The question in this case is whether an insurance company, which was one of several insurers selected to offer health insurance coverage to New York City employees and retirees, engaged in “consumer-oriented conduct” for the purposes of the State’s deceptive acts and practices statute by distributing misleading plan marketing materials to potential enrollees.
New York’s deceptive acts and practices statute, General Business Law (GBL) § 349, prohibits any person from engaging in “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state.” To assert a claim under GBL § 349, a plaintiff must allege three elements: (1) consumer-oriented conduct (2) that is materially misleading and (3) that resulted in injury to the plaintiff.
New York City contracts with a variety of insurance companies, including Group Health Insurance (GHI), to provide health insurance benefits to its employees and retirees. Plaintiff in this case, a retired alleges that GHI made materially misleading statements about benefits under a plan the City authorized it to offer to employees and retirees.
A federal district court in Pennsylvania granted GHI’s motion to dismiss. That court held that GHI had not engaged in “consumer-oriented conduct” because its allegedly misleading statements were made in the context of a private contract negotiated between the City and GHI, both sophisticated parties. The court based its holding on N.Y. University v. Continental Insurance Company, 87 N.Y.2d 308 (1995), which held that a GBL § 349 claim would not lie to redress allegedly deceptive practices in the context of an insurance contract between an insurer and a university.
On appeal, the Third Circuit certified to the Court of Appeals the question of whether GHI’s allegedly misleading statements were consumer-oriented conduct. The court held that New York law did not clearly resolve this question, citing principally Gaidon v. Guardian Life Insurance Company, 94 N.Y.2d 330 (1999), which found that an insurance company engaged in consumer-oriented conduct by disseminating misleading information about benefits to insureds. Whether this case was more like N.Y. University or Gaidon was, in the Third Circuit’s view, a question properly resolved by the Court of Appeals.
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