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New York Court of Appeals Clarifies No Private Right of Action Against Insurers Who Report Possible Professional Misconduct

Insurance fraud is a big deal and costs all of us plenty in the way of increased insurance premiums.  When automobile liability insurers see claims where they question whether the medical provider is acting appropriately, they may choose to report their findings to the state medical disciplinary authority.  If the disciplinary authority declines to impose discipline, can the medical provider sue the insurance company?  The New York Court of Appeals just answered that question.

In Harr v. Nationwide Mutual Fire Insurance Co., No. 81 (N.Y. Ct. of App. Nov. 21, 2019), the New York Court of Appeals was asked by the Second Circuit (on a certified question) to resolve whether a private right of action existed within the statute that allowed insurance companies (and others) to report possible professional wrongdoing.

In New York, insurance companies and others were often hesitant to report professional misconduct for fear of being sued by the medical provider for damages to the medical provider’s reputation.  New York passed a law, Public Health Law § 230 (11) (b), which provides:

Any person, organization, institution, insurance company, osteopathic or medical society who reports or provides information to the board 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.

In this case, the insurance company reported a doctor for professional misconduct after denying or partially denying four claims following automobile accidents.  After an investigation, the disciplinary authority declined to impose any discipline against the doctor.  Subsequently, the doctor sued the insurance company for lacking a good-faith basis for reporting him to the authorities under Section 230 (11) (b).  The federal district court dismissed the case, holding that the New York Court of Appeals would hold that the statute did not imply a private right of action.  The Second Circuit certified the question to the New York Court of Appeals because of a split in the Appellate Divisions on the issue.

The court answered the certified question in the negative (no private right of action).  The court went through a three-pronged analysis to hold that the statute was meant to protect and provide immunity to those who report information about possible professional misconduct in good faith.  The court held that the statute was not meant to help the medical professional or create a private right of action.  In other words, held the court, there was no indication that the medical professional was the intended beneficiary of this statute and therefore no private right of action could be found. The statute “was not enacted for the benefit of persons similarly situated to plaintiff, and a private right of action is inconsistent with the legislative purpose and broader statutory scheme.”

Thus, there is no implied right of action under Section 230 (11) (b).

© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume IX, Number 325

About this Author

Larry P. Schiffer Commercial Insurance Reinsurance Litigation Lawyer

Larry Schiffer practices in the areas of commercial, insurance and reinsurance litigation, arbitration and mediation. He also provides advice on coverage, insurance insolvency, and contract wording issues for a wide variety of insurance and reinsurance relationships. 

Larry is active in legal and insurance industry associations where he has held various leadership positions. He has lectured in the US, Bermuda and the UK, and has been widely published on reinsurance and other insurance, litigation and technology topics in various national and...

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