conifer contrasted with ri to collect revenue for reed services according to best industry practices and in exchange rate agreed to pay conifer tens of millions of dollars conifer did not collect revenue reed services according to best industry practices reaching the contract given the procedural posture of this case that much has to be assumed so a lot of the issue here is whether there is a genuine issue of material fact as to whether ri is entitled to seek recovery of at least some of its claim damages including the revenue it lost as a result of course there is a genuine issue of material fact on damages and so read as a it cannot be held to have reached the contract but that does not mean that it can not be held liable for breach if it otherwise breaches the contract for example by failing to adequately staff the project such that it can timely and adequately collect on accounts and in fact conifer in this reply brief summary judgment and footnote five specifically said fourteen point  likewise that loss revenue damages can be either direct or consequential so i think the debate really comes down to whether that contract limitation on consequential damages precludes recovery of even direct loss revenue damages and it doesn't specifically what the contract says is that absent willful misconduct the party can collect interact incidental special or consequential damages including without limitation los revenue whether or not such damages are seen the words including without limitation lost revenue clarify that to the extent certain loss revenue damages are consequential loss revenue damages they're not recoverable in other words this language merely refers to a subset of lost revenue damages that is revenue lost indirectly as a result of the breach but it doesn't preclude the recovery of lost revenue damages to the extent they constitute direct loss of revenue if they're given under this contract conifers performance was measured in terms of revenue correct correct and is there any more correct form of performance than collection of revenue under this contract not under revenue management cycle agreement no your honor could i ask you both to this concept that willful misconduct here in the concept of contracts here when we're not talking about independently tortious wrongs i can approach this in several ways but one  that is you know st of all has conifer committed an intentional act that violated the contract number one and number two it do so with reckless disregard for the consequences we don't have to show well i mean let's let's take a take a different kind of contract let's say just for the the sale of goods and we're we're all familiar with the notion of an efficient breach and of a seller just says we're losing money on this we're out we're terminating this contract cover as best you can and we think you can cover more efficiently with somebody else than with us because of changes in shipping costs or god knows wh r that's intentional and it's a breach hard to treat that is willful is wrongful right well no i think it is intentional and that's ultimately what matters and just briefly your honor if want to clarify this would be a bench trial would not be a jury trial that's number one number two in a classic sense but there were just postponing the problem maybe  but anyway in a classic fish and branch situation you have someone who decides to stop performance and and move on and make a clean break understanding that they're going to have to make the non breaching party whole as part of the bargain of an efficient breach that is a an intentional act with regard for the consequences contrast that with what happened here here  strong read along for nearly two full years failing to properly staff the project knowing knowing all along that it's doing so was harming read it knew this not only because employees told it so  because reid told so and then on top of that in the spring of two thousand and fourteen it came back to to read and said you know what we'd like to renegotiate this contract and we'd like to do it last for more that is an intentional act without regard for the consequences they are continuing throughout to intentionally and chronically understaffed the project full well knowing that it's harming ok so for example take it you could deal with that issue for instance if connoisseur had  and that seems to be the definition of willfulness in indiana right here right that's exactly right intentional conduct in violation of the contract with reckless disregard for the consequences and so let me if i could elaborate a little bit on that specifically in this case we've got all of this evidence in which conference intentionally and chronically under staffing its work but on top of that we know it led to at least three consequences one was an increased average length of stay which meant that reed was being underpaid for its services for patients on government insurance and we have an email showing the conifer new real time that understaffing was leading to an increase length of stay for government insured patients they're insured based on diagnosis not on how many days they stay in the hospital so average length of stay really matter something to a hospital secondly these this intentional understaffing lead to a failure to timely and accurately code bills which lead to a backup in timely and accurate billing and again we have evidence that conifer new real time but the lack of coders it had led to a soaring discharge but not final filled number which is a key industry metric in fact it was three times the national average at one point and we also have evidence that confort knew that its failure to code bills led to a five million dollars loss because those bills were never submitted and the rd consequence that this understaffing lead to was a failure to timely follow up on claimed denials which precluded reid from obtaining reimbursement for some of its claims and we again we have evidence that conifer knew real time that its staffing metrics forward one of the things that i've struggled with here is it looks to me from the record and i'm thinking specifically of the expert report that was submitted by this fella chip early that during the period that conifer had the account that they received incentive payments including a few that looked fairly sizable across the corridors and so measured by these metrics but at the same time conifer is realizing bonuses on the engagement are those two things at odds with one another or not not not at all a couple of things  number one the fact that it was earning these performance incentives it was not in suggesting that it was performing according to best industry practice and if you look at read c e o s deposition craig kenyon he testified that these performance metrics were designed to be what he called the canary in the coal mine they were to ensure that conifer was performing at a bare minimum and that if it didn't meet those performance metrics read could and that the contract without penalty that's point number one number two for makes in this is a related point come from makes a big deal out of the fact that it collected ten million dollars more in revenue than what it says that dell would have collected during the same time period again that's not suggest that best industry practices that represents a less than one percent improvement over the re dell baseline which was rather meager as conifer ten wrote in its own summary judgment motion when it took over the revenue cycle management process reed's revenue cycle was struggling that's its words and its financial performance was poor yet this is the baseline against which conference comparing its conduct so in short judge scott or the earning of these incentives against bare minimum practice metrics and the collection of additional ten million dollars is not inconsistent with the notion that it is chronically images question with respect to mr brun's county elations because i understand kind of some of the specific categories of errors you're talking about but brunn seems to be focusing on aggregate overall collections but the i would expect if you're looking at aggregate accounts you're going to find you should expect to find some adequate performance some better than average and some below on close to one hundred percent of the accounts that he has that is the definition of best industry practices as accounted for in bronzes own report he got said about six million dollars not entitle it to a credit or wash clean the fact that and nearly fifty thousand instances a nearly fifty thousand account is collected nowhere near well enough so that's that's how you reconcile those those those two points and mr francis report i wanted did you want to follow up if i could just briefly we may judge better we may need to go a little beyond twenty minutes on  category form of the images lost revenue because of delays in coding or delays in claim prosecution or or leave appeals and so on but then you've also got bronze using this kind of aggregate measure and it's easily through this kind of a built in maybe solvable with built in problem of potential double counting they're using the aggregate measure and then the category by category well i mean i certainly that would be a discussion for trial i suppose but you have to remember why mr brown's took the approach that is again because reed had almost four hundred thousand patient accounts during conifers tenure and so it would have been all but practically impossible to track the many thousands of instances in which conifers employees failed to elicit specifically delegated duty and then connect those individual breaches to a specific dollar loss and even if it were possible the cost of calculating those damages might exceed the amount of lost revenue that so this explains why mr brown struck the approach he did and why he estimate d damages based in part on categories based in part on aggregate data he compared conifers performance against the retail baseline which again you know i have to emphasize conifer acknowledge that  supposed to pay to conifer under the contract and car two of my question is how does this number compare to  total claim damages ok sure st of all yes i think we do concede that there has to be willful misconduct or gross negligence in order to allow us to recover damages in excess of the cap so if the court did not find one of those two things then we would be limited by the kal a number two i believe and i and i should have double checked this but i to yes i'm sorry i believe that mr brun's calculated a total of forty nine million dollars in damages and loss revenue and other categories of damages in the way you get that he has a if you look at his expert's report there's a bottom line number of about sixty million dollars and if you discount from that one percent what he calls the leakage that even fast hospitals have about seven million dollars you get you get to about forty nine million dollars  ok mr park this point will push the pause button we'll come back to you for a few minutes a rebuttal and why don't we turn to mr rutherford on behalf of conifer revenue cycle solutions ossie may please the court outcome in the district court here is exactly what was bargained for in the party's agreement read brought this case seeking categories of damages that are ability and that agreement and read sought to avoid those limitations of liability by alleging lawful misconduct but discovery just prove the allegations of willful misconduct and retained a summary judgment with no evidence more or less revenue during its ten years than in the time periods before it is to end the contract so that is why i am asking  application of the limitations of viability that were correctly applied by the district court with respect to willful misconduct i do not think that's what's going on here is a selection between competing narratives rather conifers arguments do and what the district court's analysis ted was look at the evidence and roll up the sleeves and summary judgment to decide a case and reads brief to determine whether or not there's a genuine issue of disputed material fact and what i would say is that what we know from discovery and what we know from the record is that there is not evidence of well misconduct and there's a few reasons why one is we reached look to the deposition of reed's corporate representative on this exact issue he did not identify anyone who had engaged in willful misconduct when he was pressed for evidence of willful misconduct what he pointed to was a pile of allegedly written off claims that reed built its case on from its original x her report that was thoroughly debunked and abandoned in what was supposed to be the last week of discovery before summary judgment and instead what we found in discovery  conifer revenue cycle solutions the the performance you all provide is revenue right not quite your honor this this contract is not a contract to deliver revenues this contract was a much broader contract for revenue cycle services that included things like a centralized me a pre registration department including i think partly coded or i'm not talking about the to measure in the reforms is there any measure better than revenue well your honor this contract had several metrics only one of which i believe was cash collections and and is there any more direct form of damages for reach of these services and loss of revenue but your honor i cannot think that those are direct damages for a few reasons first off yes in so the question i asked is there any more form of direct the images which apparently the contract those right your honor i think that the more direct form would be a refund of these and and for example your honor little or no that may be a measure of damages ultimately but what form of damages with this would that take anything more than the performance of the livery cash into the accounts of reed hospital i do not think that is a direct measure of damages at least not based on the record that that reed has put in regarding a way a breach forget about whether it's direct or indirect it is well known is there any more direct measure of damages from that breach than the drop in r honor authored when you're on the district court and they're the revenues in the contract you determine to be direct revenues because in part that is kept there was tied to sales commissions that the parties agreed on assumes the direct damages could exceed the fee is correct the category yes or so what would that be whether it be a number of ways one dollar would be that says limit to one year of these they could not see i guess because the contract clearly contemplates directed the images that can exceed feeds that is possible under fourteen point one see if willful misconduct or gross negligence is shown correct yes your honor ok and so what i'm struggling with and i'll try it one last time and then i'll let you off and your honor the other forms of direct damages minn an example would be if for example a conifer employee stole from reed or if a conifer employee damaged some very valuable equipment within the last minute what reader argues in their reply brief about why these damages are direct is reid says that if conover fails to send a bill or conifer fails to pursue collections then the direct damages would be lost revenue and  what what we said of that is that it's undisputed in the record here it's our statement in our statements of undisputed material fact and read responses which we cite that reads damages in this case are not based on any review of what happened with any account what conifer did with any account what conifer failed to do what anyone else did with that account and so if their theory of direct damages is you failed to send a bill therefore we were damaged there is no evidence in the record to support that theory of damages instead what they have is an amalgamation of averages which actually shows that we exceeded the r that they chose for those averages and they say that due to some generalized substandard performance that those collections were in some way depressed but those those payments were based on determinations ah those rd party payers under the various circumstances that is not a direct damage that is alleged damages based on the results or consequences based on those rd party determinations under contracts or other arrangements with reed and we cite nd circuit cases and i think it's consistent with indiana case law that where the damages are flowing from that determination under a separate agreement then it's not direct and hear it with you so as to is there any evidence that anything about those practices changed dramatically between the base line that runs used in the twenty three months that on a  changes but i don't think that he he didn't purport to account for everything that's insurers ask do you all have evidence that he failed to account for something significant but your honor evidence showed conifer employees who are overworked stuck five billion dollars worth of bills into a drawer never tried to collect them and we let's assume that all lost revenue damages are treated as consequential damages and that's based on the reading of the whole provision including that australian it was specifically identified rather that aren't adequate being left out including the language that takes forsee ability off the table we're not to come in and say these damages are so forseeable that they shouldn't be subject to this and then i would also say we note on page twenty four of our brief that if you're in your view then there are no damages available for that breach their career i don't know that's that's i was going to get their up apologize if i wasn't getting there quickly enough the rd point that i was going to say about why those are not direct damages under fourteen point one b is that out on page twenty four dollars of our brief a distinction between the pin prototype cases and this case is that the clause also carves out reads payment obligations which would clearly be a type of direct revenue damages and so the parties would not have carved that out of fourteen dollars b if they did not understand that lost revenue to be worded to be broader than just some level of consequential damages so to your point about the bills stuffed in the which i think is what reid is trying to do with that one million dollar e mail which i don't think is evidence of anything but the five million dollars in bills gets put in the drawer and if you're saying you get put in the drawer intentionally either conifer employee to always going to be conifer was just sloppy and slow or conifer was making merely making business are you actually say what i'm saying or honor is that in this case there is no evidence that creates a genuine dispute of willful misconduct and that the provisions of the limitations of my villainy sought to avoid a scenario just like this where reed takes a generalized area of damages that is not based on anything conifer did or did not do with respect to any account marries it up with a few emails and any whether any particular damage is director consequential ok the set of factual questions or a legal question in this case your honor i believe it's a legal question read cites a case where it was there was a remained on that issue and it was where there were particular buckets of damages in that case where the court determined that there was an issue in the record that would need to be resolved  trial and here i think that the nature of the damages particularly given the statements of undisputed material fact that went undisputed at summary judgment that show that to determine why any account was paying what it was paid you have to look at the details and it's undisputed they did not look at the details for any of those accounts and they don't base it on anything that conover did or failed to do or that anyone else jed or failed to do i think for many damages theory that says these directly below from a breach by conover i think that's both a causation issue which we address in our brief but it's also why these are not direct images is that they are not they  can't the record cannot support that they flow directly from a breach when it's undisputed that they did not even look at what caused any of these particular sister off of her can i part of part of it might be a shifting  gears but can i share an impression with you and gesserit get the benefit of your reaction to it one of the things that i've struggled with is embedded in one of the observations that judge rover made early on executive officer raising real concerns about staffing i'm aware of mr snow's e mail from may of two thousand and fourteen there's a lot of back and forth about what happened with this woman named shannon gill who is in some kind of managerial position related in one way or another to revenue and she went over to take on this story and computer project it cetera et cetera and what i see going on between the red brief and the blue brief is tug a war on what inferences to draw from those facts that that's my that's my candid kind of take on reading the briefs your you know and one of the one of the things that you may have going for you is just the height of the burden of showing willful misconduct it's not in not an easy thing to show and that may be at the end of the day what saves you but can you react to my impression that there is tug a war on facts and that suggests to me a jury question well your honor to two points the st one is yes i agree that the standard is very important here and that when you have people at conifer who are wrestling with the fact that their companies losing hundreds of thousands of dollars every month and continues to spend more than they'll get paid it's a very difficult circumstance and i don't think choosing between reasonable inference as to so that you mention that mr snow e mail that's a great example he lays out a bunch of things but in particular says we need to get additional coders and it's undisputed in the record that within two days i believe that he now had the co chairs and so what inference of willful misconduct can be drawn when someone raises a problem if there's not also evidence that that problem was then recklessly disregard  and that's the point with that age i am assessing they a child the age i am assessments but the contrary are ships sent experts to read to look at the situation and the december one that they cite says that a new director had already was lined up and was going to start and so your honor that while it may feel like tug of war it was a little bit like whack a mole to us in the sense that these get brought up and then we have to show that they're not actually supported in the record or they certainly are not evidence of conifer was losing on this country i haven't i don't understand is it why didn't he just terminate well your honor they had hoped to have a positive relationship out of this and i think the testimony is clear that they had a plan to break even that was based on reducing some rd party vendor expenses and on achieving more performance incentives and that by driving even better performance or getting more performance incentives they hope to make this profitable and then what they want to do with reed that mr paul touched on was they made a proposal for how to restructure the deal and i don't think the record supports that they were offering to do less work for more money they actually wanted to change which departments and they were going to take on significant patient access the mission and registration functions and then read being paid the same amount so they conifer wanted this to work out and when they had the change of leadership i mean the timing here it's a twenty three month period they are getting their arms around it for that st year or so maybe and then they're watching for ways how can we make this work with reed how can we make a win win  in terms of our obligations to to the public is there anything in your view that needs to remain under seal at this point or that we need to careful about in writing  whichever way this comes thank your honor to raising this the within our briefing both both sides briefing the only things that are currently redacted are a few of the financial figures a few of the reads financial figures that are in congress in terms of the contract itself within the district court record any portion that's in our greases is clearly are in the public record and that's in part based on there is a bridge back to burgeon the district court docket that is not where every page is just redacted it's just certain terms that are redacted the entire women attention of i believe provisions are in the public record so i think that redacted version in the district were i have it right here your honor if you can give me honor your honor wouldn't mind if if mr paul wants to finish up i'd be glad to give you that record side at that at the end without raising any additional argument if that would be a benefit to the court well that's of course fine thank you mr rutherford's mr paul will return to you as your honor you reserve three minutes three minutes we've gone over just given the complexity of this so i'm going to give you your three minutes ok thank you your honor person the ceiling question judge hamilton we only asked that one document be kept under seal the expert affidavit of things that would lead to the collection of revenue according to best industry practice that was reagan's expectations so if they didn't do those things the natural and direct loss was lost revenue and nothing prevents us from seeking the benefit of our argot sure we can seek a refund of our fees but that's not restitution every measure of damage we are entitled to pursue the benefit of our market the nd point on the merits there is a question of for misconduct and gross negligence this is a tug of war about competing there are narratives and efforts as we have shown unquestionably an intentional act of short staffing and i encourage you to look at the affidavits that are in our appendix on that point in particular shankill and we have also shown a question of fact on whether this act was done with reckless disregard for the points and particular sections to point  one and two point b two in our brief cite evidence showing that ri excuse me conifer new real time that while it was having these staffing issues while it was refusing to staff the project it was harming read and yet you continued to understaffed the project that is reckless disregard for the consequences and then finally on the issue of causation we did not have to eliminate all other possible causes to show a genuine issue of material fact and then back to judge hamilton's question about did anything change no there was no evidence that anything changed the only and conifer didn't put forward any other tha they changed the only thing that changed was that conifer took over the revenue management cycle process i'm causation all we had to show was that part of st conduct was any substantial cause of reach damage is not the only cause but one substantial cause and we've done that it is at least a reasonable inference that conifers breach was a substantial cause of losses when it was hired to do certain things to collect revenue and then revenue is very well thanks to both parties will take this case under advisement the court's going to take a ten minute recess before we proceed to our rd argument of the morning