ALBANY, N.Y. (Legal Newsline) - The New York Court of Appeals determined that a plaintiff properly claimed consumer-oriented behavior when alleging damages related to an insurance company falsifying representations made to New York City workers so that it would be selected over other companies.
The allegations in question specifically concern statements made to the city employees and its retirees “about the terms of its insurance plan to induce them to select its plan from among the 11 health insurance plans made available to over 600,000 current and former city employees,” according to the opinion.
Judge Leslie Stein wrote the March 24 opinion and mentioned that the issue here is the allegedly falsified statements from the defendant, not the agreement between the city and GHI since city employees and retirees weren’t privy to that.
Judge Stein pointed out that the plaintiff accused GHI of exaggerating its summary benefits as it was one of 11 insurance companies that workers and retirees could choose from. The statements were published on its website, and GHI collected premiums for its plan, so GHI had a financial interest at stake when it came to which insurance provider the retirees and employees would select.
“Simply put, plaintiff alleged that GHI was incentivized by the competition created during the open enrollment period to leverage its information advantage in order to gain the business of the employees and retirees over other insurers,” wrote Judge Stein.
The plaintiff also depended on the explanation of benefits from GHI, the court ruled.
Steven Plavin, who worked for the city of New York, sued the city’s insurance company Group Health Incorporated, which provides benefits plans for workers. GHI was up against 11 other companies to offer the city employees these benefits, but it allegedly falsified coverage packages, like “extensive out-of-network coverage subject to deductibles and coinsurance, and ‘the freedom to choose any provider worldwide,’” according to the opinion.
Things went left after his wife had medical treatments that GHI deemed were out-of-network, so GHI only covered a portion of the claims, causing the plaintiff to pay out of pocket for the rest (GHI allegedly paid $21 of a $512.66 bill).
Plavin sued shortly after in the Middle District of Pennsylvania. That court ruled that he failed to properly plead consumer-oriented conduct, which is needed to plead General Business Law sections 349 and 350 claim like this. He filed an appeal in the U.S. Court of Appeals for the Third Circuit, which asked the question of whether Plavin properly pled consumer-oriented conduct to the current court.