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Pharmacy Corp. of America v. Concord Healthcare Group, LLC

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

August 23, 2017

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

          MEMORANDUM OPINION & ORDER

          Greg N. Stivers, Judge.

         This matter is before the Court upon Plaintiffs' Motion for Attorney Fees (DN 25). For the reasons discussed below, the motion is GRANTED IN PART and DENIED IN PART. Plaintiffs are GRANTED leave to file additional documentation.

         I. BACKGROUND

         This action arises out of a billing dispute between Defendants Concord Healthcare Group, LLC (“Concord”); Waco Healthcare Residence, LLC d/b/a Crestview Healthcare Residence; Fairview Operations, LLC d/b/a Fairview Healthcare Residence; Manor Nursing & Rehab Center, LLC d/b/a The Manor Healthcare Residence; Western Hills Nursing & Rehab Center, LLC d/b/a Western Hills Healthcare Residence; Groesbeck Healthcare Residence, LLC d/b/a Windsor Healthcare Residence; Mesa Hills Healthcare Residence Operator, LLC d/b/a Mesa Hills Healthcare Residence; Plano Healthcare Residence Operator, LLC d/b/a Heritage Manor Healthcare Center; Mesa Hills Specialty Hospital Operator, LLC; Plano Specialty Hospital Operator, LLC; and Specialty Hospital of Midwest City Operator, LLC (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”).

         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 (the “Services Agreements”). (Tomassetti Aff. ¶¶ 3-4, DN 5-4). A billing dispute led Defendants to stop paying Plaintiffs for goods and services provided under the Services Agreements.[2] The parties negotiated and, ultimately, executed two settlement and forbearance agreements: one between Plaintiffs, Concord, and the SNF Defendants (the “SNF Settlement Agreement”) and another between Plaintiffs, Concord, and the LTACH Defendants (the “LTACH Settlement Agreement”).[3](Nueman Aff. ¶ 6, DN 15-1; Tomassetti Aff. ¶¶ 5-6; SNF Settlement Agreement, DN 25-3; LTACH Settlement Agreement, DN 25-4).

         Under Section 5.01 of the SNF Settlement Agreement, Concord and the SNF Defendants acknowledged and agreed that they owed Plaintiffs $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 $1, 248, 980.00 for pharmacy goods and services provided 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). However, in the event Defendants failed to make payments in accordance with the payment schedules, the outstanding SNF Balance and LTACH Balance, rather than the reduced amounts, would become due. (SNF Settlement Agreement § 5.07; LTACH Settlement Agreement § 5.07). Moreover, the Agreements contained Agreed Orders of Judgment for the outstanding SNF and LTACH balances that Plaintiffs were entitled to have entered against Defendants upon default. (SNF Settlement Agreement § 5.04; LTACH Settlement Agreement § 5.04; Agreed Orders J., DN 25-5).

         Defendants repeatedly failed to make payments due under the Agreements. (Stinnett Aff. 4-7, DN 25-2). When further attempts at reconciliation proved fruitless, (See Stinnett Aff. 4-7), Plaintiffs filed this action, moving the Court to enter the Agreed Orders of Judgment against Defendants, as well as judgment against Concord, Mesa Hills LTACH, and Plano LTACH for amounts allegedly owed for goods and services invoiced after March 31, 2016. (See Compl. DN 1; Pls.' Mot. Entry Agreed Orders J., DN 5). The Court partially granted Plaintiffs' motion, entering the Agreed Orders of Judgment against Defendants for the amounts still owed on the SNF and LTACH balances ($361, 001.16 and $901, 448.44, respectively) plus interest, but declining to grant relief at that point on Plaintiffs claims against Concord, Mesa Hills LTACH, and PLANO LTACH for goods and services invoiced after March 31, 2016. (Mem. Op. & Order 13, DN 22; Order Partial J., DN 24).

         In their present motion, Plaintiffs argue that, under the terms of the Settlement Agreements and Agreed Orders of Judgment, they are entitled to $72, 922.50 in attorney fees and $1, 685.38 in costs, which they incurred between October 2015 and April 2017 in attempting to collect the amounts owed by Defendants for goods and services provided under the Services Agreements, i.e., the SNF and LTACH balances. Plaintiffs also maintain that they are entitled to future attorneys' fees and costs incurred as they attempt to enforce the judgment entered by the Court. Defendants responded to Plaintiffs' motion arguing that Plaintiffs are not entitled to recover attorneys' fees and costs at all and, even if they were, recovery is limited to fees and costs incurred in enforcement and collection efforts following Defendants' default of the Settlement Agreements. Additionally, Defendants argue that, assuming Plaintiffs are even entitled to recover fees and costs incurred post-default of the Settlement Agreements, the amount of fees and costs they seek must be discounted. Plaintiffs replied. The matter is ripe for decision.

         II. JURISDICTION

         The Court has jurisdiction over Plaintiffs' claims because there is diversity of citizenship among the parties and the amount in controversy exceeds $75, 000, exclusive of interest and costs. 28 U.S.C. § 1332(a)(1).

         III. DISCUSSION

         The Settlement Agreements and corresponding Agreed Orders of Judgment entitle Plaintiffs to all reasonable attorneys' fees and costs incurred in attempting to collect the outstanding SNF and LTACH balances. In Kentucky, a party can recover attorneys' fees when a specific contractual provision so provides. Aetna Cas. & Sur. Co. v. Commonwealth, 179 S.W.3d 830, 842 (Ky. 2005) (citation omitted); Secura Ins. Co v. Gray Constr., Inc., 717 F.Supp.2d 710, 722 (W.D. Ky. 2010).[4] Here, the Settlement Agreements contain identical provisions regarding the recovery of attorneys' fees and costs from a defaulting party, which provide as follows:

All parties shall pay their own costs and legal fees to date. However, upon a Settlement Default, [Defendants] promise to pay to PharMerica all reasonable costs and expenses of collection, including but not limited to, reasonable attorneys' fees and court costs. This includes any costs and expenses in any action or proceeding, including but not limited to, reasonable fees and disbursements of attorneys incurred after a Settlement Default, but before such action or proceeding is commenced, whether the action or proceeding is at law, in equity or in any bankruptcy case or proceeding.

(SNF Settlement Agreement § 6.04; LTACH Settlement Agreement § 6.04). Meanwhile, the Agreed Orders of Judgment, which were attached to and a part of ...


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