Plavin v. Group
Health Inc., 35 N.Y.3d 1 (Mar. 24, 2020) 

The Third Circuit
certified to NY’s highest court whether a plaintiff “sufficiently alleged
consumer-oriented conduct to assert claims under General Business Law §§ 349
and 350 for damages incurred due to an insurance company’s alleged materially
misleading representations made directly to the City of New York’s employees
and 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.” Yes, it did. 

The plaintiff
alleged that the summary materials he received about the health plan were
misleading about various matters, including out-of-network reimbursement rates
and coverage. The district court held that, because “the alleged deception
[arose] out of a private contract negotiated between” GHI and the City—“two
sophisticated institutions,” the conduct wasn’t consumer-oriented because the
City had contracted with GHI on behalf of its employees and, therefore, “[t]he
contract was aimed to benefit only a circumscribed class of individuals.” 

Previous cases used
language such as “[i]n contrast to a private contract dispute as to policy
coverage, the practices before us involved an extensive marketing scheme that
had ‘a broader impact on consumers at large’ ” and“[d]efendants’ alleged
multi-media dissemination of information to the public [was] precisely the sort
of consumer-oriented conduct that is targeted by General Business Law §§ 349
and 350 … even though the subject of the conduct was in vitro fertilization.”
But claims are rejected when the plaintiff alleges only “a private contract
dispute over policy coverage and the processing of a claim which is unique to
the[ ] parties, not conduct which affects the consuming public at large.” 

Here, although the
underlying insurance contract was negotiated by sophisticated entities, “neither
plaintiff, nor any of the other hundreds of thousands of employees and retirees
who participated …, were participants in its negotiation and, critically, that
negotiation was followed by an open enrollment period, which exposed City
employees and retirees to marketing resembling a traditional consumer sales
environment.” That marketing was what was allegedly misleading, not the
contract between the City and GHI. Competition between insurers for subscribers
during the the open enrollment period “resembles the sort of sales
marketplace—characterized by groups of similarly-situated consumers subjected
to the competitive tactics of a relatively more powerful business—that GBL
claims were intended to address.”

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