Superior Court of Massachusetts, Suffolk, Business Litigation Session
Whittier IPA, Inc.
Steward Health Care Network, Inc. No. 136528
January 19, 2017
MEMORANDUM AND ORDER DENYING DEFENDANTS MOTION FOR
LEAVE TO ASSERT COUNTERCLAIMS AGAINST WHITTIER EPA, INC., AND
THIRD-PARTY CLAIMS AGAINST ANNA JACQUES HOSPITAL
Kenneth W. Salinger, Justice of the Superior Court.
Health Care Network, Inc. (" SHCN"), is a physician
network. It negotiates and implements contracts with insurers
and other entities that pay for SHCN's participating
doctors to provide medical care to the payors' insureds
or members. Whittier IPA, Inc., is an association of
independent physicians. It joined the SHCN network in January
2012, but began exploring other options in 2013. After SHCN
learned that Whittier had agreed to join a competing
physician network run by the Beth Israel Deaconess Care
Organization (" BIDCO"), SHCN terminated its
agreements with Whittier effective August 31, 2014.
claims that is still owed substantial sums by SHCN under the
parties' contracts. The court (Kaplan, J.) granted
partial summary judgment in Whittier's favor in June
2015, declaring that if SHCN received incentive payments from
health insurers and other payors for periods during which
Whittier was an SHCN member, then " SHCN breached its
contract with Whittier by failing to pay Whittier its pro
rata share of those payments." The amount that SHCN must
pay Whittier is still in dispute. The current case schedule,
which was jointly requested by both parties, requires the
litigants to complete all fact discovery by February 10,
2017, and to complete the exchange of any expert reports by
March 24, 2017.
seeks leave to assert counterclaims against Whittier and
third-party claims against Anna Jacques Hospital. The Court
will DENY this motion. It would be futile to allow SHCN to
assert its proposed counterclaims against Whittier for breach
of contract because they could not survive a motion to
dismiss. The proposed claims against Anna Jacques for
intentional interference and allegedly violating G.L.c. 93A
would also be futile. In any case, it would be unfairly
prejudicial to Whittier and to Anna Jacques to allow
permissive joinder of a new defendant-in-counterclaim under
Mass.R.Civ.P. 20 just weeks before the completion of
discovery in this case. SHCN has no right to join Anna
Jacques as a defendant-in-counterclaim under Rule 19 and does
not seek to assert third-party claims for indemnification or
contribution as allowed under Rule 14.
Proposed Counterclaims Against Whittier
seeks leave to assert counterclaims against Whittier for
allegedly breaching parts of its written contracts with SHCN.
The Court will deny leave to assert these counterclaims
because doing so would be futile, in that these counterclaims
could not survive a motion under Mass.R.Civ.P. 12(b)(6) to
dismiss for failure to state a claim upon which relief can be
granted. See generally Johnston v. Box, 453 Mass.
569, 583, 903 N.E.2d 1115 (2009) (" Courts are not
required to grant motions to amend prior [pleadings] where
'the proposed amendment . . . is futile.'"
(quoting All Seasons Servs., Inc. v. Commissioner of
Health & Hosps. of Boston, 416 Mass. 269, 272, 620
N.E.2d 778 (1993)); Thermo Electron Corp. v. Waste Mgmt.
Holdings, Inc., 63 Mass.App.Ct. 195, 203, 825 N.E.2d 545
(2005) (affirming denial of motion for leave to assert
counterclaim that would have been futile); Mancuso v.
Kinchla, 60 Mass.App.Ct. 558, 572, 806 N.E.2d 427 (2004)
(if amendment to add claim could not survive motion to
dismiss, allowing amendment would be exercise in futility).
Whittier agreed in October 2011 to join the SHCN network, the
parties executed and entered into a written " Service
Agreement" and a related " Letter Agreement."
The following provisions of the parties' contracts are
Service Agreement, Whittier granted SHCN exclusive authority
to negotiate and enter into " Risk Contracts" on
behalf of Whittier and its physicians, and gave SHCN " a
limited right of first opportunity . . . to negotiate and
enter into Risk Contracts" on behalf of all of
Whittier's physicians, during the term of the contract.
Whittier also agreed that its doctors who work as primary
care physicians would not " participate in any Risk
Contract with any Payor" other than through SHCN. The
term " Risk Contract" was defined to mean an
agreement with a " Payor" regarding the provision
of and payment for medical services. The term "
Payor" was defined to mean insurers and other private or
governmental entities that pay for medical services provided
to enrolled individuals.
acknowledged in the Letter Agreement that, as of the time
SHCN and Whittier entered into their contractual
relationship, Whittier was contractually obligated to give a
competitor of SHCN called the Lower Merrimack Valley
Physician Hospital Organization, Inc. (or "
LMVPHO") " a right of first opportunity to
negotiate payor contracts on behalf of Whittier and Whittier
Physicians." SHCN agreed that all the terms of its
Service Agreement with Whittier, including the exclusive
representation and right of first opportunity provisions,
were subject to Whittier's pre-existing obligation to
LMVPHO and thus would not have any effect until Whittier was
able to terminate its obligations to LMVPHO.
initial term of the Service Agreement was five years,
beginning January 1, 2012. But SHCN and Whittier agreed that
their contractual arrangements could " be terminated by
either party, with or without cause, at any time upon ninety
(90) days prior written notice to the other party." The
Letter Agreement provided that if the Service Agreement were
terminated by either party then Whittier would have the right
to terminate its participation in any existing contract with
a third-party payor and would not be obligated to participate
in any contract with a third-party payor that SHCN entered
into or renewed after the date of the termination notice.
SHCN Service Agreement also contained a provision that
addressed " proprietary information." This
provision imposed a number of obligations, including that
" [t]he parties shall . . . hold in strict confidence
any information specified in writing by any party hereto as
contract specifies in the first paragraph that it was "
made and entered . . . by and between" SHCN and
Whittier, which means that they are the " parties"
referred to in the confidentiality provision. The contract
expressly distinguishes between Whittier (which it calls the
" IPA" because it is an independent physician
association) and the physicians who are members ...