Commercial Division Blog
Implied Commercial Contract Found to Exist, Preventing Termination Except by Terms of Original Contract
On December 20, 2013, Justice Walker of the 8th Judicial District Commercial Division issued a decision in Western N.Y. Immediate Med. Care, PLLC v. Healthnow N.Y., Inc., 2013 NY Slip Op. 52252(U), addressing a claim for breach of an implied contract.
In Western N.Y. Immediate Med. Care, plaintiff entered into a contract to be a participating provider with the defendant, a health insurer. The contract ended in 2011. The plaintiff continued to provide services and the defendant continued to pay for them. The "[d]efendant admits that . . . the parties agreed to retain the status quo pending negotiations of a new written agreement." The defendant later sought to terminate its relationship with plaintiff. The plaintiff sought a preliminary injunction, preventing the defendant from terminating the relationship except pursuant to the notice provisions of the last written agreement between the parties--provisions that had not been met. The court granted the preliminary injunction, writing with respect to the plaintiff's implied contract claim:
The parties agree that their original contract, the 2005 Agreement, expired . . . in August 2011. . . . When an agreement expires by its terms, if, without more, the parties continue to perform as theretofore, an implication arises that they have mutually assented to a new contract containing the same provisions as the old. Here, the . . . 2005 Agreement expired, but the parties continued to perform as before, with mutually agreed upon rates. Defendant relies heavily upon regulatory obligations that participating provider agreements be in writing. Nonetheless, it continues to categorize, and reimburse Plaintiff as a participating provider in the absence of a new writing.
It is rare to see a successful implied contract claim in commercial litigation. The (preliminary) success of plaintiff's implied contract claim turns, no doubt, on the unique facts of this case. Still, it is worth noting that such claims can succeed.