Haar v. Nationwide Mut. Fire Ins. Co.

• Decision Date: 15 January 2019
• Docket Number: August Term, 2018,Docket No. 18-128
• Citation: 918 F.3d 231
• Parties: Dr. Robert D. HAAR, M.D., Plaintiff-Appellant, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Defendant-Appellee, John And Jane Doe Corps., 1–10, John and Jane Doe 1–10, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

918 F.3d 231

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

v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Defendant-Appellee,John And Jane Doe Corps., 1–10, John and Jane Doe 1–10, Defendants.

Docket No. 18-128

August Term, 2018

United States Court of Appeals, Second Circuit.

Argued: January 15, 2019

Questions Certified: March 13, 2019

Gregory Zimmer, New York, NY, for Plaintiff-Appellant.

Ralph Carter, Duane Morris LLP, New York, NY, for Defendant-Appellee.

Before: Katzmann, Chief Judge, Hall and Lynch, Circuit Judges.

Per Curiam:

This appeal requires us to decide whether Robert D. Haar ("Haar"), an orthopedic surgeon, may assert a cause of action for damages pursuant to N. Y. Pub. Health Law § 230(11)(b) against Nationwide Mutual Fire Insurance Company ("Nationwide"), which Haar alleges submitted a bad faith report about him with the New York State Office of Professional Medical Conduct ("OPMC"). The district court (Lewis A. Kaplan, Judge ) dismissed Haar’s cause of action asserted under Section 230(11)(b), holding that the New York Court of Appeals, were it faced with the question, would find that the statute does not create a private right of action. Because this issue turns on a question of state law for which no controlling decisions of the New York Court of Appeals exist, and given a split in the Appellate Division, we certify this question to the Court of Appeals, pursuant to 22 N.Y.C.R.R. § 500.27 and 2d Cir. R. 27.2(a).

BACKGROUND

The following facts are taken from Haar’s Verified Complaint, filed in the Supreme Court of the State of New York, County of New York, on June 7, 2017.¹ In 2012 and 2013, Haar provided treatment to several patients injured in accidents involving vehicles for which Nationwide was the insurer. After treating these patients, Haar submitted claims to Nationwide for payment of medical treatment he provided. Nationwide denied one claim in full and denied three others in part. Nationwide denied one claim in full based on a Peer Review Report which concluded that there was "no cause and effect relationship" between the injuries treated and the alleged accident. With respect to the three other claims, Nationwide only partially reimbursed Haar because of the applicable fee schedule, rather than because of any issue with the medical treatment provided.

Nationwide submitted a complaint to the OPMC with respect to Haar’s conduct for the four patients he treated in 2012.² On January 27, 2017, the OPMC notified Haar that it had concluded an investigation. The OPMC took no disciplinary action against Haar.

Haar’s lawsuit, alleging, inter alia , bad faith reporting in violation of N.Y. Pub. Health Law § 230(11)(b), followed. The claim was dismissed on November 30, 2017 because the district court found that the statute does not create a private right of action.

DISCUSSION

"We review the district court’s interpretation of a state statute de novo ." Corsair Special Situations Fund, L.P. v. Pesiri , 863 F.3d 176, 179 (2d Cir. 2017).³ "Absent law from a state's highest court, a federal court sitting in diversity has to predict how the state court would resolve an ambiguity in state law." Michalski v. Home Depot, Inc. , 225 F.3d 113, 116 (2d Cir. 2000). "In determining how the Court of Appeals would rule on this legal question, the decisions of New York State's Appellate Division are helpful indicators." Id.

N. Y. Pub. Health Law § 230(11)(b) states that "[a]ny person, organization, institution, insurance company, osteopathic or medical society who reports or provides information to the [state board for professional misconduct] 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." Section 230(11)(a) lists several entities which "shall ... report to the board any information which such person, medical society, organization institution or plan has which reasonably appears to show that a licensee is guilty of professional misconduct" as defined in earlier sections of the law. Any other person "may" make such a report. Id.

In determining whether an implied private right of action exists under a statute, New York courts are to consider three factors: "(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." Schlessinger v. Valspar Corp. , 686 F.3d 81, 87 (2d Cir. 2012) (applying New York law).

Nationwide argues that a consideration of the three factors listed in Schlessinger indicates that Section 230(11)(b) does not create a private right of action for bad faith or malicious reporting to the state board, relying in part on an opinion from the Southern District of New York, Lesesne v. Brimecome , 918 F.Supp.2d 221 (S.D.N.Y. 2013) (Nathan, J. ). There, when considering the first Schlessinger factor, the district court held that the overall statutory scheme of which Section 230(11)(b) is a part, "as a general matter, does not appear to have been enacted for the benefit of individuals against whom reports are being made—rather, it is creating a scheme to regulate medical misconduct." Id. at 229. As such, Section 230(11)(b) is not directed "toward benefiting doctors who have had false reports made against them; it is directed toward protecting individuals who have made complaints to the medical board." Id.

With respect to the second Schlessinger factor, "[t]he New York Court of Appeals has explained that the purpose of § 230(11)(a) was to ‘encourage complaints,’ primarily by medical professionals, and to address the reluctance of such individuals to provide information regarding errant doctors because of a fear of litigation." Id. (quoting McBarnette v. Sobol , 83 N.Y.2d 333, 339-41, 610 N.Y.S.2d 460, 632 N.E.2d 866 (1994) ). The "[c]reation of an implied right of action in [ Section] 230(11)(b) would thus be counter to the legislative purpose due to the likelihood that it would chill such complaints." Id.

As to the third Schlessinger factor, the district court in Lesesne found that "an implied right of action would be contrary to the legislative scheme." Id . Given that the statute provides that any reports of misconduct made to the medical board "shall remain confidential and shall not be admitted into evidence in any administrative or judicial proceeding," N.Y. Pub. Health. Law § 230(11)(a), an implied right of action based on such confidential reports "runs directly contrary" to the legislative scheme, Lesesne , 918 F.Supp.2d at 229.

The Appellate Division, Second Department agrees that Section 230(11)(b)"does not create a private right of action." Elkoulily v. N.Y.S. Catholic Healthplan, Inc. , 153 A.D.3d 768, 772 (2017). The Second Department noted that "[t]he stated purpose of the provision is to protect individuals who have made complaints to the specified institutions." Id. (citing Lesesne , 918 F.Supp.2d at 229 ).

But the First Department reached the opposite result in Foong v. Empire Blue Cross & Blue Shield , 305 A.D.2d 330, 762 N.Y.S.2d 348 (2003). In Foong , the First Department held that a "plaintiff has an implied right of action under Public Health Law § 230(11)(b)...." 305 A.D.2d at 330, 762 N.Y.S.2d 348. To be sure, the court’s analysis in Foong was quite limited. The court in Foong first addressed whether a plaintiff has an implied right of action under N.Y. Pub. Health Law § 4406-d, "which gives health care providers a measure of due process, in the form of peer review, against the arbitrary termination of health care plan contracts, but does not provide for any means of enforcement." Id. In holding that such a right of action existed, the First Department rejected the argument that such a right of action would "thwart [a defendant’s] statutory right to terminate a [health care] provider immediately, without a hearing, in cases of imminent harm to patient care and fraud," noting that defendants "remain[ ] free to terminate a provider without a hearing, although ... grounds for doing so are subject to judicial review." Id. The First Department, with no further analysis, remarked that N.Y. Pub. Health Law § 230(11)(b) also created a private right of action "[f]or similar reasons," noting that Section 230(11)(b)"immunizes from suit insurers and others who make good faith reports to" the OPMC. Id .⁴

"Although the parties did not request certification, we are empowered to seek certification nostra sponte ." Corsair , 863 F.3d at 182–83 (quoting Kuhne v. Cohen & Slamowitz, LLP , 579 F.3d 189, 198 (2d Cir. 2009) ).⁵ Pursuant to the New York Court of Appeals’ rules, "[w]henever it appears ... that determinative questions of New York law are involved in a case pending before [a federal circuit court] for which no controlling precedent of the Court of Appeals exists, the court may certify the dispositive questions of law to the Court of Appeals." 22 N.Y.C.R.R. § 500.27(a) ; see also 2d Cir. R. 27.2(a) ("If state law permits, the court may certify a question of state law to that state’s highest court.").

Our decision to certify questions to the Court of Appeals is discretionary. See Penguin Grp. (USA) Inc. v. Am. Buddha , 609 F.3d 30, 41–42 (2d Cir. 2010). In determining whether to exercise that discretion, we consider whether "the New York Court of Appeals has not squarely addressed an issue and other decisions by New York courts are insufficient to predict how the Court of Appeals would resolve it"; whether "the statute’s plain language does not indicate the answer"; whether "a decision on the merits requires value judgments and important public policy choices that the New York Court of Appeals is better situated than we [are] to make"; and whether "the questions certified will control the outcome of the case." Id. at 42. Those factors, combined with the existence of a New York State Appellate Division...