## Facts

- MVP Health Plan, Inc. retained OptumInsight, Inc. over a multi-year relationship for actuarial and consulting services used in pricing health plans and preparing Medicare Advantage bid submissions.
- For the 2013 plan year, the parties reached an agreement through their course of dealing, correspondence, and invoicing for Optum to perform actuarial services relating to MVP’s 2013 Medicare bids and related pricing analyses.
- MVP paid Optum \$332,981.44 for the 2013 work.
- MVP alleged Optum’s actuarial services were defective and failed to meet professional actuarial standards, causing MVP to underprice certain products and suffer more than \$12 million in lost revenues.
- MVP sued asserting breach of contract and multiple tort and quasi-contract theories; the court dismissed the tort and quasi-contract claims at the pleadings stage and later conducted a four-day bench trial on contract liability and damages.

## Issues

1. Whether the parties formed a binding contract for Optum’s 2013 actuarial services and what performance standards the contract required.
2. Whether Optum breached the contract by failing to perform the actuarial work in compliance with professional actuarial standards and with reasonable care.
3. Whether MVP’s claimed lost revenues from underpriced plans were recoverable as general (direct) contract damages or barred as consequential damages.
4. Whether MVP could maintain tort and quasi-contract claims alongside the contract claim where the alleged duties and losses were contractual and purely economic.

## Decision

- The court held a binding contract existed for Optum’s 2013 Medicare bid and related actuarial services, formed through correspondence, invoices, and the parties’ course of dealing.
- The court found Optum breached the contract by generally negligent performance and by failing to comply with applicable Actuarial Standards of Practice.
- The court found Optum’s breach was the direct and proximate cause of MVP’s damages.
- The court awarded MVP \$332,981.44, representing the amount MVP paid for Optum’s 2013 services.
- The court denied recovery of more than \$12 million in lost revenues, holding those losses were consequential damages not recoverable on the contract claim.
- The court dismissed MVP’s tort and quasi-contract claims as duplicative of the breach of contract claim under New York law.

## Legal Principles

- A contract may be established by course of dealing and written communications, including correspondence and invoices, where the parties’ conduct shows mutual assent and definite terms.
- In a professional-services contract, agreed performance standards may incorporate professional rules or standards of practice and a requirement of non-negligent performance.
- Under New York law, general (direct) damages compensate for the value of the promised performance and the benefit of the bargain; consequential damages compensate for additional losses arising from special circumstances and are not presumed recoverable.
- Fees paid for defective professional services may be awarded as general contract damages where the services failed to meet the contractually required standard.
- Lost revenues or profits that depend on the client’s downstream business decisions and market performance are typically consequential damages, even if causally connected to deficient professional advice.
- Tort and quasi-contract claims seeking purely economic losses are not cognizable when the alleged duties arise from the contract and are not independent of it; such claims are dismissed as duplicative.

## Conclusion

The court treated the dispute as a contract case, found Optum breached an actuarial-services agreement by failing to meet agreed professional standards, awarded MVP a refund of the service fees as direct damages, and rejected MVP’s claimed lost revenues as consequential damages while dismissing duplicative tort and quasi-contract claims.


MVP Health Plan, Inc. v. OptumInsight, Inc., No. 1:13-CV-1578, 2017 WL 3669558 (N.D.N.Y. Aug. 24, 2017)