MEMORANDUM-DECISION AND ORDER

BRENDA K. SANNES, District Judge.

I. INTRODUCTION

On December 23, 2013, Plaintiff MVP Health Plan, Inc. ("MVP") brought this diversity action against Defendant OptumInsight, Inc. ("Optum"), alleging breach of a contract to provide actuarial services. As a result of the alleged breach, MVP now seeks judgment in the amount of $12,408,641.

In the Memorandum-Decision and Order of September 30, 2016, the Court adjudicated the parties' cross-motions for summary judgment. MVP Health Plan, Inc. v. OptumInsight, Inc., No. 1:13-CV-1578 (BKS/CFH), 2016 WL 6638190 (N.D.N.Y. Sept. 30, 2016).1 The Court granted MVP's motion for partial summary judgment, dismissing Optum's affirmative defense that a master agreement between the parties limited damages to "the amount MVP paid or owes [Optum] for the 12 month period immediately prior to the incident giving rise to the cause of action." Id. at *1 (alteration original in summary judgment Decision). The Court denied Optum's motion for summary judgment and its alternative motion for partial summary judgment, and the litigation progressed to trial. Id.

The Court held a bench trial from February 6-10, 2017. On April 10, 2017, the parties submitted proposed findings of fact and conclusions of law. (Dkt. Nos. 101-02). The Court has carefully considered the trial record, the demeanor of the witnesses, all evidence in the record, and the parties' trial and post-trial arguments. Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, the Court makes the following findings of fact and conclusions of law.

II. FINDINGS OF FACT

A. The Parties

1. Introduction to the Parties

MVP is a corporation that provides health care plans, including Medicare Advantage Plans ("MA Plans"). (JPTS, ¶ 1).2 Optum, a subsidiary of United Healthcare, is an entity that provides analytics, technology, actuarial, and consulting services to businesses in the healthcare industry. (Id. at ¶ 2). Optum was known as a provider of specialized, professional services in this field. (TT, p. 487).3

By 2012, the parties had established a long-standing business relationship. Brent Greenwood—an Optum actuary—held a particularly relevant role in this relationship, having worked with MVP and its predecessor company since 1982. (Id. at p. 157). Since 2006, Greenwood was the certifying actuary for all of MVP's MA Plan work. (JPTS, ¶ 9). In this capacity, he was responsible for certifying to Centers for Medicare and Medicaid Services ("CMS") that the bid was prepared according to applicable laws, CMS instructions, and the Actuarial Standards of Practice. (TT, p. 37).

2. The Parties' Relationship

In September 2000, Optum's predecessor company Ingenix, Inc. entered into a Master Services and Licensing Agreement ("2000 MSLA") with MVP. (J-1)4. In December 2003, the parties revised the agreement with an updated MSLA ("2003 MSLA"). (J-2). In relevant part, that document provides:

(J-2). Both the 2003 and 2000 MSLA versions also preclude the recovery of consequential damages. (Id.). In March 2011, the parties amended the indemnification provision, replacing the first sentence with the following text:

(Dkt. No. 54-14). At summary judgment, the Court ruled that absent a signed schedule, the parties are not bound to the 2003 MSLA in their actuarial services transactions. MVP Health Plan, Inc., 2016 WL 6638190, at *9.

B. Actuarial Standards of Practice and the Code of Professional Conduct

The Actuarial Standards of Practice ("ASOPs") are a set of rules pertaining to professional actuarial work. The Introduction to the October 2008 ASOPs, which is the relevant version for when the underlying facts of this litigation occurred, notes that "actuaries are required to observe" the ASOPs and states:

(P-4, §§ 2.1, 3.1.1, 3.1.9) (emphasis added).

1. ASOP 1: Introductory Actuarial Standard of Practice

ASOP 1 provides, in relevant part, that where other ASOPs call for "reasonable" steps, methods, inquiries, assumptions, or methods, "[t]he intent is to call upon the actuary to exercise the level of care and diligence that, in the actuary's professional judgment, is necessary to complete the assignment in an appropriate manner." (Id. at p. 9).

2. ASOP 23: Data Quality

ASOP 23 provides, in relevant part, that "whether the actuary prepared the data or received the data from others, the actuary should review the data for reasonableness and consistency, unless, in the actuary's professional judgment, such review is not necessary or not practical." (P-2, § 3.5). It notes that "[i]f similar work has been previously performed for the same or recent periods, the actuary should consider reviewing the current data for consistency with the data used in the prior analysis." (Id.) (emphasis added). The ASOP continues, "[i]f, in the actuary's professional judgment, it is not appropriate to perform a review of the data, the actuary should disclose that the actuary has not done such a review and should disclose any resulting limitation on the use of the actuarial work product." (Id.). This and other disclosure requirements are contained in § 4.1 of the same ASOP. ASOP 23 also states that "[t]he actuary should comply with the requirements of ASOP No. 41, Actuarial Communications, regarding the preparation and retention of the documentation." (Id. at § 3.8).

3. ASOP 41: Actuarial Communications

ASOP 41 defines an actuarial communication as "[a] written, electronic, or oral communication issued by an actuary with respect to actuarial services." (P-1, § 2.1). The rule provides:

(Id. at §§ 3.1-3.1.2, 3.1.4) (internal numeration and formatting omitted).

4. The Code of Professional Conduct

The actuarial Code of Professional Conduct, adopted by "the five U.S.-based actuarial organizations," "sets forth what it means for an actuary to act as a professional" and "identifies the responsibilities that actuaries have to the public, to their clients and employers, and to the actuarial profession." (P-3, p. 1). In relevant part, the Code of Professional Conduct, annotation 1.1 provides that "an actuary shall perform actuarial services with skill and care" and that "[a]n actuary shall ensure that Actuarial Services performed by or under the direction of the Actuary satisfy applicable standards of practice." (Id. at p. 2).

C. The MA Bidding Process

1. Overview

In order to provide MA Plans, MVP is required to submit annual Medicare Advantage Bids ("MA Bids") to the Centers for Medicare and Medicaid Services ("CMS"). (Id. at ¶ 3). Each year, CMS reviews these submissions to ensure that the health plans are reasonable and affordable. (D-36, p. 61). The MA Bids, which MVP submits the year prior to the effective year of the MA Plans at issue, contain pricing parameters that govern premiums for MVP's health plans once CMS accepts the bids. (JPTS at ¶¶ 4-5). As part of this annual bidding process, MVP retains an outside actuary to help prepare and calculate MA Bids for the next year of coverage. (Id. at ¶ 6).

A critical aspect of these calculations is the determination of appropriate "cost sharing," which is the amount of money that plan members contribute as copays for particular medical services. (TT, p. 39). The cost sharing data directly impacts the MA Bids, because increased copay amounts for a given service reduce the amount of money that MVP must expend as benefits for that service. MVP therefore prices its coverage in accordance with cost sharing assumptions.

The annual MA Bids submission to CMS is contained in a standard spreadsheet called the Bid Pricing Tool ("CMSBPT"). (J-47). The CMSBPT requires health care plan providers to input cost sharing values for a list of benefit categories determined by CMS, known as Plan Benefit Package Categories ("PBP Categories"). (D-36, p. 61). The PBP Categories, which describe various types of medical services, are broader than the categories of services that MVP and Optum consider when making complex pricing calculations. (J-29).

2. Pricing the MA Bids

In order to share information for the 2013 Bid Year, MVP and Optum used a Microsoft Excel workbook containing several spreadsheets: "Notes," "PBPCats," "Mapping," "WS3 Notes," "Effective Copays," and "Copays Used in MA Bid Tool."5 (J-29). The Mapping tab, also referred to as the Data Mapping Tab ("DMT") is of particular relevance to this litigation. The DMT was an Optum tool that contained complex data and formulas used to itemize the medical services and accurately price them for each MA Plan that MVP offered. (TT, pp. 41-42, 175-76). The DMT contained more categories of services than the PBP Categories, which permitted Optum to "refine the pricing of the specific services identified." (Id. at p. 176). By narrowing the categories of service to these more specific areas, Optum could more accurately predict costs and income for MVP's MA Plans. (Id. at pp. 41-42, 175-76). Prior to CMS submission, Optum would align the DMT data with the PBP Categories in the CMSBPT, which Optum would then send to CMS. (Id. at p. 82). The DMT also contained a "Comments" column, which noted service categories for which MVP did not charge a copay; in other words, categories for which there was no cost sharing. (J-57).

Because of the complexity of the data and formulas contained within the DMT, MVP employees understood that they were not to interact with that tab. A.J. Tate, MVP's Director of Medicare Product Development, testified at trial that "very early on in the process, it was explained to me that there's [sic] linked cells and formulas in the tab and if I accidentally input something into this data, that it would remove that link or formula and so this was a hands-off tab to me." (TT, pp. 353-54). Tate, who is not an actuary, testified that he adhered to that direction, and that besides adding a header to indicate what year the DMT would be used for, he would not ever enter data in the tab. (Id. at p. 354). Since 2006 when Optum first prepared MVP's MA Bids, there is no evidence that an MVP employee ever changed or added any data to DMTs. (Id. at pp. 175-76, 368).

Instead, MVP would input cost sharing data into the PBPCats tab. Tate testified:

(Id. at p. 347-50). Greenwood also testified that the PBPCats tab was referred to as the "benefit grid" and that he "would never call the data mapping tab a grid or benefit grid or a pricing grid." (Id. at p. 208).

Thus—in broadest terms—the pricing procedure was as follows: first, MVP input cost sharing data into the PBPCats tab, which contained categories of medical services that matched the PBP Categories used by CMS on the CMSBPT; and second, Optum then used the DMT and other tools to apply that information to more specific categories of medical services and calculate pricing parameters for MVPs' MA Plans.

3. MVP's No-Stacking Policy

Optum was aware that MVP made the same pricing decision each year: that it would not charge multiple copays to a member for one health provider visit, a practice known as "stacking." (TT, pp. 351, 489-90). This "no stacking" policy is critical because MVP's cost sharing rules impact its pricing for MA Plans.

D. The — MA Bids Process

1. MVP Engages Optum

On February 7, 2012, Li Li, Associate Director for Actuarial Consulting at Optum and the lead actuary for the 2013 MVP MA Bids, sent a letter to Lucinda Lewis, who was Vice President of Actuarial, Government Programs at MVP. (Id. at p. 57; J-18, pp. 1-2). The letter stated:

(J-18, pp. 1-2). Attached to the letter were requests for bid data and a form for MVP to affirm that it had provided the necessary information. (Id. at pp. 3-17). MVP signed a representation to Optum that it had sent all of the necessary information and that MVP understood that "Optum has relied on these items to perform its analysis and has not audited the accuracy or completeness of these items beyond an assessment of the general reasonability of the data." (J-92).6

Though the parties communicated about a draft schedule of services, they never executed such a schedule. (J-4). The Court ruled at summary judgment that work on the 2013 MA Bids was not pursuant to a schedule or the 2003 MSLA. MVP, 2016 WL 6638190, at *9-12. Throughout the 2013 bid year, there was no discussion between the parties of a loss share arrangement under which Optum would "share in profits or losses associated with the performance . . . [of] the bids." (TT, p. 315).

For the 2013 bids, Brent Greenwood's billing rate was $535 per hour and Li Li's rate was $395 per hour or thereabouts. (Id. at pp. 217-18). Ultimately, MVP paid Optum $332,981.44 for the actuarial services pertaining to the 2013 MA bids. (JPTS, ¶ 15). Greenwood testified that, at those fees, MVP was entitled to expect actuarial work of the highest quality and also that Optum specializes in creating CMS bids. (TT, p. 218).

2. Changes to the 2013 DMT and Related Communication

Each year, when Optum began its work on MA Bids for MVP, it started with the work and data from the previous year and then made changes as necessary. (Id. at pp. 46, 168-70, 361). For example, if MVP were changing an underlying assumption about collecting copays (cost sharing), it would alert Optum to that change and Optum would then make the change in the updated DMT. When adding changes from a previous year's data in a workbook, Optum and MVP would highlight changes to alert each other to the addition. (Id. at pp. 48, 55-56, 176-78, 360). Li, who—as noted above—was the lead actuary on the 2013 bids, testified that she would want to inform MVP in writing of any significant changes. (Id. at pp. 55-56). She also testified that cost sharing values are "one of the key assumption[s]" in preparing an accurate bid. (Id. at p. 39).

For the 2013 bid year, Li broke from the typical practice by creating a new DMT that did not adopt the cost sharing information from the previous year's DMT; however, she failed to inform MVP in writing that she had made this change. (Id. at pp. 61-63). Among other differences, this new DMT did not include data from the old "Comments" column that denoted the "no-copay" service categories. (Id.). Thus, the new DMT did not accurately depict the "no stacking" policy and misrepresented other cost sharing assumptions.

When putting together the new DMT, Li was in communication with A.J. Tate, the Director of Medicare Marketing Communications & Product Development at MVP. (J-22). On March 29, 2012, Tate emailed Li, asking her to send "the grid with the correct format" so that he could update the data that Optum needed. (Id.). That same day, Li replied with an attached workbook labeled "MVP 2013 Cost Sharing template — Sent.xlsx." (J-23). In the email, she stated, "In the `Notes' tab, I explained the contents. After you review the mapping, please provide us with your feedback so that we can make necessary changes." (Id.). The workbook contained three spreadsheets, one labeled "Notes," another "data mapping," and the third "PBPCats." (J-24). The Court credits Tate's testimony that he did not review the data mapping tab or Notes tab, but that he reviewed the PBPCats tab. (TT, pp. 378-79). On April 27, 2012, Tate responded to Li, stating in relevant part:

(J-25). Li responded that she had sent the correct grid. (Id.).

On May 2, 2012, Li emailed Tate another workbook, this one labelled "MVP 2013 Cost Sharing template — Sent 20120502.xlsx." (J-26). Her email indicated that the workbook was "the benefit grid updated to 2013 plan ids [sic]." (Id.). The next day, Tate sent Optum his draft workbook. (J-28, 29). The workbook contained the 2012 version of the DMT and his updated PBPCats tab, both of which had the correct cost sharing information. (J-29). Soon after receiving the email, Li reviewed that version of the DMT and realized it was from the 2012 MA bid. (TT, pp. 90-91). When Li responded to Tate's email later that day, however, she did not mention that she was using a new version of the DMT. (J-30). Despite Tate's updates in the PBPCats tab and the cost sharing information contained in the Tate-DMT, Li did not update her newly created DMT to reflect the correct cost sharing. (TT, p. 98). She sent Tate an updated workbook that replaced his DMT with her new one and stated that "[i]t would save [Optum] a lot of time if [Tate would] use the attached file to update any benefits." (J-30).

Li sent Tate updated workbooks between May 7, 2012 and May 31, 2012; however, she did not request that Tate provide information regarding the DMT. (TT, pp. 330-31, 390-94). Critically, none of the messages alerted Tate that the DMT version he sent had been altered. (J-94A, J-94B, J-95A, J-95B, J-96A, J-96B). Li testified that she orally communicated the changes to Tate during a weekly call (TT, pp. 72-73); however, notes from the calls do not show this communication. (Id. at pp. 443-44). Both MVP and Optum participants testified that they do not recall this subject being raised on the calls, and Greenwood testified that he was unaware of any oral or written communication from Optum to MVP on the matter. (Id. at pp. 79-80, 212, 396-97). After considering all of the evidence, the Court finds that Li did not communicate the DMT changes to MVP.

The record also shows that Optum's peer review mechanism was insufficient to catch the mistake. Li testified to her definition of peer review:

(Id. at p. 34). She also reaffirmed her prior deposition testimony that part of the peer review process was to make sure that data transferred from one template to a new template is consistent and accurate. (Id. at p. 36). However, as Optum's expert witness testified, "not all of the [Optum] team members had the same shared knowledge of how the client operated" regarding cost sharing. (Id. at p. 693). He also testified that Li needed accurate cost sharing information "in order to accurately reflect how MVP intended to adjudicate" claims. (Id. at p. 694).

3. Determination, Submission and Certification of the 2013 MA Bids

Prior to CMS submission and certification for the 2013 bid year, MVP used Optum's calculations to make the "final say" on premiums. (Id. at p. 497). On or about June 6, 2012, Greenwood filed the 2013 MA Bid with CMS. (J-36). Greenwood certified that the bid conformed with applicable ASOP standards and that the data relied upon for the bids was reviewed for reasonableness and consistency. (Id.). However, when asked at trial whether it was his testimony "that the creation and reliance on the data in Ms. Li's new [DMT] was not adequately reviewed for consistency with the prior year or reasonableness," he replied, "A . . . simple answer would be yes." (TT, p. 217).

4. Discovery of Unexpected Outcomes

After CMS had accepted the 2013 MA bids and MVP had begun to provide benefits to its members for the 2013 plan year, MVP began analyzing its projections for the 2013 MA plans. (Id. at p. 445-46). Greg Backus, a Senior Actuary at MVP, reviewed "what the benefit factors were by plan that were being assumed for the upcoming year." (Id. at p. 446). The benefit factor is a measure of MVP's expected liability versus the total allowed costs for the plan7 (id.); therefore, it changes based on the relevant plan's cost sharing assumptions. In his analysis, Backus discovered that "there was a significant decrease in the benefit factors . . . a very significant difference." (Id.). Backus also noted that projected "per member per month costs" had significantly increased. (Id. at p. 446-47). Consequently, in late January 2013, Backus sent emails to Brent Greenwood and Di Lu, another Optum actuary, to inquire about the changes. (J-37). At this point, there was insufficient claims data to see the actual financial impact. (TT, p. 448).

In or about April 2013, MVP had sufficient claims experience data for Backus to note "actuals [that] were lower than what was priced for." (Id. at p. 450). Again, he contacted Optum and asked them to "help [him] understand how this was priced for, to help to try to get to the bottom of . . . the significant occurrence." (Id.). Optum directed him to the benefit grids, and after comparing the 2013 grids with the 2011 and 2012 grids, Backus discovered that "there was some significant differences in terms of the ultimate cost sharing that was assumed." (Id. at pp. 450-51). He noted that the 2013 DMT lacked comments about cost sharing that had been present in the 2011 and 2012 DMTs. (Id. at p. 451). In his testimony, Backus explained further:

(Id. at p. 449).

Alerted to the fact that MVP was unexpectedly losing revenue, Greenwood conducted an analysis of the situation. (Id. at p. 221). On June 26, 2013, he sent MVP an eleven page letter with exhibits, in which he offered an explanation for MVP's revenue experience. (J-44). Therein, he identified several events that he believed were impacting revenue: (1) the bankruptcy of Kodak, a significant MVP member group, which led to retirees moving to different plans; (2) Optum's use of cost sharing assumptions that were "consistent with the general PBP categories, but not always consistent with the detailed manner in which MVP configures benefits," which impacted plan benefit factors; (3) sequestration; (4) a change in CMS practices that improved MVP's risk score and favorably impacted revenue; and (5) a higher than expected benefit factor even after mapping adjustments, possibly due to systems adjudication changes. (J-44, pp. 1-2). The letter notes that "[a]lthough [Optum] made correct assumptions on some services, we didn't catch all the zero copay services" and that "there were unique provisions within MVP's benefit configuration that did not align with our logic." (Id. at p. 5). Greenwood estimated that the loss to MVP as a result of cost sharing errors was $10.6 million, "based on the assumption premium would not change from current 2013 levels." (Id. at p. 2).

5. Potential Mitigation of Losses and Total Benefit Cost

Patrick Glavey is an MVP executive with 25 years of experience at MVP and its predecessor company. (TT, p. 483). In 2012, he was Vice President for Medicare, and in that capacity, he had oversight of the MA bid process—in particular, he "would look at things like the trend assumptions we're using, the margin assumptions . . . the high level." (Id. at pp. 485-86). At trial, he testified at length regarding the potential for MVP to mitigate its revenue losses.

Glavey testified that had MVP identified the problem before submission of the 2013 bids to CMS, they might have been able to mitigate losses by "rebalancing margin requirements," pricing certain plans differently, "[l]ooking at administrative cost, trying to renegotiate provider contracts," and increasing premiums. (Id. at p. 492). When asked whether those "types of measures" were available after the contract year began, he replied:

(Id. at pp. 492-93). He then testified that, after the 2013 contract year had started, MVP could not do anything to mitigate losses that it did not already do on a regular basis.8 (Id. at p. 493). In light of Glavey's knowledge, experience, and demeanor, the Court credits this testimony.

An important limitation on MVP's pricing strategy is the total beneficiary cost9 ("TBC"). The TBC is "the sum of member premium and member cost sharing," and the TBC test refers to CMS' limitation on MA plans "in terms of the change in [TBC] from one year to the other." (Id. at 117). Glavey, along with the President and CFO at MVP, have the "final say on premiums" and oversee pricing of MVP's MA Plans. (Id. at pp. 497-98). For this reason and those noted above, the Court credits Glavey's testimony that MVP—had it known of the erroneous cost sharing assumptions before bids submission to CMS—would have been able to raise premiums sufficiently to offer the same services and same no copays that it had intended to do, all without violating the ceiling of the TBC test. (Id. at pp. 496-97, 502).

E. Calculating Lost Revenue

MVP offered the expert testimony of Barbara Niehus, a Fellow of the American Academy of Actuaries with extensive experience in the pricing of health insurance products. (Id. at pp. 504-05). Niehus analyzed the 2013 bid year to determine what the outcome would have been if the no copay service categories had been applied to the pricing analysis—to determine "how much more premium, or how much more revenue MVP would have tried to go after during that 2013 bid process, had they had the correct information." (Id. at p. 571). Her methodology generally matched the one Greenwood employed in his analysis, though it differed in three ways: (1) use of different error categories based on her independent analysis; (2) use of actual—rather than anticipated—enrollment data; and (3) disregard for errors in claims adjudication in order to isolate the impact of the misapplied cost sharing assumptions. (Id. at pp. 571-72).

On cross-examination, Niehus provided a detailed explanation of her methodology for calculating what she believed should have been the projected benefit factor for the 2013 bids:

(Id. at p. 618). She then compared the outcomes that would have occurred using the Optum-calculated benefit factor and her own benefit factor—the difference between the two constitutes her measure of damages. (Id. at pp. 619-20). To reach this conclusion, she equated decreased revenue and increased costs, though she notes that she "was trying to measure [] the decreased revenue." (Id. at p. 622). This equation rests on the proposition that increased costs could have been covered by MVP. Niehus testified that if the erroneous cost sharing assumptions had "been identified prior to the bids, then other steps could have been taken" to cover those losses. (Id. at p. 623). When asked if she considered other causes of MVP's decreased revenue, she testified that she did but that these factors were not related to her calculation.10

Ultimately, Niehus concluded that the damages as a result of Optum's cost sharing error were in the amount of $12,408,641. (Id. at p. 608). Optum's expert, Adam Reese, disagreed. Reese, a Fellow of the American Academy of Actuaries, testified that he "would question whether [Niehus' analysis and opinion] really was a calculation of damages." (Id. at p. 649). He testified that her calculations "didn't take into account [] all of the factors . . . that occurred during 2013." (Id. at pp. 649-50). He also testified, "The financial performance of a health plan can be influenced by operational, market, contractual, regulatory, and environmental factors. These factors are interrelated and can each impact the plan's actual performance. Ms. Niehus' estimate of damages wholly ignore these factors." (Id. at p. 676). Yet, the underlying logic of the Niehus analysis was that it isolated the cost sharing assumptions from these other factors. Her failure to consider other factors is therefore not a failure at all, but rather a critical aspect of her methodology. Reese's testimony and report fail to meaningfully critique this methodology.

In its proposed findings of fact and conclusions of law, Optum submits that "[t]he only damages analysis in the record that is focused around premiums is Exhibit 3 to Mr. Greenwood's June 26, 2013 letter to MVP." (Dkt. No. 102, ¶ 112). The Court disagrees. The Niehus analysis focuses on premiums and lost revenue therefrom. Additionally, Greenwood's testimony does not mention Exhibit 3 as an alternative measure of damages. Finally, the letter was designed to provide "initial insights" and, when writing, Greenwood lacked complete information about the first quarter of 2013, let alone the year as a whole. (J-44, p. 11). Conversely, Niehus designed her analysis specifically to determine damages and had the benefit of complete 2013 data.

Based upon a review of all the testimony and exhibits, this Court accepts and adopts Niehus' methodology and calculations pertaining to lost revenue. The Court finds that as a result of Optum's use of incorrect cost sharing assumptions, MVP lost $12,408,641 in revenue.

III. CONCLUSIONS OF LAW

A. Introduction

The Court concludes that, as the parties have agreed, New York law governs this contract dispute. (Dkt. No. 101, p. 77; Dkt. No. 102, p. 23). Plaintiff must establish by a preponderance of the evidence: "(1) the existence of an agreement, (2) its own adequate performance, (3) breach by defendant, and (4) damages." Brooklyn 13th St. Holding Corp. v. Nextel of N.Y., Inc., 495 F. App'x 112, 114 (2d Cir. 2012). "Causation is an essential element of damages in a breach of contract action; and . . . a plaintiff must prove that a defendant's breach directly and proximately caused his or her damages. Nat'l Mkt. Share, Inc. v. Sterling Nat'l Bank, 392 F.3d 520, 525 (2d Cir. 2004).

B. MVP contracted with Optum for actuarial services that were performed in accordance with the ASOPs and in a non-negligent manner, and the parties did not contract for a limitation of damages provision.

The Court ruled at summary judgment that a contract existed between MVP and Optum for the provision of actuarial services related to the 2013 MA bids. It remains to determine the contents of that agreement. "Under New York law, the key to contract interpretation is `the parties' reasonable expectations.'" Glassalum Int'l Corp. v. Albany Ins. Co., No. 03 Civ. 9166 (DC), 2005 WL 1214333, at *6, 2005 U.S. Dist. LEXIS 9767, at *16 (S.D.N.Y. May 23, 2005) (citing cases). "To give effect to the parties' reasonable expectations, the court must `determine the parties' purpose and intent.'" Id. (quoting Sunrise Mall Assocs. v. Import Alley of Sunrise Mall, Inc., 621 N.Y.S.2d 662, 663 (2d Dep't 1995)).

1. The parties did not agree to a limitation of damages provision.

"[N]ot all terms of a contract need be fixed with absolute certainty, and courts will not apply the doctrine of indefiniteness to `defeat the reasonable expectations of the parties in entering into the contract.'" Kramer v. Greene, 142 A.D.3d 438, 439 (App. Div. 1st Dep't 2016) (citation omitted). Here, the Court concludes that the parties had a sufficient meeting of the minds on all material terms of the contract.11 The parties agreed, inter alia, on the services to be performed by Optum, the time for performance, and the amount that MVP would pay for that performance.

In contrast to the parties' agreement on these material terms, the record shows that the parties did not mutually contemplate limitation of damages when discussing or performing the contract for actuarial services related to the 2013 MA bids. Optum argues that the unsigned 2012 SOS incorporated the 2003 MSLA, which contains a limitation of damages provision, indicates agreement. (Dkt. No. 102, p. 39). However, as the Court noted at summary judgment, the parties did not waive the 2003 MSLA's express requirement that they complete and execute an SOS for services to fall under the MSLA terms. MVP, 2016 WL 6638190, at *8-11. Moreover, the 2012 SOS was not in effect—it was unsigned and there is no evidence that it was ever advanced beyond the draft stage. Id. at *5-6.

In creating a contract detached from the 2003 MSLA, the parties were free to agree upon a limitation of damages or to omit such a provision. There is no communication suggesting that they did so agree. Given the parties' longstanding relationship, the Court examines whether relevant meaning is found in a course of dealing—a "sequence of previous conduct between the parties to an agreement which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct." Restatement Second of Contracts § 223. "The parties' conduct under similar, prior contracts with each other can be of great assistance to a court which must determine the parties' intended meaning when they formed the contract currently being interpreted." 5-24 Corbin on Contracts § 24.17. Here, the record contains no evidence of relevant conduct in the parties' relationship. As the Court noted at summary judgment, "from at least 2006 to 2012, MVP and Optum did not execute any [] product schedules pertaining to their annual Medicare bid work." MVP, 2016 WL 6638190, at *3. Nothing in this case shows that the parties previously contemplated limited liability outside the MSLA context, discussed such a provision, or disputed issues of liability. Though the 2011 Amendment to the 2003 MSLA reaffirmed the limitation of liability provision for damages arising under the MSLA framework, there is no evidence that the parties agreed to such a limitation for contracts outside that framework.12

The Court next considers custom and usage. Under New York law, "`custom and usage evidence must establish that the omitted term is `fixed and invariable' in the industry in question.'" Rapay v. Chernov, No. 16-CV-4910 (DLC), 2017 WL 892372, at *4, 2017 U.S. Dist. LEXIS 31401, at *11 (S.D.N.Y. Mar. 6, 2017) (quoting Hutner v. Greene, 734 F.2d 896, 900 (2d Cir. 1984)). The Niehus Supplemental Expert Report notes that she has "seen contracts that contain [limitation of liability] clauses . . . [and] contracts that do not contain these clauses." (P-6, p. 15). Niehus' experience in the actuarial field provides weight to her assertion that actuarial agreements do not invariably include such language. Optum's expert testified that a limitation of liability clause is "[i]n keeping with prevalent practice in the actuarial consulting community" and that "in [his] experience, these types of provisions are now standard in actuarial service contracts." (D-34, p. 18). That which is "prevalent" or "standard" is not necessarily "fixed and invariable." In any event, the Court credits Niehus' report and finds on this record that there is no relevant "fixed and invariable" custom in the industry, and that there is insufficient evidence of industry custom to support a finding that the parties' contract included an agreement to include a limitation of damages.

In sum, considering all of the testimony and the record evidence, the Court concludes that the parties did not mutually assent to a limitation of damages provision for the 2013 MA bids contract. Nothing in MVP's communications to Optum suggests an intent to be bound to such a provision outside of the context of the 2003 MSLA.

2. Optum contracted to provide actuarial services in accordance with the relevant ASOPs.

Under its agreement with MVP to provide actuarial services for the 2013 MA bids, Optum undertook a contractual obligation to abide by the ASOPs. Trial testimony establishes that compliance with these standards was within the reasonable expectations of both parties. Optum actuaries Greenwood and Li testified that they are required to follow the ASOPs when providing professional services to clients. (TT 33, pp. 144-47). The MA bids that Greenwood was expected to certify required an affirmation that Optum followed the applicable ASOPs. (J-36). Though Greenwood testified that MVP and Optum did not contract for compliance with the ASOPs, (id. at p. 155), the Court does not credit that testimony, in part because he also testified that it would be reasonable for MVP to expect Optum to comply with the ASOPs when performing its actuarial work and that such compliance was "part of the service that we provide" and "part of what MVP paid for." (Id. at 153-56). Additionally, Niehus testified that for an actuary to maintain their credentials, they must comply with the ASOPs. (Id. at p. 512). In short, the parties both expected the relevant actuarial work to be performed in accordance with the ASOPs. In light of this testimony, the Court concludes that the contractual promise to perform actuarial services included an obligation to comply with those standards. See New York State Workers' Compensation Bd. v. SGRisk, LLC, 38 Misc.3d 1229(A) (Sup. Ct. N.Y. Mar. 1, 2013) (finding that where parties contracted for actuarial services that comply with "accepted actuarial standards," failure to abide by those standards substantiated a breach of contract claim).

Optum argues that non-compliance with the ASOPs "cannot form the basis of MVP's breach of contract claim." (Dkt. No. 102, p. 27). In support of this proposition, Optum cites U.S. Bank Nat'l Ass'n v. PHL Variable Ins. Co., No. 12 Civ. 6811 (CM) (JCF), 2014 WL 2199428, at *13, 2013 U.S. Dist. LEXIS 72655, at *39 (S.D.N.Y. May 23, 2014), which refers to an ASOP not at issue here regarding policy classes, and says that its "language offers only general guidance and does not settle" the classification issue in question. The U.S. Bank Nat'l Ass'n court, adjudicating a dismissal motion, found that "[g]iven the experts' differing opinions regarding the relevant actuarial standards, an issue of fact remains." Id. In contrast here, the Court is empowered to credit expert testimony as it sees fit and concludes that the relevant ASOPs contain standards for actuarial work that were within the parties' reasonable expectations.

3. Optum had an obligation to perform the contract without negligence.

New York law provides that "[n]egligent performance of a contract may give rise to a claim . . . for breach of contract." PPC Broadband, Inc. v. Transformix Eng'g, Inc., No. 5:14-CV-0315 (MAD/TWD), 2015 WL 339564, at *15, 2015 U.S. Dist. LEXIS 8343, at *39 (N.D.N.Y. Jan. 26, 2015) (quoting Dorking Genetics v. United States, 76 F.3d 1261, 1269 (2d Cir. 1996)). New York courts recognize that contractual obligations necessitate performance with due care. 14 N.Y. Prac., New York Law of Torts § 6:13 ("One who assumes a contractual duty remains subject to the common law duty to use due care."); see also Deutsche Bank Sec. Inc. v. Rhodes, 578 F.Supp.2d 652, 671 (S.D.N.Y. 2008) ("Merely alleging that the breach of contract duty arose from a lack of due care will not transform a simple breach of contract into a tort."). Here, Greenwood testified that part of the agreement between MVP and Optum was that Optum "would provide reasonable care in the development of the bids and actual services." (TT, p. 155). In light of Optum's known specialization in providing actuarial services for MA Plan bids, the longstanding relationship between MVP and Optum, the substantial cost of the actuarial services, and all other testimony and evidence in the record, the Court concludes that the contract included an obligation that Optum provide actuarial services in a reasonable, non-negligent fashion.

C. Optum breached its obligations under the contract with MVP.

Optum actuaries failed to perform their tasks in compliance with the ASOPs. As noted above, ASOP 23 requires the actuary to "review the data for reasonableness and consistency" or otherwise inform the client that no such review occurred. Optum's failure to review the data and manage it appropriately is demonstrated by confusion among Optum actuaries regarding MVP's cost sharing practices, Li's creation of a new DMT that misidentified those practices, and Optum's ultimate reliance on the incorrect information. After Li failed to import the correct cost sharing data into her version of the DMT, she then ignored the cost sharing information in Tate's updated PBPCats tab and 2012 DMT version that he sent her, keeping her new cost sharing assumptions instead. Subsequent internal review at Optum was insufficient to catch this significant error, despite Greenwood's certification of the accuracy of the bids and compliance with the ASOPs. Thus, the Court concludes that Optum did not comply with ASOP 23.

The Court also concludes that Optum violated ASOP 41 by not clearly communicating DMT changes to MVP in a manner designed for the intended audience, which the standard requires. As noted above, the Court has found that Li did not communicate the DMT changes to MVP; however, even assuming arguendo that Li gave some oral notice to MVP, Optum would still be in breach. Li testified that she should and normally would inform the client of such a significant change in writing. Moreover, she did not highlight or explain the changes in accordance with Optum's common practice with MVP actuarial work. Also, because Tate is not an actuary, ASOP 41 would require Li to tailor her communications to him with this in mind.13

Finally, Optum breached its contractual duties with its generally negligent performance. "New York courts frequently hold that `[a] person undertaking to perform work is charged with the common law duty to exercise reasonable care and skill in the performance of the work.'" Banco Multiple Santa Cruz, S.A. v. Moreno, 888 F.Supp.2d 356, 368 n.14 (E.D.N.Y. 2012) (citing cases) (alteration original in Banco). This duty can give rise to a breach of contract action. Id. (citing cases). Here, for substantially the same reasons noted above, Optum breached its obligation to act with due care.

D. Optum's breach caused MVP's injury.

Under New York law, a plaintiff in a breach of contract action "must prove that a defendant's breach directly and proximately caused his or her damages." Nat'l Market Share, Inc. v. Sterling Nat. Bank, 392 F.3d 520, 525 (2d Cir. 2004) (citing cases) (emphasis in original). Damages resulting from other intervening causes are not recoverable. Id. at 526.

As noted above, the Court accepts the Niehus analysis of lost revenue as a result of Optum's negligent application of incorrect cost sharing assumptions. Implicit in that finding of fact is the conclusion that Optum's breach is the cause-in-fact of MVP's injury. It remains to determine whether the breach proximately caused that injury. Proximate cause "refers to a `legal cause' to which the Court has assigned liability"—an act that directly causes a given result and is not so far removed in the causal chain that liability is inappropriate. Burlington Ins. Co. v. NYC Tr. Auth., 2017 WL 2427300, 2017 N.Y. LEXIS 1404, at *9 (N.Y. June 6, 2017).14

The Court concludes that Optum's breach was the proximate cause of MVP's lost revenue. Because Optum failed to abide by the ASOPs and otherwise perform its actuarial work with reasonable care and skill, it (1) made material changes to cost sharing information without communicating any such changes to MVP and (2) relied upon those incorrect cost sharing assumptions to establish pricing parameters. As a result, MVP underpriced its MA plans and suffered lost revenue. As the Niehus analysis shows, the lost revenue at issue is measured in isolation of all other variables. Having removed other market factors, Niehus determined the losses that stemmed solely from Optum's negligent application of cost sharing assumptions.

Optum claims, however, that its actions did not proximately cause the injury; rather, Optum suggests that MVP's conduct is the proximate cause. (Dkt. No. 102, p. 38). Optum argues:

(Id. at pp. 38-39). As noted above, Tate admittedly failed to review the DMT; however, he alerted Li to his concerns about the cost sharing information in his email of April 27, 2012, and ultimately replied to Li's request for his comments with the correct cost sharing data in a PBPCats tab and the 2012 version of the DMT, which he indicated should form the basis for the 2013 bids. Thereafter, Li failed to correct her version of the DMT and used that tab without informing Tate. Thus, the Court concludes that in light of the overall interactions between MVP and Optum, Tate's purported failure was not the proximate cause of MVP's damages.

E. MVP is entitled to recover the contract price for Optum's services.

1. Lost Income

"Under New York law, damages for breach of contract should put the plaintiff in the same economic position he would have occupied had the breaching party performed the contract." Oscar Gruss & Son, Inc. v. Hollander, 337 F.3d 186, 196 (2d Cir. 2003). MVP is therefore entitled to expectation damages, which may include "the amount necessary to put plaintiff in as good a position as if defendant had fulfilled the contract, plus consequential damages for other losses caused by the breach." R.M. Railcars LLC v. Marcellus Energy Servs., LLC, No. 1:14-CV-1167 (BKS/RFT), 2015 WL 4508451, at *2, 2015 U.S. Dist. LEXIS 96491, at *4 (N.D.N.Y. 2015); see also Dobbs Law of Remedies § 12.2(3) ("Either general or special damages might be used as measures of expectancy. In fact, both measures may be used in the same case to capture different elements of compensation."). However, the proof required to recover consequential damages is more onerous than that required to recover general damages— for the former, Plaintiff must show, inter alia, that such damages "were fairly within the contemplation of the parties to the contract at the time it was made." Kenford Co. v. County of Erie, 67 N.Y.2d 257, 261 (1986).

Under New York law, "[g]eneral damages `are the natural and probable consequence of the breach' of a contract." Biotronik v. Conor Medsystems, 22 N.Y.3d 799, 805 (2014) (citing cases). General damages are "market-measured damages" based on the "value of the plaintiff's entitlement;" "courts look at the plaintiff's assets, not at income lost or expenses incurred." Dobbs Law of Remedies § 3.3(3). These damages "measure[] the losses in the very thing to which the plaintiff is entitled," whereas consequential damages "measure[] something else; not the very thing the plaintiff was entitled to but income it can produce or losses it can avoid." Id. at § 3.3(4). "[C]onsequential . . . damages do not `directly flow from the breach.'" Biotronik, 22 N.Y.3d at 805 (quoting American List Corp. v. U.S. News & World Report, 75 N.Y.2d 38, 43 (N.Y. 1989)).

In the Second Circuit, courts applying New York law typically find that lost income from third-party arrangements are consequential damages on grounds that they are "`one step removed from the naked performance promised by the defendant.'" PNC Bank, N.A. v. Wolters Kluwer Fin. Servs., 73 F.Supp.3d 358, 374 (S.D.N.Y. 2014) (quoting Schonfeld v. Hilliard, 218 F.3d 164, 177 (2d Cir. 2000)); see also Tractebel Energy Mktg. v. AEP Power Mktg., 487 F.3d 89, 109 (2d Cir. 2007) ("Lost profits are consequential damages when, as a result of the breach, the non-breaching party suffers loss of profits on collateral business arrangements."); First Niagara Bank N.A. v. Mortgage Builder Software, Inc., No. 13-CV-592S, 2016 WL 2962817, at *8, 2016 U.S. Dist. LEXIS 67705, at *24-25 (W.D.N.Y. May 23, 2016) ("Although there is no bright-line rule stating that fees flowing from a third party cannot constitute general or compensatory damages, such cases are rare.").

Here, the lost income MVP suffered as a result of its mispriced health plans is closely tied to Optum's breach, because MVP relied on Optum's complex actuarial calculations and projections to set plan premiums. Nevertheless, MVP's lost income was a step removed from Optum's promised performance. The asset that Optum contracted to provide MVP was accurate actuarial calculations and analysis, submission to CMS, and certification of the bids' accuracy— not final pricing determinations or insurance for the plans' financial well-being. Thus, this is not one of the rare exceptions to the trend in this circuit; rather, this is a "typical case [where] the ability of the non-breaching party to operate his business, and thereby generate profits on collateral transactions, is contingent on the performance of the primary contract" and the breach hinders the non-breaching party's business. Tractebel Energy Mktg., 487 F.3d at 89; see also Biotronik, 22 N.Y.3d at 806 ("Lost profits may be either general or consequential damages, depending on whether the non-breaching party bargained for such profits and they are `the direct and immediate fruits of the contract.'"). That the potential damages—surmounting $12 million—far surpass the contract price also weighs in favor of a finding that such a disproportionate risk was not assumed. See Restatement 2d of Contracts § 351(3) cmt. f (noting that "extreme disproportion between the loss and the price charged by the party whose liability for that loss is in question" suggests that "the parties assumed that one of them would not bear the risk of a particular loss or that . . . it would be unjust to put the risk on that party"); see also Int'l Ore & Fertilizer Corp. v. SGS Control Servs., 743 F.Supp. 250, 257 (2d Cir. 1990) (citing cmt. f and noting that ""[t]he mere fact that one party to an agreement has failed to satisfy a contractual duty of care does not necessarily mean that it will be held fully liable for all resulting damages, even if foreseeable"). For these reasons, the Court finds that MVP's lost income on third-party health plan contracts constitutes consequential damages.

Having determined that these damages are consequential, the Court next considers whether Plaintiff is entitled to them. In New York,

Kenford Co., 67 N.Y.2d at 262. The Kenford court did not mean that the parties must have contemplated the injury at the time of contracting, but rather the "liability for loss of profits over the length of the contract." Id.; see also Dobbs Law of Remedies § 12.4(6) ("[I]f `foreseeability' [of damages] is to be the test at all, it must not be understood as a simple factual term but as a term of art, a kind of shorthand for the more complex idea that damages should be limited as the parties intended.").

Here, there is no evidence that the parties contemplated Optum's liability for MVP's health plan losses. As MVP argues, it may be that "the losses incurred by MVP as a result of Optum's breach were . . . certain;" (Dkt. No. 101, p. 94) however, it is the parties' contemplation of liability—not just injury—that is at issue. Optum did not agree to act as an insurer for MVP's health plans or to otherwise accept liability for losses on third-party contracts. As a result, MVP is not entitled to recover lost income under the parties' contract.15,16

2. Contract Price

Unlike the lost income injury, the contract price for Optum's services constitutes general damages. General contract damages are "compensation calculated by the value of the very thing to which the plaintiff was entitled." Dobbs Law of Remedies § 3.3(1). Here, as noted above, MVP contracted for reasonable and non-negligent actuarial work that abided by the ASOPs. In consideration for this service, MVP tendered $332,981.44. The actuarial work that MVP received was negligent and violated the ASOPs, and it caused MVP to lose millions of dollars of income. Thus, the service that Optum provided MVP for the 2013 MA bids was worthless and MVP is entitled to recover the value of the asset for which it contracted—that is, the value of Optum's services, or $332,981.44.

F. Interest

Under New York law, "[i]nterest shall be recovered upon a sum awarded because of a breach of performance of a contract." NY C.P.L.R. § 5001(a); see also J.D'Addario & Co., Inc. v. Embassy Indus., Inc., 20 N.Y.3d 113, 117 (2012) ("The plain language of CPLR 5001(a) mandates the award of interest to verdict in breach of contract actions."). "Interest shall be computed from the earliest ascertainable date the cause of action existed." NY C.P.L.R. § 5001(b). This interest "shall be at the rate of nine per centum per annum, except where otherwise provided by statute." NY C.P.L.R. § 5004.

Here, the earliest ascertainable date that MVP's claims against Optum existed is June 8, 2012—when Greenwood certified and submitted the 2013 MA bids to CMS. Thus, the interest calculation shall be from that date until judgment is fully satisfied.

IV. CONCLUSION

For these reasons, it is

ORDERED that Plaintiff MVP is awarded a money judgment in the sum of $332,981.44 with interest at 9% per annum from June 8, 2012 to the date that the judgment is fully satisfied.

IT IS SO ORDERED.