91 F.4th 600
2d Cir.2024Background
- Plaintiffs (patients) requested medical records through their counsel from several hospitals, whose vendors charged 75 cents per page for the records.
- Plaintiffs alleged that the vendors engaged in a kickback scheme with the hospitals by charging patients above actual production cost and using profits to subsidize the hospitals’ free record production obligations under federal law.
- Plaintiffs filed class actions alleging violations of New York Public Health Law (PHL) § 18(2)(e), deceptive practices under General Business Law (GBL) § 349, and unjust enrichment.
- While the case was pending, the New York Court of Appeals in Ortiz v. Ciox Health LLC held there is no private right of action under PHL § 18(2)(e).
- District court granted defendants’ motion for judgment on the pleadings as to all claims, and denied plaintiffs’ motions to amend their complaints and for summary judgment.
- On appeal, the Second Circuit consolidated the cases and affirmed the district court’s judgments in all respects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a GBL § 349 claim can be based on violation of PHL § 18(2)(e) | Vendors’ 75-cent charge was a deceptive business practice due to undisclosed profiteering and kickbacks | GBL § 349 claim is not cognizable if based solely on violation of PHL § 18(2)(e), which lacks private action | Such a GBL § 349 claim is not cognizable absent an independent deceptive act |
| Whether unjust enrichment claim is cognizable based on PHL § 18(2)(e) | Patients (McCracken, Carter) overpaid due to excessive charges and unjustly enriched vendors/hospitals | Unjust enrichment cannot survive without independent wrongful conduct outside PHL § 18(2)(e) | Claim fails; no cognizable theory of unjust enrichment independent of PHL § 18(2)(e) |
| Whether the court should have treated defendants’ motion as summary judgment | Plaintiffs submitted materials outside the pleadings and argued these should be considered | District court did not rely on extrinsic materials in its decision | No error: court properly decided on pleadings, summary judgment not required |
| Whether leave to amend complaint should have been granted | Additional allegations would clarify and support deception/unjust enrichment | Any amendment would be futile since claims remain legally insufficient | No abuse of discretion; amendment would be futile |
Key Cases Cited
- Ortiz v. Ciox Health LLC, 37 N.Y.3d 353 (N.Y. 2021) (no private right of action under PHL § 18(2)(e))
- Ortiz v. Ciox Health LLC, 21 F.4th 50 (2d Cir. 2021) (unjust enrichment claim relying solely on PHL § 18(2)(e) fails)
- Schlessinger v. Valspar Corp., 723 F.3d 396 (2d Cir. 2013) (GBL § 349 claim requires independent deceptive conduct, not merely a statutory violation)
- Broder v. Cablevision Sys. Corp., 418 F.3d 187 (2d Cir. 2005) (claim based on statute without private right of action cannot be repackaged through another cause of action)
- Corsello v. Verizon N.Y., Inc., 18 N.Y.3d 777 (N.Y. 2012) (unjust enrichment claim available only where no adequate remedy at law exists)