By David A. Zarett, Esq. & Zoila Sanchez, MPH (Legal Intern)

State law provides legal immunity from liability to any person who reports physician misconduct to the New York Office of Professional Misconduct (“OPMC”). New York Public Health Law § 230(11)(b).  But this immunity is limited, extending only to those reports made in good faith, and without malice. As a result, some courts in New York previously held that a physician could bring a lawsuit for damages against the person who made the OPMC report, if the aggrieved physician believed the report was made in bad faith or with malice.[1] Other New York courts held that this private right of action did not exist.[2]

Recently, in Haar v. Nationwide Mutual Fire Insurance, the New York Court of Appeals (the State’s highest court) resolved the conflict among the lower courts, by holding there is no private right of action for physicians to sue a third-party (and others) for reports made to OPMC, even if those reports are alleged to have been made for malicious or bad faith reasons.

In Haar, a surgeon sued Nationwide Mutual Fire Insurance Company for damages, alleging a violation of New York Public Health Law § 230(11)(b) on the part of the insurer for making a bad faith report to the OPMC of false allegations of professional misconduct (Dr. Haar’s Second Cause of Action was based on defamatory statements). While OPMC’s investigation did not lead to any action against the physician, he claims he suffered damages including costs (i.e. attorneys’ fees) associated with responding to the investigation.

Dr. Haar argued that since the statute states that only persons and entities making reports to OPMC in “good faith” are protected from civil liability, it therefore implies a corollary private right of action for bad faith and malicious reporting to OPMC. The U.S. District Court for the Southern District of New York dismissed the case, ruling there is no implied right of action under Section 230(11)(b). Dr. Haar appealed the lower court’s decision. The U.S. Court of Appeals then certified the question of whether the statute created a private cause of action.

In analyzing whether a private right of action exists, the New York State Court of Appeals applied the following three-part test:

“(1) whether the [physician] is one of the class for whose benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether the creation of such a right would be consistent with the legislative scheme.”

The Court of Appeals determined that under the first prong of the test, the statute was intended to protect the public from medical misconduct by encouraging reporting, and therefore physicians are not intended to be protected beneficiaries. Additionally, recognizing a private right of action for bad faith reporting would be inconsistent with the provision's purpose or legislative scheme to increase reporting since exposing complainants to liability may create a “chilling effect” on good-faith reporting.[3] As a result, the Court of Appeals ruled that the statute did not imply a private right of action for bad faith reporting to the OPMC.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, employment law and discrimination matters, bankruptcy and creditors' rights, and commercial real estate transactions.

 

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[1] See Foong v. Empire Blue Cross & Blue Shield, 305 A.D.2d 330, 330, 762 N.Y.S.2d 348 [1st Dept. 2003] (the New York Supreme Court, Appellate Division, held in pertinent part that, “[p]laintiff had [an] implied cause of action under [two] provisions of [the] Public Health Law” including § 230(11)(b)).

[2] See Ahmed Elkoulily, M.D., P.C. v. New York State Catholic Healthplan, Inc., 153 A.D.3d 768, 771–772, 61 N.Y.S.3d 83 [2d Dept. 2017] (holding in relevant part that the “[c]linic was not entitled to raise a claim against insurer and employees under [a] Public Health Law provision that created a defense to an action for civil damages or other relief”).

[3] See Haar v. Nationwide Mut. Fire Ins. Co., 34 N.Y.3d 224 (2019).