

“conclusory allegations of the complaint or answer with conclusory allegations

of an affidavit.”); see also Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138

(3d Cir. 2001) (“A nonmoving party has created a genuine issue of material fact

if it has provided sufficient evidence to allow a jury to find in its favor at trial.”).

Thus, if the nonmoving party fails “to make a showing sufficient to establish

the existence of an element essential to that party’s case, and on which that

party will bear the burden of proof at trial . . . there can be ‘no genuine issue of

material fact,’ since a complete failure of proof concerning an essential element

of the nonmoving party’s case necessarily renders all other facts immaterial.”

Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quoting Celotex,

477 U.S. at 322–23).

Moreover, the “mere existence of some alleged factual dispute between

the parties will not defeat an otherwise properly supported motion for summary

judgment; the requirement is that there be no genuine issue of material fact.”

Anderson, 477 U.S. at 247–48. A fact is only “material” for purposes of a

summary judgment motion if a dispute over that fact “might affect the outcome

of the suit under the governing law.” Id. at 248. A dispute about a material fact

is “genuine” if “the evidence is such that a reasonable jury could return a

verdict for the nonmoving party.” Id.

III. INDECS Motion for Summary Judgment on Claim Doc’s

Remaining Counterclaims

A. Tortious Interference Counterclaim

In Count IV of its Amended Counterclaim, Claim Doc alleges that

INDECS tortiously interfered with the terms of the Settlement Agreement

between Krambeck/Claim Doc and Fishbone/Needham in the EDPa matter.

According to Claim Doc, INDECS was aware of the Settlement

Agreement’s information screen and prohibition on Fishbone/Needham’s

soliciting Wirerope, but nevertheless communicated with Fishbone for the

purpose of moving Wirerope’s business from Claim Doc to Claim Watch. Claim

Doc argues that when INDECS provided the Claim Watch proposal to Wirerope

on May 6, 2016, they interfered with the Settlement Agreement and damaged

Claim Doc by causing it to lose Wirerope as a customer.

INDECS, on the other hand, asserts that Claim Doc has not presented

evidence that INDECS had knowledge of the specific terms of the Settlement

Agreement; that INDECS did not act with the requisite “malice” required to

establish a prima facie tortious interference claim; and that even if INDECS did

interfere with the Settlement Agreement, INDECS’s actions did not lead to any

breach or loss of rights under the Settlement Agreement.

For the reasons stated below, I find that summary judgment must be

granted in favor of INDECS on the tortious interference claim.

Under New Jersey law, there are four elements in demonstrating a claim

for tortious interference with a contract: “(1) the existence of a contract; (2)

interference that was intentional and done with malice; (3) the loss of the

contract as a result of the interference; and (4) damages.” Berkley Risk Sols.,

LLC v. Indus. Re-Int'l, Inc., No. A-2366-15T1, 2017 WL 4159170, at *5 (N.J.

Super. Ct. App. Div. Sept. 20, 2017) (citing Printing Mart–Morristown v. Sharp

Elecs. Corp., 116 N.J. 739, 751–52 (1989)). Claim Doc has established the first

prong of a tortious interference claim by demonstrating the existence of a valid

contract, i.e., the Settlement Agreement. See id. (“It is undisputed that the

Settlement Agreement between defendants and [third party] satisfied the first of

these elements.”). The primary issue between the parties is whether the actions

of INDECS amounted to an intentional interference with the Settlement

Agreement, done with malice, and whether Claim Doc’s rights under the

Settlement Agreement were violated as a result of that interference.

The threshold issue is whether INDECS had knowledge of the terms of

the Settlement Agreement, and in particular the non-compete aspects.

Although INDECS was neither a party to the Settlement Agreement nor

included in any of its terms or provisions, Claim Doc argues that because

Fishbone acted as an agent of INDECS, all of his knowledge on the terms of the

Settlement Agreement must be imputed to INDECS as his principal.3

INDECS does not deny that Fishbone acted as a consultant for it and its

owner, Tom Knox; that Fishbone is affiliated with Claim Watcher, a competitor

of Claim Doc; that Fishbone shared office space with INDECS; and that he had

access to INDECS’s computer network. However, INDECS denies that specific

knowledge of the Settlement Agreement should be imputed to itself because

INDECS “never received, obtained, viewed, or otherwise was made aware of the

settlement agreement itself.” (DE 126, INDECS Opp. Br. at 2.) I must accept,

3 For these purposes, New Jersey follows black-letter principles of agency

law. “An agency relationship is created when one party consents to have another act

on its behalf, with the principal controlling and directing the acts of the agent.” Verify

Smart Corp. v. Bank of Am., N.A., No. CV174248JMVJBC, 2019 WL 1594474, at *5

(D.N.J. Apr. 15, 2019) (citing Sears Mortg. Corp. v. Rose, 134 N.J. 326, 337 (1993)

(citing Restatement (Second) of Agency § 1 (1958))). “This consent to act on the

principal’s behalf, or grant of ‘authority,’ may be ‘actual’ or ‘apparent.’” Id. “Actual

authority” may be created through written or spoken words or other conduct of the

principal which “causes the agent to believe that the principal desires him so to act on

the principal’s account.” Id. (citing Jennings v. Reed, 381 N.J. Super. 217, 231 (App.

Div. 2005)) (internal quotation marks omitted). In contrast, “apparent authority” may

be created by written or spoken words, or through any other conduct of the principal

which “causes a third person to believe that the principal consents to have the act

done on his behalf by the person seeming to act for him.” Id. Apparent authority

essentially “imposes liability, not as the result of an actual contractual relationship,

but because of actions by a principal which have misled a third party into believing

that a relationship of authority does, in fact, exist.” Id.

however, that there is good evidence of an agency relationship between

Fishbone and INDECS.4

In addition, Fishbone testified that at some point—the timing is not

clear—he actually informed Shine and Knox (owner and president of INDECS)

that he couldn’t be contacted about Wirerope or the other customer. This,

Fishbone testified, was to implement the information screen required by the

Settlement Agreement. (See INDECS MSJ Ex. J at 173:7–18.) INDECS states it

did not have knowledge of “the settlement agreement itself”; still, it would have

to have been very incurious to have taken Fishbone’s statement at face value

without asking why he could not be contacted on those subjects.

In short, there is at least an issue of fact as to whether knowledge of

Fishbone’s non-compete obligations of the Settlement Agreement can be

attributed to INDECS.

Nevertheless, even assuming that INDECS was aware of the Settlement

Agreement, I find that Claim Doc has not established a prima facie case of

tortious interference. As stated above, the second element of a tortious

interference claim is that the interference was performed with malice. “The

term malice is not used in the literal sense requiring ill will toward the

plaintiff.” Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 751,

563 A.2d 31, 37 (1989) (citing Restatement (Second) of Torts Chapter 37 at 5

(introductory note) (1979)). Instead, it is defined to mean any harm “was

inflicted intentionally and without justification or excuse.” Id. (citing Rainier's

Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552, 563, 117 A.2d 889 (1955)).

“To qualify as malice, ‘conduct must be both injurious and transgressive of

generally accepted standards of common morality or of law.’” Berkley Risk

Sols., LLC v. Indus. Re-Int'l, Inc., No. A-2366-15T1, 2017 WL 4159170, at *6

(N.J. Super. Ct. App. Div. Sept. 20, 2017) (citing Lamorte Burns & Co. v.

4 There is an issue, however, as to whether, at the time Fishbone was

working with Krambeck and Claim Doc through his own company, Needham, he was

then acting as an agent for INDECS.

Walters, 167 N.J. 285, 306–07 (2001)). A court or fact finder may permissibly

conclude that “conduct that is fraudulent, dishonest, or illegal amounts to

tortious interference.” Id., 167 N.J. at 307. Ordinary, even aggressive, efforts to

obtain business at the expense of a competitor do not qualify.

Here, I do not find that INDECS’s actions were done with malice. Claim

Doc has admitted that INDECS had a legitimate interest in keeping Wirerope as

a client. (See INDECS MSJ Ex. O at 32:20–25.) That is within the rules of the

game; it is an ordinary incident of business competition, and it does not

bespeak any illegitimate intent to harm Claim Doc per se. Claim Doc is

attempting in effect to treat INDECS as if it were bound by the Settlement

Agreement. That pushes the concept of tortious interference too far. The actual

party to the Settlement Agreement, Fishbone, has not been shown to have

violated it by soliciting Wirerope, directly or indirectly, during its term. INDECS

was not a party to the Settlement Agreement, and it had its own legitimate

business interests to pursue.

Claim Doc cites the following three emails as evidence of malice:

(1) An email from Claim Doc to INDECS, which Mike Shine then

forwarded to Fishbone, regarding the status of the reconciliation and

settlement of claims questions after Fishbone had recently been terminated

from Claim Doc. (see Claim Doc. Opp. Br. Ex. O at ESI 0000008)

(2) A meeting of INDECS and Fishbone with representatives from

Wirerope in January 2016, after Fishbone had been terminated by Claim Doc,

and a follow-up email from Fishbone that allegedly called into question the

adequacy of Claim Doc’s management of the Wirerope account (see Claim Doc

Opp. Br. Ex. P at DEF 003621).

(3) An October 2015 email that Shine forwarded to his colleagues at

INDECS which questioned whether Krambeck’s email sent at 3:37 AM was an

“alcoholic or drug induced rant” and that questioned Krambeck’s “ability to

function in a real world environment.” (see Claim Doc Opp. Br. Ex. Q at DEF

002433.)

I do not find that any of these emails demonstrate actions of tortious

interference with the Settlement Agreement, done with malice. The first email

was not designated as “confidential,” as Claim Doc now asserts. It is an inquiry

about the status of the reconciliation or settlement of certain accounts for

which Fishbone had previously been responsible prior to his break with Claim

Doc. The second follow-up email that Fishbone sent to Wirerope does not,

whether fairly or unfairly, disparage Claim Doc’s management of the account. It

simply explains the different parts of the audit report which Claim Doc would

send to Wirerope. The third, October 2015 email that Shine forwarded to his

colleagues at INDECS is surely an impolite, even unkind, comment about

Krambeck, but it represents Shine’s opinion, not Fishbone’s. Nor is there any

evidence that it was used in some dishonest or defamatory way to harm Claim

Doc’s relations with customers.

Critically, all of these communications occurred prior to the execution of

the Settlement Agreement. In no way do they demonstrate that INDECS was

tortiously interfering with the Agreement, which did not yet exist.

The analysis need go no farther. I will grant summary judgment to

INDECS on Claim Doc’s tortious interference counterclaim.

B. Civil Conspiracy Counterclaim

I will also grant summary judgment to INDECS on Claim Doc’s claim of

civil conspiracy.

Under New Jersey law, a claim for civil conspiracy consists of a

“‘combination of two or more persons acting in concert to commit an unlawful

act, or to commit a lawful act by unlawful means, the principal element of

which is an agreement between the parties to inflict a wrong against or an

injury upon another, and an overt act that results in damage.’” LoBiondo v.

Schwartz, 199 N.J. 62, 102, 970 A.2d 1007, 1029–30 (2009) (citing Banco

Popular N. Am. v. Gandi, 184 N.J. 161, 177–78, 876 A.2d 253 (2005)). However,

“a claim for civil conspiracy cannot survive without a viable underlying tort[.]”

Dist. 1199P Health & Welfare Plan v. Janssen, L.P., 784 F. Supp. 2d 508, 533

(D.N.J. 2011).

I have already dismissed the underlying tort of tortious interference, so

the claim of civil conspiracy to commit that tort must be dismissed as well. I

will grant summary judgment in favor of INDECS on Claim Doc’s civil

conspiracy counterclaim.

IV. Claim Doc’s Motion for Summary Judgment on INDECS’s

Remaining Claims

INDECS’s remaining claims against Claim Doc are breach of fiduciary

duty and breach of the contractual duty to indemnify. Both claims have as

their background the Service Agreement and Joinder Agreement, and Claim

Doc’s alleged failure to provide post-termination defense of holdover balance

billing claims.5 I therefore start with an examination of the relevant contractual

provisions, and then consider the claims individually.

A. Contractual Ambiguity

“In general, ‘contracts are given their plain and ordinary meaning.’” CPS

MedManagement LLC v. Bergen Reg'l Med. Ctr., L.P., 940 F. Supp. 2d 141, 154

(D.N.J. 2013) (citing M.J. Paquet, Inc. v. N.J. Dept. of Transp., 171 N.J. 378,

396, 794 A.2d 141 (2002)). Where the terms of a contract are clear, the court

must enforce it as written, and the court cannot rewrite the terms of the

contract by substituting a new or different provision from what is clearly

expressed in the contract itself. Id. (citing County of Morris v. Fauver, 153 N.J.

80, 103, 707 A.2d 958, 969 (1998); E. Brunswick Sewerage Auth. v. E. Mill

Associates, Inc., 365 N.J. Super. 120, 125, 838 A.2d 494, 497 (App. Div.2004)).

A contract is ambiguous if it is capable of being interpreted in more than

one way. Id. at 155. In deciding whether a contract is ambiguous, a court must

hear the parties’ interpretation of the contract and determine if there is any

5 The parties do not seem to contend that these claims are encompassed by the

prior settlement of breach of contract claims. Although they are closely related, I treat

them as distinct fiduciary and indemnity claims.

indication that the terms of the contract are susceptible to different meanings.

Id. “Before making a finding concerning the existence or absence of ambiguity,

we consider the contract language, the meanings suggested by counsel, and

the extrinsic evidence offered in support of each interpretation.” Id. “Extrinsic

evidence may include the structure of the contract, the bargaining history, and

the conduct of the parties that reflects their understanding of the contract's

meaning. And once a contract provision is found to be ambiguous, extrinsic

evidence must be considered to clarify its meaning.” Id.

Furthermore, whether “a contract is ambiguous is a legal question for the

court.” Order of St. Benedict of New Jersey v. Gianforcaro, No. A-1158-16T3,

2018 WL 3596282, at *7 (N.J. Super. Ct. App. Div. July 27, 2018) (citing Nester

v. O’Donnell, 310 N.J. Super. 198, 210 (App. Div. 1997)). However, “if there is

an ambiguity, then the resolution of the ambiguity is for the jury.” Id. (citing

Michaels v. Brookchester, Inc., 26 N.J. 379, 388 (1958)).

INDECS cites Paragraphs 10 and 1.e of the Service Agreement, which, in

its view, obligate Claim Doc to provide legal defense against non-patient

responsibility in balance bills. Claim Doc does not wholly disagree, but argues

that these paragraphs define the scope of balance-billing defense during the

pendency of the agreement, not after its termination. (See Claim Doc Motion at

9.)

Paragraph 10 of the Service Agreement states that post-termination,

“[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 . . .” (INDECS MSJ Ex. F ¶ 10.) The Agreement defines “Referred Appeal”

as “any appeal of a denied Health Benefit Claim under the Plan, which shall be

referred to [Claim Doc] by the Plan Administrator after audit under this

Agreement by [Claim Doc] . . . .” (Id. ¶ 2.) The Agreement also defines “Health

Benefit Claim” as “a claim for benefits filed by a participant in the Plan, where

the request for approval of treatment or services or the rendering of services or

supplies occurred during a Plan Year or calendar year applicable under the

term of this Agreement.” (Id.) The Agreement does not, however, specifically

define “Referred Health Benefit Claim” or “Appeal of a Health Benefit Claim.”

Putting the definitions together, I find it likely that “Referred Health

Benefit Claim” would mean a claim for benefits filed by a participant in the

Plan that was referred to Claim Doc. An “Appeal of a Health Benefit Claim”

would refer to an appeal of a Health Benefit Claim that was denied under the

Plan. The contract is ambiguous, however, as to what Claim Doc’s obligations

are in connection with such Referred Health Benefit Claims and Appeals of

Health Benefit Claims. Paragraph 1.e of the Service Agreement states that

Claim Doc shall “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 . . . .” (emphasis added.) Reasonable minds could

disagree on whether that contractual provision means that the provision of

legal defense against balance bills is part of Claim Doc’s obligations in

“handl[ing] appeals,” or if it is a separate obligation, apart from the handling of

appeals. Post-termination, the obligations are if anything less clear.

The extrinsic evidence that INDECS cites in its Opposition Brief is

unhelpful in resolving this ambiguity. First, INDECS relies on the testimony of

Mike Shine that Claim Doc had assured him that they would provide legal

support, even after the Agreements with a client were terminated. See INDECS

Opp. Br. Ex. 1 at 12:5-25. Krambeck, however, has testified that he never

understood Claim Doc’s post-termination obligations to include balance billing

defense. (See Claim Doc MSJ Ex. A at 113:5–114:3.) There is evidence that

Shine discussed with Claim Doc employees past examples of Claim Doc’s

having provided post-termination balance billing defense for other clients;

Fishbone, too, testified that Claim Doc had provided this service to other

clients. Such past-practice evidence falls short of establishing that Claim Doc

undertook to provide post-termination balance billing defense as to this

account. INDECS points to Claim Doc’s being prepaid to provide balance bill

defense, but again, this does not necessarily imply that the obligation to

undertake such defense continued past the termination date of the

Agreements.

In short, I find the agreements ambiguous on the point; I therefore

cannot award summary judgment on the basis of the agreements themselves.

Nevertheless, I will grant summary judgment in favor of Claim Doc on

INDECS’s remaining claims for the reasons stated below.

B. Breach of Fiduciary Duty

INDECS alleges in its Complaint that Claim Doc breached its fiduciary

duty to them by failing to “provide balance bill defense to Wirerope health

benefit plan members,” which, a fortiori, failed to discharge its fiduciary duty to

exercise “the skill, care, and diligence of a prudent [person].” (Compl. ¶ 76.)

INDECS argues that under Paragraph 1 of the Joinder Agreement, “Claim

Doc became a fiduciary for all of its actions” undertaken pursuant to that

Agreement. (INDECS MSJ Ex. G ¶ 1.) The text of that paragraph, however, is

actually more limited: it provides that Wirerope as Plan Sponsor “hereby

authorizes [Claim Doc] to be a co-fiduciary as respects all determinations made

by [Claim Doc] for claims subject to the Service Agreement.” Id. The Service

Agreement refers to a “fiduciary” just once; it provides that, “[i]n performing its

duties hereunder, [Claim Doc] shall be acting as a fiduciary of the Plan and

shall adhere to the applicable standards of conduct, which are set forth in 29

U.S.C. § 1104(a)(1)(A), (B) and (D).” (INDECS MSJ Ex. F ¶ 1.) The Service

Agreement defines “Plan” as any “self-funded ERISA and non-ERISA health

plans.”

So Claim Doc is a fiduciary with respect to somebody. I find no language

in these contracts, however, which designates Claim Doc as a fiduciary in

relation to INDECS. The Service Agreement designates Claim Doc to be a

fiduciary with respect to the Plan, not INDECS. The Joinder Agreement

designates Claim Doc as a “co-fiduciary” with Wirerope, the Plan sponsor; but

even if the other co-fiduciary were INDECS, that would not imply a fiduciary

duty running from Claim Doc to INDECS.

As a result, I will grant Claim Doc’s motion for summary judgment on

INDECS’s breach of fiduciary duty claim.

C. Duty to Indemnify Plaintiffs

Paragraph 6 of the Service Agreement states that Claim Doc “shall hold

harmless, indemnify, and defend INDECS against any and all losses, claims,

expenses (including reasonable attorneys’ fees), sanctions, fines, penalties,

taxes damages including, but not limited to, multiple, exemplary or punitive

damages, judgments or liabilities whatsoever. . . .” INDECS alleges that Claim

Doc’s failure to “defend the balance bills, . . . thereby causing this litigation,

require[s] indemnification for Plaintiffs by Claim Doc.” Compl. ¶¶ 83, 85.

Claim Doc responds that summary judgment must be granted in its favor

because INDECS lacks standing under Article III of the Constitution to bring

this claim, since it has not suffered an injury. Relatedly, it asserts that

Wirerope has not incurred any defense costs related to post-termination

balance billing, so there is nothing for INDECS to indemnify.

I agree with Claim Doc and find that INDECS has not suffered an injury

in fact. In order to bring a suit in federal court, a plaintiff must demonstrate

that he “(1) suffered an injury in fact, (2) that is fairly traceable to the

challenged conduct of the defendant, and (3) that is likely to be redressed by a

favorable judicial decision. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547, 194

L. Ed. 2d 635 (2016), as revised (May 24, 2016). “To establish injury in fact, a

plaintiff must show that he or she suffered ‘an invasion of a legally protected

interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not

conjectural or hypothetical.’” Id. at 1548 (citing Lujan v. Defenders of Wildlife,

504 U.S. 555, 560–561, 112 S. Ct. 2130 (1992)). A “concrete” injury is one that

is “de facto” and must actually exist. Id. at 1548 (citing Black's Law Dictionary

479 (9th ed. 2009)). The Supreme Court has held that when using the adjective

“concrete” they mean to convey an injury that is “real and not abstract.” Id.

(citing Webster's Third New International Dictionary 472 (1971); Random

House Dictionary of the English Language 305 (1967)).

Here, I find that the damages which INDECS claims are not concrete or

actual so as to confer standing to pursue its indemnification claim against

Claim Doc. As stated above, Harold Kropp, Wirerope’s CFO, testified that he

could not recall whether there were any leftover balance bills that resulted in

litigation (i.e., required a defense). He acknowledged that if there were such

balance bills, he should be aware of them. (Claim Doc. MSJ Ex. I at 34:17–

35:13.) Shine also testified that there had not been any legal fees that needed

to be paid in connection with balance billing. (Claim Doc. MSJ Ex. J at 153:15–

23.) INDECS admits that it did not “suffer any ‘damages’ in the traditional

sense, e.g., out-of-pocket monetary payment to attorneys.”

Rather, Shine claimed that he was required to “expend a number of

hours to address numerous issues which arose from Claim Doc’s actions.” (See

Cert. of Mike Shine, DE 122-2.) Shine certified that those efforts included:

• Communicating by phone and email with Claim Doc personnel to

obtain all relevant information regarding balance bills, including

numerous follow-up request due to Claim Doc’s lack of response;

• Communicating by phone and email with Wirerope’s staff

regarding how balance bills would be addressed;

• Answering calls and addressing inquiries made by Wirerope

employees concerning outstanding bills;

• Communicating by phone and email with certain medical providers

and facilities concerning balance bills and Wirerope employees;

• Communicating by phone and email with Claim Watcher, the new

vendor providing claims review services for Wirerope, concerning

balance bill issues.

Id. Based on the above, Shine “estimate[s]” that he spent approximately 160

hours working on balance bill issues from May – September 2016, and that

because the rate which should apply to these services is $200, the value of his

time expended is $32,000. Id.

Shine’s lost time value, however, is not connected to the claimed breach

of the duty to defend holdover balance billing claims; everybody agrees that

there were no such claims requiring a defense. The time expended was the

result of dealing with the administrative issues that followed the termination of

the Agreements, and not in connection with the “legal defense . . . in balance

bills.” (See INDECS MSJ Ex. F ¶ 1.e.) Moreover, Shine’s certification only

contains his post hoc assessment of what he thinks his time was worth, and

his personal opinion of the “market rate” which would apply to his services.

There is no evidence in the record that he was entitled to be compensated by

Claim Doc for his time at all, or that he had ever charged Claim Doc an hourly

rate for his personal work on the Wirerope account. At best, Shine seems to be

saying that he expended a great deal of effort in ascertaining that Claim Doc

had not deprived INDECS of anything to which it had been entitled under the

contract.

Thus, I find that the Shine certification does not demonstrate the type of

concrete or actual injury, resulting from the claimed breach, that would be

required in order to establish standing on INDECS’s indemnification claim. In

the alternative—even if the matter is not viewed as one of standing—this is a

no-damages claim. Either way, I will grant summary judgment to Claim Doc on

INDECS’s remaining claims.

V. Conclusion

For the reasons set forth above, I will grant INDECS’s motion for

summary judgment on Claim Doc’s remaining counterclaims (DE 118) and will

grant Claim Doc’s motion for summary judgment on INDECS’s remaining

claims (DE 120).

An appropriate order follows.

Dated: October 2, 2020

/s/ Kevin McNulty

____________________________________

Kevin McNulty

United States District Judge