NY appellate court uses per-patient measure to assess statutory civil penalties for false advertising

State v. Image Plastic Surgery, LLC , --- N.Y.S.3d ----, 210 A.D.3d 444, 2022 WL 16640767, 2022 N.Y. Slip Op. 06181 (App. Div. Nov. 3, 2022)

The trial court found Image liable for false advertising of an unapproved medical procedure (removing fat cells and reinjecting them elsewhere in the patient’s body). It awarded $1,193,150 in restitution and assessed $2,962,500 in civil penalties. The court of appeals, in its own discretion, reduced the assessment of civil penalties by an order of magnitude to $285,000.

Defendants misrepresented the procedure’s efficacy in treating various medical conditions, and also stated, falsely, that the treatment was part of a study authorized or overseen by the FDA. Defendants didn’t “meaningfully dispute” that their representations of efficacy were materially misleading. And restitution was within the trial court’s discretion. Those patients didn’t receive the benefit of their bargain with defendants “because they did not receive treatment that was overseen by the FDA, affiliated with certain scientific and medical organizations, or recognized as effective in treating medical conditions.” Even if some consumers might have benefited, “essentially as a placebo, … any benefit received would be de minimis when compared to the treatment advertised.”

However, the court of appeals reduced the assessment of civil penalties ($2,500 per day for 1135 days – the approximate number of days defendants’ website operated), “since under these circumstances, the penalty is more properly connected to the number of consumers affected by the advertising.” This is an important reminder about how much discretion NY courts currently have in setting the per-incident penalty. The court didn’t suggest that the trial court abused its own discretion in using days online.