New York’s Highest Court Denies Right to Recover for OPMC Complaint Filed in “Bad Faith”
This Bulletin is brought to you by AHLA’s Medical Staff, Credentialing, and Peer Review Practice Group.
- March 27, 2020
- David A. Zarett , Weiss Zarett Brofman Sonnenklar and Levy PC
- Zoila Sanchez
New York State law provides legal immunity from liability to any person who reports physician misconduct to the New York Office of Professional Misconduct (OPMC), the agency responsible for disciplining physicians and physician assistants.[1] But this immunity is limited, extending only to those reports made in good faith, and without malice. This statutory exception has led to litigation over whether an implied right of action existed against those who filed “bad faith” or malicious complaints with the state licensing board. While the New York mid-level appellate courts were split on whether this private right of action existed, that conflict was recently resolved by the New York Court of Appeals in Haar v. Nationwide Mutual Fire Insurance Co.[2] In Haar, the court held there is no private right of action.
Appellate Division Split
The Appellate Division: First Department’s decision in Foong[3] determined that the plaintiff health care provider had an implied right of action under N.Y. Pub. Health Law § 230(11)(b). In that case, the court denied the defendant’s dismissal motion finding there was an issue of fact as to whether defendant Empire Blue Cross & Blue Shield acted in good faith by filing the OPMC complaint. However, in 2017, the Appellate Division: Second Department held that this private right of action did not exist even though there were allegations that the OPMC complaint was filed for bad faith and malicious reasons.[4]
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 disciplinary action against the physician, he claims he suffered damages (e.g., attorney’s fees).
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 implied a corollary private right of action for bad faith and malicious reporting. 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), adopting the reasoning of Elkoulily. Dr. Haar appealed the lower court’s decision. The Second Circuit then certified the question of whether the statute created a private cause of action.[5]
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.”[6]
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 were not intended to be protected beneficiaries. Additionally, recognizing a private right of action for bad faith reporting would be inconsistent with the statute’s overriding purpose and legislative scheme to encourage reporting, the court recognized that exposing complainants to the threat of litigation and liability would create a “chilling effect” on good-faith reporting.[7]
As a result, the Court of Appeals ruled that the statute did not imply a private right of action for bad faith reporting to OPMC.
Note that the court did not address the legal vitality of the second cause of action for defamation, since it was dismissed by the lower court as untimely.