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Posted: September 8, 2015

One-Time Private Contract Not Subject to GBL 349 Claim

On August 31, 2015, Justice Scheinkman of the Westchester County Commercial Division issued a decision in Unitedhealthcare Services, Inc. v. Asprinio, 2015 NY Slip Op. 25298, examining the scope of conduct covered by General Business Law Section 349.

In Unitedhealthcare Services, the the plaintiff health insurer brought an action against the defendant doctor and medical practice relating to fees charged by the defendants, who did “not participate in [the plaintiff’s] provider network, to the plaintiff’s insureds. Among the claims brought by the plaintiff was “a claim under New York General Business Law § 349(a),” which alleged that the “Defendants entered into a scheme to deceive [the plaintiff] and the general consuming public through a pattern of submitting false and misleading insurance claims to [the plaintiff] in which they misrepresented the charges for services rendered to patients.” In deciding the plaintiff’s motion for a preliminary injunction, the court found that it was unlikely to succeed on this claim, explaining:

[A] claim under GBL § 349 requires a plaintiff to establish: first that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act. In determining whether a representation or an omission is a deceptive act, the test is whether such act is likely to mislead a reasonable consumer acting reasonably under the circumstances.

Here, even assuming that the challenged balance billing practice is consumer-oriented, [the plaintiff] is not likely to succeed in showing that it has standing to raise this issue. GBL § 349(h) provides standing to any person who has been injured by reason of any violation of this section. And while courts have determined that standing is not limited to consumers and have afforded standing to direct competitors, it is well settled that standing does not exist when the claimed loss arises solely as a result of injuries sustained by another party. [The plaintiff] was not itself alleged to be a consumer of the medical services provided by Defendants; rather, it is a large, sophisticated insurance company which has agreed to indemnify its insureds for certain of their medical costs under specified terms and conditions.

To the extent that Defendants filed claims with [the plaintiff], [the plaintiff] did not receive them as a consumer of the medical services provided by [the defendants], but in as part of its business activities as a health insurer. To the extent that Defendants sent bills to [the plaintiff’s] insured[s], [the plaintiff] has not shown how it would have the right to complain of such conduct or how it was injured by such conduct.

To the extent Plaintiff is claiming that Defendants misrepresented the charges to the United member by charging excessive rates in order to maximize the reimbursement they received from United, such allegedly deceptive acts were not directed at the consumer but rather to a large institutional provider of health insurance or, even more indirectly to the plan sponsors who might see their premiums increase. Such conduct cannot be viewed as consumer related.

This dispute is essentially a one-time business dispute to which the consumer — the patient — is not a party. As noted by one court, under New York law, the term consumer is consistently associated with an individual or natural person who purchases goods, services or property primarily for personal, family or household purposes Thus, private contract disputes that are unique, private in nature, or involve a so-called single-shot transaction do not fall within the statutes ambit. And the acts complained of must be of a recurring nature.

(Internal quotations and citations omitted) (emphasis added).

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