Premier, Inc. v. Peterson
2017 N.C. App. LEXIS 734
| N.C. Ct. App. | 2017Background
- In 2006 Premier acquired Cereplex under a Stock Purchase Agreement that entitled defendants (former Cereplex stakeholders) to annual earnout payments: $12,500 per "Hospital Site" with a "Product Implementation," excluding the first 50 sites, for five years.
- "Product Implementation" required (A) the Hospital Site to have "subscribed to or licensed" Setnet/PharmWatch or any successor and (B) completion of implementation/configuration/testing so the product was ready for production use.
- After an audit, defendants claimed SafetySurveillor (Premier’s successor product) was used at over 1,000 Hospital Sites (based on alerts) but Premier recognized only 263 sites for earnout calculations; defendants sued for underpayment.
- On first appeal (Premier I) this Court held that some affirmative act by the Hospital Site is required to "subscribe to or license"; mere receipt or alerts alone is insufficient; remanded for further factual development.
- On remand defendants conducted limited discovery (no third-party subpoenas) and failed to produce evidence that individual Hospital Sites (as opposed to Hospital Networks) took affirmative acts to accept/use SafetySurveillor; trial court granted Premier summary judgment and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether firing of alerts or mere provision of software constitutes "subscribed to or licensed" for Product Implementation | (Premier) Alerts/mere receipt are insufficient; Product Implementation requires affirmative act by Hospital Site | (Defendants) Alerts and infection-prevention staff activity show sites accepted and used the product, so Product Implementation occurred | Held: Alerts alone are insufficient; defendants produced no evidence of affirmative acts by individual Hospital Sites, so no genuine issue of material fact |
| Whether a Business Associate Agreement (BAA) demonstrates Hospital Site acceptance | (Premier) A BAA, especially signed by a Network, does not prove the individual Hospital Site affirmatively accepted/use the product | (Defendants) HIPAA requires a BAA before PHI exchange; existence of BAAs implies acceptance by each Hospital Site | Held: One example BAA in record and no evidence of BAAs between Premier and the specific Hospital Sites; Network-level BAAs do not prove individual Site affirmative acceptance |
| Whether remand discovery cured the evidentiary gaps identified in Premier I | (Premier) Defendants failed to develop the factual record as directed; summary judgment appropriate | (Defendants) Additional evidence (alerts, HIPAA/BAA inferences, Infection Preventionist work) suffices to create disputed facts | Held: Defendants failed to conduct third-party discovery or produce evidence showing affirmative acts by the Sites; Law of the Case binds the interpretation from Premier I; summary judgment affirmed |
| Standard for summary judgment and burden on non-movant after movant shows lack of genuine issue | (Premier) Having shown lack of evidence of affirmative acts, burden shifted to defendants to produce evidence | (Defendants) Argued existing record (alerts, example BAA, audit) raised triable issues | Held: Under Rule 56 and controlling NC precedents, defendants did not meet their burden to forecast admissible evidence of Site-level acceptance; summary judgment proper |
Key Cases Cited
- Premier, Inc. v. Peterson, 232 N.C. App. 601, 755 S.E.2d 56 (N.C. Ct. App. 2014) (earlier appeal holding some affirmative act by Hospital Site is required for "subscribed to or licensed" and that alerts are probative but not dispositive)
- Radiator Specialty Co. v. Arrowood Indemnity Co., 800 S.E.2d 452 (N.C. Ct. App. 2017) (court may limit discussion when record materials are filed under seal)
- In re Will of Jones, 362 N.C. 569, 669 S.E.2d 572 (N.C. 2008) (standard of review for summary judgment is de novo)
- Creech v. Melnik, 147 N.C. App. 471, 556 S.E.2d 587 (N.C. Ct. App. 2001) (law-of-the-case doctrine binds repeated determinations of the same issues)
- Furr v. K-Mart Corp., 142 N.C. App. 325, 543 S.E.2d 166 (N.C. Ct. App. 2001) (summary judgment viewed in light most favorable to non-moving party)