234 F. Supp. 3d 580
S.D.N.Y.2017Background
- Mount Sinai, an out-of-network medical provider, routinely calls HCSC to verify coverage and reimbursement methodology before treating HCSC-insured patients and informs patients of expected payment responsibility.
- Mount Sinai alleges six specific verification calls in which HCSC stated a reimbursement methodology or rate but later paid significantly less, causing potential balance billing to patients.
- Mount Sinai sued HCSC asserting negligent misrepresentation (Count I), promissory estoppel (Count II), and violations of N.Y. Gen. Bus. Law § 349 (Count III).
- HCSC moved to dismiss for failure to state a claim, focusing on (a) alleged unidentified/unpled verification calls beyond the six examples and (b) insufficiency of allegations on duty, falsity, and reasonable reliance.
- The district court dismissed the negligent misrepresentation claim without prejudice (giving leave to amend), and denied dismissal as to promissory estoppel and GBL § 349 claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HCSC owed a duty to provide correct reimbursement information (special relationship) | Mount Sinai: frequent, routine verification calls and HCSC’s position as the insurer make HCSC the best/peculiar source, creating a duty | HCSC: no special expertise or duty; insureds and plan documents are alternatives; mere phone number not enough | Dismissed negligent misrepresentation for failure to plead facts establishing the special-relationship duty; leave to amend granted |
| Whether HCSC made false representations (versus promissory/future statements) | Mount Sinai: calls misstated the existing plan methodology for reimbursement (factual) | HCSC: statements were promissory/future and not actionable as misrepresentations | Court: allegations that HCSC misrepresented plan methodology are sufficient to plead falsity for now |
| Whether Mount Sinai reasonably relied on HCSC’s statements | Mount Sinai: reliance was customary, practical, and not obviously unreasonable; appeals delay hid discrepancies | HCSC: reliance unreasonable given alleged frequent misstatements; should have obtained written confirmation | Court: reasonableness is fact-intensive; alleged reliance is plausible and not dismissed at this stage |
| Whether Mount Sinai stated claims for promissory estoppel and GBL § 349 | Mount Sinai: specific promises on six calls, reasonable reliance, and consumer-oriented harm because Mount Sinai relayed info to patients who faced balance bills | HCSC: insufficient particularity for unidentified calls; § 349 not applicable because Mount Sinai is not a consumer and conduct not consumer-oriented or broadly impacting consumers | Court: promissory estoppel claim survives as to the six calls; § 349 claim survives because Mount Sinai transmitted misinformation to patients and alleged consumer injury and broader consumer impact |
Key Cases Cited
- Hydro Investors, Inc. v. Trafalgar Power Inc., 227 F.3d 8 (2d Cir.) (elements of negligent misrepresentation)
- Kimmell v. Schaefer, 89 N.Y.2d 257 (N.Y.) (factors to determine special-relationship duty for negligent misrepresentation)
- Warner Theatre Assocs. Ltd. P’ship v. Metropolitan Life Ins. Co., 149 F.3d 134 (2d Cir.) (reliance reasonable where truth peculiarly within defendant’s knowledge)
- Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC, 797 F.3d 160 (2d Cir.) (reasonableness of reliance is fact-intensive; typically not resolved on motion to dismiss)
- Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (N.Y.) (§ 349 does not require a pattern; protects potential consumer harm)
- Blue Cross & Blue Shield of N.J., Inc. v. Philip Morris USA Inc., 3 N.Y.3d 200 (N.Y.) (§ 349 is broad and remedial; applies across economic activity)
- Karlin v. IVF Am., Inc., 93 N.Y.2d 282 (N.Y.) (misrepresentations to intermediaries that affect patients can be consumer-oriented under § 349)
- Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co., 662 F.3d 376 (5th Cir.) (customary practice: providers verify coverage with insurers and admit patients based on insurer confirmation)