NY high court reiterates that "consumer-oriented" is broad, covers statements to thousands of gov't employees

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.”