Reid Hospital and Health Care v. Conifer Revenue Cycle Solution ( 2021 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 20-1735
REID HOSPITAL AND HEALTH CARE SERVICES, INC.,
Plaintiff-Appellant,
v.
CONIFER REVENUE CYCLE SOLUTIONS, LLC,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
No. 1:17-cv-01422-JPH-TAB — James Patrick Hanlon, Judge.
____________________
ARGUED DECEMBER 11, 2020 — DECIDED AUGUST 11, 2021
____________________
Before ROVNER, HAMILTON, and SCUDDER, Circuit Judges.
HAMILTON, Circuit Judge. Navigating health-care payment
systems is not easy, as many patients can attest. Some provid-
ers, it turns out, face their own challenges on a much larger
scale. That’s why plaintiff Reid Hospital contracted with de-
fendant Conifer Revenue Cycle Solutions to handle the hospi-
tal’s “revenue cycle,” that is, the provider-side work of setting
up billing codes, billing, processing paperwork, and collect-
ing payments.
2 No. 20-1735
According to the hospital, Conifer mismanaged the reve-
nue cycle and failed to meet its contractual obligations in a
wrongful attempt to cut Conifer’s own staff costs. The hospi-
tal sued for breach of contract. Conifer moved for summary
judgment, arguing that even if it breached the contract, the
hospital cannot recover lost-revenue damages because the
contract does not allow for “consequential” damages. The dis-
trict court agreed and granted summary judgment to Conifer.
We reverse and remand. Given the way Conifer framed its
motion for summary judgment, we must assume that it
breached the contract substantially and on a large scale. Even
if lost revenue is often considered consequential, this contract
was a contract for revenue collection services. The parties’ con-
tract did not define all lost revenue as an indirect result of any
breach. Lost revenue would have been the direct and ex-
pected result of Conifer’s failures to collect and process that
revenue as required under the contract. The text and overall
context of this complex multimillion-dollar contract for spe-
cialized services made clear that the parties did not intend to
insulate Conifer entirely from damages for its breaches. Coni-
fer also offers some alternative arguments for affirmance, but
they are rife with disputed issues of fact that are inappropri-
ate for summary judgment.
I. Factual and Procedural Background
“We review a district court’s summary judgment ruling de
novo and consider the facts and draw all inferences in the
light most favorable to the nonmoving party.” Henry v. Hulett,
969 F.3d 769, 776 (7th Cir. 2020) (en banc). We do not vouch
for the objective truth of every fact that we must assume to be
true for purposes of the appeal. Brunson v. Murray, 843 F.3d
698, 701 (7th Cir. 2016).
No. 20-1735 3
Defendant Conifer Revenue Cycle Solutions is a health-
care revenue cycle management contractor. It prepares, is-
sues, and collects payment for health-care bills. Its responsi-
bilities include extensive work both before and after billing,
including managing the behind-the-scenes aspects of pa-
tients’ health-care, from pre-registering patients so that their
medical billing information can be processed quickly to re-
viewing and approving documentation upon release. Hospi-
tals and such contractors must navigate the ever-changing
web of medical billing codes and reimbursement rates for
multiple third-party payors, from federal and state govern-
ments to large and small insurers and health maintenance or-
ganizations. And they do the vital tasks of collecting, pro-
cessing, and transmitting payments for health-care services.
After years of managing its own billing and collections,
plaintiff Reid Hospital decided that this complex and special-
ized work should be outsourced. It felt that it was leaving
money on the table by not managing the revenue cycle effi-
ciently. So it turned that work over to Dell Marketing L.P.,
also a revenue cycle management contractor.
Their contract ran 80 pages and included several appen-
dices and exhibits to those appendices. The parties agreed
that both sides’ damages in a breach of contract action would
be limited. Here’s the language at the center of this appeal:
Except with respect to claims resulting from the
willful misconduct of Dell [or] its employees
and agents … but with respect to all other
claims, actions and causes of action arising out
of, under or in connection with this Agreement
… whether or not such damages are foreseen,
neither Party will be liable for, any amounts for
4 No. 20-1735
indirect, incidental, special, consequential (in-
cluding without limitation lost profits, lost rev-
enue, or damages for the loss of data) or puni-
tive damages of the other Party or any third par-
ties.
§ 14.1(B). Likewise, in the absence of willful misconduct or
gross negligence by the contractor, Reid Hospital’s direct
damages are capped at the amount it has paid under the con-
tract. § 14.1(C).
Dell recognized that Reid Hospital’s revenue management
needed extensive up-front investments to improve revenue
collection down the line. Dell planned to invest resources up
front, expecting profits further down the road. Dell’s plan
never took root, though, because it sold much of its revenue
management portfolio to Conifer in 2012 while Dell was still
losing money on the Reid Hospital contract. Conifer took over
the revenue operations contract at the hospital as the assignee
of Dell.
According to the hospital’s evidence, Conifer immediately
began cutting corners on this contract by reducing staff to a
bare-bones crew and neglecting many of the duties for which
they were responsible. Conifer employees found themselves
overworked and in over their heads. Beyond Conifer’s gen-
eral inability to collect and process revenue properly with a
skeletal crew, Reid Hospital claims there was a general slow-
down throughout the revenue-management cycle. For exam-
ple, Conifer’s failure to update medical insurance charge de-
scriptors meant that patients were later underbilled. At the
other end of patient care, Conifer was slow in processing pa-
tients’ discharge forms, leading to longer hospital stays that
third-party payors refused to reimburse fully.
No. 20-1735 5
After two years of this, Conifer asked the hospital to rene-
gotiate the contract, claiming that it was still losing money
and needed more favorable terms. The hospital refused and
opted to bring its revenue operation back in-house. The hos-
pital hired another consultant to assist the transition, and that
contractor found what we must assume were several signifi-
cant errors in Conifer’s work.
Reid Hospital then filed this suit against Conifer for
breach of contract, claiming that Conifer’s poor performance
caused the hospital to lose tens of millions of dollars in reve-
nue it should have collected. On cross-motions for summary
judgment, the district court granted summary judgment to
Conifer. The court read this contract as defining all claims for
lost revenue as claims for “consequential damages,” thus bar-
ring recovery absent “willful misconduct.” The court further
concluded that there was no evidence of willful misconduct
because Conifer showed that its decisions to cut costs were
motivated by a desire to save its own money, not malice to-
ward the hospital. Accordingly, the district court did not
reach Conifer’s alternative arguments that the hospital could
not demonstrate that it had been damaged at all or that any
purported damages were caused by its hypothetical breaches
of contract. The court also denied as moot the hospital’s mo-
tion for partial summary judgment on the issue of breach.
II. Analysis
We review a district court’s summary judgment ruling de
novo, giving the non-moving party the benefit of conflicting
evidence and reasonable inferences from the evidence. Vesey
v. Envoy Air, Inc., 999 F.3d 456, 459 (7th Cir. 2021). Summary
judgment is appropriate when “there is no genuine dispute as
6 No. 20-1735
to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a).
The essential elements of a breach-of-contract claim are
“(1) a valid and binding contract; (2) performance by the com-
plaining party; (3) non-performance or defective performance
by the defendant; and (4) damages arising from defendant’s
breach.” Karma International, LLC v. Indianapolis Motor Speed-
way, LLC, 938 F.3d 921, 926 (7th Cir. 2019), quoting U.S. Re-
search Consultants, Inc. v. County of Lake, 89 N.E.3d 1076, 1086
(Ind. App. 2017). Conifer’s motion assumes that it breached
the parties’ contract.
Businesses are of course entitled to use a contract to estab-
lish a custom-tailored set of rights, obligations, remedies, and
procedures for resolving disputes. See, e.g., Sterling National
Bank v. Block, 984 F.3d 1210, 1213–14 (7th Cir. 2021) (under Il-
linois law, applying “elaborate” terms of parties’ stock pur-
chase agreement); Indiana v. IBM, 51 N.E.3d 150, 160 (Ind.
2016) (IBM I) (parties may displace common-law default
rules). When the contract is a product of arms-length negoti-
ation between two sophisticated commercial entities, Indiana
law generally requires that the contract be enforced as writ-
ten. E.g., SAMS Hotel Group, LLC v. Environs, Inc., 716 F.3d 432,
435 (7th Cir. 2013); WellPoint, Inc. v. National Union Fire Ins. Co.
of Pittsburgh, 29 N.E.3d 716, 724–25 (Ind. 2015), modified on
rehearing, 38 N.E.3d 981 (enforcing as written a multi-tiered,
multimillion-dollar insurance contract between two sophisti-
cated entities).
These businesses agreed on various changes to the com-
mon-law default rules of contracting that would otherwise
govern their claim. As relevant here, Reid Hospital’s contract,
originally with Dell but later assigned to Conifer, caps both
No. 20-1735 7
direct and indirect damages (such as consequential damages)
unless the hospital can show that Conifer engaged in “willful
misconduct.” The hospital argues that the district court erred
in concluding that these negotiated limits on damages defeat
its entire lawsuit.
Conifer counters that the district court’s ruling should be
affirmed and that it is also entitled to judgment as a matter of
law on alternative grounds. First, based primarily on a paren-
thetical phrase following the word “consequential” mention-
ing “lost revenue,” it reads the contract as defining all lost rev-
enue as consequential and thus presumptively not recovera-
ble. Second, Conifer says, the hospital cannot satisfy the ex-
ceptions for “willful misconduct” because the record shows,
and common sense confirms, that Conifer cut its costs to
stanch its business losses, not out of ill will toward the other
party to the contract. Third, in the alternative, Conifer argues
that it is entitled to summary judgment because the hospital
cannot prove damages at all. Conifer claims that it increased
the hospital’s revenue during its two years of operations and
says that the hospital cannot tie any specific loss to any as-
sumed breaches.
We conclude that the district court erred in granting sum-
mary judgment on the first two theories, and we cannot affirm
on the third. First, the contract does not define all lost revenue
as indirect or consequential. Revenue was the entire point of
this contract for revenue collection services. Lost revenue was
the direct result of at least some breaches. Second, whatever
the parties meant by “willful misconduct,” a tort concept that
does not have an obvious meaning in such a commercial con-
tract, a jury could find that at least some of Conifer’s assumed
breaches amounted to willful misconduct. Finally, the issues
8 No. 20-1735
of damage and causation are rife with disputed issues of ma-
terial fact.
A. Consequential Damages
Conifer relies upon portions of the contract that limited
Reid Hospital’s right to recover consequential damages in
claims stemming from anything other than Conifer’s willful
misconduct. The key provision limiting consequential dam-
ages addressed lost revenue: “whether or not such damages
are foreseen, neither Party will be liable for, any amounts for
indirect, incidental, special, consequential (including without
limitation lost profits, lost revenue, or damages for the loss of
data) or punitive damages.” § 14.1(B). Even if damages were
direct (as opposed to indirect), the contract limited damages
available in such claims to the fees the hospital paid under the
contract in the absence of willful misconduct or gross negli-
gence. § 14.1(C). Finally, Conifer did “not guarantee the col-
lection of any accounts receivable.” § 14.1(A).
Conifer claims that these various damage limits worked to
define all lost revenue as consequential and thus not recover-
able at all in the absence of willful misconduct. Conifer’s read-
ing of the parenthetical following “consequential” misunder-
stands the distinction between direct and indirect (e.g., conse-
quential) damages, especially as applied to a contract for reve-
nue collection services. And its other arguments cannot carry
the day.
The definition of consequential damages is “elusive,”
“ambiguous[,] and equivocal.” Damages, Black’s Law Diction-
ary (11th ed. 2019), quoting Emerson G. Spies & John C.
McCoid II, Recovery of Consequential Damages in Eminent Do-
main, 48 Virginia L. Rev. 437, 440–41 (1962). Then-Judge
No. 20-1735 9
Cardozo identified the difficulty as follows: “At the root of the
problem is the distinction between general [direct] and special
[indirect] damage as it has been developed in our law. There
is need to keep in mind that the distinction is not absolute, but
relative. To put it in other words, damage which is general in
relation to a contract of one kind may be classified as special
in relation to another.” Kerr Steamship Co. v. Radio Corp. of
America, 157 N.E. 140, 141 (N.Y. 1927). Applying Indiana law,
we similarly explained that “the difference [lies] in the degree
to which the damages are a foreseeable (that is, a highly prob-
able) consequence of a breach.” Rexnord Corp. v. DeWolff Bob-
erg & Associates, 286 F.3d 1001, 1004 (7th Cir. 2002).
Other authorities draw this distinction in similar terms.
According to the Restatement (Second) of Contracts, conse-
quential damages are “recoverable for loss that results other
than in the ordinary course of events.” Restatement (Second)
of Contracts § 351 cmt. b (1981). Williston elaborated: “Conse-
quential damages are those damages that do not flow directly
and immediately from the breach, but only from some of the
consequences or results of the breach.” 24 Williston on Con-
tracts § 64:16 (4th ed. May 2021 update). In contrast, direct
damages are “considered to include those damages that flow
naturally from a breach, that is, damages that would follow
any breach of similar character in the usual course of events.”
Id.
Unforeseeable indirect damages are not recoverable.
That’s the teaching of the canonical British case, Hadley v.
Baxendale, 156 Eng. Rep. 145 (1854), which concerned a con-
tract for timely transport of a piece of a miller’s steam engine
to a manufacturer for replacement. The carrier breached by
delivering the crankshaft late, and the miller lost profits
10 No. 20-1735
because it had to shut down its engine while waiting for the
replacement part. The court held that even if the carrier
breached, it could not be held liable for the profits the miller
would have made if it had been able to reassemble its engine
and resume operations on schedule. Id. at 151. The court sug-
gested, however, that if the miller had notified the carrier in
advance how critical the crankshaft was to its business and
losses it would suffer from a late delivery, the result could
have been different. Id.
To be sure, lost profits and lost revenue are the classic ex-
amples of unrecoverable consequential damages from Hadley,
but not all lost revenue is consequential by definition in all
cases. Even where a class of damages is generally consequen-
tial, the ultimate determination is a relative one based on the
substance and terms of the contract. E.g., Kerr Steamship Co.,
157 N.E. at 141 (stressing that this is a “relative” context- and
contract-specific inquiry). Hadley was about a contract for de-
livery. But this is a contract for revenue collection, after all. It
is not hard to see how a breach of this contract could, would,
and did lead directly to lost revenue.
Indeed, courts regularly conclude that in the business ser-
vice context, some lost revenues or lost profits are well within
the ambit of direct damages. A good example is Penncro Asso-
ciates, Inc. v. Sprint Spectrum, L.P., 499 F.3d 1151, 1156 (10th
Cir. 2007), where then-Judge Gorsuch’s opinion affirmed an
award of lost-profit damages as “direct” and not “consequen-
tial” where the breaching party had promised to refer clients
to the contractor and failed to do so, causing the contractor to
miss business opportunities. See also, e.g., Energy Capital Corp.
v. United States, 302 F.3d 1314, 1328–29 (Fed. Cir. 2002) (federal
law; affirming award of lost-profit damages where breaching
No. 20-1735 11
government agency cancelled contract with private financier;
rejecting agency’s argument that profits on anticipated loans
were “consequential” because in this contract, the profits
would have accrued “as the direct and immediate results of
[the contract’s] fulfillment”) (citation and quotation marks
omitted); ViaStar Energy v. Motorola, Inc., 2006 WL 3075864, at
*4–5 (S.D. Ind. Oct. 26, 2006) (Indiana law; denying summary
judgment on damages notwithstanding contractual exception
for recoupment of “consequential” damages; failure to deliver
key products or otherwise abide by the contract could result
directly in lost profits); see also IBM v. Indiana, 112 N.E.3d
1088, 1098–1101 (Ind. App. 2018) (IBM II), affirmed in relevant
part, 138 N.E.3d 255 (Ind. 2019) (one class of damages, though
sometimes indirect, was actually direct under the terms of
contract for business services); Computrol Inc. v. Newtrend,
L.P., 203 F.3d 1064, 1071 n.5 (8th Cir. 2000) (Illinois law)
(dicta), citing Moore v. Boating Industry Ass’ns, 754 F.2d 698,
717 (7th Cir. 1985), vacated on other grounds, 474 U.S. 895(1985) (“We are not convinced that the … restriction on ‘spe-
cial, incidental, or consequential damages,’ standing alone,
precludes the recovery of lost profits…. Thus, it is incorrect to
classify mechanically the prospective lost profits portion of
Computrol’s damage award as consequential damages.”).
Parties may, of course, negotiate for idiosyncratic defini-
tions of ordinary phrases. E.g., IBM I, 51 N.E.3d at 160. As
then-Judge Gorsuch wrote for the Tenth Circuit, “Up may be
defined as down, right as left, day as night.” Penncro, 499 F.3d
at 1157; see also AM International, Inc. v. Graphic Mgmt. Asso-
ciates, 44 F.3d 572, 576 (7th Cir. 1995) (“If the parties agree to
an idiosyncratic meaning, the court will honor their agree-
ment.”). That’s what Conifer claims happened here: the par-
ties decided to redefine the term “consequential damages” to
12 No. 20-1735
include all lost revenue, including any such damages that di-
rectly flowed from a breach. For support, Conifer relies on the
parenthetical following the bar on consequential damages,
“including without limitation … lost revenue.”
Properly understood, this parenthetical reference to “lost
revenue” did not foreclose collection of all lost revenue—just
revenue that was lost as an indirect result of Conifer’s breach.
This is apparent from the face of the contract, which did not
list “lost revenue” separately as nonrecoverable. Instead, the
contract included lost revenue in a parenthetical following the
word “consequential” within a discussion of various types of
indirect damages.
The question is how to interpret the parties’ decision to in-
clude the phrase “lost revenue” adjacent to a list of subsets of
indirect damages. In Penncro, the Tenth Circuit examined a
similar contract and found that such an aside did not categor-
ically foreclose the collection of lost revenue or lost profits
that resulted directly from breach. 499 F.3d at 1156. The place-
ment of “lost revenue” within a discussion of consequential
and indirect damages indicates that the reference to “lost rev-
enue” was not necessarily to all lost revenue but only that
which can be determined on some other basis to be conse-
quential rather than direct. Id. at 1156–57.
Penncro is well reasoned, and we believe that Indiana
courts would agree. See Sutula-Johnson v. Office Depot, Inc., 893
F.3d 967, 971 (7th Cir. 2018) (“Under Erie Railroad Co. v. Tomp-
kins, 304 U.S. 64 (1938), our role is to decide questions of state
law as we predict the [state] Supreme Court would decide
them.”); IBM II, 112 N.E.3d at 1100–01 (taking contract-spe-
cific approach to whether damages were direct).
No. 20-1735 13
In explaining its holding in Penncro, the Tenth Circuit pro-
vided a useful analogy that we find persuasive and present
here (albeit modified to account for each side’s attempt to ma-
nipulate the analogy to its advantage). Consider a cardiologist
who instructed a patient to “avoid all fried foods, including,
without limitation, all fruits and vegetables.” The doctor
merely clarified that though Popeye eats spinach and an apple
a day keeps the doctor away, spinach fritters and fried apple-
pie must still be avoided. Likewise, the doctor did not dis-
courage eating all fruits and vegetables, just those that were
fried. So too here—the contract bars not all lost-revenue dam-
ages but only those lost-revenue damages that properly fall
within the category of “consequential” damages. See Penncro,
499 F.3d at 1156.
Conifer counters the Penncro analogy by arguing that we
should instead imagine a cardiologist instructing a patient to
“avoid all unhealthy foods, including, without limitation,
steak and pizza.” Conifer’s example does not match its textual
argument, which asserts that the parenthetical redefined the
term “consequential damages” to have an unusual contract-
specific meaning. As we’ve said, parties are, of course, free to
set up their own bespoke legal universe adopting idiosyn-
cratic or counterintuitive definitions for everyday terms. But
the fact that they could does not mean that they did.
In fact, these sophisticated parties agreed on a glossary of
66 contract-specific terms and phrases in a “Certain Defini-
tions” subsection (not to mention other definitions included
in the appendices). The supposed redefinition of “consequen-
tial” was not in any of these sections. In other words, Conifer’s
best argument is that the proposed special definition was not
in the Definitions but merely implied by a parenthetical
14 No. 20-1735
phrase in an out-of-the-way subsection. That simply was not
a clear indication that the parties agreed to depart from the
ordinary meaning of “consequential,” so we apply the ordi-
nary definition. See Penncro, 499 F.3d at 1157, citing Corbin on
Contracts § 24.8, and Restatement (Second) of Contracts
§202(3)(a); WellPoint, 29 N.E.3d at 721.
The better reading of this lost-revenue parenthetical,
which takes into account the actual meaning of the phrase
“consequential damages,” is that it bars recovery of lost reve-
nue that would have flowed indirectly from breach even if
such damages otherwise could be recovered under the Hadley
rule. Because this was a contract for revenue collection ser-
vices, however, at least some of the lost revenue at issue here
could have flowed directly from the breaches. See Penncro, 499
F.3d at 1157; Energy Capital Corp., 302 F.3d at 1328–29; see also
Kerr Steamship Co., 157 N.E. at 141 (distinction between conse-
quential and direct damages hinges on context and substance
of contract).
Conifer attempts to distinguish this case from Penncro on
the ground that this contract contained a phrase that becomes
redundant under the hospital’s reading: that indirect dam-
ages are barred “whether or not such damages are foreseen.”
This phrase would be redundant, says Conifer, because un-
foreseeable indirect damages can never be recovered under
the Hadley rule; if that phrase had been deleted, the overall
meaning of damages limitation in the contract would not
change.
We pause at the outset to note that this is an extremely nar-
row alleged redundancy; calling these seven words a redun-
dancy at all overstates any possible problem. There is a differ-
ence between interpreting interlocking and separate
No. 20-1735 15
provisions of a legal text to avoid redundancy, e.g., In re
Southwest Airlines Voucher Litigation, 799 F.3d 701, 710 (7th Cir.
2015), and attempting to assign special significance to a less-
than-concise aside, e.g., White v. United Airlines, Inc., 987 F.3d
616, 622 (7th Cir. 2021) (not assigning special weight to pres-
ence of allegedly verbose and superfluous parenthetical).
Nonetheless, Conifer advances a broad reinterpretation of
this contract section that would give a distinct effect to this
redundant phrase—but not much else. Conifer asserts that,
properly interpreted, this damage limit defined all damages,
including even direct damages, as “indirect” and therefore
not recoverable without a showing of willful misconduct. The
district court accepted this creative argument, but the anti-re-
dundancy canon should not have been given such controlling
weight.
For starters, Conifer’s reinterpretation of this provision
does not solve the redundancy problem but actually makes it
much worse. Conifer claims that this contract redefined the
broad categories of “direct” and “indirect” damages, with the
distinction between the two erased entirely by making all
damages “indirect.” See Dkt. 139 at 9 (“In short, what Indiana
law would otherwise split between direct and consequential
damages based on foreseeability, the Agreement lumps into
consequential damages.”). But this interpretation would ren-
der the contract’s delineations of all the different types of ex-
cluded indirect damages superfluous and quite perplexing. If
we were to accept the theory that the parties agreed to define
“direct damages” as a null set, that would render the entire
section entitled “Limitations on Direct Damages” superfluous
as well.
16 No. 20-1735
The anti-surplusage canon, like all textual canons, has its
limits, and that particular canon is especially prone to exces-
sive use. We have recognized that “the presence of some re-
dundance is rarely fatal on its own to” the meaning of a legal
text. White, 987 F.3d at 622. It is well known that drafters of
legal documents often consciously adopt a “belt-and-sus-
penders approach” to try to capture the universe. Gadelhak v.
AT&T Services, Inc., 950 F.3d 458, 465 (7th Cir. 2020) (Barrett,
J.), quoting Antonin Scalia & Bryan A. Garner, Reading Law:
The Interpretation of Legal Texts 176–77 (2012); Sterling National
Bank, 984 F.3d at 1218, citing Abbe R. Gluck & Lisa Schultz
Bressman, Statutory Interpretation from the Inside—an Empirical
Study of Congressional Drafting, Delegation, and the Canons: Part
I, 65 Stan. L. Rev. 901, 934 (2013). Conifer’s ability to find a
purported redundancy in this 80-page contract is thus not a
“deal-breaker.” Gadelhak, 950 F.3d at 465; accord, e.g., Rimini
Street, Inc. v. Oracle USA, Inc., 139 S. Ct. 873, 881 (2019) (alleged
statutory redundancy not a “silver bullet”).
Conifer’s reliance on the anti-redundancy canon also loses
sight of the meta-canon for the interpretation of legal texts:
“no canon of interpretation is absolute.” Scalia & Garner,
Reading Law, at 59. Conifer thus overemphasizes one canon
and fails to account for two others that clearly apply here and
that strongly counsel a different meaning: ordinary meaning
and whole text.
“In the case of a written contract, the parties’ intent is de-
termined by looking first to the plain and ordinary meaning
of the contract language.” BKCAP, LLC v. CAPTEC Franchise
Trust 2000-1, 572 F.3d 353, 359 (7th Cir. 2009), citing among
other cases USA Life One Insurance Co. v. Nuckolls, 682 N.E.2d
534, 538 (Ind. 1997); see also Scalia & Garner, Reading Law, at
No. 20-1735 17
69 (“Words are to be understood in their ordinary, everyday
meanings—unless the context indicates that they bear a tech-
nical sense.”). Here, in laypersons’ terms, the contract said
that consequential damages were not recoverable even if they
were actually foreseen.
Conifer’s suggestion that the contract defined all damages
as consequential and thus nonrecoverable because they are ei-
ther foreseeable or not foreseeable has no basis in the lan-
guage in question. The anti-redundancy canon is strongest
where “one possible interpretation of a [legal text] would
cause some redundancy and another” would not. Rimini
Street, 139 S. Ct. at 881. It is at best a “clue as to the better in-
terpretation,” not a wholesale invitation to rewrite a contract.
Id. (refusing to rewrite statute to avoid alleged minor redun-
dancy).
Conifer’s proposed reading is especially troubling because
it ignores the overall structure and context of this contract—
as we cannot help repeating—for revenue collection services. See
Lawson v. Sun Microsystems, Inc., 791 F.3d 754, 762 (7th Cir.
2015) (Indiana law; requiring that separate contract terms be
read “holistically and harmonized”); Scalia & Garner, Reading
Law, at 167 (“The text must be construed as a whole.”). Reid
Hospital paid Conifer millions of dollars to do the hundreds
of tasks and subtasks that go into collecting revenue. At a min-
imum, Conifer’s failure to collect, process, and transmit reve-
nue properly could directly cause revenue to be lost. Revenue
is the point of this contract for revenue collection services, upon
which Reid Hospital was utterly dependent.
“Rather than try ‘to avoid surplusage at all costs,’ we in-
terpret” the contract “in light of its text and place within a
comprehensive [] scheme.” Guam v. United States, 141 S. Ct.
18 No. 20-1735
1608, 1615 (2021), quoting United States v. Atlantic Research
Corp., 551 U.S. 128, 137 (2007). There is no persuasive indica-
tion, textual or otherwise, that these sophisticated parties in-
tended to leave Reid Hospital without any remedy for any
breaches that did not rise to the ill-defined level of “willful
misconduct.” Conifer’s interpretation of this contract would
allow it to collect and keep millions of dollars in fees while
turning the contract’s core obligations into mere suggestions
that could be ignored or performed sloppily with impunity.
Finally, Conifer’s assertion that it should be immunized
from all mine-run breach of contract suits is, as a practical
matter, highly improbable and divorced from business reali-
ties. We have often said that business contracts should be in-
terpreted with a healthy dose of common sense to avoid
reaching nonsensical results. For example, “business con-
tracts of the kind involved here[] are not parlor games but the
means of getting the world’s work done.... True, parties can
contract for preposterous terms. If contract language is crystal
clear or there is independent extrinsic evidence that some-
thing silly was actually intended, a party may be held to its
bargain, absent some specialized defense.” Indianapolis Air-
port Authority v. Travelers Property Casualty Co. of America, 849
F.3d 355, 368 (7th Cir. 2017), quoting Rhode Island Charities
Trust v. Engelhard Corp., 267 F.3d 3, 7 (1st Cir. 2001).
Conifer asserts that its interpretation would still leave
some damages recoverable by Reid Hospital, but its example
of compensable damages is fantastic and convoluted. Conifer
hypothesizes that Reid Hospital could sue for breach of con-
tract if a Conifer employee (a back-office accountant, say)
somehow stumbled into an equipment storage room and de-
stroyed some expensive medical equipment. With respect,
No. 20-1735 19
even if what Conifer describes would be a breach of this busi-
ness services contract, cf. Rexnord, 286 F.3d at 1005 (where a
business services contractor “came into [plaintiff’s] plant and
messed things up,” damages may lie in tort), that is a highly
improbable reading of this 80-page multimillion-dollar con-
tract for specialized revenue collection services. The sugges-
tion that the parties drafted the contract to ensure that dam-
ages would be available for that improbable scenario but to
bar any meaningful accountability for the central purpose of
the contract borders on the absurd. See Nuckolls, 682 N.E.2d
at 539 (avoiding an absurd reading of an insurance contract
that would have denied coverage based on arbitrary criteria).
To the extent that there is any remaining lacuna in the con-
tract language, the baseline default rules in the common law
of contracts counsel the same result. Reid Hospital paid mil-
lions of dollars for Conifer to collect revenue for the care it
provided. Conifer says that the parties agreed that Reid Hos-
pital would effectively waive damages resulting from Coni-
fer’s nonperformance absent extraordinary circumstances.
That reading creates structural problems with the contract,
such as Conifer’s seemingly illusory promises to perform and
the lack of mutuality in the bargain. E.g., Restatement (Sec-
ond) of Contracts, § 351, cmt. a (“courts are often asked after
the fact not to enforce such provisions [limiting consequential
damages] and may construe a provision narrowly or find it
unenforceable because of lack of bargain, bad faith, uncon-
scionability or public policy”).
Conifer also asserts that the no-guarantee clause shields it
from any lawsuits regarding lost revenue: “No Guarantee of
Collection. The Services provided by Dell under this Agree-
ment do not guarantee the collection of any accounts
20 No. 20-1735
receivable.” § 14.1(A). This sentence protected Conifer from
claims based on failures to collect any particular account. Co-
nifer’s argument misunderstands the no-guarantee clause, as
its disclaiming of collecting any specific revenue did not ena-
ble Conifer to breach without consequence.
As a final note on this point, the district court held that
even if the standard definition of consequential damages ap-
plied in this contract, two sets of claimed damages—costs as-
sociated with increased “Length of Stay” and post-termina-
tion consulting fees—were wholly consequential to breach.
We are not confident that this conclusion was correct. The dis-
trict court’s order did not address some potentially material
factual wrinkles with both classes of damages.
The hospital seeks repayment for losses from patients’ in-
creased lengths of stay in the hospital, reasoning that Conifer
took so long to process patients’ billing information and pa-
perwork that the patients stayed in their beds longer than nec-
essary. As a result, the hospital had to cover those extra costs
out of its own pocket. The district court held that Conifer’s
assumed breaches could not have directly caused increased
lengths of stay because patient discharge decisions are made
by doctors. But the hospital argues that Conifer employees
processed discharge paperwork improperly or slowly after
the doctors had signed it.
There are similar factual issues related to fees the hospital
paid to a new outside consultant. The district court found that
these costs were not direct damages because fees for post-hoc
assessments of a prior contractor’s performance do not neces-
sarily flow from breach. But the hospital claims that the new
contractor also did some of the work that Conifer was sup-
posed to have done under the contract but did not. That
No. 20-1735 21
sounds like “cover,” which can be recoverable as a form of
direct damages. See IBM II, 112 N.E.3d at 1100–01 (costs of
“reprocurement” were direct damages under the terms of a
contract for business services); cf. BRC Rubber & Plastics Inc. v.
Continental Carbon Co., 981 F.3d 618, 634 (7th Cir. 2020) (Indi-
ana law; applying Uniform Commercial Code’s allowances
for recovering costs of “cover” in sales of goods).
To be clear, we do not address the relative merits of the
parties’ arguments on these subclasses of damages, either as
to whether there are disputed facts or how the law should be
applied to those facts. Rather, the district court’s misappre-
hension of the relationship between direct and indirect dam-
ages, combined with the factual wrinkles in these sub-classes
of damages, gives us pause. We will not resolve these layered
factual and legal issues on appeal when remand is necessary
in all events. See CPL, Inc. v. Fragchem Corp., 512 F.3d 389, 393
(7th Cir. 2008).
B. Willful Misconduct
Even under Conifer’s interpretation, the contract left room
for lost-revenue damages caused by “willful misconduct.”
The district court held that Conifer’s (assumed) breaches of
the contract did not rise to the level of “willful misconduct”
because it was motivated by its own financial self-interest, not
animus toward the hospital. The issue of willful misconduct
is likely to arise again on remand because the hospital is seek-
ing direct damages in excess of the contract price, and some
of the damages it seeks might properly be deemed “conse-
quential.” See §14.1(B) and (C). The district court’s grant of
summary judgment to Conifer on this issue conflicts with the
Rule 56 standard because there are genuine factual disputes
22 No. 20-1735
as to whether Conifer’s breaches amounted to willful miscon-
duct as that term is used by Indiana courts.
The parties’ use of “willful misconduct,” a concept from
tort law, in this contract for business services strikes us as at
best an awkward fit. State of mind plays an important role in
tort law. Consider the fundamental divide between negligent
and intentional torts. Or consider the standards for punitive
damages in tort cases, which ordinarily require intentional or
at least reckless wrongdoing. In contract law, by contrast,
courts typically do not consider the state of mind of the
breaching party. E.g., Vernon Fire & Casualty Insurance Co. v.
Sharp, 349 N.E.2d 173, 180 (Ind. 1976) (“a promisor’s motive
for breaching his contract is generally regarded as irrele-
vant”); see generally Oliver Wendell Holmes, The Path of the
Law, 10 Harv. L. Rev. 457, 458, 462–64 (1897) (anticipating sep-
aration “between legal and moral ideas” in contract law).
Courts might assume that breaches are deliberate, but ordi-
narily that does not matter. A breach is a breach, based on ob-
jective standards of performance.
The concept of “efficient breaches” highlights the prob-
lem. Contract law has evolved to encourage, or at least to tol-
erate, deliberate breaches when the breaching party will come
out ahead financially if it both breaches and pays the other
party damages. See BRC Rubber, 981 F.3d at 632. Given this
background, it is not obvious what would count as willful
misconduct under this contract. Still, the parties chose to write
their contract this way, so we have tried our best to under-
stand what they intended.
In Indiana law, willful misconduct is a concept used most
often in personal-injury torts and in several Indiana statutes
governing tort liability, as well as in unemployment
No. 20-1735 23
compensation and worker’s compensation cases. For exam-
ple, willful misconduct is an exception under the Indiana
Guest Statute that could allow a passenger to recover for in-
juries caused by a driver of the same vehicle. E.g., Sharp v. Eg-
ler, 658 F.2d 480, 485 (7th Cir. 1981); Obremski v. Henderson, 497
N.E.2d 909, 911 (Ind. 1986) (under Guest Statute, “‘wanton
and willful’ and ‘reckless’ seem to imply the same disregard
for the safety of others”); Williams v. Crist, 484 N.E.2d 576, 578
(Ind. 1985) (drunk driver whose driving causes accident en-
gages in wanton and willful misconduct under Indiana Guest
Statute); see generally Ind. Code § 34-30-11-1(1) (current cod-
ification of Guest Statute).
“Willful misconduct” by a defendant could also overcome
an otherwise ironclad defense of contributory negligence (be-
fore Indiana adopted a modified comparative fault standard
in negligence cases). E.g., McKeown v. Calusa, 359 N.E.2d 550,
553 (Ind. App. 1977) (“contributory negligence is no defense
when injuries are wilfully inflicted,” and rule includes con-
duct “variously labeled ‘constructive wilfulness,’ ‘wanton’ or
even ‘reckless.’”).
Similarly, an employee’s misconduct could provide just
cause for firing, without unemployment compensation bene-
fits, if the misconduct was willful. See Stanrail Corp. v. Review
Bd. of Dep’t of Workforce Development, 735 N.E.2d 1197, 1203
(Ind. App. 2000) (fired employee ineligible for benefits for
“wanton or willful disregard of the employer’s interests, a de-
liberate violation of the employer’s rule, or wrongful intent”),
quoting Merkle v. Review Bd. of Indiana Employment Sec. Div.,
90 N.E.2d 524, 526 (Ind. App. 1950) (affirming denial of bene-
fits where employee’s chronic absenteeism showed “wilful
disregard of the employer’s interests”). And “willful
24 No. 20-1735
misconduct” has been a core concept in Indiana’s worker’s
compensation system for more than a century. See DeMichaeli
and Associates v. Sanders, 340 N.E.2d 796, 805 (Ind. App. 1976);
id. at 806–07 (opinion of White, J.) (tracing history of statutory
amendments regarding willful misconduct and self-inflicted
injuries). 1
In a relatively recent treatment of the concept, the Indiana
Supreme Court explained that willful misconduct can include
either “an intentional act done with reckless disregard of the
natural and probable consequence of injury to a known per-
son under the circumstances known to the actor at the time,”
or “an omission or failure to act when the actor has actual
knowledge of the natural and probable consequence of injury
and his opportunity to avoid the risk.” Witham v. Norfolk and
Western Ry. Co., 561 N.E.2d 484, 486 (Ind. 1990) (reversing
summary judgment for defendant railroad; evidence would
support finding that railroad’s failure to repair defective
warning signal was willful, wanton, or in reckless disregard
for motorists’ safety, thus defeating defense of contributory
negligence). The defendant must “have knowledge of an im-
pending danger or consciousness of a course of misconduct
calculated to result in probable injury,” and “the actor’s con-
duct must have exhibited an indifference to the consequences
of his conduct.” Id.
1Complicating matters a bit, the Indiana cases often refer to willful
and/or wanton misconduct without parsing differences between them.
See generally Cheek v. Hamlin, 277 N.E.2d 620, 626–27 (Ind. App. 1972)
(“wanton” and “willful” are frequently synonyms but not always). Our
purpose here, however, is not to test the boundaries of Indiana tort or stat-
utory law, but to understand how to apply the contractual exceptions for
“willful misconduct” to damage caps that would otherwise apply.
No. 20-1735 25
In a case applying the Guest Statute, we reviewed the con-
tours of “willful misconduct” under Indiana law:
Indiana’s courts have defined wanton or wilful
misconduct as “the conscious and intentional
doing of a wrongful act or omission of a duty,
with reckless indifference to consequences, un-
der circumstances which show that the doer has
knowledge of existing conditions and that the
injury will probably result.” Brown v. Saucerman,
237 Ind. 598, 619, 145 N.E.2d 898, 907 (1957)
(quoting Becker v. Strater, 117 Ind. App. 504, 506,
72 N.E.2d 580, 581 (1972)). The Indiana Supreme
Court has held that
(T)he gravamen of an actionable
guest act case that distinguishes it
from actions not under its pur-
view is the mental attitude of the
host driver when the misconduct
occurs. Such attitude with respect
to both his driving and his guest
must have been one adverse to the
welfare of the guest.
Andert v. Fuchs, Ind., 394 N.E.2d 931 (1979). As
the Indiana appellate courts note, “This does
not mean that the wrongful conduct of the
driver must be motivated by malice, ill will or
intent to injure.” Cheek v. Hamlin, 150 Ind. App.
681, 277 N.E.2d 620 (1972) (quoting Mazza v.
Kelly, 147 Ind. App. 33, 258 N.E.2d 171 (1970)).
Rather, it is sufficient that the appellee has been
“motivated by a desire to assert himself or his
26 No. 20-1735
interests above or beyond, or in reckless indif-
ference for, the safety of his guests.” Clouse v.
Peden, 243 Ind. 390, 186 N.E.2d 1, 4 (1962) (quot-
ing Judge [Achor’s] concurring opinion in
Brown v. Saucerman, 237 Ind. at 619). See also
Fuller v. Wiles, 151 Ind. App. 417, 280 N.E.2d 59,
62 (1972).
Sharp, 658 F.2d at 485. For present purposes, the key points
from Sharp are from the last quoted paragraph: that the plain-
tiff need not prove malice, ill will, or intent to injure, and that
it is sufficient if the wrongdoer was motivated by a desire to
put his own interests above those of the other party. 2
Conifer argues that its evidence shows that it was working
hard on the Reid Hospital account and kept trying to improve
performance while also controlling its own costs on an un-
profitable account. The district court agreed. We agree that the
evidence could be read that way. On review of summary
judgment, though, the hospital receives the benefit of conflicts
in the evidence and any reasonable inferences in its favor. The
evidence could also support reasonable inferences that
2 Conifer argues that Sharp actually supports its position because it
noted that under Indiana appellate court decisions, “intoxication of a
driver by itself is usually not evidence of ‘wanton and wilful misconduct’
within the meaning of the guest statute,” even though “drunk driving is
so serious and dangerous an offense that it should amount to gross negli-
gence, or wanton or wilful misconduct.” Sharp, 658 F.2d at 485 & n.7. Co-
nifer reasons that if driving drunk and causing an accident does not meet
that bar, its assumed mismanagement of a business contract should not
either. Soon after Sharp, however, the Indiana Supreme Court clarified that
evidence of drunk driving by itself is enough to sustain a finding that the
driver engaged in willful or wanton misconduct. See generally Williams,
484 N.E.2d at 578.
No. 20-1735 27
Conifer knew it was stuck with this unprofitable contract (out
of the larger portfolio it acquired) and that it made obviously
inadequate efforts to perform while trying to minimize its
own out-of-pocket expenses, and that its managers recog-
nized that their choices to cut Conifer’s own costs were prob-
ably going to reduce revenue for the hospital.
Again, willful misconduct does not require intent to harm;
knowledge of probable harm may be enough. And evidence
from which a factfinder could infer knowledge of the proba-
ble harm is enough to survive summary judgment. See
Witham, 561 N.E.2d at 486; Clouse, 186 N.E.2d at 4–5; see also,
e.g., Scott v. Sunrise Healthcare Corp., 195 F.3d 938, 941 (7th Cir.
1999) (summary judgment inappropriate where evidence
would allow inference that a decision-maker had knowledge
of a critical fact).
Conifer’s “willful misconduct” case, Sportsdrome Speedway
v. Clark, 49 N.E.3d 653 (Ind. App. 2016), does not conflict with
this reasoning. That case involved an accident where a race
car spun off a racetrack and hit a civilian volunteer in an un-
der-protected area. The court affirmed summary judgment
for the defendant racetrack on whether its failure to protect
that part of the track constituted willful misconduct, reason-
ing that the accident in question was a freak accident. Id. at
661–62. Because an accident of that nature and severity was
unforeseen, a factfinder could not infer that the defendant
made a conscious decision to disregard a known risk, so there
was no willful misconduct.
By comparison, this case involves not a one-off mistake or
freak accident, but a course of conduct over many months in
the face of the hospital’s complaints about understaffing, giv-
ing Conifer knowledge of the problem and the probable
28 No. 20-1735
consequences of its course of action. See Witham, 561 N.E.2d
at 486 (repeatedly ignoring complaints and warnings about
unrealized but probable danger can be willful misconduct);
see also Jones v. Motley, 309 N.E.2d 173, 176–77 & n.2 (Ind.
App. 1974) (noting cases where poor driving constituted will-
ful misconduct because a defendant continued on dangerous
course despite a passenger’s warning); Kahan v. Wecksler, 12
N.E.2d 998, 1000 (Ind. App. 1938) (applying similar Illinois
guest statute and citing Indiana cases to effect that continuous
or persistent course of conduct could be deemed willful and
wanton), quoting Armstrong v. Binzer, 199 N.E. 863, 868 (Ind.
App. 1936) (affirming plaintiff’s verdict under Indiana Guest
Statute where defendant-driver persisted in dangerous con-
duct despite warnings).
Conifer also challenges the concept of willful misconduct
generally, arguing that its breaches cannot have been willful
misconduct if it was motivated by consideration for its own
bottom line. Conifer claims that it had been losing money de-
spite understaffing the contract and that it chose to cut staff-
ing to try to break even or at least reduce its losses. Conifer
says these were business decisions that were “efficient” from
the internal perspective of the firm.
The first problem with this “efficient breach” argument is
that it is not built upon Indiana case law on “willful miscon-
duct.” Recall that, as we summarized in Sharp, it can be suffi-
cient that the wrongdoer was motivated by a desire to put his
own interests above those of the other party. 658 F.2d at 485,citing Clouse, 186 N.E.2d at 4.
Second, Conifer’s argument also misunderstands the the-
ory of efficient breach and how it relates to this contractual
exception for willful misconduct. Contract law, especially in
No. 20-1735 29
commercial settings, encourages or at least tolerates breaches
that are economically efficient so long as the non-breaching
party is made whole (net of transaction costs). BRC Rubber,
981 F.3d at 632 (collecting authorities). Conifer is correct that
this principle sits oddly with the bargained-for exception for
willful misconduct in this contract: the theory of efficient
breach posits that the willful breach of a contract does not
carry with it the moral connotations of the term “miscon-
duct.”
But the parties here are sophisticated and chose to include
an exception to this understanding, just as they also departed
from the ordinary default rules for computing damages to
begin with. Even if the “willfulness” of a breach is ordinarily
irrelevant in determining damages, the parties here opted to
change that rule. They agreed that willful breaches of this
business contract should be treated differently. If Conifer, en-
trusted with the responsibility of collecting Reid Hospital’s
revenue, chose to breach while disregarding the probable
(nearly certain) harm to the hospital, its conduct could be
deemed willful misconduct for the reasons discussed above.
See also IBM I, 51 N.E.3d at 160 (where parties’ contract pro-
vides rule that conflicts with background principle of contract
law, the contract language wins out).
In all events, efficient breach is not a shield from the nor-
mal rules of contract damages. It merely absolves a breaching
party of the moral stain of, and additional punishment for,
breaking a promise. BRC Rubber, 981 F.3d at 632. An efficient
breacher still needs to make the non-breaching party whole.
See Northern Indiana Public Service Co. v. Carbon County Coal
Co., 799 F.2d 265, 279 (7th Cir. 1986) (explaining how a so-
called efficient breach might work in practice). Even if Conifer
30 No. 20-1735
had shown that its internal costs outweighed Reid Hospital’s
millions in alleged damages, then Conifer should simply pay
the damages and pocket the savings from its non-perfor-
mance. 3
Conifer raises other factual issues it claims would justify
affirmance, but they are inappropriate for resolution on ap-
peal. Conifer claims that Reid Hospital waived any factual ar-
gument because it did not cite any evidence before the district
court tying Conifer’s knowledge of probable harms to its de-
cision to breach. But Reid Hospital’s brief did have a factual
recitation about Conifer’s knowing misdeeds, and Conifer
even complained about the length of this section in response.
See Dkt. 115 at 9, quoting Dkt. 95 at 15 (“Reid devotes more
than fifteen pages of its Brief to a section about Conifer’s al-
leged ‘conscious understaffing of Reid’s revenue cycle.’”).
Conifer asserts that the undisputed facts show that there
was no willful misconduct, citing various cross-referenced
summary judgment exhibits. But a factfinder could conclude
that the evidence considered in the district court’s summary
judgment order, taken in the light most favorable to the hos-
pital, fits the proper definition of willful misconduct. For ex-
ample, the district court recounted that the contract was un-
der-resourced and underperforming under Dell, and that Co-
nifer then cut staff and resources even further after assuming
3 On this summary judgment record, there are further reasons to ques-
tion Conifer’s business-necessity narrative. Conifer acquired the Reid
Hospital contract from Dell as part of a larger book of business. At the
time of the acquisition, Reid Hospital’s contract was losing money but
most of the others were not. Taking these facts in the light most favorable
to the hospital, Conifer has not shown as a matter of law that it was losing
money from its assumption of the Reid Hospital contract.
No. 20-1735 31
the contract, and did so despite Reid Hospital’s complaints
and the threat posed by poor revenue collection.
Even more to the point, the district court cited an email
thread among several Conifer executives noting the need to
add staff to meet the contract’s performance standards but de-
clining to do so because of internal budget pressures. A ra-
tional factfinder could conclude that those decision-makers
exhibited the sort of “arrogant recklessness” to the probable
harm to the hospital that can support a finding of “willful mis-
conduct” under Indiana law. See Clouse, 186 N.E.2d at 4 (re-
versing directed verdict for driver where driver ignored pas-
senger’s pleas to slow down). And even if there were no direct
evidence of Conifer executives’ respective states of mind over
the course of its poor contract performance made worse by
further staff cuts, a factfinder could infer that they knew that
cutting staff would probably cause serious financial harm to
the hospital. That is enough to survive a motion for summary
judgment. See Scott, 195 F.3d at 941; Witham, 561 N.E.2d at 486.
Finally, Conifer argues that it was not a malefactor at all—
that in fact it deserves praise because it remained responsive
to Reid Hospital, operated this contract at a loss, and did eve-
rything it could to remediate staffing problems that were be-
yond its control. Conifer cites Reid Hospital executives’ praise
of its work. The hospital counters with evidence of com-
plaints. We cannot weigh Conifer’s citations to plaudits
against Reid Hospital’s citations to reproach. Conifer’s de-
fense along these lines must wait for trial. For now we must
view the record in the light most favorable to the hospital.
32 No. 20-1735
C. Causation and Damages
In the alternative, Conifer urges us to affirm on grounds
that the district court did not reach. Briefly, Conifer argues
that even if we assume a breach, the hospital cannot show that
it was damaged at all or that Conifer’s breach caused any
damages. Conifer highlights an analysis commissioned by the
hospital showing that Conifer increased Reid Hospital’s rev-
enue by one to two percent during its contract term. Conifer
also argues that the hospital’s damages and causation theories
are too speculative because it may have been reimbursed for
some of the money that it now claims it never received and
cannot tie each dollar to specific breaches. The hospital coun-
ters that it need not approach its damages calculations with a
surgeon’s precision to defeat a motion for summary judg-
ment. It says that it has met its burden by showing that after
Conifer assumed the contract, the standard of performance
(and revenue collected) fell on key metrics.
We are not persuaded that the judgment can be affirmed
on these intertwined factual and legal arguments. Our review
of the summary judgment record shows plenty of material
factual disputes, so a blanket affirmance would be inappro-
priate. See International Financial Services Corp. v. Chromas
Technologies Canada, Inc., 356 F.3d 731, 740 (7th Cir. 2003). It’s
disputed facts all the way down. For example, the parties’ ap-
pellate briefs debate the meaning and import of an email
chain (as interpreted in light of deposition testimony, revenue
reports, et cetera) about five million dollars that Reid Hospital
claims was uncollected because of Conifer’s assumed breach.
This money, moreover, is part of a larger subset of alleged
damages (one of many) that is also disputed based on differ-
ent revenue reports, emails, and deposition testimony.
No. 20-1735 33
Conifer’s claim that it increased Reid Hospital’s revenue
also does not resolve the case. According to the Reid Hospital
employee who performed this accounting, he adopted Coni-
fer-friendly assumptions in his analysis and found conflicting
evidence of growth and loss. Conifer’s reliance on this evi-
dence also suffers from a more basic fault. Is one to two per-
cent revenue growth over two years a lot or a little? Is the rel-
evant baseline for comparison the collections established by
Reid Hospital’s own underperforming in-house operation?
By Dell before Conifer took over the contract? As compared
to well-known trends in medical cost inflation? In exchange
for millions of dollars in fees? The one to two percent increase,
assuming it is correct, does not conclusively resolve the merits
of the case. These are questions for trial.
The judgment in favor of Conifer is REVERSED and this
case is REMANDED for proceedings consistent with this
opinion.