FMLASource Alleges RWJBarnabas Wrongfully Terminated Contract

On Wednesday in the District of New Jersey, FMLASource filed a complaint against RWJBarnabas, alleging that the defendant breached an agreement between the parties that stipulated a three-year period of leave administration services, “conjur(ing) up criticisms” of the plaintiff’s services in order to justify terminating the contract.

Leave administrator FMLASource entered into a contract with RWJBarnabas that said FMLASource would administer the leaves of the approximately-33,000 employees of the defendant, which was the result of a 2016 merger between Robert Wood Johnson Health System and Barnabas Health. Among the services included in the agreement were access to a “designated account management contact” and to “FMLASource’s call center and online tools,” the complaint said.

The plaintiff claimed that the agreement period started Oct. 20, 2019, and was to end Oct. 19, 2022; however, the defendant terminated the agreement Dec. 15, 2020, “wrongfully, and without justification,” the complaint said.

FMLASource asserted that there was no valid reason that the defendant should have terminated the agreement, which states that RWJB is only permitted to end it if FMLASource “fails to perform any material service required to be performed” or if a failure is not remedied within 30 days, according to the complaint. Not only did the plaintiff argue that no such failures occurred, but it claimed FMLASource customized certain services covered under the agreement to suit the needs of RWJB, having no contractual obligation to do so.

Purportedly no shortcomings on FMLASource’s end, according to the plaintiff, caused RWJB to “manufacture dissatisfaction” with the plaintiff’s services. FMLASource links this alleged change in tone to a change in business contacts at RWJB.

“After the decision makers at RWJB made up their mind that they wanted to end the Agreement with FMLASource … they proceeded to engage in a plan to conjure up criticisms about FMLASource’s services,” the complaint said. “This was done in an attempt to prematurely exit the Agreement under the auspices of a material breach without having to pay FMLASource for the remainder of the contract term.”

The plaintiff claimed that May 2020 marked the beginning of “nitpick complaints” by the defendant that mostly were related to matters “departed from” the agreed-upon services between the parties or that simply “were without merit.” FMLASource called a June 6, 2020, letter from the defendant detailing its complaints a “wish list.”

After additional back-and-forth letters, RWJB eventually sent a letter on Oct. 19, 2020, stating its intention to terminate the agreement effective Dec. 15, 2020.

“As a direct result of RWJB’s breaches of the Agreement and the implied covenant of good faith and fair dealing, Plaintiff has and will continue to suffer damages in excess of $1 million that it would have otherwise received as a benefit from the contract,” the plaintiff claimed.

FMLASource is seeking compensatory and punitive damages and declaratory judgment, among other relief.

The plaintiff is represented by Genova Burns.