Haar v. Nationwide Mut. Fire Ins. Co.

• Decision Date: 21 November 2019
• Docket Number: No. 81,81
• Citation: 115 N.Y.S.3d 197,138 N.E.3d 1080,34 N.Y.3d 224
• Parties: Dr. Robert D. HAAR, M.D., Appellant, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Respondent, et al., Defendants.
• Court: New York Court of Appeals Court of Appeals

34 N.Y.3d 224

138 N.E.3d 1080

115 N.Y.S.3d 197

Dr. Robert D. HAAR, M.D., Appellant,

v.NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Respondent, et al., Defendants.

No. 81

Court of Appeals of New York.

November 21, 2019

Gregory Zimmer, New York City, for appellant.

Duane Morris LLP, New York City (Ralph J. Carter of counsel) and Philadelphia, Pennsylvania (Charlotte E. Thomas, of the Pennsylvania bar, admitted pro hac vice, of counsel), for respondent.

Short & Billy, P.C., New York City (Ioanna Olivia Zevgaras and Skip Short of counsel), for New York Insurance Association, Inc. and others, amici curiae.

Greenberg Traurig, LLP, Albany (Susan Phillips Read of counsel), for Coalition Against Insurance Fraud and another, amici curiae.

OPINION OF THE COURT

STEIN, J.

The United States Court of Appeals for the Second Circuit has certified the following question to this Court: "Does New York Public Health Law [§ ] 230(11)(b) create a private right of action for bad-faith and malicious reporting to the Office of Professional Medical Conduct?" ( 918 F.3d 231, 235 [2d Cir.2019] ). Because there is no indication that the legislature intended to create a private right of action in section 230(11)(b), we answer the certified question in the negative.

Plaintiff, an orthopedic surgeon licensed to practice medicine in New York, treated four patients who were injured in automobile accidents and insured by defendant Nationwide Mutual Fire Insurance Company. Plaintiff submitted claims to defendant in connection with each patient, and defendant either fully or partially denied each claim. Defendant thereafter filed complaints with the Office of Professional Medical Conduct (OPMC) alleging insurance fraud. After an investigation, OPMC declined to impose any discipline against plaintiff. Plaintiff then commenced this action, asserting that defendant's complaints to OPMC 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 action to federal court and moved to dismiss the complaint, arguing that Public Health Law § 230(11)(b) did not expressly or impliedly provide plaintiff with a right of action and that the defamation claim was time-barred. The United States District Court for the Southern District of New York granted defendant's motion to the extent of dismissing the cause of action premised on section 230(11)(b). Relying on its prior decision in Lesesne v. Brimecome , 918 F. Supp. 2d 221 (S.D. N.Y.2013), the District Court opined that, if presented with the issue of whether Public Health Law § 230(11)(b) implies a private right of action, this Court would hold that it does not. The District Court subsequently concluded that plaintiff's defamation cause of action was time-barred.

Plaintiff appealed. Recognizing an Appellate Division split regarding whether Public Health Law § 230(11)(b) implies a private right of action (compare Ahmed Elkoulily, M.D., P.C. v. New York State Catholic Healthplan, Inc., 153 A.D.3d 768, 771–772, 61 N.Y.S.3d 83 [2d Dept. 2017] ), with Foong v. Empire Blue Cross & Blue Shield, 305 A.D.2d 330, 330, 762 N.Y.S.2d 348 [1st Dept. 2003] ), the Second Circuit certified the above question, which this Court accepted ( 32 N.Y.3d 1211, 98 N.Y.S.3d 754, 122 N.E.3d 552 [2019] ).

Public Health Law § 230 governs professional medical misconduct proceedings. Section 230(11) sets forth the procedures for reporting "information ... which reasonably appears to show that a licensee is guilty of professional misconduct," as defined by the Education Law ( Public Health Law § 230[11][a] ). To that end, the statute requires that certain organizations and licensees report suspected medical misconduct, although the statute also permits "any other person" to submit complaints to OPMC ( Public Health Law § 230[11][a] ). The provision at issue in this case states that "[a]ny person, organization, institution, insurance company, osteopathic or medical society who reports or provides information to [OPMC] in good faith, and without malice shall not be subject to an action for civil damages or other relief as the result of such report" ( Public Health Law § 230[11][b] ).

As plaintiff concedes, Public Health Law § 230(11)(b) does not expressly create a cause of action authorizing licensees to commence civil litigation against a complainant that files an allegedly bad-faith and/or malicious report with OPMC (compare Public Health Law § 230[10][j] [creating an express right to commence a CPLR article 78 proceeding in certain instances] ). Consequently, "recovery may be had ... only if a legislative intent to create such a right of action is fairly implied in the statutory provision[ ] and [its] legislative history" ( Brian Hoxie's Painting Co. v. Cato–Meridian Cent. School Dist., 76 N.Y.2d 207, 211, 557 N.Y.S.2d 280, 556 N.E.2d 1087 [1990] [internal quotation marks omitted]; see Sheehy v. Big Flats Community Day, 73 N.Y.2d 629, 633, 543 N.Y.S.2d 18, 541 N.E.2d 18 [1989] ; see also Cruz v. TD Bank, N.A., 22 N.Y.3d 61, 70, 979 N.Y.S.2d 257, 2 N.E.3d 221 [2013] ; Hammer v. American Kennel Club, 1 N.Y.3d 294, 299, 771 N.Y.S.2d 493, 803 N.E.2d 766 [2003] ; Uhr v. East Greenbush Cent. School Dist., 94 N.Y.2d 32, 38, 698 N.Y.S.2d 609, 720 N.E.2d 886 [1999] ; Carrier v. Salvation Army, 88 N.Y.2d 298, 302, 644 N.Y.S.2d 678, 667 N.E.2d 328 [1996] ). Stated differently, "[a]bsent explicit legislative direction, ... it is for the courts to determine, in light of [the statutory] provisions, particularly those relating to sanctions and enforcement, and their legislative history, and of existing common-law and statutory remedies, with which legislative familiarity is presumed, what the [l]egislature intended" ( Burns Jackson Miller Summit & Spitzer v. Lindner , 59 N.Y.2d 314, 325, 464 N.Y.S.2d 712, 451 N.E.2d 459 [1983] ).

We have consistently identified three "essential factors" to be considered in determining whether a private right of action can be fairly implied from the statutory text and legislative history: "(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" ( Sheehy, 73 N.Y.2d at 633–634, 543 N.Y.S.2d 18, 541 N.E.2d 18 ; see e.g. Cruz, 22 N.Y.3d at 70, 979 N.Y.S.2d 257, 2 N.E.3d 221 ; Carrier, 88 N.Y.2d at 302, 644 N.Y.S.2d 678, 667 N.E.2d 328 ). Critically, all three factors must be satisfied before an implied private right of action will be recognized (see Pelaez v. Seide, 2 N.Y.3d 186, 200, 778 N.Y.S.2d 111, 810 N.E.2d 393 [2004] ). Applying these factors here, we conclude that the legislature did not intend to create a right of action under Public Health Law § 230(11)(b).

Beginning with the first factor, plaintiff failed to demonstrate that he falls within the class the legislature intended to benefit by enacting Public Health Law § 230(11)(b). Section 230 was first adopted, without subdivision (11), to facilitate resolution of medical disciplinary proceedings (see Sponsor's Mem, Bill Jacket, L 1975, ch 109 at 6). Subdivision (11) was subsequently added and amended, providing "[a]ny person, organization, institution, insurance company, osteopathic or medical society" with immunity from civil litigation for making good-faith reports to OPMC ( Public Health Law § 230[11][b] ). On the face of this provision, there is no indication that the legislature intended to benefit medical professionals accused of misconduct, as opposed to persons or entities that report suspected medical misconduct.

Even if there were any ambiguity in the statutory text with respect to who the statute was intended to benefit, the legislative history of section 230(11)(b) could not be much clearer on this point. The Sponsor's Memorandum in support of the original version of section 230(11)(b) observed that "[t]he American Medical Association's ad hoc Committee on Medical Discipline ha[d] reported that one of the major problems for state regulating boards [was] the reluctance of hospitals, medical societies, and physicians to provide information concerning errant doctors, because of a fear of litigation" (Sponsor's Mem, Bill Jacket, L 1977, ch 773 at 6). In order "to alleviate that concern and to increase the reports of unprofessional conduct to [OPMC], " section 230(11)(b) was codified specifically to afford "immunity from civil suit to all individuals, societies, and institutions who provide information to [OPMC] in good faith " (id. [emphasis added] ). In that regard, the Sponsor's Memorandum further observed that, "[w]hen Arizona enacted similar legislation, the number of complaints reported to [its] board quadrupled, and disciplinary action became more effective." Thus, the pertinent legislative history makes clear that section 230(11)(b) was not added to the Public Health Law to protect physicians, such as plaintiff, accused of misconduct. Rather, that provision was intended to protect the public from medical misconduct by encouraging reporting.

Nevertheless, plaintiff argues that, given the numerous procedural protections afforded to doctors who are accused of misconduct, Public Health Law § 230 was generally intended for their benefit. To be sure, as the legislature has amended section 230 over the past 45 years, it has continuously grappled with how to balance an effective disciplinary system for the medical profession with procedural due process. However, the fact that the legislature has amended section 230 to provide procedural safeguards does not mean that section 230(11)(b), in particular, was designed to benefit medical professionals accused of misconduct. A degree of procedural due process is afforded in all administrative proceedings; therefore, to accept plaintiff's argument essentially would be to conclude that, in all administrative...