On March 24, 2020, the New York Court of Appeals (Court) decided an issue concerning claims under the State's consumer deception statute that can be expected to impact consumer claims against various professionals.
In Plavin v. Group Health Inc., the Court addressed certified questions referred to it by the Third Circuit Court of Appeals. At issue was whether the plaintiff had sufficiently alleged consumer-oriented conduct to assert claims against a group health plan insurer under New York General Business Law §§ 349 and 350. The plaintiff sought damages arising from the insurer's alleged materially misleading representations made to the City of New York's employees and retirees about the terms of its insurance plan to induce them to select its plan from among multiple plans made available to over 600,000 current and former employees.
The Court ruled unanimously that the complaint sufficiently alleged consumer-oriented conduct to give rise to a viable claim under those statutes, which furnish a cause of action for consumers harmed by allegedly deceptive conduct. Specifically, the Court concluded that the defendants' marketing actions were consumer-oriented because they potentially affected a broad group of similarly situated consumers, contrasting cases which did not involve such widely disseminated communications. The Court rejected the argument that the statutes could not apply because the subject plan was negotiated between sophisticated entities on the grounds that the conduct at issue was the marketing to individual participants who were not sophisticated. The plaintiff sufficiently alleged damages by pleading reliance on the insurer's summary materials to select its plan, which allegedly failed to cover out-of-network procedures to the extent that the summary materials led him to expect.
It should be noted that the Court's decision points out in a footnote that the New York Attorney General had previously concluded after investigation that the plan violated the very General Business Law provisions on which the plaintiff's complaint was predicated. Presumably, that fact impacted the Court's approach.
We expect this ruling to be heavily relied on by the plaintiffs' bar to resist defendants' efforts to defend these claims. That is of clear concern given the ability to recover attorneys' fees and limited treble damages under the statutes.
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