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FIRST HEALTH GROUP v. NATIONAL PRESCRIPTION ADM'RS

July 19, 2001

FIRST HEALTH GROUP CORP., PLAINTIFF,
V.
NATIONAL PRESCRIPTION ADMINISTRATORS, INC., AND DAVID W. NORTON, DEFENDANTS.



The opinion of the court was delivered by: Kane, District Judge.

    MEMORANDUM

I. Introduction

Plaintiff First Health Group Corp. ("First Health") initiated this diversity action against David W. Norton ("Norton") and National Prescription Administrators, Inc. ("NPA"), by filing a complaint, motion for temporary restraining order, motion for preliminary injunction, and motion for expedited discovery on February 22, 2000. Plaintiffs complaint alleges claims of breach of contract, misappropriation of trade secrets, breach of fiduciary duty, tortious interference with contract, and tortious interference with a prospective economic advantage, against Norton and NPA, arising out of NPA's successful 1999 bid to manage and administer Pennsylvania's Pharmaceutical Assistance Contract for the Elderly ("PACE") program. Plaintiffs claims against Norton arise out of his role as a former employee of First Health (and officer-in-charge of the PACE program) and his later role as a consultant to NPA in connection with the preparation of its successful 1999 bid to manage and administer the PACE program.

The Court denied Plaintiffs motion for a temporary restraining order on February 23, 2000, and held a hearing on Plaintiff's motion for preliminary injunction on May 15-18 and 24, 2000. Based on the testimony presented and documentary evidence introduced at the hearing, and upon consideration of the briefs and proposed factual findings submitted by the parties, the Court makes the following findings of fact and conclusions of law. For the reasons set forth below, the court will deny Plaintiff's motion for a preliminary injunction.

II. Findings of Fact

Background

1. In 1983, the General Assembly of the Commonwealth of Pennsylvania enacted legislation that established the PACE program to provide prescription drugs to eligible senior citizens.
2. The Pennsylvania Department of Aging ("PDA") administers the program through a contractor. The contractor maintains operations to determine cardholder eligibility, provide cardholder services, enroll providers, maintain provider relations, adjudicate on-line claims, administer clinical programs (such as retrospective and prospective drug utilization review, disease state management programs, and establishment of drug formularies), administer manufacturers' rebates, and manage PDA's funding stream.
3. First Health Group Corporation is the parent company of First Health Services Corporation. First Health Services Corporation is a national company that manages and administers, in approximately twenty-two (22) states, Medicaid and other public assistance programs including, but not limited to, government-funded entitlement programs. First Health Services Corporation derives an important part of its business from government-funded pharmacy benefit programs. First Health Group Corporation (operating through First Health Services Corporation) is currently the contract administrator for government-funded programs that provide prescription drug benefits for the elderly, such as the New York EPIC program and PACE.*fn1
4. First Health submitted a bid proposal in response to the initial RFP issued by the PDA for the PACE program in 1983, and was awarded the contract.
5. Since 1983, First Health has been the only contractor to manage and administer the PACE program, having won three (3) subsequent bids in 1987, 1990 and 1995. The contract term of the PACE contract entered into between PDA and First Health in 1995 was originally three years. In 1998, PDA extended its contract with First Health for the two year period from 1998-2000.
6. Thomas Snedden ("Snedden"), Director of the PACE program for PDA, has consistently given First Health an "A-plus" rating with respect to First Health's performance under the PACE contract.
7. In each and every re-procurement of the PACE contract before 1999, First Health had always been the lowest bidder.
8. Ninety-five percent of NPA's business is as an administrator of commercial health care benefit programs. NPA has never managed or administered either the PACE program or a comparable government-funded entitlement program.

PACE Contract

9. Relevant portions of the contract between First Health and the PDA read:
b. In the event Contractor or subcontractor proprietary software utilities (programs) are utilized in the operation of the system, Contractor agrees upon request by the Department to grant to the Department at the end of [this agreement] a non-exclusive, nontransferable license for three years to use the programs required to operate the PACE system subject to the following conditions: [t]he programs shall only be used by the Department or the Department's successor PACE contractor(s) to operate the PACE system. . . .
c. All computer files, computer programs and related items developed by the Contractor for the program shall be owned fully and without restriction by the Department. . . .
10. While the PDA owns the administrative and operating system, it does not own the way in which the Contractor ties together all the individual elements to manage the PACE program.
11. The contract requires that First Health provide documentation for proprietary software directly affecting the PACE program including "the name of the software vendor, the method of acquisition, the identification of the party responsible for maintenance . . . warranties applicable to the software and the software contract or lease."
12. The contract further requires First Health to deliver to the PDA a description of all manual procedures, including copies of the programs, the instruction manuals and the procedure manuals that are used.
13. On or about September 14, 1999, PDA forwarded the its request for proposals ("1999 RFP") for the contract to manage and administer the PACE program for the period commencing July 1, 2000 to First Health, NPA and other potential bidders.
14. Norton was not on PDA's list of potential bidders for the PACE contract, and did not receive a copy of the 1999 RFP from PDA.
15. The 1999 RFP required all bid proposals to include, among other things, a technical proposal setting forth (i) a statement of understanding, management summary, work plan (addressing the three separate tasks of program takeover, operation and turnover), bidder's experience and personnel (collectively the "technical proposal"); (ii) a proposal to include Socially/Economically Restricted Businesses ("SERB"), and (iii) a cost and price proposal.
16. The 1999 RFP required that all bidders address the PACE program, the PACE needs enhancement tier ("PACENET") program and certain related ancillary programs, such as Chronic Renal Disease, Cystic Fibrosis, Spina Bifida, PKU (a metabolic disorder in children) and a special program for AIDS patients within the Commonwealth of Pennsylvania's Department of Welfare.

Norton's Employment with First Health

17. In 1974, The Computer Company (now known as First Health) first hired Norton as an analyst and programmer in its information systems area.
18. From approximately 1990 to 1993, Norton was the vice president and officer-in-charge of the PACE program and was responsible for, among other things, the day-to-day operations of the PACE program and First Health's business relationship with PDA.
19. As part of his job responsibilities, Norton served as the principal liaison between First Health and PDA and Snedden.
20. On or about October 1, 1997, Norton and First Health executed an Employment Agreement (the "Agreement"). The Agreement sets forth the terms of Norton's employment with respect to First Health's pharmacy management and benefits programs, and delineated certain contractual obligations that Norton agreed to honor.
21. In return for executing the Agreement, Norton received the following consideration: (i) a guarantee of one-year of employment, with successive automatic renewals (unless the Agreement was terminated), (ii) participation in First Health's management incentive plan, and (iii) stock options.
22. Section 6 of the Agreement, entitled "Termination," states: Either party may terminate this Agreement at any time following the Initial Term, without cause and without any liability to [First Health], upon no less than one hundred and twenty (120) day's [sic] prior written notice. In such event, [Norton] if requested by [First Health], will continue to render Employee Services and be paid [Norton's] regular compensation up to the date of termination in accordance with [First Health's] then-current payroll policies and procedures.
23. Section 7 of the Agreement, titled "Confidentiality" states:
Norton agrees not to directly or indirectly use or disclose, for the benefit of any person, firm or entity other than [First Health] and its subsidiary companies, the Confidential Business Information of [First Health]. Confidential Business Information means information or material which is not generally available to or used by others or the utility or value of which is not generally known or recognized as a standard practice, whether or not the underlying details are in the public domain, including but not limited to its computerized and manual systems, procedures, reports, client lists, review criteria and methods, financial methods and practice, plans, pricing and marketing techniques as well as information regarding [First Health's] past, present, and prospective clients and their particular needs and requirements, and their own confidential information.
Upon termination of employment, with or without cause, [Norton] agrees to return to [First Health] all policy and procedure manuals, records, reports, notes, data, memoranda, and reports of any nature (including computerized and electronically stored information) which are in [Norton's] possession and/or control which relate to (i) the Confidential Business Information of [First Health], (ii) [Norton's] Employment with [First Health], or (iii) the business activities or facilities of [First Health] or its past, present, or prospective clients.
24. Section 8 of the Agreement, titled "Restrictive Covenant" states, in pertinent part:
For a period of one year after termination of employment, with or without cause, [Norton] will not directly or indirectly, for the purpose of selling services provided or planned by [First Health] at the time the employment was terminated, call upon, solicit or divert any actual customer or prospective customer of [First Health]. An actual customer, for purposes of this Section, is any customer to whom [First Health] has provided services within one year prior to [Norton's] termination. A prospective customer, for purposes of this Section, is any prospective customer to whom [First Health] sought to provide services within one year prior to the date of [Norton's] termination and [Norton] has knowledge of and was involved in such solicitation. For the purposes of this Section, responding to an unsolicited request for proposal by a customer or prospective customer which is a government agency or government contractor will not constitute a violation of [Norton's] obligation hereunder.
25. Section 9 of the Agreement, titled "Non-Solicitation of Employees," states:
[Norton] further agrees that for a period of one year from the date of [Norton's] termination, with or without cause, [Norton] shall not directly or indirectly solicit or hire any person who is currently or was an employee of [First Health] at any time during the twelve months prior to [Norton's] termination.
26. Section 10 of the Agreement, titled "Remedies," states:
In the event [Norton] breaches or threatens to breach Section 7, 8 or 9 of this Agreement, [First Health] shall be entitled to injunctive relief, enjoining or restraining such breach or threatened breach. [Norton] acknowledges that [First Health's] remedy at law is inadequate and that [First Health] will suffer irreparable injury if such conduct is not prohibited.
[Norton] and [First Health] agree that, because of the difficulty of ascertaining the amount of damages in the event that [Norton] breaches Section 9 of this Agreement, [First Health] shall be entitled to recover, at its option, as liquidated damages and not as a penalty, a sum equal to one year's salary of the employee(s) solicited to leave [First Health's] employ. The parties further agree that the existence of this remedy will not preclude [First Health] from seeking or receiving injunctive relief.
[Norton] further agrees that the covenants contained in Sections 7, 8 or 9 shall be construed as separate and independent of other provisions of this Agreement and the existence of any claim by [Norton] against [First Health] shall not constitute a defense to the enforcement by [First Health] of either of these paragraphs.
27. Norton participated in the preparation of First Health's 1990 bid proposal for the PACE contract as a member of First Health's editing team. Particularly, Norton gathered cost information pertaining to the development of a point-of-sale prescription claims processing system for the PACE program.
28. In 1990, after PDA awarded the PACE contract to First Health, Norton developed the point-of-sale prescription claims processing system for the PACE program.
29. Norton, in his role as vice president and officer-in-charge of the PACE program, was responsible for the general management of First Health's PACE office and staff, as well as the budget and financial information of the PACE program. Norton also prepared cost projections for the contract with PDA, including costs for personnel and equipment, and prepared a budget of the cost to operate First Health's PACE office in Harrisburg, Pennsylvania. Norton implemented a clinical program of prospective drug utilization review, and initiated the development and installation of the imaging system for cardholder eligibility and other documents. Norton gained intimate knowledge of First Health's profit margins with respect to the PACE program.
30. In 1993, First Health promoted Norton to senior vice president of its pharmacy business unit, a position he held until 1998. In this capacity, Norton was responsible for overseeing the management and administration of all of First Health's pharmacy business including, but not limited to, the PACE program. In his capacity as senior vice president of First Health's pharmacy business unit, Norton was responsible for bringing the PACE program's ancillary programs on line, and approved strategic planning for those ancillary programs.
31. Further, in his capacity as senior vice president of First Health's pharmacy business unit, Norton (1) met with PDA representatives and visited First Health's PACE office in Harrisburg every four to six weeks, (2) continuously monitored the operations of the PACE program, (3) knew of the status of the PACE program at any given time, (4) approved strategic planning for the PACE ancillary programs, and (5) discussed with PDA the directions or enhancements that PDA wanted for the PACE program.
32. In his capacity as senior vice president of First Health's pharmacy business unit, Norton was also responsible for all First Health pharmacy contracts including, but not limited to, New York EPIC, Oregon Medicaid, Washington, D.C. Point-of-Service, Virginia Medicaid Point-Of-Service and RetroDUR, Alaska Point-of-Service and RetroDUR and Rebate, South Carolina RetroDUR, North Carolina RetroDUR, Blue Cross/Blue Shield of North Carolina, Blue Cross of Northeast Pennsylvania, Nebraska Medicaid, Healthpass, TennCare and Promark.
33. In preparing First Health's response to the 1995 RFP for the PACE contract, Norton defined the technical, cost and price strategies for First Health's bid proposal, and determined the enhancements to be added to the PACE program. Norton also wrote and/or edited each section of First Health's bid proposal, and assisted in determining First Health's price for both the capitation and non-capitation proposals that were required by the RFP.
34. In his capacity as senior vice president of First Health's pharmacy business unit, Norton was intimately involved with the preparation of all the bid proposals submitted by the pharmacy business unit including, but not limited to, the technical and cost proposals of First Health's 1995 bid proposal for the PACE contract, and First Health's cost proposal for the 1998-2000 PACE contract extension. Norton knew First Health's profit margins on the PACE program with respect to First Health's cost proposals for the 1995 PACE contract and the 1998-2000 contract extension.
35. Norton gained an intimate knowledge of First Health's costs, pricing and profit margins, and helped First Health win numerous bids for government-funded pharmacy benefit programs including, but not limited to, bids pertaining to the PACE program and the New York EPIC program. Norton prepared the technical and cost proposal strategies for First Health's bid for the New York EPIC contract; more specifically, Norton determined the takeover cost for First Health's takeover cost proposal. In his capacity as senior vice president of First Health's pharmacy business unit, Norton had overall management authority of First Health's takeover of the New York EPIC program, which included a takeover of some of the incumbent contract administrator's staff.

Norton's Departure from First Health

36. Sometime between March and June 1999, Norton decided to leave his employment with First Health.
37. On June 7, 1999, First Health sent a letter to Norton that (i) described his severance package, (ii) stated that the effective date of his employment termination was October 28, 1999, and (iii) reminded him to adhere to the restrictive covenants set forth in the Agreement. The letter stated that Norton would be on First Health's payroll until October 28, 1999, yet it also contemplated that he might work for another company before his last day on the payroll at First Health. The letter informs Norton that "[i]f you are employed by another company prior to October 28, 1999, or serve in a consulting capacity, you are not specifically required to notify First Health, although all of the provisions of your Employment Agreement apply." Norton completed most of his work for First Health in June 1999.
38. In or around April, 1999, Norton met Snedden of the PDA for dinner in Harrisburg and, during their visit, Norton told Snedden that they would not be able to speak for a period of time.
39. In May 1999, Norton and former First Health executive Richard Hofheimer ("Hofheimer") met Snedden for dinner in Harrisburg and discussed, among other things, the potential impact of an outpatient prescription drug benefit under Medicare on state-funded pharmacy assistance programs such as PACE.
40. Between June 1999 and November 1999, Norton and Hofheimer marketed themselves to various companies as consultants interested in (i) assisting a vendor in preparing and submitting a successful bid proposal for the PACE contract, and (ii) maintaining an ongoing business relationship with the successful vendor.

Norton Approaches NPA

41. On November 15, 1999, Norton telephoned NPA President Richard Ullman ("Ullman") and offered to assist NPA in the preparation and submission of NPA's 1999 bid proposal for the PACE Contract.
42. On November 17, 1999, Norton attended an in-person interview with NPA senior management representatives Ullman, NPA General Manager Allan Zimmerman ("Zimmerman") and Vice President of Finance Steven Nicoletos ("Nicoletos") for the purpose of discussing Norton's ability to assist NPA in the preparation and submission of its 1999 bid proposal for the PACE contract, and whether or not NPA wanted to retain him as a consultant.
43. During his November 17, 1999 interview with NPA, Norton stated that he was out of work and could help NPA prepare its 1999 bid proposal for the PACE contract. Norton also described his prior employment at First Health, and his intimate knowledge of, and experience with, the PACE program.
44. At the interview Norton told NPA that he would not divulge any confidential information related to anything that First Health had done. Norton further disclosed that he had executed an employment agreement with First Health that contained restrictive covenants.
45. During his interview, Norton provided NPA with a single-page document which he prepared that purported to represent limitations on his future employment. However, the document set forth only Section 7 (confidentiality) and Section 8 (customer non-solicitation) of his Agreement with First Health. The single-page document did not set forth Section 9 (employee non-solicitation) of the Agreement, nor the remainder of the Agreement.
46. Between the November 17, 1999 interview with NPA and NPA's submission of its 1999 bid proposal for the PACE contract on December 10, 1999, Norton did not discuss the restrictive covenants in his First Health Agreement with anyone at NPA. During that time, Norton did not receive anything in writing from NPA that cautioned him to adhere to the restrictive covenants in his First Health Agreement.
47. NPA believed that Norton, as a result of his PACE experience with First Health, could provide information about the PACE program that NPA did not already possess.
48. On or about November 17, 1999, NPA hired Norton as a consultant pursuant to a consulting agreement ("Consulting Agreement"). The Consulting Agreement provided that Norton would provide NPA with consulting services with respect to the preparation and submission of NPA's 1999 bid proposal for the PACE contract.
49. Allen Langjahr, NPA's general counsel, drafted the Consulting Agreement for Norton's execution without first reviewing or examining Norton's contract with First Health or any provisions therein.
50. The Consulting Agreement contains a confidentiality provision that precludes Norton from disclosing NPA's "trade secrets," as the term is defined in the agreement, and a restriction against soliciting employees.
51. As part of his Consulting Agreement with NPA, Norton, in the course of preparing and presenting NPA's bid proposal for the PACE contract, was permitted to use the services of Hofheimer as needed. Norton recommended that NPA retain Hofheimer because Norton believed that Hofheimer could provide valuable assistance to NPA with respect to the drafting and editing of the "Management Summary" portion of NPA's 1999 bid proposal for the PACE contract. NPA retained Hofheimer in mid-November 1999.
52. Over the three-week period when Norton consulted with NPA about PACE, Norton billed NPA a total of one hundred and seventy seven hours, or an average of about sixty hours per week, for the work that he performed in preparing and submitting NPA's 1999 bid proposal for the PACE contract. For the services that he rendered in connection with preparing NPA's bid proposal for the PACE contract, and before NPA's oral interview with PDA, NPA paid Norton approximately $15,000.
53. For the services that he rendered in connection with preparing NPA's bid proposal for the PACE contract, NPA paid Hofheimer approximately $5,000.

NPA's Bid Proposals

54. NPA submitted bid proposals for the PACE contract in 1990 and 1995.
55. NPA was not awarded the PACE contract in 1990 or 1995 because PDA's bid proposal evaluation committee gave NPA's technical and cost proposals scores that were significantly lower than the scores given to First Health. PDA determined that NPA's bids were too expensive and poorly prepared.
56. In its 1995 bid proposal, NPA bid a price for the entire PACE contract that was approximately twenty-five percent (25%) higher than the price proposed by First Health.
57. In October, 1999, prior to Norton's arrival at NPA, the draft bid proposal prepared by NPA ("October draft") was little more than a repeat of NPA's 1995 proposal.
58. In October, 1999, before Norton began work for NPA, Peter Grieger, who prepared the losing 1990 and 1995 bid proposals for NPA, went to PDA's procurement library with two other NPA employees to view the 1995 First Health proposal, including its cost proposal section, and the 1998-99 contract extension. Neither Grieger nor the other NPA employees were given access to the cost proposal section of First Health's 1998-2000 contract extension.
59. While working on NPA's 1999 bid proposal, Norton met with Zimmerman on a weekly basis to discuss Norton's recommendations for, and preparation of, NPA's 1999 bid proposal. Norton's responsibilities on NPA's 1999 bid included:
a. preparing a spreadsheet with his estimates of the costs to administer the PACE program, including an estimate of takeover costs based on current PACE contract percentages;

b. following up with Paragon Systems;

c. adding management staffing and takeover section;
d. adding one extra third-party liability coordinator above and beyond First Health's requirement, to obtain more dollars;

e. reading the new NPA takeover section;

f. adding recruitment, hiring incentives and switch vendor notification into NPA's work plan;
g. drafting and/or editing portions of NPA's 1999 technical proposal; and
h. serving as a member of NPA's "red team" of bid proposal reviewers, and therefore "touching" every page of NPA's 1999 bid proposal.

Officer-in-Charge

60. Norton recommended to NPA that it propose him as the officer-in-charge of the PACE program.
61. NPA's final 1999 bid proposal for the PACE contract proposes Norton as the officer-in-charge of the PACE program, and states NPA's intention to recruit and hire First Health's current 75-80 member Harrisburg PACE staff.
62. In PDA's answers to the bidders' questions pertaining to the 1999 RFP, PDA stated that it would react "affirmatively" to a bidder proposing to hire many of First Health's current PACE staff.
63. The PACE staff represents a core asset of First Health with respect to its management and administration of public entitlement programs for senior citizens. First Health's PACE staff possesses skills easily transferrable to other First Health contracts.
64. First Health has invested considerable resources in its PACE employees and their expertise and, in the event of the award of the PACE contract to another vendor, First Health has a retention program through which it would use these employees in other capacities.

Cost Proposal

65. Norton worked with Nicoletos in preparing NPA's 1999 cost proposal for the PACE contract, although Nicoletos spent very little time with Norton, and Norton prepared several iterations of NPA's cost proposal.
66. Norton prepared a spreadsheet with preliminary cost numbers and established a methodology for assigning those costs to the ancillary programs that are part of the RFP.
67. The cost proposal of a bid was required to contain a fixed price for each of the three tasks of the program: Takeover, Operations, and Turnover. The costs of each section were then broken down as further required by the RFP.
68. Norton developed the takeover cost number for NPA's 1999 cost proposal for the PACE contract.
69. In the cost buildup that he prepared for NPA's 1999 cost proposal, Norton also prepared estimated preliminary costs for staffing, travel, equipment, supplies, general operating expenses, direct labor, other direct costs and the cost for the maintenance of imaging equipment. However, Nicoletos made changes to Norton's numbers for professional staff.
70. For its 1999 bid proposal, NPA's pricing strategy was to estimate First Health's bid price for the 1999 contract, and then to bid a price that was ten percent less.
71. To estimate First Health's price for the first year of the PACE Contract, NPA reviewed First Health's bid for the 1995-98 contract term (with its cost proposal section), and First Health's total price for the 1998-2000 contract extension (without its cost proposal section), and a March 31, 1997 Dun & Bradstreet report for a company called Health Care Compare ("HCC").
72. The cost proposal section of First Health's 1995 bid reflected that First Health's profit margin was ten percent. To find out whether First Health's profit margin had changed since 1995, Nicoletos turned to the Dun & Bradstreet report. Nicoletos understood, albeit incorrectly, that the March 31, 1997 Dun & Bradstreet report reflected First Health's figures for sales and net income before taxes. From the Dun & Bradstreet Report, Nicoletos calculated that First Health earned about fifty percent profit. Nicoletos thus concluded that, in its 1999 bid, First Health would likely price its bid to include a profit margin of between ten and fifty percent. In order to bid carefully but competitively, Nicoletos chose to assume ten percent as First Health's likely profit on their 1999 bid, and chose that figure as the amount by which he would reduce his estimate of First Health's 1999 bid price.
73. Nicoletos arrived at NPA's final bid price by using the average yearly price as calculated from First Health's 19982000 extension, increasing that figure by three percent yearly for inflation and then reducing it by ten percent (First Health's likely profit margin). Although none of the figures in the March 31, 1997 Dun & Bradstreet report for sales and net income before taxes relate to or include First Health's operations, Nicoletos believed that HCC and First Health were the same company, and that gave him confidence that the ten percent figure was a safe estimate. Nicoletos' reliance on the Dun & Bradstreet Report to estimate the upper level of First Health's likely profit margin was unimportant. The most important basis for Nicoletos' estimate of First Health's profit was the profit margin in the cost proposal of First Health's cost proposal for the 1995-1998 bid.
74. First Health's total price for the 1998-2000 PACE contract extension was $17,691,376, or $8,845,688 per year. The total price bid by First Health in 1999 for the PACE contract was $47,458,112, or $9,491,622.40 per year.

Information Regarded as Confidential and Proprietary by First Health

75. Although the 1999 RFP sets forth PDA's general requirements pertaining to the management and administration of the PACE program, First Health, as the incumbent, possessed special knowledge of the preferences of PDA for the PACE program that are not set forth in the 1999 RFP.
76. In order to maintain what it regards as the confidential and proprietary nature of its information pertaining to the administration and management of the PACE program (including costing, pricing, margins, marketing, and the highly specialized procedures, processes, policies, systems and methods of operation, as well as PDA's particular needs, preferences and requirements for that program), First Health
a. requires all of its employees including, but not limited to, its PACE staff, to execute employment agreements that contain clear and precise obligations of confidentiality;
b. limits access to its cost proposals to First Health's senior management in charge of the PACE contract, the financial manager of the PACE contract, and First Health's financial staff;
c. limits the number of individuals who prepare, review or have access to First Health's technical proposals to First Health's key management personnel in Harrisburg and First Health's proposal preparation staff in Richmond, Virginia;
d. stores its technical proposals in a locked library, access to which is limited to certain employees during and after preparation of the proposals;
e. maintains a computerized financial system, access to which is limited to First Health's vice president of finance and his staff at First Health's Richmond, Virginia headquarters, and First Health's parent corporation;
f. limits access to its computer mainframe through an information systems manager and the mandatory use of passwords and identification numbers;
g. enters into contracts with customers that restrict access to First Health's proprietary software; and
h. includes in its bid proposals a statement that the material set forth in the bid proposal is confidential and proprietary business information of First Health.

Imaging System

77. First Health uses an imaging system to support the cardholder application and provider enrollment processes, and uses Paragon software and support to do so.
78. Norton, during his tenure at First Health, was responsible for the development of First Health's business relationship with Paragon as it pertained to the PACE program and the New York EPIC program.
79. NPA does not presently use imaging with respect to claims processing, determining cardholder eligibility or routing work flow of documents.
80. By the terms of its contract with PDA, First Health waived any proprietary claim to any computer systems developed for the PACE program.
81. Neither Norton, who developed the relationship with Paragon for First Health, nor Howells, the current First Health officer-in-charge of the PACE program for First Health, considered First Health's relationship with Paragon a secret.
82. There is no evidence of any confidentiality agreement between First Health and Paragon.
83. Paragon's website lists First Health, Harrisburg as a customer.
84. Neither First Health's 1995 bid, nor NPA's October draft, included mention of Paragon as ...

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