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MVP Health Plan, Inc. v. Cotiviti, Inc.

United States District Court for the Northern District of New York

November 1, 2019, Decided; November 1, 2019, Filed

1:18-CV-677 (FJS/CFH)

Opinion

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

MVP Health Plan ("Plaintiff") brings this action against Cotiviti (formerly known as Verscend Technologies) ("Defendant") seeking compensatory damages, punitive damages, declaratory relief, and attorney's fees. See generally Dkt. No. 24, Amended Complaint. Defendant has moved (1) to dismiss all claims in Plaintiff's complaint against it pursuant to Rules 12(b)(6) and 9(b), (2) for declaratory judgment pursuant to Rule 57, and (3) to strike claims for damages and fees and demand for a jury trial pursuant to Rules 12 and 39 of the Federal Rules of Civil Procedure. See generally Dkt. No. 26.

II. BACKGROUND

Plaintiff is a regional health plan that offers [*2]  Medicare Advantage plans to its enrollees. Instead of receiving a fee from the Centers for Medicare and Medicaid Services ("CMS") for each service an enrollee receives, the Medicare Advantage plans receive a monthly fee per enrollee, known as a "capitation payment." The amount of the capitation payment that a Medicare Advantage plan receives varies for each enrollee. There is a base fee amount for an enrollee and then an additional fee based on the "risk adjustment processing system" ("RAPS"), which accounts for the financial risk an enrollee presents. Medicare Advantage plans also use RAPS data in preparing bids for submission in an annual competitive bidding process in which CMS determines the amount it will pay on each plan.

CMS has specific requirements about how Medicare Advantage plans must submit enrollees' diagnosis and treatment data, and which information they can and cannot submit as part of the RAPS data. On December 1, 2008, Plaintiff and Defendant (operating under a different name) entered into a Master Service Agreement ("the 2008 Contract") whereby Defendant agreed to filter Plaintiff's data, convert it into a format that CMS would accept, and submit the data to CMS [*3]  on Plaintiff's behalf. Plaintiff agreed to pay fees in exchange for the services rendered pursuant to the agreement and to assist Defendant in performing its responsibilities by providing Defendant with data and access to certain CMS systems. The parties extended the 2008 Contract by amendment in 2009 and again in 2011.

Plaintiff alleges that Defendant materially breached the 2008 Contract and then concealed the breaches from Plaintiff. According to Plaintiff, Defendant's filtering logic was fundamentally flawed; and Defendant submitted RAPS data to CMS that should have been omitted, while failing to submit data that should have been included, based on CMS's criteria. Because of these errors, Plaintiff alleges that it was deprived of additional payments CMS owed it for coverage it was providing to its enrollees. Plaintiff also alleges that, because of the flawed filtering logic, its annual bid submissions to CMS were incorrect.

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2019 U.S. Dist. LEXIS 190440 *; 2019 WL 5684410

MVP HEALTH PLAN, INC., Plaintiff, v. COTIVITI, INC., Defendant.

CORE TERMS

fraudulent, inducement, filtering, enrollee, flawed, misrepresentation