Karlin v. IVF AM.

• Court: New York Court of Appeals
• Citation: 690 N.Y.S.2d 495,712 N.E.2d 662,93 N.Y.2d 282
• Parties: JAYNE KARLIN et al., Appellants, v. IVF AMERICA, INC., et al., Respondents.
• Decision Date: 04 May 1999

93 N.Y.2d 282
712 N.E.2d 662
690 N.Y.S.2d 495

JAYNE KARLIN et al., Appellants,
v.
IVF AMERICA, INC., et al., Respondents

Court of Appeals of the State of New York.

Argued March 30, 1999.

Decided May 4, 1999.

93 N.Y.2d 284

Sheldon V. Burman, P.C., New York City (Sheldon V. Burman of counsel), for appellants

Ledy-Gurren & Blumenstock, L. L. P., New York City (Nancy Ledy-Gurren, Deborah Bass and Elissa Shechter of counsel), for IVF America, Inc. and others, respondents.

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Garfunkel, Wild & Travis, P. C., Great Neck (Jordy Rabinowitz, David E. Steckler and Steven J. Chananie of counsel),

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for United Hospital, respondent

Pilkington & Leggett, P. C., White Plains (Dennis A. Vernoia of counsel), for John J. Stangel, respondent.

Eliot Spitzer, Attorney General, Albany (Peter H. Schiff, Troy

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J. Oechsner and Melissa Saren of counsel), for New York State Attorney General, amicus curiae.

Michael D. Hess, Corporation Counsel of New York City (Stephen J. McGrath and Marta Soja of counsel), for City of New York, amicus curiae.

Peter G.A. Safirstein, New York City, for Association of the Bar of the City of New York, amicus curiae.

Judges BELLACOSA, SMITH, LEVINE, CIPARICK, WESLEY and ROSENBLATT concur.

OPINION OF THE COURT

Chief Judge KAYE.

In order to ensure an honest marketplace, the General Business Law prohibits all deceptive practices, including false advertising, "in the conduct of any business, trade or commerce or in the furnishing of any service in this state" (General Business Law § 349 [a]; § 350; Governor's Approval Mem, L 1970, ch 43, 1970 McKinney's Session Laws of NY, at 3074). This appeal requires us to determine whether plaintiffs can maintain

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an action against defendants operating an in vitro fertilization (IVF) program for deceptive practices and false advertising under General Business Law §§ 349 and 350, or are instead limited to a claim for medical malpractice based on lack of informed consent. We hold that plaintiffs have properly stated causes of action under these consumer protection statutes, and are not precluded from pursuing those claims because the alleged misrepresentations relate to the provision of medical services

Facts

In 1987, plaintiffs Jayne and Kenneth R. Karlin sought evaluation and treatment from defendants' IVF program. The IVF procedure involves removal of multiple eggs from a woman's ovaries, fertilization of the eggs outside her body and transfer of the fertilized eggs to her uterus in an attempt to impregnate her (see, Kass v Kass, 91 NY2d 554, 557). Over the course of 2½ years, Mrs. Karlin completed seven IVF cycles at defendants' clinic but did not become pregnant.

In 1990, the Federal Trade Commission (FTC) charged IVF America and related entities (IVF America) with deceptively advertising and promoting its program, finding the following statements typical of representations in their promotional materials:

"1. `LIKELY TREATMENT OUTCOMES . . . Our experience indicates that when a patient at an IVF [America] Program completes four IVF treatment cycles, the chance of giving birth is about 50%. * * * If 25 women begin a total of 100 IVF cycles . . . About 13 (or about 50%) of the women give birth to 18 babies' (emphasis in original) * * *.

"2. `[M]ore than 28% of the couples who complete a cycle of treatment are becoming pregnant' * * *.

"3. `[O]ne out of three couples who complete a cycle of treatment is becoming pregnant.'"

According to the FTC, these statements were misleading because women who participate in IVF America's treatment program "consisting of four IVF cycles have considerably less than a 50 percent chance of giving birth," and women who participate

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in IVF America's treatment program "consisting of one IVF cycle have considerably less than a 28 to 33 percent chance of becoming pregnant." By consent decree dated December 31, 1990, IVF America agreed to cease and desist from misrepresenting success rates, and also agreed in the future to disclose the basis used for calculating the percentage of patients who have become pregnant or given birth.

In February 1993, however, the ABC News program "20/20" televised an investigative report on the IVF industry in which IVF America employees were shown informing prospective patients that after four to six cycles, IVF America had pregnancy success rates "between 60 to 80 percent." The report also showed an IVF America representative telling a seminar participant that there are "[a]bsolutely not" any long-term effects of the IVF procedure. This report prompted New York City's Department of Consumer Affairs to charge IVF America with violations of the City's Consumer Protection Law. As part of a settlement reached in April 1993, IVF America agreed to refrain both from marketing its services using unsubstantiated pregnancy success rates and from stating that IVF procedures posed no adverse health risks.

The following year, plaintiffs commenced this action alleging that defendants engaged in fraudulent and misleading conduct by disseminating false success rates and misrepresenting health risks associated with IVF. In particular, plaintiffs claim that defendants "exaggerated success rates, excluding certain subsets of failed treatment procedures, emphasizing numerically false and misleading overall success rates and conceal[ing] and misrepresent[ing] significant health risks, high miscarriage rates and excessive neonatal deaths and abnormalities of infants even if a birth resulted from the treatment rendered by defendants."

Supreme Court dismissed all of plaintiffs' causes of action except those alleging unfair and deceptive trade practices in violation of General Business Law § 349, false advertising in violation of General Business Law § 350 and lack of informed consent in violation of Public Health Law § 2805-d. In a separate order, Supreme Court denied plaintiffs' motion for class action certification. On appeal, the Appellate Division dismissed plaintiffs' General Business Law §§ 349 and 350 claims, categorically refusing to apply "the consumer fraud statutes to the providers of medical services" in order to prevent what the court perceived as "a drastic change in basic tort law where the Legislature has not explicitly expressed its intent to effect

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such a change" (Karlin v IVF Am., 239 AD2d 560, 561). The Appellate Division separately affirmed Supreme Court's denial of plaintiffs' motion for class action certification.

After the case returned to Supreme Court, defendants successfully moved for summary judgment on the...