Appellate Update: The Court Of Appeals Rules That There Is No Private Right Of Action Under Public Health Law §230(11)(b) For Bad Faith Reporting To The Office Of Professional Medical Conduct

by | Nov 22, 2019 | Appellate | 0 comments

In Haar v. Nationwide Mutual Fire Insurance Company, orthopedic surgeon Dr. Haar treated four patients who were injured in automobile accidents and insured by Nationwide Mutual Fire Insurance Company. Dr. Haar submitted claims to Nationwide in connection with each patient, and Nationwide either fully or partially denied each claim. Nationwide thereafter filed an Office of Professional Medical Conduct (OPMC) complaint against Dr. Haar alleging insurance fraud, however, after an investigation, OPMC declined to impose any discipline. Dr. Haar subsequently commenced an action against Nationwide under Public Health Law §230(11)(b), alleging that its complaint lacked a good faith basis. Dr. Haaralso brought a defamation claim.

Nationwide removed the action to Federal Court and moved to dismiss, arguing that PHL §230(11)(b) does not provide for a private cause of action, and that the defamation claim was time barred. The Federal District Court agreed with Nationwide and dismissed both claims. Dr. Haar appealed to the Second Circuit, which noted a split in authority amongst the Appellate Divisions regarding whether PHL §230(11)(b) provides for a private right of action for bad faith reporting to OPMC, and certified this question to the New York State Court of Appeals.

The Court of Appeals ruled that there is no private right of action under PHL §230(11)(b) for bad faith reporting to the OPMC. The Court of Appeals noted, and Dr. Haar agreed, that the statute does not expressly create a cause of action for bad faith OPMC reporting. Rather, the statute immunizes from civil liability any person or entity who makes a good faith report. Thus since there is no express private right of action in the language of PHL §230(11)(b), a private right may only be had if a legislative intent to create one “is fairly implied in the statutory provision and its legislative history.”

The Court of Appeals has 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.”

The Court of Appeals analyzed the statute itself and the legislative history, and determined that there was no legislative intent to create a private right of action under PHL §230(11)(b). There is no indication that the legislature intended to benefit medical professionals accused of misconduct, and indeed the statute specifically states that it protects persons and entities that report suspected misconduct. The Court of Appeals also noted that recognizing a private right of action would decrease reporting, which is inconsistent with the legislative purpose of increasing reporting. Lastly, the Court of Appeals noted that Dr. Haar had common law remedies such as a defamation claim, however such a claim was time-barred here.

Thus, the Court of Appeals ruled that there is no private right of action under PHL § 230(11)(b), and answered the Second Circuit’s certified question in the negative.

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