(To be sure, these aren't the standard California claims. But still!)
Previous opinions in the case. The parties compete to screen urine for drugs; they contract with healthcare providers to determine whether patients are abusing their prescriptions. Ameritox brought multiple false advertising/unfair competition claims against Millennium, which responded with counterclaims under similar laws. The court in this opinion weeded out some of the counterclaims, most notably claims for certain violations of California’s Unfair Practices Act and NY’s GBL.
California’s UPA bars anticompetitive below-cost/loss-leader sales, as well as secret kickbacks not extended to all similar purchasers. Millennium alleged that Ameritox violated the UPA by providing free/below-cost testing cups; providing gift cards, meals, office parties, and free computers; encouraging referrals by arranging for the sale of non-Ameritox products to Ameritox’s customers at favorable prices; providing free specimen processors to “big accounts” who agreed to provide a minimum number of samples to be tested; and overcompensating those physicians for the sham lease of space used by the processors. Though the UPA covered below-cost/loss-leader sales of ancillary goods and services that were sufficiently related to the main service, the court ultimately found that Millennium hadn’t alleged enough specifics to state a claim.
As for the NY claims, GBL § 349 bars deceptive/misleading consumer-oriented conduct that causes damage. Millennium alleged that Ameritox knew that its arrangements were illegal kickback schemes, but told physicians that placing specimen processors in their offices was legal. Other allegedly unlawful practices included those summarized above; Ameritox also allegedly misled healthcare providers into ordering tests based on insurance status and not medical necessity, thus promoting medically unnecessary testing.
To the extent that this conduct was merely unfair, not deceptive, it couldn’t support a § 349 claim. The remaining allegedly deceptive conduct was (1) misleading healthcare providers into ordering tests based on insurance status and not medical necessity, thus promoting medically unnecessary testing, and (2) misleading customers about the legality of Ameritox providing the free specimen processors. So limited, the allegations described consumer-oriented conduct, even though the dispute was between competitors, because this conduct affected the public interest.
Because § 349 isn’t subject to a heightened pleading standard, Millennium didn’t need to allege causation and injury with particularity.