There can be a lot at stake when parties agree to enter into contractual relationships. Oftentimes wronged parties are subjected to massive financial losses, and one or both parties may end up facing damage to their reputation and goodwill. This is why contracts need to be carefully negotiated, and aggressive action should be taken when the terms of a contract aren't adhered to as written.
While proper contract negotiation can oftentimes avoid contract disputes and claims of breach, sometimes that process in itself can cause complications.
This was the situation recently between the state of Louisiana and several health care providers. There, the state's procurement office halted multiple contracts, worth billions of dollars, related to Medicaid services.
When the contracts were awarded, those who made unsuccessful bids, such as Louisiana Healthcare Connections and Aetna, protested the state's decision. This led to the contracts being halted which, in turn, threatened to throw more than 1 million people off of their government-funded healthcare.
Fortunately, the state eventually issued emergency contracts to bridge the gap between dealing with protests from those companies that lost out and issuing long-term contracts. Despite this act by the state, many are afraid that the emergency contracts leave healthcare coverage at risk. We will have to wait to see exactly how long it will take for long-term contracts to be implemented and whether that delay will have an impact on Louisiana residents.
Although some contracts in the business world are relatively routine and deal with relatively small, albeit important, matters, others can have enormous ramifications and reshape the business landscape for those involved.
Both types of agreements need careful negotiating and policing, though, which is why those affected by contract disputes, like the one mentioned above, may be well suited to seek out legal guidance.