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Pharmacy Corporation of America v. Concord Healthcare Group, LLC

United States District Court, W.D. Kentucky, Louisville Division

April 14, 2017

PHARMACY CORPORATION OF AMERICA, et al. PLAINTIFFS
v.
CONCORD HEALTHCARE GROUP, LLC, et al. DEFENDANTS

          MEMORANDUM OPINION & ORDER

          Greg N. Stivers, Judge.

         This matter is before the Court upon Plaintiffs' Motion for Entry of Agreed Orders of Judgment (DN 5), which is ripe for adjudication. For the reasons discussed below, the motion is GRANTED IN PART and DENIED IN PART.

         I. BACKGROUND

         This action arises out of two settlement and forbearance agreements between Defendants Concord Healthcare Group, LLC (“Concord”); Waco Healthcare Residence, LLC d/b/a Crestview Healthcare Residence (“Waco”); Fairview Operations, LLC d/b/a Fairview Healthcare Residence (“Fairview”); Manor Nursing & Rehab Center, LLC d/b/a The Manor Healthcare Residence (“Manor”); Western Hills Nursing & Rehab Center, LLC d/b/a Western Hills Healthcare Residence (“Western Hills”); Groesbeck Healthcare Residence, LLC d/b/a Windsor Healthcare Residence (“Windsor”); Mesa Hills Healthcare Residence Operator, LLC d/b/a Mesa Hills Healthcare Residence (“Mesa Hills SNF”); Plano Healthcare Residence Operator, LLC d/b/a Heritage Manor Healthcare Center (“Plano SNF”); Mesa Hills Specialty Hospital Operator, LLC (“Mesa Hills LTACH”); Plano Specialty Hospital Operator, LLC (“Plano LTACH”); and Specialty Hospital of Midwest City Operator, LLC (“Midwest City LTACH”) (collectively, “Defendants”)[1] and Plaintiffs Pharmacy Corporation of America d/b/a PharMerica, PharMerica Long-Term Care LLC d/b/a PharMerica, and PharMerica Hospital Pharmacy Services, LLC d/b/a PharMerica (collectively, “Plaintiffs” or “PharMerica”), each of which contain Agreed Orders of Judgment.

         In 2014 and 2015, Plaintiffs contracted with Concord, the SNF Defendants, and the LTACH Defendants to provide pharmacy-related goods and services to the residents of the facilities operated by the SNF and LTACH Defendants. (Tomassetti Aff. ¶¶ 3-4, DN 5-4). A billing dispute arose, and Defendants failed to pay Plaintiffs for goods and services invoiced, so the parties began negotiating to resolve the matter.[2] (Nueman Aff. ¶ 6, DN 15-1; Tomassetti Aff. ¶ 5). As a result of their negotiations, on April 27, 2016 (the “Settlement Date”), Plaintiffs executed two settlement and forbearance agreements: one with Concord and the SNF Defendants (the “SNF Settlement Agreement”), and the other with Concord and the LTACH Defendants (the “LTACH Settlement Agreement”) (the SNF Settlement Agreement and the LTACH Settlement Agreement are jointly referred to as the “Agreements”). (Tomassetti Aff. ¶ 6; SNF Settlement Agreement, DN 17-2; LTACH Settlement Agreement, DN 17-1).

         Under Section 5.01 of the SNF Settlement Agreement, Concord and the SNF Defendants acknowledged and agreed that they owed Plaintiffs the sum of $621, 998.07 for pharmacy goods and services provided through December 31, 2015 (the “SNF Balance”). (SNF Settlement Agreement § 5.01). Under Section 5.01 of the LTACH Settlement Agreement, Concord and the LTACH Defendants acknowledged and agreed that they owed the sum of $1, 248, 980.00 through March 31, 2016 (the “LTACH Balance”). (LTACH Settlement Agreement § 5.01). In order to settle the outstanding amounts with Concord, the SNF Defendants, and the LTACH Defendants, Plaintiffs agreed to accept $559, 798.26 from Concord and the SNF Defendants and $1, 030, 408.50 from Concord and the LTACH Defendants; both balances were to be paid in accordance with the payment schedules attached to the Agreements. (SNF Settlement Agreement § 5.02; LTACH Settlement Agreement § 5.02). Importantly, the Agreements contained Agreed Orders of Judgment that were to be entered against Defendants if they failed to make required payments. (Tomassetti Aff. ¶¶ 14-15; SNF Settlement Agreement § 5.04; LTACH Settlement Agreement § 5.04). Section 5.04 of the Agreements provides:

Agreed Order of Judgment. As an inducement for PharMerica to enter into this Agreement, and as a material term of this Agreement, the [Defendants] have executed and delivered to PharMerica an Agreed Order of Judgment, which is attached hereto as Attachment D. PharMerica will not file the Agreed Order of Judgment unless there is a Forbearance Default. By executing the Agreed Order of Judgment, the [Defendants] deem their signatures to constitute sufficient and proper evidence of the justness of the debt and their confession of the judgment and that no further evidence or appearance in open court is necessary before entry by the Court of, and execution upon, the Agreed Order of Judgment.

(SNF Settlement Agreement § 5.04; LTACH Settlement Agreement § 5.04).

         Defendants have failed to make payments due under the Agreements since November 2016. (Tomassetti Aff. ¶ 16). In accordance with the terms of the Agreements, Plaintiffs provided notice to Defendants of their defaults and Defendants have failed to cure the defaults. ((Notice of Default, DN 5-7; Tomassetti Aff. ¶ 16). As a result, pursuant to Section 5.07 of the Agreements the entire SNF Balance and LTACH Balance, less payments made, is now due and owing with interest at 6% per annum from the Settlement Date until paid in full. (SNF Settlement Agreement § 5.07; LTACH Settlement Agreement § 5.07).

         On January 23, 2017, Plaintiffs filed the present motion, asking the Court to enter the Agreed Orders of Judgment against Defendants. (Pls.' Mot. Entry Agreed Orders J., DN 5). Accounting for all payments by Concord and the SNF Defendants before default, Plaintiffs contend that Concord and the SNF Defendants owe Plaintiffs a principal balance of $361, 001.16, plus interest. (Tomassetti Aff. ¶ 18). Accounting for all payments by Concord and the LTACH Defendants before default, Plaintiffs allege that Concord and the LTACH Defendants owe Plaintiffs a principal balance of $901, 448.44, plus interest. (Tomassetti Aff. ¶ 19).[3]

         Additionally, the LTACH Settlement Agreement requires Concord and the LTACH Defendants to pay for goods and services provided by Plaintiffs after March 31, 2016, in accordance with the terms of the prior contract between the parties. (LTACH Settlement Agreement § 5.03). Since March 31, 2016, Mesa Hills LTACH and Plano LTACH have received goods and services from Plaintiffs but failed to pay for them. (Tomassetti Aff. ¶ 17). According to Plaintiffs, Mesa Hills LTACH owes $100, 819.00, and Plano LTACH owes $146, 387.00. Plaintiffs ask the Court to enter judgments for these amounts as well. (Tomassetti Aff. ¶ 17).

         After filing the present motion, Plaintiffs moved the Court to set an expedited briefing schedule on their motion and to set a hearing after the parties filed their briefs. (Pls.' Mot. Briefing Schedule & Hr'g, DN 9). The Court held a telephone conference with the parties, after which it entered an order requiring expedited briefs, and setting a hearing date. (Order, DN 13). Defendants timely filed their response, contending that Plaintiffs' motion should be denied because there is a question of material fact as to whether the Agreements were signed under duress. Defendants also assert that the sums for which Plaintiffs seek entry of judgment are inaccurate because they claimed to have made substantial payments to Plaintiffs which have not been credited. Defendants further requested an opportunity to conduct discovery regarding their duress defense, potential other defenses, and whether the conditions necessary for entry of the Agreed Orders of Judgment have been satisfied under the terms of the Agreements. (Defs.' Opp'n Pls.' Mot. Entry Agreed Orders J. 9, DN 15). Plaintiffs replied that Defendants have failed to establish that they entered the Agreements under duress, that Defendants have failed to offer any evidence showing that the amounts for which Plaintiffs seek entry of judgment are inaccurate, and that discovery is unnecessary. (Pls.' Reply Mot. Entry Agreed Orders J. 8-14, DN 17). The hearing was held on March 28, 2017 (the “hearing”). (Order, DN 18). This matter stands ripe for adjudication.

         II. JURISDICTION

         This Court has jurisdiction under 28 U.S.C. § 1332(a)(1) because there is diversity of citizenship between the parties and the amount in controversy ...


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