New York’s Highest Court Holds Public Health Law § 230 (11) (b) Does Not Have a Private Cause of Action
The State of New York Court of Appeals recently held in Dr. Robert D. Haar, M.D. v. Nationwide Mutual Fire Insurance Company (November 21, 2019, No. 81) that a doctor cannot sue an insurance carrier for reporting him to state authorities for insurance fraud. More specifically the Court held that N.Y. Pub. Health Law 230(11)(b) does not create a private right of action for bad faith and malicious reporting to the Office of Professional Medical Conduct. (“OPMC”)
Plaintiff, an orthopedic surgeon, treated patients insured by a specific automobile insurance company. The Defendant insurance company later filed complaints with OPMC alleging insurance fraud. OPMC declined to impose discipline against Plaintiff. Plaintiff then commenced an action asserting that Defendant's complaints lacked a good-faith basis in violation of Public Health Law § 230 (11) (b) and interposed a separate cause of action for defamation. Defendant removed the matter to federal court, moved to dismiss, and the United States District Court for the Southern District of New York granted Defendant’s motion. The District Court noted that if presented with the issue of interpretation of New York State law, it would hold that § 230 (11) (b) did not imply a private right of action.
Plaintiff appealed and the Second Circuit, recognizing an Appellate Division split, certified the above-noted question. In Ahmed Elkoulily, M.D., P.C. v New York State Catholic Healthplan, Inc., 153 AD3d 768, 771- 772 (2d Dept 2017), the Second Department found that the law does not create a private cause of action. Earlier in Foong v Empire Blue Cross & Blue Shield, 305 AD2d 330, 330 (1st Dept 2003), the First Department held that the law did create an implied right of action. This Appellate Division split allowed for the same law to be interpreted differently in the state.
The Court identified “essential factors” to be considered in determining whether a private right of action can be fairly implied from the statutory text: “(1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme[.]” (citing Sheehy v Big Flats Community Day, 73 NY2d 629, 633 (1989).
The Court concluded that there was not a private right of action because Plaintiff failed to demonstrate that he fell within the class the legislature intended to benefit by enacting Public Health Law § 230 (11) (b). The Court reviewed the law’s legislative history and found the intent of the law was to protect specific people and entities – including insurance companies form making good-faith reports to OPMC. The Court concluded that the law, on its face, was intended to benefit persons or entitles that report suspected medical misconduct, not medical professionals accused of misconduct.
This case stands for the proposition that diligent investigation and reporting of suspected medical, insurance, and other types of fraud remains a statutory priority. Carriers and people with good faith information should not hesitate to report same to the appropriate authorities.